Got R500 or less? This is what you can invest in! | Woman & Finance (2024)

28 Jan Got R500 or less? This is what you can invest in!

There is a world of options when it comes to investing. Even a small amount can go far. Stick with it and it will work.

One of the most frequent questions I get is: “What can I invest in as a first-time investor who doesn’t have a big cash flow?”

This question excites me, as there are quite a few options available to investors, regardless of what they can afford. It goes to show that investing is not for the rich only, but for anyone who is willing to be patient and build wealth.

Remember, it is not how much you earn that matters, it is what you do with it that is important. Before you start investing, you first have to think about your time horizon (how long do you want to invest for), your risk profile (how comfortable are you with risk) and your investment goal.

Perhaps before we get into the investment options available, let us emphasise why investing is important. With the rising cost of living, it ensures both present and future financial security. Not only do you end up with more money, but you also end up with another income stream (dividends and capital growth).

Investing is the only way to achieve both growing wealth and passive income.

EASY EQUITIES

Easy equities is a cost-effective platform to invest in any company that is listed on the JSE from as little as R250 (once-off or monthly). Another benefit to using the platform is that once you have registered for free, you can create a demo account that allows you to get comfortable and teach yourself more about investing before you invest real money.

However, there is a 15-minute delay in share prices (you can counter this with looking at websites such as Moneyweb or the JSE website). www.easyequities.co.za

IMPACT INVESTING

Impact investing is relatively new to the South African markets but it is exciting nevertheless. With more and more people looking to invest responsibly and sustainably, more people are drawn to impact investing. What is impact investing?

It is a rapidly growing industry, powered by investors who are determined to generate social and environmental influence, as well as financial returns.

One of South Africa’s first is the Fedgroup app, which enables you to invest as little as R300 in blueberries. Their tagline is “Earn the profit without getting your hands dirty!” and it does exactly that. You own the assets on the farming venture you choose, whether its blueberries, solar panels or honeybees. www.fedgroup.co.za/ventures/ impact-farming

UNIT TRUSTS

The unit trusts fund is a pooled resource, which allows a group of investors to combine their cash and invest. It represents a mixture of the securities of the underlying fund. One of the major advantages to unit trusts is the reduction in investment risk by way of diversification as well as having a professional manage the fund, taking away the stress from the investor as to which companies to invest in.

While most asset management firms start with R500, there are a few which take a lower monthly premium. For example:

•PSG Fund Managers

•Old Mutual Unit Trusts

•Coronation also ran a campaign to celebrate their 25th birthday, where you can invest as little as R1. www.becauseitsyourmoney.com/

EXCHANGE-TRADED FUNDS

Unlike unit trusts, exchange-traded funds (ETFs) are not actively managed but instead are passively managed. ETFs track an index, for example, the JSE Top 40, meaning that the cost of investing in ETFs is lower than that of unit trusts.

Satrix, CoreShares and Easy Equities offer exchange-traded funds. They all range from R250 recurring or once-off. www.satrix.co.za www.coreshares.co.za www.easyequities.co.za

TAX-FREE SAVINGS ACCOUNT

Tax-free savings accounts were introduced to encourage a savings culture in South Africa. It is one of the most effective ways to save for a goal because any interest, dividends or capital gains from your investment will be free of tax.

It is important to note that tax-free savings accounts are accessible through the investment platforms already mentioned.

You simply need to select which option. It is advisable not to contribute more than the annual limit of R33 000 (or R2 750 a month), as you will be taxed on any amounts after that.

Happy investing!

This article first appeared in City Press.

Ps. Join me this Saturday for the Personal Finance Mastery workshop

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