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Investments

Introduction Important principals to follow when investing Risk Profile description & features

Introduction

When considering an investment an investor will soon realise that finding the correct investment vehicle for their unique circumstances can become very confusing. There are literary hundreds of investment vehicles to choose from and even more combinations of underlying investment funds from which to choose! There are many product providers and even more sales people, each with their own reasons why you should invest in their product! Don’t despair, by following a few basic principles you will find the best investment for your unique circumstances!

Important principals to follow when investing?

Know yourself!

Before you begin investing, you need to know your goals. You should have well-thought-out goals. Goals are critical to knowing yourself because they will help you understand what you are trying to accomplish with your investment. As part of knowing yourself, you need to know your budget. You cannot invest without funds. You also need to understand your ability to tolerate risk because this ability will determine what kind of an investor you are. You want to develop a “sleep well” portfolio—a portfolio that is planned so that even when investments go wrong, as they sometimes do, you can still sleep well at night. Understand Risk Risk is inherent in all investment activities. Some risks include inflation risk, business risk, interest-rate risk, financial risk, market risk, political and regulatory risk, exchange-rate risk and liquidity risk. The key to managing risk is understanding the different types of risk and investing at a risk level that is comfortable for you. It is critical for you to find the risk level at which you are most comfortable. You can use our risk-tolerance calculator to assist you to find the level of risk that is right for you. Stay Diversified Diversification is your best defense against risk. You should invest in a variety of assets and asset classes. Diversification does not mean investing in ten different banks. It means investing in different companies, industries, and perhaps even countries. Bank shares will all tend to go up and down together. To truly diversify you need to invest in different industries and perhaps countries that won’t be subject to the same economic factors or risks. Make sure you understand the risks of each of your investments. Investing is risky and uncertain: minimise risk by diversifying your portfolio. All our product providers have risk profiled managed funds which are managed by experienced fund managers. These risk profiled funds could be the best solution for the not so experienced investor as these funds are not only managed according to your tolerance towards risk but you have peace of mind that your money is in a diversified investment managed by professionals. Invest Low-Cost and Tax-Efficiently Watch your costs very carefully, including, management fees, and taxes. Remember that regarding investment, a rand saved is worth more than a rand earned; this is because while you have to pay taxes on every new rand you earn, every rand you save is already taxed and can earn interest on income. It is not the amount of money you make, but the amount of money you keep after costs, taxes and inflation that makes you wealthy. If you decide to find your investment direct on the Plandirect website you will enjoy big savings not only on the initial fees but also on the ongoing advise fee compared to the traditional fees charged! Invest for the Long Run  Invest for the long run: this is how you will achieve your goals. Invest wisely: there are no “get-rich-quick” schemes that work, and short-term investing is expensive in terms of time, transaction costs, and taxes. Keep at least part of your funds in the market for the long run. Keep in mind that taking money out of the market, as well as discontinuing saving, may not only slow your progress but could stop it altogether. Use Caution If You Are Investing in Individual Assets If you must invest in individual assets (and this is not a given), know what you are investing in. Do your homework. If you do not have the time to research individual investments, invest in unit trust funds that have many individual assets. Know who you are investing with. Make sure you invest with unit trust companies that have built a tradition of meeting the needs of their investors. Work with good companies that have good products. Be very careful with your money and invest it wisely considering all the principals of investing. Invest Only with High-Quality, Licensed, Reputable People and Institutions When you need help, do not be afraid to ask for it. But get help from good people whose actions and beliefs are consistent with the principles discussed. Good help from qualified, licensed, and experienced financial planners, financial advisors and brokers may help you in your investment plan. Use the best resources available, but be aware of how those resources are compensated. In addition, make sure advisors have the required licenses to counsel you on the broad range of investment assets you are (and should be) considering. Work only with licensed and registered advisors. In some circumstances, fee-only financial planners or advisors may be a better choice than financial planners or advisors that are paid on commission.As discussed elsewhere on this website, Plandirect’s direct offer is intended for the DIY orientated investor that know exactly what they want and wants to do their investment direct with Quality, Licensed, Reputable People and Institutions. Not only will this investor have peace of mind but he/she will be benefiting from our fee for service approach. Remember that every rand discount you receive on fees increase your investment positively and ultimately your return and/or income will be more compared to full commission charged! Develop a Good Investment Plan and Follow It Closely Complying to the principals discussed above you can develop a good investment plan that is consistent with your goals and your budget. Follow this plan closely. An investment plan is a detailed road map of your investment risk and return, constraints and investment strategy.

Risk Profile description & features

Investments & investing Investments & investing Investments & investing Investing and investments.
Risk Profile to describe:
 
Definition and Main Characteristics
 
 
 
 
Capital Growth
 
Short term volatility & risk appetite
 
Investment Portfolio
 
Income generation
 
Personal circumstances
 
Main objective
 
Investment Term
 
Withdrawals requirements
 
Expected return over full term
 
Income & Capital gains
 
Best expected return over 1 year
 
Worst expected return over 1 year
 

Investment

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