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It's My Money with Sonia du Plessis · Strictly Business

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  You're listening to Strictly Business Podcast with Lindsay Williams.
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  This edition of It's My Money is brought to you by Brenthurst Wealth, your partner
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  for global wealth creation.
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  Welcome to It's My Money.
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  It's My Money is brought to you by Brenthurst Wealth, South Africa's
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  multi-award winning boutique wealth manager.
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  Today we're going to talk about the following.
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  It's an article which appeared in the press recently and the headline is five
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  ways to face today's markets with
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  true South African grit.
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  I added the true there, but with South African grit.
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  And the author of this piece was Sonia Duplessis.
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  And she's with me now.
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  Sonia, are you inspired by the rugby victory recently against New Zealand?
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  Or was it just something you wanted to write?
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  Yeah, Lindsay, hello.
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  And hello to your listeners.
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  Thank you.
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  Yeah, I mean, we had such a good rugby match on Saturday.
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  So everyone, I think everyone's morale and you know we're just feeling a little bit
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  better in South Africa and
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  after a game like that how can you not
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  feel inspired so it just shows you how you know that true South African grit that
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  everyone's talking
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  about it really the
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  South African rugby team really reflected it on Saturday yes it was a good game so
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  the things are very good and as you
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  say in your article you know how to adapt and you've faced An awful lot.
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  Load shedding, you say, political curveballs and Iran that has a mind of its
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  own, but it's doing well at the moment because of the weak dollar.
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  But there's a resilience there, isn't there?
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  And I suppose you can apply that to markets.
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  And I think that's what you want to do, isn't it?
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  And you start off with saying what's stirring the pot.
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  And I think the first one is a very interesting one, stagflation and trade
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  tensions.
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  We have to take them separately.
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  Stagflation is interesting because inflation is stubborn in the United
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  States.
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  And maybe even ticking higher.
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  And the jobs market is in decline.
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  And that is a sort of a mini stagflation, isn't it?
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  Yeah, Lindsay.
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  So if we look at what's making investors nervous at the moment, stagflation is
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  definitely one of them.
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  And like you mentioned now, stagflation, the definition is low growth paired with
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  high inflation.
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  So it's not a good combination.
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  And that, fueled by the rising tariffs and global trade uncertainties, is
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  It's a recipe for not disaster, but it's a recipe for uncertainty.
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  And we don't know what President Trump is going to do in the next month or the next
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  six months.
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  And that is causing a lot of uncertainty for investors.
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  Should they invest?
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  Should they sit on the sidelines?
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  Should they not invest?
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  Yeah.
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  And when you say should they invest or should they not invest, AI, artificial
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  intelligence,
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  and the companies associated with AI and its delivery.
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  really does provide you and your clients with a conundrum because the valuations
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  are so high.
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  And is this thing hype or hope, as you say?
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  Yes, yeah.
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  So one's got to ask the question now, is the AI sector,
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  is it hope or just a situation of hype?
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  But a lot of the growth in markets has been driven by the AI sector.
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  And...
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  We don't know if it's sustainable.
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  I mean, I think Meta came out, I think it was in August this year,
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  saying that they're going to slash a lot of what they're spending on their AI
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  budget.
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  And that was a big decision that they made.
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  And we're not really seeing, you know,
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  a lot of companies have spent so much on getting AI technology into their company,
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  but they're not,
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  very few are really showing profits yet from...
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  you know, the big spend that they made into the company.
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  Yeah.
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  You know, so it's debatable.
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  Is the whole AI story, is it just a hype or will profit still come through?
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  And that is one of the concerns of investors on, you know.
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  Yeah, and it could take the whole market down if the bubble, so-called bubble, does
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  burst.
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  And outside of the tech sector, you talk about soaring valuations.
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  Because shares are expensive relative to their actual performance.
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  There's worrying macro signals.
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  We've sort of spoken about that.
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  And there's geopolitics in the background the whole time.
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  So there's so many things that people have to consider.
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  But what we really need to address here, or what you need to address, Sonia, is how
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  to respond.
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  What do you say when people come to you and make all the points that we've just
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  made?
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  Yeah, so, I mean, it's valid points.
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  if a client comes to us with these points.
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  And we do take it into consideration.
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  We just don't, you know, we take calculated risks.
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  We sort of like, I don't want to say read the market, but you assess the market.
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  And according to...
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  What is happening in the macro picture, and according to the client's risk
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  profile,
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  you would invest it.
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  But a couple of pointers on how do the men on the street or how do investors respond.
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  We always tell them that you have to filter out the noise.
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  It's so important to make an informed decision on what you are actually reading
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  and how much time you are spending
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  on it.
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  You're always going to have that one economist.
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  that's going to forecast the global meltdown.
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  And it's been happening now for the last 100 years.
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  So you've got to sort of like filter out the noise and lend your ears out
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  selectively and take
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  what's out in the media with a pinch of salt.
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  So, yeah, the other thing is stay diversified.
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  Just before you go to stay diversified, some commentators are incredibly
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  persuasive, aren't they?
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  If they want to punt a particular stock or a particular idea or a particular asset
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  class, they can be so persuasive.
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  And you think, wait a second, he or she said something that really resonates with
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  me.
