What to do with new money?

It was a spectacular 2013 and I need not say more on that. The year before, 2012 was even better so I cannot see SA equities delivering the same results in 2014 although some counters (Resources) had a dismal 2013 and could bounce if China starts growing again. The USA had a 27% (in $) return, also following a good 2012 and with the Rand depreciating 23% in 2013 SA investors smiled all the way to the bank.

Bonds will remain under pressure with interest rates going up rather than down so to answer the question of where to invest additional funds in 2014, I will say 50% in International Equities and 50% in SA equities for longer term.

Reason: Even if we get a very low 2014 for equities, I prefer not to time the market and regarding the international side, Developed markets still offer better value for money than SA and even though the Rand should strengthen against the $, there are no guarantees.

If my gut feeling is right, any Equity investment made by a SA investor will not perform much better than cash in 2014 but I have been wrong too many times to trust my own short term predictions and would rather just follow sound investment principals and get the money into the right place for the longer term growth prospects.

Some very unpredictable things can happen in 2014:

• The reaction to election results in South Africa
• The striking miners in South Africa
• The US tapering and debt ceiling handling
• China growth?
• Europe back into recession?

The good thing is that the US seems to be recovering well. That should at least stabilise many of the potential surprises.