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
Related Posts:
Exchange Traded Funds – ETFs
What are ETFs?
Exchange Traded Funds (ETFs) are investment funds which are listed on a stock exchange. An ETFs purpose is to track an index. (An index is a statistical measure of a compilation of several shares i.e. an index can be compiled of the 20 leading gold mining companies on JSE or maybe the 40 best performing IT listed companies)
When you purchase an ETF, you in effect own the shares of a fund that replicates the index’s performance by simply tracking its return. This investment style is referred to as passive management and it is the most important distinguishing feature of an ETF since it presents investors with a number of unique advantages. So owning an ETF doesn’t give you direct access to a companies’ shareholding, but rather a group of companies which dilutes the risk you would be exposed if you owned a direct stake in a single company.
Essentially, passive management means the index fund manager makes only minor, periodic (monthly, weekly, daily etc) adjustments to keep the fund in line with its index. Therefore adjustments occur for example if an index tracks the top 40 performing listed IT companies, when one of those company falls off the top 40 based on the set criteria then better performing companies should be
included in the index, hence the adjustments. This is quite different from an actively managed fund where the manager continually trades assets in an effort to outperform the market. More trades mean more expenses and potential added risk. ETFs are therefore low cost investment vehicles which also mitigate the element of “managerial risk” to a large degree.
In simple terms, ETFs don't try to beat the market, they are the market.
Of the 30 ETFs available in the local market, one is a commodity ETF – the ABSA NewGold. Five are offshore equity ETFs (the Deutsche Bank XTrackers), two are listed property ETFs (Proptrax), two are bond ETFs, 15 are domestic equity ETFs, three can be considered specialist equity ETFs, and the remaining two (both newbies) are considered balanced fund ETFs (the ABSA MAPPS). The number of
issuers remains the same at 8.
Broad Market Exposure
- Satrix 40 and Stanlib 40
Offers high exposure to mining and large share capital. With the focus on the JSE’s top 40 bluechip shares.
- BIPS(Beta Investment Performance securities) 40
- Stanlib SWIX 40 and the SATRIX SWIX Top 40
- BettaBetaQWT 40 allocates 2.5% to each of the Top 40 shares less
volatility and lower exposure to risk.
Sector Exposure
- Satrix INDI 25 providing access to the top 25 industrial shares
(manufacturing, construction and retail). - Satrix FINI 15 concentrates on local banks, insurance and financial
services companies. - SATRIX RESI 20 looks at mining and resource counters
- Poptrax covers the top 16 property shares on the JSE, giving
exposure to property. - zGovi invests in government bonds.
- BIPS inflation Plus gives exposure to portfolio of government
inflationlinked fixedinterest bonds. - ABSA NewGold tracks the price of gold in rand terms (a good way to
gain exposure to gold without buying gold mining companies)
Offshore
- ETF allow you to invest in overseas markets without having to go through
exchange controls. You buy and sell ETF in rands. - DBX Euro : tracks the Dow Jones Stixx 50 Index(50 largest and most
liquid blue chip stocks from eurozone countries) - DBX Japan : tracks 400 stocks represented on the Japanese Stock
Exchange - DBX USA : tracks performance of 600 stocks listed on USA stock
markets - DBX UK tracks FTSE 100 index : tracks FTSE 100 index(top 100 blue
chip shares listed on the London Stock Exchange - DBX World tracks the MSCI World Index: diversified world equity
markets.
Smart Indices
- SATRIX RAFI selects 40 JSE companies
- eRAFI products: eRafi indi, eRafi Resi, eRafi Fini
- Satrix Divi tracks the Dividend Plus Index which is based on
companies dividend yield.