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  Let me phone Sonia Duplessis and you filter for them.
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  Stay diversified.
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  Sorry, I interrupt you.
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  Diversification is so important.
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  Yeah, so it's so important.
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  We've spoken so much on your program about it.
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  investment world, we say it's the only free lunch that you get.
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  So as boring and as vanilla as it sounds, you have to have a diversified portfolio.
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  And for South Africans, you have to have some sort of like,
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  or a heavy offshore allocation in your portfolio.
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  And even for offshore investors, you need to split your assets across geographies,
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  across asset classes, across currencies.
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  And also be mindful of very sector-specific stocks.
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  Like, for example, technology.
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  Don't go and put 40% of your money in a very specific sector.
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  You know, the whole crypto phase, or not phase,
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  but also be mindful not to over-invest into risky assets like that.
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  So, so important to stay diversified.
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  And apart from risky assets, there's also a temptation to go into safe havens as
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  well.
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  And the money market funds in particular are generally considered to be safe havens
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  in the global system.
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  Yeah.
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  So if you've got all these things going on in global markets,
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  you tend to want to hide in money market or in bond funds.
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  But we warn people or warn investors about that.
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  you've got The risk of your money not growing with inflation, not keeping up
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  with inflation.
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  You've got growth that is taxed quite a bit, money market growth that's taxed
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  quite a bit.
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  And then you always sit with that question at the back of your head that if this
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  money, if you want to invest this money,
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  when are you going to invest it?
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  When is it, when's the right time going to be to invest this money?
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  So yeah, so use money market cautiously.
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  Don't, don't have a massive allocation to money market.
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  but there is definitely a space for some allocation to money market for your super
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  short term money.
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  But don't go and try and hide all your money in money market for when things
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  settle down and for when markets will recover,
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  because you, quite frankly, will never get that day.
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  There will always be something that's going on in markets.
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  OK, money markets, we must reiterate, are an important part of many portfolios.
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  What you're saying is they shouldn't be used as a sort of any port in a storm and
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  put all your money in there.
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  We know what you're saying here.
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  What do you mean by phase in if you're uncertain, which is point number four,
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  Sonia?
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  One of the strategies that you can follow if you are a bit cautious about just going
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  smack bang
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  to put your money in the market, we would follow a phase in approach.
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  So we'll put, you know, you'll phase it over three or six month period.
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  systematically into the market.
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  It just softens the blow if there is a market correction.
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  So you can either make the decision to, if you've made the decision to invest your
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  money,
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  you can either put everything into the market in one bank or you can phase it in
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  over a couple of months.
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  So for your more cautious investor, that is sometimes the better approach to
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  follow.
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  Okay, and the final point is let the plan...
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  work once you invest you say give it time it's like me so this is a stupid example
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  but it's
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  it works for me i'll be watching a series on netflix and i think oh my goodness me
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  why did i choose this it's so slow and then
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  suddenly you get into it it's the same as a financial plan it's not gonna usually
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  not gonna you know turn the lights on straight away shoot the lights out
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  straight where you've got to give it time.
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  Yeah, no, I mean, investing isn't a short-term race.
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  You know, it's a long-term marathon.
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  So you need a plan.
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  You need a short-term plan for your immediate financial needs.
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  You need a sort of like a medium-term plan, and then you need a long-term
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  retirement plan.
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  And also the other thing that investors must know is if all of this sounds too
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  complicated or
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  overwhelming, you tend to just put it aside and want to deal with it later on,
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  which is also not the correct path to follow.
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  So if you've done the moita and you've put in the time to set up a proper plan with a
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  financial
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  planner, when you start to implement it, I almost want to say don't overthink it,
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  just let the process follow through and you will definitely reap the rewards
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  from this plan and the financial decisions you made.
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  Very good.
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  So let's put all this together.
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  The factors that you're being bombarded with, plus the advice that you've given,
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  what's the bottom line?
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  How would you sum it up, please, Sonia?
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  Yeah, I think that, you know,
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  we've summed it up quite nicely now in the last thing about let your plan work for
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  you.
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  And resilience pays off.
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  Lindsay, like we all know,
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  it's not the best decision to switch or sell out of the market if there's a
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  correction or a dip.
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  And if we've got luck in times that we are experiencing now, you know,
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  with a lot of uncertainty in markets, it doesn't make sense to sell out or sit on
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  the sideline.
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  You have to think long term.
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  You have to.
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  Equities is always a long term game, at least eight to 10 years.
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  But there is, you know, you need a financial planner to guide you,
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  to look at your short term.
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  for objections or, you know, goals and also for your medium term goals.
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  So you need to bring in other asset classes and not just equity.
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  You might want to bring in a little bit of money market or, you know, the bottom line
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  is resilience pays off.
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  You have to sit through the market cycles, the different ups and downs, and it will
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  definitely pay off.
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  Exactly.
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  And if you've got any worries or any aspirations that you can't quite work out
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  yourself, just phone your financial.
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  advisor.
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  Sonia, great advice as always.
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  Thanks very much for your time.
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  Sonia Duplessis from Brenthurst Wealth.
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  And that was It's My Money.
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  It's My Money was brought to you by Brenthurst Wealth, an award-winning
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  boutique wealth management company.