Investors often spend more time wondering whether this is the right moment to enter the market than asking what the money is actually meant to achieve.
For Hercu Pienaar, Director at Aurora Capital SA, that order should be reversed. He believes a new investment decision should begin with a clear purpose, an understanding of when the money may be needed, and a realistic view of the investor’s broader financial position.
“There will never be a perfect time,” says Pienaar. “Nobody has a crystal ball, not Warren Buffett, not Aurora, and not the adviser.”
That does not mean market conditions should simply be ignored. It means short-term predictions should not become the foundation of a decision that may have consequences for many years. Waiting indefinitely for a better entry point can leave someone doing nothing while hoping for certainty that the market cannot provide.
The investment needs a job
Before deciding where to invest, Pienaar says the investor needs to understand what the money is intended to do and when it may be required. In his view, those questions sit at the heart of the investment decision because they influence how much flexibility the investor needs and how much risk can reasonably be taken.
Money that may be needed relatively soon has a different purpose from money intended for retirement much later in life. That is why the conversation cannot begin with whichever investment is attracting attention at the time. The starting point has to be the need the money is expected to meet.
This also makes it easier to judge whether a proposed investment fits into the rest of the financial plan. Without that context, an investor can end up making an isolated decision that looks sensible on its own but does not fit comfortably with other priorities.
Liquidity cannot be an afterthought
Pienaar believes emergency savings should take precedence over committing additional money to a longer-term investment, although he does not see the two as mutually exclusive. Where affordability allows, building an emergency reserve and contributing towards longer-term goals can happen alongside one another.
The difficulty, he says, is that many households do not have enough disposable income to fund every financial need at the level they would like. This is where starting early becomes important. It allows different priorities to be built up over time, rather than leaving someone to address several gaps later, when the required contributions may be much harder to accommodate.
Existing investments should also be part of the conversation
A new financial objective does not automatically require a new investment product. Pienaar says there are many instances where increasing a contribution to an existing investment could be the more appropriate approach. The answer depends on what the investor needs and what is already in place.
The composition of the existing portfolio also has to be considered. He cautions against concentrating all long-term savings in retirement annuities, while having no retirement annuity provision at all can create a different problem. The point is that an investor’s arrangements should reflect different needs rather than accumulating products without considering how they work together.
This is why the decision to invest should be considered in the context of the overall financial plan. An existing product may already be well suited to the objective, while a new investment may be justified when the need, access requirements, or longer-term purpose differs.
Market noise can change investor behaviour
The challenge is that investment decisions are rarely made in a purely rational environment. Pienaar points to the well-established role of behavioural economics, particularly the influence of fear and greed on decisions.
Strong recent performance can make an investment feel more attractive just as markets have already risen, while uncertainty can make investors reluctant to commit money after markets have fallen. In both cases, emotion can pull attention away from the reason the investment was being considered in the first place.
Pienaar believes that is where advice can help keep the decision anchored to the investor’s actual circumstances rather than the mood of the market.
The question of whether now is a good time to invest will probably never disappear. Markets move, headlines change, and investors will always have reasons to wonder whether waiting might produce a better opportunity.
For Pienaar, a more practical starting point is much closer to home. The investor needs to know what the money is for, how long it can remain invested, what other financial needs require attention, and whether the proposed investment fits into the broader plan.
Once those questions have been answered, timing becomes part of the decision rather than the decision itself.