Themes
- Shariah Top 40 (Islamic investment principles in the top 40 shares)
- NewSA : focuses on shares with BEE credentials
- NewRand : invests in top 10 South African companies
Related Posts:
The Johannesburg Stock Exchange
The JSE like many exchanges over the world and as the name suggests is a place where professional investors (stockbrokers) buy and sell (exchange/trade) ownership of various financial instruments (assets). It is also a registered company JSE Ltd offering services and products to clients being all the listed companies on its boards/indices. The JSE is a regulator and middle man between the buyer and the seller to ensure a conducive environment and systems to enable the buyers and sellers to exchange defined assets in a timely and secure manner. A company can be either listed on the All Share Index (ALSI) or the Alternate Exchange (ALTX) a “listing”, in keeping with the minimal jargon motto effectively means ownership of the company can only be exchanged through the JSE and various legal and financial regulations to be met before listing and while it is listed. Only public companies these are companies carrying the “Limited”/Ltd after the companies registered name are registered on the JSE.
Majority of the leading and well known companies in the country are listed on the ALSI including MTN, Vodacom, BHP Billiton, SAB, ABSA, Discovery, just to mention a few. Each of these listed companies are allocated a unit price (a value of each share) which determines the companies economic value, using complex financial formulae and various company specific factors that influence the company’s prospects.
The question now is how do I invest in these listed companies? Easy!! You have
three options:
- For the budget constrained and entry level investor looking to capitalise on the good returns and liquidity (easily converted to cash) of the asset classes available, is through an Electronically Traded Fund (ETF). Although you don’t directly become a shareholder. However you reap most of the benefits enjoyed by ordinary shareholders. However ETF’s require lower investment entry quantum’s and are more cost effective for the investor.
- You can invest directly in the listed ALSI or ALTX company, i.e. pay R50 per share for a 100 shares in Company X, becoming a shareholder in Company X and receive all the benefits detailed in the company agreements concerning shareholders. This is done through approaching and instructing a stockbroker, with the stockbroker charging fees for the services rendered to you.
- The 3rdoption is also through stock brokers via financial institutions like FNB, Standard Bank, ABSA etc (full service stockbroking), here the stockbroker structures an investment portfolio suitable for your risk profile and financial objectives. This is a value added service normally offered by banks, to qualifying customers.
A quick glossary of some key terms which you might encounter in financial publications, financial reviews and while investing in the JSE.
Asset allocation:An approach of investing a portfolio across numerous assets classes in precise proportions so as to achieve diversification.
Asset class:A broad investment category, such as equities, fixed income, commodities or real estate.
Basket:Another name for a portfolio of equities or other assets.
Benchmark:An alternate name for an index.
Brokerage commission:The fee you pay a stockbroker to buy or sell a listed security such as an ETF.
Capitalisation weighted index:An index or basket of equities where the makeup of each stock is weighted in proportion to its market capitalisation.
Controlled Client: An investor whose funds and uncertificated securities are in the control of a Settlement Agent and whose settlements take place via a CSDP as if the investor’s funds or uncertificated securities were under the control of a Settlement Agent.
CSDP:A person who is licensed as a central securities depository under section 32 of the Securities Services Act, No 36 of 2004.
Dividend: Dividends are generally payments made to owners of a company. These payments can be in the form of cash or the issuance of additional Stock. Dividends are generally used as a way to allow the owners to participate in the profits generated by the company.
Dividend yield: The dividend per share shown as a percentage of the last sale price.
Exchange Traded Funds (ETFs): Exchange Traded Funds (ETFs) are investment funds which are listed on a stock exchange. A ETFs purpose is to track an index. (An index is a statistical measure of a compilation of several shares i.e. the FTSE/JSE Top 40 Companies Index which tracks the performance of the top forty companies listed on the Johannesburg Stock Exchange.)
Expense ratio: The amount, expressed as a percentage of total investment, that shareholders pay annually for mutual and ETF Funds operating expenses and management fees.
Indexing:An investment management strategy in which, the investor aims to match the performance of a market as a whole, rather than selecting particular stocks or assets.
