New year investing traps to avoid | PSG Wealth

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CIARAN RYAN: It’s the start of a new year, and that carries a new set of risks and challenges, especially after the 38% increase in the JSE last year, 2025. For many people this is a time of reassessing their portfolios and making changes. But should they? There is a temptation to chase last year’s winners and pour money into get-rich-quick schemes.

There is also a more troubling tendency among many to increase credit card debt at this time of year to carry them through penalties of spending too much over the festive season. So what should we be doing? To answer that we’re joined now by Adriaan Pask, chief investment officer at PSG Wealth.

Hi Adriaan, I hope the new year is treating you well. A lot of people will be looking at the amazing 38% jump in the JSE Alsi Index last year. They might also be looking at the huge rise in gold and silver prices and think they should be chasing those trains. They will also be trying to fill financial holes by perhaps investing in forex bots or the latest crypto craze.

So what is your advice at the start of the year?

ADRIAAN PASK: Hi Ciaran, and hello to everybody listening in. I hope it’s a good New Year for everybody.

Our chat today is just to say it’s that time of the year when everybody has a New Year’s resolution. Normally these things focus on health, or maybe spirituality or your career. It’s not often that people actually set down real resolutions from their financial well-being side.

But it is a really good year to do that because there is so much happening in markets – and it is a sort of risky time of the year. Ciaran, you’ve mentioned the get-rich-quick schemes.

It always surprises me how we see, year in and year out, routinely there are operators out there who promise big returns luring retail investors into these schemes and to face big disappointment.

I think [it would be good to] pencil down: ‘This year I won’t be lured into something that looks too good to be true.’

I appreciate that building wealth over time is a long-term process, and it’s not something that happens overnight.

And whatever I do to grow my wealth, I’m going to go to the Financial Sector Conduct Authority [FSCA] website, the regulator’s website, to make sure that whomever I’m doing business with is licensed to perform activities in the industry. It sounds like a basic thing, but there are still quite a few operators, as I’ve mentioned, who manage to lure investors who are not aware of the risks or how to vet service providers, et cetera.

CIARAN RYAN: Yes. Now, at this time of year we’re also going to see a lot of reports coming out showing the relative performance of different funds. People will look at those and see that they missed out on investing in the best performers, and the tendency is to switch to the previous year’s winning horse. Is that a good idea?

ADRIAAN PASK: I think that’s exactly right. I think, again, it’s something that we’ve spoken about before.

It’s one of those behavioural aspects and people are lured into strong returns from the previous year.

That ‘fear of missing out’ component features quite strongly there, and ultimately we’re just saying it’s not to say that that performance can’t continue, but be quite careful in terms of what your overall strategy is.

So again, maybe thinning that down to a proper New Year’s resolution is just to say: ‘I’ve identified my needs and what I need to achieve. And if I’ve identified a skilled manager or a good business that I’m investing in, I’m going to give it an appropriate amount of time to work in my favour.’

Don’t get too impatient with your investments, don’t follow last year’s winners. Those things typically end quite badly.

CIARAN RYAN: Now, another thing that happens this time of year is that people set off the year with the resolution they’re going to be debt-free by the end of the year. That’s a common one. And we also see credit card debt rising at this time of the year.

So let’s talk about the cycle of credit card debt, and how people can start to retire some of that debt and achieve that goal of being debt-free.

ADRIAAN PASK: I think, especially right now, everybody has had a very long December.

Salaries are normally paid a little bit sooner in December. You’ve had to make it stretch.

And all of a sudden you’re reaching for a credit card or two to make things last a bit longer, or to get you the things you need, because it’s not only just the income side that’s really stretched, but it’s also that the expenses tend to tick up. We’ve school fees and all sorts of new things that surface in people’s personal lives that they need to try and target.

But I think the worst thing that you can do right now is reach for a credit card, because it sets you up for the worst possible start to the year, since from there you sort of backpedal all the time.

It really is the best possible month to be quite conservative in your spending, where you can think about maybe starting small.

I think we sometimes make these targets much bigger than they need to be.

You don’t have to settle all your debt with your credit cards in the next few weeks. We are talking about maybe a project for the year. Start with one card. Try and consolidate everything into one environment where the rates are attractive; then focus on that specifically and try to chip off a little, month by month, to ensure that you can by the end of the year hopefully be in a position to say ‘I’ve set myself up not only to not have any debt, but hopefully next year I can actually work on growing my investment – maybe emergency funds, that kind of thing’.

CIARAN RYAN: You touched on emergency funds. This is something that a lot of South Africans really pay no attention to. How does one put an emergency fund into place? How seriously do you need to take that?

ADRIAAN PASK: I think it’s really important.

A very good example of this, where you could see not just individuals, but also businesses exposed to a lack of emergency funding, was obviously through Covid.

We tend to extrapolate our current environment, thinking well, everything’s okay now. But emergencies by definition are not something that you can perfectly foresee. We know that these things do pop up – whether it’s a new set of tyres or someone that needs something in the family, or there’s a whole range of things. But for people, if they are still in that debt-funding process, it’s very difficult to step to the next stepping stone, which is emergency funding.

So for those who are fortunate enough to have very little debt or are much closer to a process where they have paid off their debts, now you’re in a very good, strong position to think about emergency funds and try to think about what is reasonable.

Think back to past experiences when you were under financial strain, what could have been useful, and what type of amount would have helped you through that previous challenge; make that a goal and then start again small. I think it’s such a recurring theme, just starting small with the right habits, and over time things grow.

You don’t have to put down hundreds of thousands in emergency funds from day one; you can build that over time. And what is also very important because we do see – even when people are very good with that component – is that they tend to tap into that for things that might look to them like emergencies but are not really emergencies. They’re closer to being wants.

So I think it’s important, once you’ve paid off the debts, got your emergency fund, to protect that really well and understand specifically what that is for – real emergencies.

I think that’s a good way to start that emergency-fund strategy.

CIARAN RYAN: Yes. And finally, Adriaan, retirement planning. This all comes back to this issue of retirement planning. The stats show that South Africans tend to defer this until the very last moment – if they have any retirement planning at all. So how does one make this into a daily kind of habit, something that you focus on, not just something to be tackled next year or next month, but something that you do today?

ADRIAAN PASK: I think it is helpful to speak to someone who is more acquainted with how people typically approach it, and what is a good strategy.

Making contact with a wealth manager is not just good for getting you started with the investment, but a wealth manager will also help you stay on track, which is actually the most important component you can hear – how much of what we are talking about now is about setting down the right discipline, but then also staying with that discipline.

I think that’s where speaking to a wealth manager is really, really valuable. They will tell you that, for what you want to achieve: ‘This is what you need to accomplish over this journey. This is how quickly you need to move, and I’m going to help you stay on track for that.’

I think people underestimate that. People tend to say ‘Well, I’m going to live X years. I may be going to work for so many decades, so I’ve lots of time to think about it.’

But the reality is we run into people all the time who under-provisioned for their retirement – and it’s not something that you can do last minute.

It’s a case of the earlier you start, the easier it is.

And the best way to make that start is speaking to a wealth manager who can give you a clear rundown of what exactly needs to happen over what time period, and then keep you on track for that.

So that would be my approach and suggestion for the retirement-planning side of things.

CIARAN RYAN: Great advice for the start of the new year. We are going to leave it there. Thank you very much, Adriaan Pask, chief investment officer at PSG Wealth.