BRIAN KANTOR: Taking advantage of risk aversion
Risks fall sharply when the investment period is extended beyond one year
The Covid pandemic of 2020 was a frightening episode. The JSE all share index lost 20% of its value by March that year, and the S&P 500 suffered a similar drawdown in dollar terms. Yet something predictable then followed.
Between January 2020 and July 2024 share market returns have outperformed bonds and cash by large margins. The R100 invested in the JSE immediately before Covid with dividends reinvested would now be worth R173. Had the R100 been invested in the S&P 500 it would now be worth significantly more — R236. The same R100 if invested in the bond index or in a money-market fund with interest reinvested would have grown to only R144 and R130, respectively. ..
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