Investments in South Africa for Beginners

Investing can be complicated and can seem impossible if you don’t have a lot of money. While we may read investing is vital to growing wealth, it does not make it easier. So what are possible investments in South Africa for beginners?

The first step as identified by many professionals is to define your investment objectives. Standard Bank said you should ask the following questions:

  • Why am I investing? (to buy a home, build a retirement fund, pay for my child’s education)
  • What kind of returns do I expect?
  • What portion of my net worth would I like to set aside for investments?
  • What do I intend to use the gains for? How many years do I have?
  • What is my investment objective? Is it capital appreciation, capital preservation, or a combination of income and capital growth?
  • What kind of risk am I willing to take in the long run?

Once you have determined your investment goals you can speak to your financial advisor about your potential options. They can also help you in determining your investment goals.

Two Options to consider:

While we cannot suggest or recommend any products as we known nothing about you, we can give you information at two popular types of investing. These options are relatively straightforward, especially when you invest with a financial advisor.

Exchange Traded Funds (ETFs)

These are groups of shares or funds that are traded on the stock exchange. These funds are made up of many types of assets including property, shares, bonds, cash and other asset classes. These funds are great inexpensive way to gain exposure to the stock exchange in a diversified way.

With platforms like Easy Equities and Satrix Now, it makes it easy and fast to do your research and invest. These platforms are based online making them easy to access. Most ETFs follow an Index and rely on a passive investing approach. These means they mimic an index like the JSE Top 40 or are based on a specific set of rules. They are often not actively managed.

Unit Trusts

Unit Trusts are similar to unit trusts in that they are funds made up of many different asset types. Where they differ as instead of getting them on the stock exchange, you would get them on a platform like Satrix Now or Coronation Fund Managers.

These funds tend to have higher fees but are often actively managed by a professional fund manager. These fund managers have years of experiences and work with teams of analysts to help produce outstanding returns.

Both of these options as well as many others on the market can help investors to produce outstanding returns. While there is not perfect investment and losses do occur, starting to invest and making a habit of investing consistently can help your grow your investment. Speak to a financial advisor today about which options suit your goals and needs.