JSE:JSE Limited, a public company duly registered and incorporated with limitedcliability under the company laws of the Republic of South Africa, under registration number 2005/022939/06, and licensed as an exchange under the Securities Services Act, No 36 of 2004.
Large cap:‘Large cap’ is a term used to refer to the largest companies on the major exchanges in the world.
Liquidity:Liquidity means how easy it is to buy and sell a financial instrument for cash without causing any significant change in its price. A very actively traded market, where it's easy to sell whatever you're holding for cash, without discounting its price heavily, is said to be a liquid market.
Management fee:The annual fee charged to investors in a fund.
Manager:A company duly incorporated in accordance with the laws of the Republic of South Africa, which is approved to manage investments.
Mid cap:‘Mid cap’ refers to companies below the very largest in the main index of a stock exchange.
Net Asset Value (NAV):The Net Asset Value or NAV is the total value of the fund's portfolio less itsliabilities i.e. equal to the closing market value of all securities within a portfolio plus all other assets, subtracting all liabilities, and then dividing the result by the total number of shares outstanding. Offering Circular & Portfolio Supplement:The Offering Circular and Portfolio Supplement are documents issued by all ETF as required by law, which discloses the fund's investment objectives, history,management, fees, holdings, and related information.
Rebalancing: Rebalancing is the action of bringing a portfolio of investments that has deviated away from one's target index back into line.
Settlement Agent:A CSDP approved in terms of the Applicable Procedures to perform electronic net settlement of both cash and securities on behalf of market participants.
Small cap:‘Small cap’ companies are those whose market valuations rank between the largest 50% and 80% that are publicly traded.
Strate System:The electronic settlement system utilised by the JSE and administered by Strate, which facilitates the electronic clearing and settlement for all transactions concluded on the JSE.
Tracking error:Any divergence between an ETF's value and the value of the index or benchmark it is attempting to track
by bloogle
Related Posts:
Highest Paying Jobs in South Africa
These days, most people wish to have highly paid jobs so that they can enjoy higher level of living and can fulfil their needs and desires. Acquiring a highly paid job completely depends upon the level of education. If a person is a graduate and just holds a degree, he might not be able to settle to a salary what a post graduate can earn easily. Sometimes, it takes years for people to reach a good salary bar, so the level of education is important while searching and bargaining for better paying jobs.
Highest paid jobs are sorted and determined by the level of education required by a paying employer to enter a particular field of expertise. Highest paying employment research is mainly determined by the hourly wage earned and cannot necessarily be taken for granted that the largest salaries can be earned in those particular fields. For instance a lot of building construction work can earn a qualified employee a lot of money but is often seasonal and employee?s working in this area may only work on projects at certain intervals. Getting to work on an oil rig is similar in that although the salary may be a lot, the work is normally on a per project basis and may only be for a few months in a year.
Paying jobs
With the advent of technology, the process of searching for a good paying overseas job has become really simple. One of the simplest way is to apply online by simply uploading the CV on a job portal and have the advantage of receiving latest updates on new vacancies. The world is slowly coming out of the recession period and big companies have started hiring again. So its time have a look at some of the hot jobs and hiring scenario in South Africa where more job opportunities will be created in the near future.
* Petroleum Engineers: This is a field which requires a lot of dedication towards work and along with this, a candidate should hold a masters degree that can help him to get promoted or enjoy a revised salary on a yearly basis. The average amount that a person can earn in this profession is R 572,600 per year.
* Air Traffic Controllers: There might be a few people who consider this profession as their line of work. This occupation also requires lot of devotion and some experience in the same field. Most of the companies opt for those candidates who have prior experience in this field and offer good pay scale around R 583,450 per year.
* Computer and Information Systems Mangers: This is a field where people need to have good experience in the field of Information Technology and computers. On an average, if the candidate has experience of four to five years, in this line of work an organization can easily offer him a starting salary package of R 587,230 per year. Depending on the capability, performance and quality, people can get promoted and will also be proffered an increase in salary.
