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Ah, yes. Christmas. Even the awful year that is 2020 cannot shake the festivities. Shops and malls have started to deck the halls with holly, while that ageing Boney M Christmas CD – that every supermarket seems to own – blares through the speakers. As we draw nearer to the end of 2020, perhaps a jolly Christmas spent with (immediate) family is just what we need, to reminisce and look back on what we can be grateful for in this absolute train wreck of a year.
Still, as many South Africans have lost their jobs – and loved ones – in this tumultuous year, perhaps it’s also the perfect time to remove the rampant consumerism that often sees people diving into debt. Christmas presents get more extravagant each year, with people trying to impress or out do one another as gifts become more lavish, wrapping gets shinier and bows bigger.
Now, I would never go into debt to purchase gifts. And no, that isn’t because I have a fat bank balance or excellent money management skills. It’s because I’m absolutely terrified of debt. Knowing that I owe someone or something money plagues every fibre of my being, and so for that reason, I avoid it like I do public spaces in 2020.
However, I am aware that some people have no choice. They’re forced into debt, just to survive. But if you can help it, then avoid the sweet nothings that your credit card whispers from your wallet – no gift is worth the anguish of financial pain further down the road, especially in these uncertain economic times.
But, as I’m sure you’ve gathered from my previous pieces, I’m excellent at giving advice but terrible at following it. While I didn’t go into debt to buy presents this year, I certainly had to reconfigure my budget. This meant that instead of a few shares of Naspers in my Christmas stocking (the shares I was eyeing) I will just have to make do with my current shares – which by the way, are the best they’ve ever been. As I write this, PurpleGroup is over R1 a share. A big deal, considering I bought it for 70-something cents.
Well, perhaps I can buy my Naspers shares next year. I may have to reconfigure my New Year’s resolution, though. New year, new Naspers. No, that doesn’t work. It sounded funnier in my head.
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.
What is a rights issue? Curro shares (which I own) had a rights issue? What does that mean?
Companies may need more capital from time to time, and do not always want to increase their level of debt. By raising capital from shareholders, the company’s balance sheet is strengthened while they are still able to pursue growth opportunities by investing in new projects. A rights issue is the process a company goes through to raise more capital from its shareholders. As a shareholder you typically have the right to participate in any equity capital raise, which prevents your percentage shareholding from being diluted. They do this by issuing ‘rights’ to all shareholders, which allows the shareholder to participate in the capital raise in proportion to their existing shareholding. Shareholders can then decide if they want to exercise their rights by purchasing the shares at the specified price, or let them lapse. In some instances it is possible to sell the rights if you do not want to follow them.
Victor Ntombela asked,
I would like to know if the JSE closes during December? How does share investing work over that period?
The JSE is closed on public holidays, so there will not be any trading during those days. However, any other work day during December the JSE will be open and trading will take place. However, the volume of trading typically falls during this time as many market participants are on holiday.
- 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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