Investment advice

IanM

IanM

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Cape Town, ZA
Hi guys!

Right, so I've been working for the past 3 years doing my articles, supporting 2 people on that and managed to save a bit of money. Now my girlfriend is also starting to work and I've calculated we, jointly, have about 4-5k remaining each month after all expenses. I don't want to leave it in a savings account, which is not going to grow more than inflation, but would also like to have access to a bit of savings in case of an emergency.

What would you guys suggest investing in and why?

Thanks in advance!
 
What is your goal with these savings? Do you want to save for property, a new car, retirement?
 
I have heard on the radio (The Money Show on 702) that Warren Ingram has a good book out called "Become Your Own Financial Advisor" maybe have a look at that. Could give you a more holistic picture rather then just a view of what to do now.
 
Hamster said:
What is your goal with these savings? Do you want to save for property, a new car, retirement?
Click to expand...

I would like to purchase a house for us in 2-4 years time and definitely start providing for retirement.
 
Ecco said:
I have heard on the radio (The Money Show on 702) that Warren Ingram has a good book out called "Become Your Own Financial Advisor" maybe have a look at that. Could give you a more holistic picture rather then just a view of what to do now.
Click to expand...

I'll definitely check that out. Thanks for the tip! Looks like a good read from the description on the web.
 
Protip: Buy the Kindle version on Amazon - it's about R80. Download the kindle reader for PC/Android/iOS and read it there.

It's a good book for basics if you really know nothing.
 
Gaz{M} said:
Protip: Buy the Kindle version on Amazon - it's about R80. Download the kindle reader for PC/Android/iOS and read it there.

It's a good book for basics if you really know nothing.
Click to expand...

I'll buy it tonight on my phone and start reading. Think it'll also be a good read for my girlfriend just so that we're on the same page.

I spoke to a colleague of mine and he says that Allen Gray unit trusts are good investments with decent returns, so I'm busy reading up a bit on that.
 
If I were you, this is what I would do:

1) Save 3 months expenses in a bank account, like a Capitec account, that will earn you decent interest nearly enough to match inflation. Expenses are: all the money you have to pay each month (your installments, insurance etc.), plus minimum food allowance and some petrol money. Exclude anything you can do without: e.g DSTV. This nest egg should cover you if you ever lose you job or have another emergency expense like medical or car etc.
2) Pay off all your expensive debt. Anything with interest more than 9%.
3) Then and only then, start investing. For a beginner, I would buy some Equity and Balanced unit trusts from Allen or Coronation and in parallel start buying ETF's from etfsa.co.za. Buy the Top40 index fund ETF's, like Nedbank, RMB and Satrix. You can buy unit trusts for as little as R5000 with Coronation (Allen is R20 000 minimum) and ETF's from R1000 lump sums.

It doesn't make sense to invest, when you are paying 9 or more % on debt's like cars, credit cards etc. because you are just losing out in the long term and have opened yourself up to risk if your income is interrupted.
 
Gaz{M} said:
If I were you, this is what I would do:

1) Save 3 months expenses in a bank account, like a Capitec account, that will earn you decent interest nearly enough to match inflation. Expenses are: all the money you have to pay each month (your installments, insurance etc.), plus minimum food allowance and some petrol money. Exclude anything you can do without: e.g DSTV. This nest egg should cover you if you ever lose you job or have another emergency expense like medical or car etc.
2) Pay off all your expensive debt. Anything with interest more than 9%.
3) Then and only then, start investing. For a beginner, I would buy some Equity and Balanced unit trusts from Allen or Coronation and in parallel start buying ETF's from etfsa.co.za. Buy the Top40 index fund ETF's, like Nedbank, RMB and Satrix. You can buy unit trusts for as little as R5000 with Coronation (Allen is R20 000 minimum) and ETF's from R1000 lump sums.

It doesn't make sense to invest, when you are paying 9 or more % on debt's like cars, credit cards etc. because you are just losing out in the long term and have opened yourself up to risk if your income is interrupted.
Click to expand...

Good advice. Also have a look at Investec's iSelect Access - unit trusts from R1000 per month. You can transact online as well.
 
Gaz has good advice but it takes discipline to not get into more debt once its paid up. I treat investments as debt, it gets paid first by debit order along with the rest, and I have to make do with whatever is left. I tend to adjust spending based on the equilibrium in my cheque account, equilibrium being how close to 0 it is.

50% goes into satrix (divi + indi), 50% into allan gray (equity, balanced, bond). These were picked without much thought, but have seen double digit growth. I'm hoping for steady growth over the next 20 years.
 
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