Update on investments.

You who have equities in South Africa should not expect double digit returns over the next couple of years!

In short the following:

• Inflation is going to kick ass in a couple of years from now.
• That is bad for equities!
• USA will have less of a problem because they can't raise interest rates for a year or two.
• That is good for equities!

So, equities in Developed markets like USA should outperform SA equities over the next couple of years. (also because USA gave you 0% for the last 10 years!!!)

Bottom line
Do not sell SA equities but if you have very little International equity exposure, try to swap some SA for International. This should be done after considering the TAX effect. (Remember, any investment sold 0- 3 years after acquisition will be taxed as INCOME!). This swap should also not be tried if you are not invested on a "platform" offering a range of unit trust funds.

If you have enough international equity exposure for you longer term investments, ride out the equity volatility because Cash after tax will give you even less than equities over longer periods of time.

For longer term investments avoid Bonds, Cash and even property.

UPDATE: The Momentum Protected Index Plan I wrote about in a previous blog, now gives you a capital guarantee on the Top40 shares in South Africa with a 39% after cost participation in growth in that index over a 3 year period. If you have cash to invest for 3 years and do not want to remain in cash but are afraid of losing money on the SA equity market, this might be a good product for you.