Another tool to protect investors against market volatility

The last year or so has not been an easy time for anyone.

The Covid-19 pandemic has turned out to be far more than a health crisis, as efforts to halt the spread of the deadly virus have seen much of the world’s economy being shut down for long stretches over the past year, leaving many feeling financially vulnerable in very difficult times.

In these times of extreme volatility, it’s not surprising that people are looking at various ways to preserve their wealth.

From commodities to stocks and foreign currency, we look at some ways to diversify your savings.

And one of them may just be a great option for the present moment in time.

Stocks

While the stock market is the go-to investment vehicle and has proven over time to grow consistently, 2021 poses some difficulties for the growth of companies amid the Covid-19 pandemic.

Given the volatile markets, people are increasingly wanting the flexibility of being able to invest abroad when it comes to protecting their wealth.

For South Africans, this risk calculation is even more daunting because they have to make these calls while figuring out which way the rand will go.

At around R14.85 to the US dollar, the rand is trading where it was at the beginning of 2020. The volatility of the local currency, however, can be seen in it rising to as high as R18 to the dollar on April 3, 2020.

Foreign Currency Account

This where Nedbank’s Foreign Currency Account (FCA) can help. It enables clients to buy eight currencies without having to use an intermediary or to move funds offshore in order to maximise returns.

The FCA facility allows Nedbank’s customers to deposit as little as R1 500 (and up to R11 million) a year.

It not only enables them to hedge against volatility and save for an upcoming international travel trip – the FCA is a savings account with no monthly maintenance fees and can also be used to transfer money to a foreign bank account or the Nedbank Travel Card.

To qualify, the client has to be 18 years and older with a valid SA ID, be an existing Nedbank transactional account holder, be a “taxpayer in good standing” and have a tax number.

Non-Nedbank clients interested in opening up a FCA can do so by first opening a Pay-as-You-Use transactional account – an account with zero monthly fees and a free Gold cheque card, allowing clients to pay only for what they use.

No restrictions

Investors are not restricted to investing in only one of the eight currencies with the Nedbank FCA. It may even be prudent to invest in more than one foreign currency to mitigate the risk posed by one volatile currency.

This account gives the astute investor the opportunity to make their investments based on the best performing currency against the rand. The transaction can be done instantly since no go-between is involved.

Brought to you by Nedbank.

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