Pieter Albertyn, Head of Product Solutions at Momentum Savings
Let’s compare being in and out of the market with your investment with the children’s game: musical chairs.
You can play the game to any kind of music while players walk around a circle of chairs. When the music stops, everyone must find a chair, but because there’s one chair short, one player is left standing, and is out.
We can use “any kind of music” for a simile for volatile markets. Often, when markets are not in a good mood and lose value, we panic. It’s the gut reaction to try and prevent losses to our hard-earned growth – to jump up from your chair and get out of the market.
This is where the same kind of disorientation than that of the game can hit you if the music stops and you’re without a chair. Of course, you won’t ever be without a fund to invest your money in. But that feeling of being caught unawares – what to do now when you’ve disinvested? Do you run to the safety of a money market, but where the growth is ultraconservative? Or do you take a deep breath and look from scratch for a chair that will give you both comfort and some decent growth to look forward to?
Our colleague in the Momentum Financial Planning and Advice team, Paul Nixon, has done a lot of research on clients jumping investments. He calls it “behavioural tax” because he believes you pay a kind of penalty or “tax” for knee-jerk reactions when switching funds.
For instance, by April last year the global tariff surprises of the American president, Donald Trump, had made a lot of people jumpy. Nixon investigated the behaviour of clients invested in a post-retirement product – how much were they switching, and into which alternative funds?
He compared the period of September 2023 until September 2024 with April 2025 and saw that switches increased by 130% because of the market antics. At the time, there was also an inflow of well over a billion rand into the Momentum Money Market.
Nixon calculated that clients who switched then would have lost yearly growth of more than 10%. But you must also consider how well the All-share index (Alsi) of the JSE has grown since then, and the loss would have been far larger. By the end of 2025, the Alsi had grown with far more than another 30%. Clients who were stuck in less risky assets missed out big time.
His research further shows that anxious investors, and those trying to read and time the market, lost out the most.
The lesson is that it’s a safer approach to let your well thought-through long-term plan guide your decisions. Short-term reactions will almost always cost you growth, and cause even more anxiety.
Being invested is a long game, like a marathon. To apply short-distance rules, is to mess up the game plan. A good financial adviser will also tell you that.
This year, if the markets are playing a maddening rumba, rather put your earphones on. Listen instead to a gentle melody and keep your backside safely on your investment seat.
ENDS
