According to Warren Jeffery, Head of Research and Trading, FSP Invest (14th Jan 2013) the cracks are starting to show in the idyllic investment environment of sunny South Africa.
You see, despite the fact our local market is trading, pretty much, at all-time highs, there are signs that the global investment community is starting to lose faith in our ability to resolve our socio-economic issues.
And if these issues aren’t resolved soon, you need to make sure your investments aren’t left exposed to the biggest threat facing South African investors today.
So what is this threat? Well to answer this you just have to look at the media headlines that have been dominating the financial papers over the last few months. Mining strikes… Agricultural strikes… Transport strikes… Slowing growth… A widening budget deficit!
These are at the forefront of undermining international investor confidence in South Africa. In fact, just last week, international ratings agency, Fitch, downgraded its outlook on SA.
And with this decline in international confidence you’ll see the rand start to collapse.
No matter who you are or what you do, if you live in South Africa, a collapse in the rand is the biggest threat to your investments.
Now, you may have heard some analysts and investors saying that a weak rand would be good for our economy because it will boost our exports by making our locally produced goods relatively cheaper to foreigners with stronger currencies.
But this is a short-term outlook!
Because with a weaker rand, we’ll all have less spending power with every rand we hold. And that means we’ll soon be facing rising inflation.
Inflation that will make feeding your kids, driving your car and just living out your everyday life more expensive.
Inflation that will rob you of the value held in your savings.
Inflation that destroy the returns on your investments.
That’s why it’s critical for you to protect your wealth from inflation with smart investments.
When looking at the potential threat the rand poses to your investments, it’s clear that you should be looking for a way to protect yourself should the currency collapse.
Warren Jeffery believes one of the methods he likes to use, to protect wealth from a collapse in the rand, is to get exposure to rand hedge shares. At IPS, Scott Picken, IPS CEO believes it is all about growing your global wealth through quality investments in First World countries, assets and income.
Investing like this will help to protect and grow your wealth when the world loses faith in the rand.
So make sure you’re protected.