The world is changing fast and to keep up you need local knowledge with global context.
I have a dirty, dirty habit. I just can’t seem to quit it. You see, it brings me so much enjoyment.
I’m not talking about smoking. Thankfully, I’ve managed to ditch that filthy business. I’m not talking about drinking either. No, I’m referring to the magical trap of online car classifieds.
Sometimes an idea will pop into my head. ‘Wouldn’t it be nice to own an old Jaguar or Alfa?’ Off I go, foraging about the less desirable bits of the second-hand car market. Often, something ‘with potential’ catches my attention and for a brief, fleeting moment I convince myself that a 24-year old Alfa-Romeo could be a sensible investment for someone like me.
I get snapped right back into reality when that small, sensible bit of my brain reminds me that a purchase like this would be ruinous and would end up with me sobbing on the side of the road.
That small and sensible bit is also very good at reminding me that I have a financial goal in mind – one which I’d really like to achieve. Taking in old, neglected luxury cars as if they were stray cats isn’t going to better that cause.
Still, just yesterday I was tempted by a rather tasty-looking (again, one with ‘potential’) BMW when I again realised the financial repercussions could be severe.
Dramatically, I slammed my laptop shut, removing all temptations.
It’s not human to have one, single dream. We are complex creatures, you and I. We are made up of a number of desires. Travel, romance, financial security.
But unlike romance and travel, there are no do-overs. What you do now will affect your future, make no mistake about it. This week, I was reminded not to be derailed from my financial plans from the future, despite the fruity exhaust tones which beckon, from the automotive temptresses that plague me through the computer screen.
Your kryptonite may not be cars – it may be expensive food, clothing or even the latest technology. I’m not for one moment suggesting that you don’t indulge and spoil yourself every now and then – it’s a part of life – but don’t let it distract you from the end goal, whatever that may be.
A pleasurable moment is temporary. Financial stability is forever.
For the past week or two, I’ve been tempted to sell my Tongaat shares. They’ve remained rather stagnant since I bought them, dipping and rising every now and then. I thought I had better just cut my losses and move on. Imagine my delight when, after a month, my Tongaat shares were the healthiest they had ever been. Let’s hope it stays that way.
Last week, I asked you to send me your finance and investment queries. Here, Johan Steyn, CFA* of Stellenbosch University, shares his expert advice by providing answers to your questions.
Karene Fisher asked,
I have looked at the EasyEquities site but haven’t got any idea where to even start investing. I would like to invest to make a profit, not for retirement. I’m a lover of Facebook, Apple, Amazon and Google. I know they cost a fortune, but I suppose you have to start somewhere. Would this be a good entry into the market? What’s your view?
I think a good place to start is with the companies who make the products or deliver the services you know and use often. Peter Lynch, the famous American investor, wrote in his popular book ‘One up on Wall Street’ that he got many of his investment ideas from where his wife shopped or the products she bought. Although a good company does not always make a good investment, it at least gives you a starting point. From there you can do some research to form your own opinion about their investment prospects. It helps to read other people’s opinions as well, if only to test your convictions. I like to make a bullet point list of at least five good reasons I think a share is a good investment, before I make the buy decision. This way you can come back to the list if the share price falls, to see if you were wrong about the share, or whether it may be an opportunity to buy some more.
How can I learn more about international investing?
There are a number of ways to learn more about international investing. A good place to start is to read as much as you can. And consult a variety of sources. Especially sources like BizNews, where there are often articles or podcasts about international investing.
Gordon Houston-McMillan asked,
What is the easiest and most cost effective way to invest offshore? Also, how do you invest in precious metals?
The easiest and most cost effective way to get offshore exposure is by investing in exchange traded funds (ETFs) listed in SA but tracking offshore indexes. It can be done within a trading account like EasyEquities, where the trading costs are low as well. This way you do not first have to convert your rands into dollars, or open a foreign trading account. This is also quite straightforward to do if you want to invest in specific shares listed offshore. There are a variety of international ETFs listed on the JSE, from those that give you broad exposure to global equity markets (like the Ashburton Global 1200), to those that are region or theme specific (like Satrix MSCI China Feeder ETF).
The easiest way to get exposure to precious metals is also via ETFs. Again, there is a variety to choose from, including ETFs for Gold, Platinum, Silver and Palladium. Although, it is also possible to invest in the mining companies that produce these metals, this a riskier route as the share prices of these resources tend to be quite volatile.
- Johan Steyn, CFA is a lecturer in investment management, from the department of business management at Stellenbosch University. He holds a Masters in investment management and has a background in fund management.
Have a question about share investing? Write to me at [email protected]
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