Registered users can save articles to their personal articles list. Login here or sign up here

Do I invest my money or store it under the mattress?

The R400 000 I invested is now worth R383 000 a year later. We are 50 years old, and don’t have a lot of time left to contribute towards our pension….

Q:  I need some advice on money that I need to invest, or just keep under my bed. The amount is R 7 million to R8 million.

I have had R5 million of the money in acsis for a while and planned to keep it there for at least five years but when they transitioned over to Old Mutual I was advised to take the money out and put it in Investec. This happened about a year ago. I paid the money back into my bank account to transfer it to the Investec opportunity fund under Clive Rossouw. 

Something made me feel uneasy, so I only opened the fund with R 400 000 to start with – luckily.

The R400 000 is worth R383 000 almost a year later. There is R5 million sitting in an non-interest bearing account for the same period, and now I am to scared to do anything.

This money was supposed to have grown with good compounding interest by now for our pension one day and nothing is happening. We are 50 years old, and don’t have a lot of time left to contribute towards our pension.

The financial institutions/advisors out there promise you good returns and all that really happens is their fees get deducted, they make their money, tax eats the rest and you are left with egg on your face and no or low returns.

What to do? I don’t know!


Mduduzi Luthuli - Luthuli Capital (Pty) Ltd


It sounds like you’ve grown disillusioned with the investment market, and those who are meant to guide you and provide some certainty in an environment that at times reacts more to sentiment and emotion, rather than facts and statistical data. We’re told consistently as investors to never time the market and to be patient. The reason for this is for the exact situation experienced above. We can all have a bad year investing but that doesn’t mean we must proceed in fear and avoid all investment related risk. We simply need to learn how to manage that risk and ensure it aligns to our long-term goal. 

You must always invest with a risk management discipline. This is critical. Never violate this rule. This rule is essential to ensuring you stand any chance to still recover over the long-term. The key to a consistently profitable investment portfolio is to control the losses for each individual investment. The way you do that is through risk management.

Controlling losses in each investment lowers the risk profile of your portfolio, reduces its volatility, and can increase its return. This is not opinion but is mathematically provable. I’ve spent years researching investment strategy and have not found an exception to this rule. That is a big statement so please read it carefully. Controlling losses when you make an investment decision should be your primary concern. We use standard deviation to measure investment risk and historic volatility. If you have an adviser who’s never discussed standard deviation with you, fire them immediately.

I don’t know the reason for the negative return in your investment over the last 12 months nor will I speak on behalf of the fund-manager. I can speculate as to the reasons for the outcome. Was it market movement or poor investment strategy? Speculating won’t help you and will only serve to waste both your time and mine. What I will say is it’s important to remind yourself that at times you will experience a dip or sub-par investment performance if you’re invested for the long-term and seek high compounded returns. It is an expected, unavoidable part of long-term investing. You may want to act? That’s fine but do remember that productive actions don’t necessarily include changing course. I wish the advice was simple and straightforward like stay calm and stay the course.

What I can say at this point is to remember why you’re investing. If you’re saving for a long-term goal, such as a retirement, your allocation already factors in a short-term market drop. A sharp fall in equity prices is usually accompanied by scary news headlines and red numbers. Modern media wants clicks and attention, and, unfortunately, fear sells. It’s hard to stay calm. We knew there would be days like this, and we planned for it. Ask yourself if your current portfolios are optimized for your time horizon. If the answer is yes, Stay that way. If you’re tempted to act, consult with a wealth-manager who’ll assist you with a tailored investment plan which is properly adjusted for risk and considers the likelihood and magnitude of a downturn or below-average returns; That is, if you still trust any adviser.

Some folks never forgive themselves for suffering capital loss (let alone forget). Some people feel so badly about what they’ve done that they never go near investments again. Others try with all their might to make up for the misstep and just repeat the same mistake repeatedly.  Both these reactions are understandable but can cost you big time when it comes to your net worth and future growth. So, like you asked…What do I do now? If you really want to prevent future train wrecks and make up for past errors, dissect the experience, isolate the mistake, create a plan on how to avoid that same error in the future, and then forgive yourself.   Let’s break this down.

What happened? 

Just because an investment didn’t work out it doesn’t mean you did anything wrong.  Sometimes things don’t work out. It still pays to ask a few questions: –

  • Why did you make this investment?
  • Were your expectations reasonable?
  • Based on what?
  • Did you make the investment purely based on another person’s recommendation or reputation or did you take a good look under the hood?
  • Did you understand the risks before going ahead?
  • What went wrong?
  • In retrospect, was this negative outcome inevitable or foreseeable?
  • If you could do it all over again, what other questions would you have asked or what would you have paid more attention to?


Once you ask yourself these questions, you’ll have a sense of whether or not this investment was a dumb move or something that just happened to work out badly.

Was the investment consistent with your long-term plan/goals?

Was this investment a solid long-term move, or was it more speculative?  There is nothing wrong with taking a little money and speculating occasionally.  But you should never speculate with your serious money. Did you convince yourself that this investment was less speculative than it really was?  The best way to avoid doing that in the future is to have an accountability partner/ financial adviser/ wealth-manager and run these ideas by that person before you do it.

Losses are a natural and normal result of making investment decisions, and the key to long term success is what you do when they occur. Losing investments can be great teachers. You will learn from every investment mistake you make. Each investment lesson learned can help you avoid a loss in the future which can turbo boost your lifetime investment performance. Use this as an opportunity to diversify.Remember that what matters is the outlook for the future, not a “correction.” It is also worth remembering that this drop is nothing compared to the gains the market has seen in the past 10 years. I only mention this as a reminder that investments do work. As an experienced investor, I always recommend that my clients “have a diversified portfolio, consisting in large part of low-cost index funds, weighted toward equities; add money as you get it, and diversify it as well; keep the cash you need; and otherwise hold steady.

Finally, legendary investor Warren Buffett gives perhaps the most concise advice about how risky markets feel, and what you should do: “The stock market is a device for transferring money from the impatient to the patient.” Stay Focused on the Future, Not the Past. We’re in an era of uncertainty; we always have been, and we always will be. Even if people say otherwise, no one knows what will happen, so there’s no use in projecting. I understand that it might feel necessary to try to correct what’s happened, but it’s just a distraction. The more important thing to do is focus on the future and staying properly invested.

What do I do now?

I think you would be well served by a Guaranteed Future Value Investment. I say this without knowing your risk profile or investment objective, so take my suggestion with a pinch of salt, and consult an investment specialist for a tailored answer, as opposed to a generic answer.

A Guaranteed Future Value Investment can offer you peace of mind, knowing that no matter what – the future value of their investment is guaranteed.  This investment vehicle assures a fixed return on investments over a five-year investment period. The investment is uniquely designed as an endowment, which ensures that the earnings received on maturity are tax free.

It is ideal for investors that:

  • are looking for a guaranteed return after five years.
  • are seeking to diversify their investment strategy.
  • are looking for a secure option to invest their money.
  • have a high marginal tax rate.
  • have previously used their interest tax exemption.
  • don’t need their capital for the next five years.
  • have discretionary savings to invest.
  • are looking to invest in a low risk product.


Remember that security is a double-edged sword. You pay for the guarantee as such vehicles tend to, but not always, have a higher cost and “lower” long-term returns. What they can offer you is surety today. They can offer you an above inflation return, full capital protection, and tax-efficiency. What more do you need?







Follow us:

Search Articles:Advanced Search
Click a Company: