How to Invest R100k

[DJ...]

A Correction? Is this a quarterly or annual occurrence in the investment world?
Sorry for my lack of knowledge on this but could you explain in simple terms.

No, it's a market price correction and happens randomly, for the most part at least. It's often used to describe a volatile price movement upward or downward, mostly down though, and is often used incorrectly as well, as far as terminology is concerned.

If you were to understand it properly, think of markets as bears and bulls. Bulls being longer term gains. Bears being longer term losses (or up and down pressure on price of an asset). A correction is a much shorter duration of price movement, nearly always downwards but sometimes up. You'll see upward corrections in low liquidity assets, mostly. A correction is also (usually) a sharper price movement than what you'd see in a bear market which will have a slower price movement gradient.

Often people mistake profit-taking for price corrections though. The two are not the same things...

 

[bchip]

A Correction? Is this a quarterly or annual occurrence in the investment world?
Sorry for my lack of knowledge on this but could you explain in simple terms.

DJ said most of it, but basically if the market is down 10-20% from the highs then you can start buying.
Youll know when its around when every newsreader starts telling you theres blood on the streets.
Idea is basically imagine you bought in 2009, right after the financial crisis, truth is corrections and crashes
happen over and over and over. Learn to be patient, wait for the next one and buy after a significant move down.
(As a rule of thumb if it starts going down give it another 3 months before you buy and wait for the panic,
patience is the name of the game).

I wouldnt expect much growth from Satrix40 for the next 2 years, but dont let that stop you from buying,
stock markets are designed to go up, so just keep buying the (bigger) dip.
Just remember its a long term investment and keep re-investing.

 

[Counterstrike]

DJ said most of it, but basically if the market is down 10-20% from the highs then you can start buying.
Youll know when its around when every newsreader starts telling you theres blood on the streets.
Idea is basically imagine you bought in 2009, right after the financial crisis, truth is corrections and crashes
happen over and over and over. Learn to be patient, wait for the next one and buy after a significant move down.
(As a rule of thumb if it starts going down give it another 3 months before you buy and wait for the panic,
patience is the name of the game).

I wouldnt expect much growth from Satrix40 for the next 2 years, but dont let that stop you from buying,
stock markets are designed to go up, so just keep buying the (bigger) dip.
Just remember its a long term investment and keep re-investing.

Simple enough for me to understand, thanks!

 

[Paul_S]

I'm looking at a long term (3-5 year) investment period but something a bit more aggressive.

I always thought 3-5 years is short to medium term and 10+ years is long term?
Getting above inflation, guaranteed returns on such a short time frame is going to be tough.

I have just started investing in equity unit trust funds (Coronation Top 20 and Allan Gray Equity) but that is higher risk and generally needs to be viewed as a long term investment in order to weather any downward market fluctuations.
Both funds have provided annualised returns in the 18% to 24% range over the past 10 years and both companies have a good reputation.

No risk - no reward.

P.S.
I just checked my investment portfolios:
- My Coronation Top 20 portfolio has grown by 5% over the past three months
- My Allan Gray Equity portfolio has grown by 5.87% over the past three months

Of course there could always be some market corrections, economic troubles, etc. so I'm not rubbing my hands in glee just yet.

 

[Icarium]

I always thought 3-5 years is short to medium term and 10+ years is long term?
Getting above inflation, guaranteed returns on such a short time frame is going to be tough.

Even a fixed deposit will garner him more than 5.5% without any risk (but no liquidity).

 

[Paul_S]

Even a fixed deposit will garner him more than 5.5% without any risk (but no liquidity).

How much more than 5.5%? CPI is already pushing the 6% mark and CPI is in any case a load of bollocks with some consumers experiencing close to double digit inflationary figures.
I doubt a fixed deposit is going to get you guaranteed, double digit growth over that term.

 

[DJ...]

How much more than 5.5%?

You can get double-digit fixed deposits. A family member has a 12% fixed deposit account with African Bank. Large sum of money though so she might have got pref rates...

 

[Wife]

Transfer it to a Stanlib Industrial fund...I've had returns close to 30% for the past 2 yrs. I've almost doubled my money in 4 yrs.

 

[Garson007]

RMB Inflation-x ETF goes about 1.5% above inflation at all times. Lots of liquidity too.

 

[Icarium]

How much more than 5.5%? CPI is already pushing the 6% mark and CPI is in any case a load of bollocks with some consumers experiencing close to double digit inflationary figures.
I doubt a fixed deposit is going to get you guaranteed, double digit growth over that term.

5 Year fixed on R100k gets you 9% at Capitec. Not the best returns possible by any means, but way better than 5.5% and still risk free.