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What can I invest in – the ultimate investment map

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What can I invest in – the ultimate investment map

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The world of investments is riddled with so much choice. You never know where to put your money. Should you buy shares in a hot new company? Should you buy a property? Should you trade forex? Put money in a stokvel? Start your own company?

The answer to these questions depends on a number of things. The biggest influence here is usually your own personal circumstances. See here for an article on how your personal circumstances can affect your investment decision. To help you figure out the best approach to take, we list some of the different available avenues to invest.

In the table below, we consider:

  • Risk – the chances of losing a part or all of your money in the investment
  • Return – the growth in your money that you could get
  • Minimum investment – the level of money needed for the investment to make sense or for providers to allow you to invest.
Available investment types

Item
Risk & Return Description
 
Shares
 
Med to high
 
When you buy shares in a company you become one of its owners. You basically make your money by selling the shares to someone else at a higher price or by getting a share of the company’s profits through dividends.   Minimum Investment: Usually R5,000 on most platforms
 
Property
 
Med to very high
 
You can buy a property such as a house, a flat or business premises and then lease them out to tenants.   A lot of people like property because it is physical and you can see it. It also gives you a sense of ownership.   This type of investment does come with its own headaches that include managing tenants, maintaining the property, participating in body corporate meetings among other issues.   Minimum Investment: R400,000 or more depending on the property
 
Property shares
 
Med to high
 
Property shares are an indirect way of investing in property. Instead of buying a fixed property, you invest in a company that buys properties and manages them on behalf of its shareholders.   This allows people who don’t have large sums of money to invest in property. Some of the properties owned by property companies include malls, lifestyle developments, and office buildings.   Minimum Investment: Same as minimums for normal shares (zero on some platforms and about R5,000 on others)
 
Money market account
 
Low
 
Money market investments are usually carried out with your bank. They allow you to invest your money with the bank, in exchange for interest payments. The interest payments are usually low (about 5%) but the chances of losing your money are usually very low.   Minimum Investment: Usually around R5,000. For some of these, you may have to give up accessibility to your money for a defined period.
 
Bonds
 
Low to med
 
There are 2 main types of bonds – government bonds and non-government bonds. When you buy bonds you are effectively borrowing the government (or company) money.   In exchange for borrowing them this money, you receive interest payments called coupons as well as your money back at a defined future date. The bonds (essentially the right to receive the interest payments and the final payout) can be bought or sold any time before the final payment date.   Government bonds are considered safe in most cases. Some company bonds can be risky.   Minimum Investment: Usually around R1,000 (SA Retail Savings Bonds).
 
Unit trusts
 
Med to high
 
Unit trusts are a way of combining money from a large number of investors and then buying different types of investments. The specific unit trust will state upfront the type of investments they make.   The unit trust could invest in shares, property, bonds or other types of investments. When you buy units in a unit trust, you are basically investing in the underlying investment indirectly.   Minimum Investment: Usually around R20,000 (or about R500/month)
 
Stokvel
 
Low to very high
 
Stokvels are a traditional way of saving or investing among a  lot of South African/African communities.   Each stokvel is different from the next and its members determine the rules.   Minimum Investment: Usually no minimums
 
Forex
 
Very high
 
Forex is not really an investment but is used in the short term to generate trading profits. We include it here because a lot of people seem to be interested in forex trading.   Forex is extremely high risk and it is very easy to lose money trading forex, especially as an individual.   Minimum Investment: No minimums
 
Starting a business
 
Very high
 
Another form of investing is starting your own company. Starting a company can be very risky and you could lose all your money and possibly go into further debt.   However, there is also a chance to have a broader impact on society of your business does workout (job creation, economic growth). Before starting a business you have to be prepared to work extremely hard and also realize that nothing is guaranteed.   Minimum Investment: Depends on the business

What other types of investments would you like us to add to this list?

NB: This article is for information purposes only and does not constitute financial advice. Please contact a registered financial advisor for any advice needs.

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