South Africa is a great and popular place to invest worldwide. So where should you invest? The questions are not so simple, as everyone is different and has different financial needs and means. That is why we always suggest you speak to your financial advisor before making any financial decisions.
The questions of where you should invest also get more complicated when you start considering how many different types of investment opportunities there are. From bank savings accounts to Cryptocurrency, unit trusts, endowment funds, retirement annuities, and the stock market. And that is before you get into online share trading!
Each of these investment vehicles or options has their own set of ups and downs. And depending on how much money you have, earn and how old you are. This can all effect which is best for you.
Here are 5 investment options for Investing in South Africa:
Unit Trusts, sometimes referred to as Mutual Funds overseas, are funds that hold a variety of different assets. These funds are groups of shares, bonds, cash, property or similar depending on the fund. These funds are managed by Asset Managers. These are professionals who study a specific field of investing and pick the assets (shares, bonds, property, etc) that make up the fund. They then allow you to buy a piece of the fund and earn as the assets inside increase in value or payout in the form of dividends, rental income or interest.
Retirement Annuities are funds specifically designed to be invested in and held for retirement. That is why you can only access the money when you retire. The benefit of this, is you are forced to leave the money in the account until such a point as you retire. Avoiding you cashing out your money for your next beach holiday.
Retirement annuities invest like unit trusts, but are more restricted into what they can and can’t invest in. This is regulated by the FSB to protect your future.
Money Market Funds
Money Market Funds or similar funds are very stable funds often used for short term investing. These funds invest like a unit trust into Cash and Bond assets. They are very easy to access and are often used as savings accounts or emergency accounts due to the accessibility of the money. They can often be found through your bank, making them easy.
They do have less long-term growth potential due to their lower risk, but your financial advisor can go into more detail on the exact fund you are looking at.
Stock Market / Share Investing South Africa
When you hear the words “Stock Market”, you are probably thinking of Wall Street. This is good because this is where a lot of the investing used to happen. These days it is done online.
The Stock Market is a place where you can invest directly in the underlying assets that are found in Unit trusts. You can buy pieces or shares of a real company like Naspers, British American Tobacco or Pick’n Pay in South Africa, or Apple, Amazon & Facebook in America. This allows you direct control over where your money is invested as you can choose exactly which companies you put your money in.
While you may have more control, you must realise that the stock market does come with a lot more risks and costs than other options. And while you may here of stocks that go up 300% in a year, those are few and far between.
Make sure you do extensive research and chat to a professional before jumping into the stock market.
Cryptocurrency or Bitcoin has gotten a lot of press over the last few years. Some good, some bad. So what is it?
They are a form of digital currency based on unique codes and formulas that are solved by supercomputers, often referred to as m
So, are they a good investment? The honest answer is no one really knows. What one can say with certainty is they are risky. This is because of their popularity and how much they are influenced by the US and the News means their values are constantly fluctuating.
Now you understand why the question of where you should invest is a straight answer. Investing in South Africa is a great idea to grow your wealth over the long term. Make sure you do your research before making any investment decisions, as investments can lead to loss. But with so many options, you are indeed spoilt for choice.
So, explore and find the options that suits you best.