I'm looking for some advice on how to best position myself in an country that faces a volatile economic future in the short/mid term ahead.
- I live in South Africa where our currency has been slammed this year due to poor economic prospects ahead, a bad political landscape, and also less global appetite for risk.
- The outlook for the country over the short/mid term is very shaky. Things could gradually decline over the next few years (most likely), but even take a sharp turn for the worse...a lot depends on the political scene next year.
I've made some investment mistakes in the past of trying to buy individual stocks (without proper analysis) and have lost a bit of money. I decided recently to sell off the individual shares and rather take an approach of just buying and holding long term in diversified index funds.
Recently I also sold off some of my locally based index funds and re-adjusted the balance of my portfolio to try preserve some of my wealth with foreign invesments. I'm fairly young (early 30s) so my portfolio is fairly aggressive towards equities.
Current portfolio make-up:
- 10% risky assets (bitcoin)
- 10% gold index tracker (good hedge for our currency)
- 41% local indexes & retirement annuity
- 27% foreign indexes (DBX USA, S&P 500, FTSE 100, etc).
- 6% cash locally (held in a low interest savings account)
- 6% cash foreign (USD & GBP)
My main goal is not to panic when things happen but to try stick to a plan.
- What approach should I take to best protect my wealth against currency devaluation & poor growth prospects. I want to avoid selling off any more of my local index funds in a panic as I want to hold long term. Does my portfolio balance make sense?
- Quite a large portion of my foreign investments have been bought at an expensive time when our currency is already around historic lows, which does concern me in the event that it strengthens in future. What strategy should I take in the future if/when my local currency starts the strengthen...do I hold my foreign investments through it and just trust in cost averaging long term, or try sell them off to avoid the devaluation?
Any advice would really be appreciated. Thanks.