Investing: What to look out for??

In the world of investing, investment companies in South Africa love to use complicated terminology and vast graphs to show how well their funds are doing. And to the average Joe like you and I, it can be overwhelming and even make you feel lesser than and make you turn away from investing.

It shouldn’t be like that! So, I have listed the 3 top things I look for when investing:

What are the fees??

I’ve touched on this before but fees can make a monumental difference in your actual return. And you need to ask yourself if the fees are worth it. If you are paying 1% for an advisor who helps you make your investments and keeps an eye on them for you all well and good. But if you are paying 3%? It may be a bit steep! So always look at the TER or Total Expense Ratio which shows the total percentage that is taken off as fees every year.

What are the Returns?

Yes, the saying is true “Past performance doesn’t predict future results” but they do tell you something about their consistency. A fund that is running at a negative return may have a boomer of year next year, but is it worth the risk? I always check for the average return over the last 5 years to see that they are at least making some money.

Getting my money back?

Also known as exit fees! Make sure you check if there are penalties for removing your money within a year. This is when a company charges you money for removing money out of the fund under a certain period, I.e. less than 12 months. It’s not necessarily a bad thing, but should be noted. So that you know where you stand to avoid incurring unnecessary fees.