Investing 2012

So what does investing mean, as many people seem to use the word loosely for any potential money making activity. To some it could be depositing your money into a savings account, maybe buying shares on the stock exchange, some think it’s buying a new car or maybe owning livestock?

“Investing” means a lot of things to various people but in basic lay man terms an investment is an asset (any class) which some form economic benefit can be accumulated. You won’t find this definition in any textbook but that is what investing boils down to. So if you can derive some form of economic benefit from an asset then that’s a investment. The series of articles will have a keen focus on investing on the stock exchange, contrary to popular belief investing in public companies is possibly one the easiest and most diverse investment opportunities in the financial system.
Although many people might believe the stock exchange provides a asset classes preserved for only the nerdy, tie wearing, boring and rich individuals who we see on T.V screens and newspapers time and time again telling us how the world is coming to an end because of some financial crisis or another. However the Stock Exchange, in South Africa being the Johannesburg Stock Exchange (JSE) located in Sandton Johannesburg, offers easily accessible, endless wealth creation opportunities for majority of unaware South Africans. I will attempt to decipher the investment game in simple language with minimal industry jargon, however not advising but rather informing the novice of the many instruments available on the Johannesburg Stock Exchange to South Africans looking to accumulate wealth and also debunk the misconception and mystery behind investing on the stock exchange.

As a personal investor there are many dynamics to consider when looking to investing in to the stock exchange firstly you must clearly define your investment motive, that is are you looking for a long term (10 or more years), medium (3 to 5 years) or short term (2years or less) investment. As a non-professional investor looking to make a quick buck over six month period is not such a good idea, long term investment returns are the best way to go for a non-professional investor, with very little time and expertise your chances of making money are non-existent.

Secondly your monthly or lump sum budget should be determined, can you afford to contribute R100 a month, R100 000 lump sum upfront or maybe “money ain’t a thing” as some would say and your budget is not capped. If budget is not a factor hiring a stockbroker is the way to go and we shall delve further into the detail at a later stage. But if budget
constraints are a factor like it is for majority of the country’s population don’t despair as the (JSE) is your oyster with various trading platforms providing access to invest in listed companies directly and indirectly, suitable for a range of income groups.

Thirdly as an investor you must understand risk, just like in life the riskiest decisions made have the greatest returns and the worst consequences if the wrong decision is taken. Simply put you must understand the consequences of your investment decisions. Nothing is guaranteed when it comes to the investment game anything can happen the best we can do is take calculated educated guesses and by educated meaning awareness rather than a Phd in Economics, to mitigate the risk.

by Bloogle

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