Investment advice needed please.

[Bluishboy]

Hi,

I have came upon a little cash (R150 000) and would like to invest the total amount.

I currently have a bout R30 000 in Satrix 40 and another R40 000 in Coronation Top 20.

I am thinking of dividing the money up between the two but I am sure that there are better options available.

Thanks a lot.

 

[supersunbird]

Yay! First investment thread of the new year.

OK, so what I see here is that you are heavily into local equities. Maybe you need to diversify into other areas like property and overseas.

One option is to take R50 000 and put R20 000 into Top20 and R30 000 in the Top40, making them each about R70 000. Since you already are with Coronation lets stick it there, take R50 000 and put it into Coronation Global Emerging Markets Flexible Fund or Coronation Global Managed Feeder Fund or R25 00 in each. The remaining R50 000 you can put into the Coronation Property Equity Fund.

If you are into the Satrix Top40 is via the ETFSA.co.za provider, you can go into property and overseas ETF/ETNs via their platform in similar amounts as stated above, but the costs are not that far apart.

 

[Bluishboy]

Thanks for taking the time to reply!

Yay! First investment thread of the new year.

OK, so what I see here is that you are heavily into local equities. Maybe you need to diversify into other areas like property and overseas.

It definitely makes sense to diversify! As I understand the growth on property is not as good as local equities.

One option is to take R50 000 and put R20 000 into Top20 and R30 000 in the Top40, making them each about R70 000. Since you already are with Coronation lets stick it there, take R50 000 and put it into Coronation Global Emerging Markets Flexible Fund or Coronation Global Managed Feeder Fund or R25 00 in each. The remaining R50 000 you can put into the Coronation Property Equity Fund.

Is there a reason that you would rather recommend Coronation above Satrix?

Also I am planning on putting away R3 000 to both the Satrix top 40 and the Coronation Top 20 on a monthly basis.

If you are into the Satrix Top40 is via the ETFSA.co.za provider, you can go into property and overseas ETF/ETNs via their platform in similar amounts as stated above, but the costs are not that far apart.

I work directly with Satrix but this site looks good.

Thanks again!

 

[supersunbird]

Thanks for taking the time to reply!

It definitely makes sense to diversify! As I understand the growth on property is not as good as local equities.

Is there a reason that you would rather recommend Coronation above Satrix?

Also I am planning on putting away R3 000 to both the Satrix top 40 and the Coronation Top 20 on a monthly basis.

I work directly with Satrix but this site looks good.

Thanks again!

For a decade general local property outperformed general local equity until around end 2012. And property provides good income growth, they are cheaper at the moment but still provide good income growth. And as I said, diversity.

Because Satrix doesn't have a Property ETF, and I guess you can go into the new Satrix MCSI unit trust if you want too.

OK, have to go visit mom in hospital now, another interesting low cost provider is www.sygnia.co.za (index tracking unit trusts for 0.4% cost (incl VAT)). You have big enough lump sum amounts to go there. I'll tell you more about their stuff later.

 

[Freaksta]

Don't dump it all at once! I would do this over a period of a few months!

 

[Rugonye]

I would dump 40 and go into Sayrix indi for the next 5 months and 2nd half of the year go back to Satrix 40.

 

[snoopdoggydog]

It depends on your investing time horizon. I personally would just buy R150 000 worth of CML

 

[Bluishboy]

For a decade general local property outperformed general local equity until around end 2012. And property provides good income growth, they are cheaper at the moment but still provide good income growth. And as I said, diversity.

Because Satrix doesn't have a Property ETF, and I guess you can go into the new Satrix MCSI unit trust if you want too.

OK, have to go visit mom in hospital now, another interesting low cost provider is www.sygnia.co.za (index tracking unit trusts for 0.4% cost (incl VAT)). You have big enough lump sum amounts to go there. I'll tell you more about their stuff later.

Hi, thanks! I hope that your mom gets well soon.

I will definitely check out sygnia.co.za.

I checked out some property funds and Coronation's one is one of the better performers, so I will be sure to invest some there!

 

[phiber]

Theres quite a few cool investment products out there that diversify for you across multiple asset classes, should look at Alan Grey, Sanlam and the like and see what funds/unit trusts they have.

 

[Bluishboy]

It depends on your investing time horizon. I personally would just buy R150 000 worth of CML

Thanks for the response, excuse my ignorance but what CML's would you recommend?

 

[modern10]

On the offshore front I would look at the DBX ETFs. Especially the US one seeing that investors are likely to be moving their money back into US equities.

Another reason will be that it will provide a nice Rand hedge as it's likely that the weakness in local currency will continue.

 

[supersunbird]

Thanks for the response, excuse my ignorance but what CML's would you recommend?

CML... Coronations JSE share code. Yes, he wants you to put everything into one share... :erm:

EDIT: If he had had better foresight he would have put all into EOH in Jan 2013 since EOH had the biggest share price growth on the JSE. That's the risk of going into one share (you would still have done well in just Coronation, but it the riskiest strategy) and backing last years winner, there could always be a new even better winner.

