I would like some assistance about investing money.
I have about R300 000 - R500 00 to invest and would like to have virtually instant access - or a few days at the most.
Financial fundies- where would you stash your cash ??? Money market ? Shares ?
Money Markets and Instant Access to Cash
For what reason do you need instant access to the cash?. If you need instant access, you will cut down your returns considerably. That said, a money market account will be your best bet if you would like 24h access to your money. I do not really consider a money market account as an investment. An investment to me is somewhere you put your money and leave it for more than two years with the hope of medium to high gains. A money market account is where most Personal Financial Advisors suggest placing your 'nest egg', commonly 3 to 6 months of your expenses, which can be withdrawn in 24 hours for emergencies, ie. If you are retrenched, or uninsured property is stolen etc. A money market will track inflation and maybe just beat it. For example, from March 2002 to March 2012, the 10 year average interest across RSA money market accounts is 8.67% p.a, or 2.44 percent above inflation.
Medium/Long Term Investments
I would suggest Coronation and Allan Gray as they both have excellent current and historical results.
Although past performance is not necessarily an indication of future success I fully agree with the statements that long term investments are the key to wealth creation. A number of funds are available with varying degrees of risk, and drawdown. For example, if you are prepared to put the money away for five years, then go for higher risk, because in the case of a draw down the equities should recover within 2 or 3 years.
I'm sure at this point you are thinking you still want instant access to your money. You want a high return with instant access. Unfortunately you can't have both, unless you are very clued up on shares or Forex and can see some movements about to happen. If done incorrectly shares and Forex trading are get-poor-quick schemes. The chances are you won't beat Coronation or Allan Gray at their own game.
So now, I would suggest that if you have R500k to invest, stick 30% of this money into a money market account to track or slightly beat inflation (where you should have 24h access), and put the rest into Coronation/Allan Gray.
Coronation has a number of different funds, I won't go into detail here, but here are three options:
Strategic Income - 11.2% p.a. since 2001 - 1 to 3 years recommended
"An intelligent alternative to cash or bank deposits over periods of 1 – 3 years. The Strategic Income Fund is a conservative multi-asset fund that aims to provide a higher level of income than a pure income fund."
Capital Plus - 14.78% p.a. since 2001 - 3 years and longer recommended
"Focused on providing a growing regular income. Ideal for investors in retirement."
Top 20 - 22.88% p.a. since 2000 - 5 years and longer recommended.
Best performing general equity fund in South Africa over 5, 10 years and since launch.
Now, you can pull your money out of these funds relatively easily, however one big mistake is to pull the money out of a unit trust fund at a LOW, because you need it immediately, that's where your 'nest egg' should support you so you don't have to do this.
Example Scenario
Lets say you had put R500k, ten years ago with R150k in a money market or income fund, leaving you with R350k to invest for ten years in Coronations Top 20.
R 350 000 would now be worth R 2 913 069!
If you had put this R 350 000 in a money market, it would now be worth approx R 803 000.
So ask yourself, how urgently do you need quick access to your money.
I know I haven't answered your question, but I'm sure this info will be of use to you or some others on this forum.
You can find more info on Coronations funds here:
http://www.coronation.com/personal/domestic-funds
Another interesting tool is "Suppose you had invested in Coronation sooner?"
http://www.coronation.com/fundcalculator/index.aspx
I am not affiliated in any way with Coronation or Allan Gray.
Sign up with Google
