Putting financial solutions in place should be part of a carefully designed strategy. Each solution or product should serve a pre-determined purpose in your wealth creation strategy. As US investment guru Peter Lynch is famous for saying: ‘Know what you own and why you own it’. Here, we explore the mechanisms of seven financial solutions,
Money market funds are not right for long term savings
Words on Wealth:
With Absa recently announcing the closure of its R80 billion money market fund, I thought it apt to consider what this type of a fund is, how it differs from a bank deposit, and the role it should play in an investment portfolio.
One of the reasons Absa gave for closing its fund was it found that the investors did not expect it to behave as it did; they expected it to behave like a bank deposit. One has to question why investors were invested in the fund if this were the case. Did their advisers not spell out to them how a money market fund operates?