The expression, “It is never too late”, can be applied to many different situations. When we talk about investments, it is a popular saying amongst financial advisors when referring to the most opportune time to start saving for retirement, but it is not entirely true. Time plays a crucial role when it comes to investing, as we have discussed numerous times in the past. Telling someone that it is never too late to start saving is like parents telling their children that they can do anything they choose to do in life. These sayings are more motivational than fact, but they do serve an important purpose in that they focus the mind and create a positive attitude.
When it comes to investing, we are getting to a point where we have to consider our allocation between equities and cash. Simply put, we have to re-evaluate how much risk we want to take with our investment portfolios. We have seen fantastic returns, not only on international equities, but also on our local equities. We are seeing gold at the highest level it has ever been (up 52% over the last 12 months), and silver doing even better (up 56%). We have seen big tech companies in the USA and China shooting the lights out and Europe is having a very good year as well. These returns have been supported by various factors, including strong earnings growth from tech companies; central banks buying gold to replace their reliance on the US$; and world trade still strong, despite the dire predictions made by some when Trump introduced tariffs.
With all of this said, being overly optimistic over the short to medium term can be costly. We are at a stage where there will be winners and losers when it comes to investing in shares. Currently, investors are just buying everything they can get that involves AI, but at some stage, they will want to see some returns, and not all companies will be able to deliver. Gold will also come under some stress if central banks decide they have accumulated enough reserves, and at some stage the US$ will stabilize and we might see the rand slowing its run against the greenback. Unless you have decades to go before dependence on your savings becomes an issue, you have to apply sound portfolio risk management now and ensure that you have some diversification between your equity and cash holdings.
It might well be too late to start some things, but there are many things for which you are not too late. We can just look at Charles Flint who started IBM at the age of 61, or Chaleo Yoovidhya who started Red Bull at the age of 64.