What is Investing?
At its core, investing is putting your money into assets (things like stocks, bonds, or property) with the expectation that they will grow in value over time. In other words, investing is how you make your money work for you, rather than just saving it in a bank account where it might not earn much interest.
Why Should South Africans Invest?
Many South Africans face financial challenges, such as inflation, unemployment, and the rising cost of living. Investing allows you to protect your wealth from inflation and build financial security for the future. Here are a few reasons why you should consider investing:
1. Beating Inflation: In South Africa, inflation often eats away at the value of your money. For example, if inflation is at 6%, your R100 today may only be worth R94 a year from now. Investing can help protect your money from this erosion.
2. Building Wealth for the Future: Whether you’re saving for retirement, your children’s education, or a home, investing gives you the chance to grow your money over time.
3. Generating Passive Income: Some investments, like stocks or property, can provide passive income through dividends or rent. This is money you earn without having to work for it actively.
Types of Investments
There are many ways to invest your money. Here are some of the most popular types in South Africa:
1. Stocks (Equities): Buying shares of a company means owning a small part of that company. The value of your shares can go up or down depending on the company’s performance. South Africans can invest in local stocks (like those on the JSE - Johannesburg Stock Exchange) or international stocks.
Example: You buy shares in a company like Naspers or Shoprite. If the company does well and its stock price increases, you make a profit. But if the company struggles, the value of your shares may decrease.
2. Bonds: Bonds are a form of debt. When you buy a bond, you’re lending money to a government or company in exchange for regular interest payments and the return of your original investment when the bond matures.
Example: The South African government issues bonds that you can buy. In return, the government pays you interest for a fixed period and then repays your original investment after a set time.
3. Property: Investing in property involves buying real estate, like houses or apartments, with the expectation that they will increase in value over time or generate rental income.
Example: You buy an apartment in Cape Town. Over time, the value of the apartment increases, and you can either sell it for a profit or rent it out for steady income.
4. Unit Trusts & ETFs (Exchange-Traded Funds): These are pools of money from many investors, which are used to buy a range of different assets (like stocks or bonds). Unit trusts and ETFs allow you to invest in a diverse range of companies and markets, helping reduce risk.
Example: Instead of picking individual stocks, you can invest in an ETF that holds shares in multiple companies, both local and international. This helps spread out the risk.
5. Cryptocurrency: Cryptocurrencies like Bitcoin and Ethereum have become popular among South African investors, although they are much more volatile and risky. Cryptocurrencies are digital currencies that can potentially offer high returns, but they can also lose value quickly.
Example: If you bought Bitcoin when it was R200,000 and sold it when it rose to R1 million, you would have made a large profit. However, if the price drops, you could lose money just as fast. How to Start Investing
Starting to invest doesn’t have to be complicated. Here are the steps to get started:
Set Clear Goals:
Before you invest, know why you’re doing it. Are you saving for retirement, buying a house, or growing your wealth? Clear goals will help you choose the right investments.
Start with an Emergency Fund:
Before you invest, make sure you have an emergency fund (about three to six months' worth of expenses) to cover unexpected events. This way, you won’t have to sell your investments in a financial emergency.
Do Your Research:
It’s crucial to understand what you’re investing in. Research different investment options and decide which one aligns with your risk tolerance and goals. In South Africa, many online platforms, like EasyEquities, make it easy to start investing with low fees.
Start Small:
You don’t need a lot of money to start investing. Many platforms allow you to start with as little as R500. Starting small allows you to learn without risking too much money.
Diversify:
Don’t put all your eggs in one basket. Spread your investments across different asset classes (stocks, bonds, property, etc.) to reduce risk. A diversified portfolio is generally safer and can grow steadily over time.
Monitor Your Investments:
Keep track of how your investments are doing. You don’t need to check them daily, but be aware of major changes. This will help you adjust your portfolio if needed.
Common Mistakes to Avoid
Trying to Time the Market:
Don’t try to predict market movements. The market can be unpredictable, and attempting to buy and sell at the perfect time can lead to losses. Invest for the long term instead.
Ignoring Fees:
Many investment platforms charge fees that can eat into your returns. Always be aware of any fees or commissions you may have to pay before investing.
Chasing Quick Profits:
Avoid risky investments that promise fast returns. Instead, focus on long-term, stable investments that will grow over time.
Overlooking Risk:
Every investment carries some level of risk. Be honest with yourself about how much risk you’re willing to take. Don’t invest in something you don’t fully understand.
South Africans, This is How You Can Benefit from Investing
In South Africa, where inflation and the cost of living are high, investing is one of the best ways to secure your financial future. Here’s how it can benefit you:
Hedge Against Inflation: By investing, your money has the potential to grow at a rate that outpaces inflation, protecting your purchasing power.
Diversification: You can invest in both local (JSE) and international markets, providing a safety net if the South African economy faces turbulence.
Retirement Savings: In a country with an ageing population, having a good retirement savings plan through investing is critical. It ensures you won’t rely solely on the state pension.
Investing is a smart way to grow your wealth, but it’s important to start small, be patient, and stay informed. South Africans can benefit greatly from understanding the basics of investing and using it as a tool for long-term financial security. Whether you’re investing in stocks, property, or unit trusts, the key is to begin, stay disciplined, and let your money work for you.
Questions after the interview:
At the end of an interview there is usually an opportunity where you can ask any questions you might have. This is a great opportunity to show the interviewer that you are interested in the position as well as the company. It is a good idea to prepare a few questions before the interview – this can be done while you are doing research on the company.
Your questions should show the interviewer that you are a good candidate for the position. Try and avoid questions that are based on your personal needs and preferences, for instance:
- How much leave will I get in a year?
- Will I be considered for promotion in my first year?
- When will I get an increase?
- What time can I leave in the afternoon?
These questions are inappropriate at this stage and will probably raise concerns on the side of the interviewer. Should you be the successful candidate then all these questions will be answered in your letter of appointment so don’t waste this opportunity by asking these basic questions.
If the position is an entry level job or very junior then you are welcome to ask questions in line with the position, for instance:
- Why did the previous person leave the position?
- What would the successful person be tasked to do in a typical day?
- How does this position fit into the department and / or company?
- Could you explain the company structure to me?
- Is there any further education assistance or support?
If the position is more senior then you can prepare question around the following themes:
- current issues that will face the successful candidate;
- inter-personal challenges in the department;
- any process, technology or people challenges that needs to be attended to urgently;
- key result areas that need urgent attention in the first few months;
The above information should get you started. Prepare a few questions so that you can show your worth. Good luck with your interview!
