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20 Jan 2015


I get emails everyday but I find it particularly impressive when students and new entrants in the job market think of saving or investing. The amount of money invested is not as important as the early start and consistency thereof. Today we have a new graduate who gets an allowance from his/ her parents or guardian. The young investors are so close to my heart because they are the ones who have the best shot at shortening the journey to wealth. Our graduate here wants to invest R100 or R200 every month. Here goes:
Hi there,
I am in my 20s. I just completed my university degree. I do not have a job yet but I have about R100 to R200 allowance that I would like to invest. My question is where you would suggest that I invest? Would it be in a unit trust or ETF?
Thank you.
I am so happy that you are thinking of starting to invest at your age and current financial status. That is quite commendable. There are limited options for investing R100 or R200 per month. This is due to the costs of investing in general. If I were in your position I would be creative to do either unit trust or exchange traded funds in this manner:

Unit Trusts
I would get information on the cheap/ cost effective unit trusts that exist on the market and put the R150 or so in there monthly. The best way to do research about the fund is to look at its historical performance. Check how the fund has performed in the past 10, 5 and 3 years. That's a good indication of how it will perform going forward. I would definitely keep it going and track its progress to see how it is doing.

Exchange Traded Funds (ETFs)
If you follow this blog, you will know that I am quite fond of this investing vehicle, especially for new investors and those who do not invest much time in reading financial and company news. The ETFs that I know of start at the minimum of R300 per month. However, the lump-sum investment usually starts at R1000. You may be able to save R100 to R200 in one of the banks' interest bearing accounts that allow a small amount to open. You may save your R100 to R200 in that account until it reaches at least R1000. You then invest the R1000 or more you have saved in the Exchange Traded Fund of your choice. Remember to do the research I mentioned in the paragraph above.

Savings Bonds
The bonus idea I have is putting the money in the savings account like you do with the ETFs in the paragraph above. When it reaches R1000 or more, invest it in the savings bonds. If you do not have a good understanding of how savings bonds work, go check these links... What are savings bonds and How to invest in savings bonds.

I wish you the best in your investment choice. Please do come back with the testimony to encourage another young person.

My mailbox is filled to the brim. I have read all the emails you sent but I can only respond to one question at a time. If you emailed me through the contact me form, be rest assured your response is on its way. I love hearing from you by the way. Thanks for your emails.
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  1. If I decide to go with the savings bonds: which option is best i.e. linked to inflation rate or fixed retail?

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