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Now is a good time to increase your exposure to equities, particularly if your investment horizon is five years or longer.

"Even if you’re 75, and your family history indicates a longer than normal lifespan, you need exposure to growth assets, in other words equities," says Marius Fenwick of Mazars Moores Rowland Financial Services.

Your investment horizon is the amount of time you’re prepared to leave your money invested prior to consumption. Fenwick says many investors change their investment horizon on the basis of current market conditions. They may initially say they’re happy to take a long term view, but when markets start to tumble they suddenly want their money back immediately. Unfortunately this often happens after the event thus locking in the incurred losses.

"This wreaks havoc with a financial plan and is likely to destroy wealth over the long-term," he says. Market volatility has always and will always be a characteristic of growth assets, but the time spent in the market reduces this volatility.

Driven by fear, many investors have withdrawn from equities and have moved most if not all of their portfolios into money market or income funds. But Fenwick says while interest bearing assets have a place in a portfolio, they should only be your primary investment if your investment horizon is less than three years.

Fenwick says Mazars is in the process of increasing the equity exposure of its moderate risk rated clients’ portfolios from approximately 35 percent to approximately 50 percent. He is also advising clients to channel any new money in the form of monthly contributions into equities. Through rand-cost averaging (buying more or less units monthly depending on the unit price) your long-term investment will provide inflation beating returns. It is still advisable to phase lump sum investments into the market to reduce the expected continuing volatility. Phasing-in should be done over between six and 12 months.

Although company earnings are still overstated and forward earnings are likely to come down, Fenwick says the market has largely factored this into share prices so they’re unlikely to decrease dramatically in the short to medium term.

"While many companies will continue to be under pressure, there are some good value shares available and fund managers are identifying companies that are trading below their intrinsic value," he says.

He says investors tend to wait for the market to start heating up before they gain the conviction to buy. "If you wait until the market is running before you get it, it’s too late. Studies have shown that if you miss the first couple of weeks of a bull run, you’ll lose a significant part of the upside."

He says investors should not try to time the market, but keep the balance of asset classes in line with what the economy and interest rates are telling them to do. "During these times, it’s best for investors to rather be asset allocators than market timers," he concludes.

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