* Lawyers: This profession is considered good as here people get paid for their abilities. If a candidate has been practicing for three to four years, he can easily work under a reputed and recognized name. The starting salary package of a lawyer can vary from R 643,440 to R 665,000.
* Airline Pilots, Co-Pilots and Flight Engineers: This is a field where a candidate needs to spend some time in education and training, but once a person is done with these two aspects, he can easily get a job in this industry and get highly paid for different posts starting with a salary package of R 695,800 and above.
Related Posts:
Credit card skimming scam
"Customers are also urged to remain vigilant as the fraudsters' main aim is to access customer funds by stealing information off your card as well as getting your secret PIN," said Itumeleng Monale, Standard Bank director of self service channels, in a statement.
"It is therefore imperative that customers protect their card and PIN information."
Skimming, which is a global problem, usually takes place when fraudsters capture card data on devices similar to those used for legitimate point-of-sale or ATM transactions.
"The industry has been hard hit by this modus operandi, which has been around for years; however an increase in these attacks during the last two years is prevalent due to the availability of high-tech skimming devices in the open market."
The devices fit snugly over the card slot on an ATM and can even include a camera to record the PIN number.
"The main point of compromise still occurs when customers' cards are presented to a third party," Monale said.
"Cards and PIN numbers are harvested by syndicate members when they either distract or observe our customers typing in their PIN numbers.
"The rule of thumb is never to let your card out of your sight and, when entering your PIN, to cover the PIN pad," she said.
Customers should also keep their daily withdrawal limit as low as possible to minimise loss. The bank advised customers not to insert their cards into slots that looked as if they had been tampered with. If customers suspect a card had been tampered with, they should immediately stop it.
They should also review their bank statements regularly and should not send emails containing their account number and expiry date.
Keep cards in sight and report lost and stolen cards immediately, the bank advised.
Related Posts:
Personal Loans For Blacklisted People
Personal loans for blacklisted people are easier to secure than you might imagine. In these trying economic times, financial lenders are more aware than ever before about the needs of securing personal loans for blacklisted people. The need for extra cash by the consumer in this deepening economic downturn is ever increasing and there are financial lenders out there that can offer help to you. Here are some ideas you might want to consider when you begin your search.
Micro lenders are specialized lenders that will be able to grant you a loan based on your current employment status. Most micro lenders require only a pay slip and proof of residence as the set criteria for supplying personal loans for blacklisted people. However, it is very important to check that the micro lender is registered as a NCP (National Credit Provider) and adheres to the NCA (National Credit Act), otherwise this is not a micro lender, it is most probably a loan shark.
Loan sharks are not the way to go when looking to secure extra cash. While they may seem credible up front, these lenders do not adhere to best business practices and can often end up changing the loan amount or repayment period without your consent. It is much better to go the safe route, that way you know the principle amount wont change and the interest rate you negotiated is going to remain stable for your repayment period.
Related Posts:
ABSA Personal Loans
With ABSA personal loans, you are offered the wonderful flexibility of choosing your monthly installments to suit what you can afford with your current level of income. Come into any ABSA branch today and enquire with one of our friendly service consultants about an ABSA personal loan. Our lending rates are amongst the most generous in the country and you may qualify for a loan of up to R120 000 depending on your monthly income.
All you need to apply for your ABSA personal loan is your pay slip, green bar-coded ID document and provided you have a good credit standing, you will have access to funds quicker than you think.
ABSA does not require knowing the nature of your loan, all we ask is that you use your own due diligence on the matter and are able to keep to the monthly commitment that is tailored to suit your monthly income.
ABSA personal loans are a great way to finance whatever you need. In this day and age, with the economy in a bit of a slump and everyone having to tighten their belts, its good to know that quick, easy access to cash is available to you whenever you should need it.
ABSA personal loans are the best way to pay for that vacation or even apply for a student loan so that you can further your studies at an institute of higher learning. With very competitive interest rates and flexible repayment schedules, you can afford to manage your expenses and your income more efficiently, while at the same time keeping a little of the luxury in your life.
