Where to Invest R50000.00 for best returns. Let’s imagine that you have R50000.00 to invest. Maybe you do, or it’s a goal you are working towards. But for now, let’s say that you have it, sitting in a savings account and burning a hole in your proverbial pocket. You know that it is going to do very little for you just sitting there; it’s a decent amount of money that could be used as a great foundation for wealth building. But what is the best way to make use of it, in terms of investments?
What are You Working Towards?
Before you decide how to invest you need to ask yourself what are your goals for your money? Do you intend to begin building the kind of ‘nest egg’ for retirement that everyone really needs in order to live relatively comfortably after you stop working? Or are you saving for a specific goal that you would reap the rewards from sooner, such as the ability to pay cash for a home, take a trip around the world or have the money available to help your child through university?
If you are investing for retirement you have a great many options available to you. Tax-free savings accounts – which first became available to South Africans in 2015 – endowment accounts, fixed deposit, and money market accounts or a plan to make some long-term investments in the stock market. If on the other hand you are working towards a goal that will need ‘funding’ sooner you may have to take a more aggressive stance.
Stocks 101
You will have noticed the mention of the stock market. Many people assume that investing in the stock markets is something that only the very rich do. This is no longer the case. Online stock trading has lower costs than those associated with a traditional stockbroker and also gives you full control over your portfolio.
This assumption that stock market investment is not for the average South African is just one of the myths that surround the practice. Let’s look at a few more:
Myth: It’s Too Complicated for the Average Person
Reality: Yes there are people who go to university to study finance and then make their living, day in and day out, following the ups and downs of the stock market. But you don’t have to be one of them. They might be able to give you some valuable help if they are financial advisers, but there are lots of other learning tools out there as well. Not in the form of one of those ‘get rich quick’ offers you’ll find on the Internet but in terms of free lectures, free online courses and information you can download. You can even find mobile games that simulate stock market trading so you can get a feel for it. Do your homework and you’ll find the idea is not as scary as you thought.
Myth: You are Only Going to End Up Losing Everything
Reality: If you decide to take big risks, yes, you very well might lose money. You can choose to trade or invest, though. If you do trade, which is the act of buying and selling shares good money can be made, but yes, it can be lost too. If you invest you buy shares in an established company that pays dividends over time, as they make money so do you. Often the very best strategy is to diversify – don’t put all of your eggs in one basket and create a mix of assets and strategies.
Myth: It Will Take Forever to See Any Profit
Reality: If you are saving for a shorter term goal you may shy away from the stock market as you have heard it takes forever to see any real return on your investments. The fact is though that no, you can’t expect to buy stocks today and then cash a big check in a month but, if you take your 50000 Rand and use it to begin an investment portfolio at say, 25, by the time you are 35 you could be sitting on a nice little nest egg, one that you can use then or roll over to keep saving for retirement in earnest.
Where to Invest R50000.00 for best returns is not as hard as you perhaps imagined. Our best advice is found via speaking to one of our Professional Consultant Investors , call now to find out more on 031 2675060
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