 

[supersunbird]

Ok, here are the Sygnia funds you can choose from in their Boutique option (Boutique options means you can only choose Sygnia funds on their platform):

http://sygnia.nedoweb.com/collectiv...3/10/Sygnia-Boutique-Fund-and-Fee-Summary.pdf

You will see that the below listed funds have costs of 0.40% (incl VAT) which is very very decent and a good option if you are into index funds (like ETFs):
Sygnia International Equity Fund
Sygnia Listed Property Index Fund
Sygnia DIVI Index Fund
Sygnia Top40 Index

For example your Coronation Top 20 is a managed fund, Coronation fund managers choose what they think are the best shares our of the Top 50 biggest shares on the JSE. Personally I like a mix of managed fund and index funds (and with index funds the cost is super important, since they should all perform almost exactly the same).

 

[Sly21C]

I read a book recently and it suggested the following.

If you won't need or use the R150k within the next 7 years then allocate:
- 70% (R105k) into buying shares such as platinum shares. Purchase shares from other indexes just to diversify. ArseloMittal SA is doing fairly well. Telkom could be a good buy too.
- The rest (30%) to ETFs

If you'll need your capital between 3 to 7 years then allocate:
- 50% into shares, and
- 50% into ETFs.

If you think you'll need to use your capital within 3 years then:
- Invest all your shares in different ETF products.

I wouldn't invest offshore if I were you, the Rand seems too volatile and you might get burnt. Malema is not in power so don't buy Gold shares or Gold linked products .

Research before you buy though, I'm not a financial advisor. I'm just giving you a perspective.

 

[supersunbird]

I read a book recently and it suggested the following.

If you won't need or use the R150k within the next 7 years then allocate:
- 70% (R105k) into buying shares such as platinum shares. Purchase shares from other indexes just to diversify. ArseloMittal SA is doing fairly well. Telkom could be a good buy too.
- The rest (30%) to ETFs

If you'll need your capital between 3 to 7 years then allocate:
- 50% into shares, and
- 50% into ETFs.

If you think you'll need to use your capital within 3 years then:
- Invest all your shares in different ETF products.

I wouldn't invest offshore if I were you, the Rand seems too volatile and you might get burnt. Malema is not in power so don't buy Gold shares or Gold linked products .

Research before you buy though, I'm not a financial advisor. I'm just giving you a perspective.

Does not compute...

 

[saturnz]

Does not compute...

I suppose the rand is oversold at this stage and so it will be expensive to invest offshore now, if it should improve he would get burnt.

I wouldn't put my money in things I do not understand though, for example investing in platinum requires knowledge of the platinum sector, prices of platinum are driven by supply (most mines here and in Zim) so things like labour disruptions, future investment, expropriation etc matter and by demand- which is mostly global and would depend on the global economic recovery which is at best slow and extremely uncertain especially with tapering starting now.

Property is cheap and if all things go wrong, you still sitting with a physical asset you can draw an income from, but it also has its risks, free standing properties are high maintenance and sectional title units are lower maintenance but come with complexities such as body corporates and levies. Interest rates are at an all time low (real prime actually negative or zero) and may increase in the future, this could have an impact on the markets either way depending on how generous banks will be in extending loans in the future.

 

[supersunbird]

I suppose the rand is oversold at this stage and so it will be expensive to invest offshore now, if it should improve he would get burnt.

I wouldn't put my money in things I do not understand though, for example investing in platinum requires knowledge of the platinum sector, prices of platinum are driven by supply (most mines here and in Zim) so things like labour disruptions, future investment, expropriation etc matter and by demand- which is mostly global and would depend on the global economic recovery which is at best slow and extremely uncertain especially with tapering starting now.

Property is cheap and if all things go wrong, you still sitting with a physical asset you can draw an income from, but it also has its risks, free standing properties are high maintenance and sectional title units are lower maintenance but come with complexities such as body corporates and levies. Interest rates are at an all time low (real prime actually negative or zero) and may increase in the future, this could have an impact on the markets either way depending on how generous banks will be in extending loans in the future.

Yes, but that shouldn't stop you from putting a part into it for the long term, especially if you can phase it in over 6 months to year. There is a reason most balanced funds have their foreign investments at the maximum 25% they are allowed to have. Seems the developed markets are slowly getting back on their feet. One thing is the rand will fluctuate up and down, its a folly to try to time it.

 

[saturnz]

Yes, but that shouldn't stop you from putting a part into it for the long term, especially if you can phase it in over 6 months to year. There is a reason most balanced funds have their foreign investments at the maximum 25% they are allowed to have. Seems the developed markets are slowly getting back on their feet. One thing is the rand will fluctuate up and down, its a folly to try to time it.

I would wait and actually time the exchange rate at this point.

If you recognise that the rand is oversold then you would wait until its closer to fair value or overbought.

If you recall that around the time of the financial crises the rand reached R10 as well, and then recovered to R6.50, that will impact significantly on any off shore investment, infact the reason why Naspers is doing well now is because of the oversold position of the rand, once the rand recovers Naspers prices will come down.

With regards to your point on global recovery, it is generally recognised that the recovery is driven by monetary stimulus in the US, EU and now Japan. That monetary stimulus had a marginal impact if one looks at the recovery and now that monetary stimulus is being reversed so whether that recovery is sustainable is extremely questionable. If one looks at the stalemate in fiscal policy in the US then there is actually no real fundamentals pushing economic recovery in the biggest market in the world.