A recent report reveals that many South African investors have suffered financial losses due to emotional reactions to market fluctuations, termed a 'behaviour tax'. The Momentum Investments’ Sci-Fi Report 2025 highlights how such decisions led to missed opportunities in a recovering market. Experts advise a simple pause before making changes to protect long-term returns.
The Momentum Investments’ Sci-Fi Report 2025 examines investor behaviour in South Africa over the past year, identifying a 'behaviour tax' that erodes returns through emotional responses to market volatility. Rather than fees or poor products, this tax stems from human decisions made at inopportune times, such as switching funds during downturns.
Paul Nixon, head of behavioural finance at Momentum Investments, analyzed the period from September 2023 to September 2024, comparing it to April 2025. He found that switches in investments surged by 130% amid market turbulence, with over a billion rand flowing into the Momentum Money Market fund as investors sought safety.
Those who switched missed out on more than 10% yearly growth. Meanwhile, the All-Share Index (Alsi) of the Johannesburg Stock Exchange (JSE) rebounded strongly, gaining over 30% by the end of 2025. Clients remaining in riskier assets benefited significantly, while anxious investors attempting to time the market fared worst.
Nixon recommends a practical strategy: implement a 48-hour pause before any major investment changes, like switching or withdrawing funds. This allows time for reflection, ensuring decisions align with long-term goals rather than fleeting emotions.
The report underscores that consistent, 'boring' investing outperforms frequent adjustments. A reader anecdote illustrates this: Keir shared how his father, who constantly tinkered with shares, ended up with half the returns of a colleague who invested steadily with less initial capital.
As markets continue to fluctuate, the advice is clear—prioritize patience over impulse to safeguard financial growth.
