Investment mix

Investment mix tailored to the individual

10X invests your money according to your age and retirement date, using life-stage portfolios. 10X runs ten life-stage portfolios with time horizons ranging from one year to nine years and longer (to retirement). Each life-stage portfolio has a different risk and return profile. In this way, the relevant investment advice and risk management you need is embedded in the solution.

Why life-stage portfolios?

Simply put, investment risk is linked to time (the number of years the investment is held). Investment risk is
high in the short-term but falls as the time horizon lengthens.

Shares (equities) provide the highest expected returns — around a 7% pa real (after-inflation) return – but this return is uncertain and variable, especially over shorter investment periods. From a risk and return perspective, investors close to retirement should not have a high share weighting in their portfolio. However, time transforms shares from high risk to low risk assets. As the time horizon increases the risk of shares performing poorly decreases. Since 1900, the worst real return from South African shares over any 35 year investment period has been 5% pa. Although future investment returns are not guaranteed, there is no reason to believe SA shares will deliver materially lower long-term real returns in future. Cash and bonds provide lower real returns than shares, around 1% to 3%, but with lower risk. Investors with shorter-term time horizons should own more low risk assets such as cash and bonds.

Figure 1. Example: 10X Life-stage portfolio matched to your years to retirement
Source: 10X Investments

Your 10X Life-stage portfolio

The longer your time to retirement, the higher your allocation to shares (equities) – the asset class with the highest expected long term return but also the higher risk. If you are more than nine years away from your stated retirement date, you will be allocated to a portfolio with the largest exposure to shares (75% including listed property). This portfolio will produce variable returns over the short term and may suffer losses of 20% or more over a one or two-year investment period. However, over the long term this portfolio is expected to produce the best returns, around 5% pa after inflation.

Figure 2. 10X Life-stage portfolio investment mix
Source: 10X Investments

The shorter your time to retirement, the greater our focus on capital preservation. With less than nine years to your retirement date, you will be allocated to portfolios with lower share exposure and higher exposure to bonds and cash (lower risk assets).

Figure 3. 10X Life-stage strategic asset allocation
Source: 10X Investments