NEWS ANALYSIS: An investment debate SA should have
If you’ve heard enough active managers wax lyrical about their fund’s inflation-beating returns or been reminded for the umpteenth time by passive managers that most active funds don’t outperform their benchmark, you’d be forgiven for thinking the underside of your mattress is the best place to stash your money. The active-versus-passive investing debate obfuscates the most important elements of what makes one investor more successful than another: when they start saving and how much they save. Take two people who contribute the same amount and earn exactly the same return on their investment over a lifetime. One starts saving 10 years before the other. The power of compound interest means that person A’s extra contributions are compounded so that she ends up with twice as much as person B, despite only contributing 33% more. How refreshing it would be if asset managers, instead of boasting about returns or fees, bragged instead about how many first-time investors they had signed on...
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.
Subscribe now to unlock this article.
Support BusinessLIVE’s award-winning journalism for R129 per month (digital access only).
There’s never been a more important time to support independent journalism in SA. Our subscription packages now offer an ad-free experience for readers.
Cancel anytime.
Questions? Email helpdesk@businesslive.co.za or call 0860 52 52 00. Got a subscription voucher? Redeem it now.