So what are you waiting for?, head down to your local branch and speak to one of our friendly loan officers about ABSA personal loans today, If you qualify, the funds will be deposited into your ABSA account on the same business day, ready for you to use whenever you should need it.
ABSA personal loans are simple to apply for, just remember to bring the relevant documentation with you and then leave the rest up to our professionally trained loan officers.
So if you earn above R2500 per month and have a good credit history, you may qualify for a loan of up to R120 000 but you will only know if you qualify for an ABSA personal loan if you get down to an ABSA branch and find out for yourself!
Related Posts:
Petrol to increase by 29c/l
The retail price of all grades of petrol will increase by 29 cents per litre on Wednesday May 4, the Department of Energy announced on Thursday.
The price of both 0.05% sulphur diesel and of 0.005% sulphur diesel will increase by 16 cents per litre.
Wholesale paraffin will increase by 15 cents a litre, and the price of illuminating paraffin (SMNRP) will rise by 20 cents per litre.
There will be a 53 cents per kilogram increase in the maximum retail price for LPGAS.
During the period under review, the average international product prices of petrol, diesel and illuminating paraffin increased.
The average rand/US dollar exchange rate strengthened when compared to the previous period.
The average rand/US dollar exchange rate for the period 01 April 2011 to 27 April 2011 was 6.7701 compared to 6.9512 during the previous period.
Petrol 95 ULP octane in Gauteng will now cost 10.25 rand a litre from 9.96 rand before, while at the coast it will cost 9.95 rand per litre compared with 9.66 rand previously.
Related Posts:
FNB Personal Loans
FNB personal loans:
- Get a loan for R2 000 or more depending on your financial profile.
- FNB offers flexible repayment periods from 6 to 60 months. Loan repayment
periods can be negotiated in order to suit what is affordable for you. - Repayments are done via a monthly debit order and your instalment amount
will remain fixed over the loan period, even if interest rates go up. - Your loan is offered with insurance which covers the original loan amount in
the event of death, retrenchment, dread disease as well as
temporary/permanent disability. - You can get a valid quote for 10 days within which you can either accept or
decline the loan offer. - You get to choose either a voice-logged contract or a paper-based contract
that is face to face with our branch consultants in any of our branches. - You get to take a break every January from paying your loan instalment.
- Individuals banking with FNB, will get lower interest rates.
A personal loan is for personal use and this implies that FNB does not dictate what the loan is to be used for. You may access your account and even perform transfers through the following facilities from your FNB transactional account:
-ATMs
-Telephone Banking
-Cellphone Banking
-Online Banking
Related Posts:
Matching you to the right financial productTrending Topics
Just in
- Keyshia Cole – Take Me Away
- Google launching Google drive?
- The Bourne Legacy
- Judge Judy tells it like it is
- Men – bluetooth, women – wifi
Categories
- Business
- credit cards
- Economy
- Education
- Entertainment
- European Soccer
- Finance
- Food
- Gaming
- Health
- humour
- Industrial
- Insurance
- Lifestyle
- loans
- money
- Motoring
- Music
- Nature/Earth
- Random
- SA Cricket
- SA Politics
- SA Soccer
- Social Networking
- South Africa
- South African Entertainment
- Sports
- student loans
- Technology
- weather in swaziland
- World Events
- World News
- World Politics
Twitter Updates
- Post Edited: Keyshia Cole - Take Me Away http://t.co/lXrMITWF 3 days ago
- New post: Keyshia Cole - Take Me Away http://t.co/lXrMITWF 3 days ago
- Post Edited: Google launching Google drive? http://t.co/7QWa6HS6 3 days ago
- New post: Google launching Google drive? http://t.co/7QWa6HS6 3 days ago
- Post Edited: Capitec Bank Loans http://t.co/LqsUa6Xt 1 week ago
Login
Register | Lost your password?