Invest wisely or see inflation eat your income!
The economy may not look very good, but now is a great time to invest! Here are a few of the trending SA industries to invest in.
It is a critical time to consider your investment strategy. Times have changed and the best investment opportunities of yesterday are coming short of its growth in previous years. Conventional industries like property, are proving to have a low growth forecast and looks to be risky.
It's important to note that a passive strategy of investing will be helpful. Fewer transactions mean fewer fees. Long term investments with lower risks are better suited for the current economy of South Africa.
Hedging your Rands against inflation is the way to go!
Here are the 5 trending SA industries to beat
Equity Portfolios – with maximum offshore exposure.
Equity Portfolios are limited by law in South Africa from investing more than 25% of the portfolio’s value in offshore investments. What will help in 2016 is investing your money in a well-diversified portfolio with 25% thereof in offshore investments. This counteracts against the weakening of the Rand. The drawback is the fact that equity portfolios can become expensive ways of investing in South Africa
Property for rent – that beats inflation.
There aren’t that many locations where property prices have grown satisfyingly in the past year or so. Investing in property to rent it out to tenants can be wise. Retail and industrial property are both still doing well. The problem with property comes with the tenants. Admin for the maintenance of a building can stand in the way and rising borrowing costs are raising the risk involved with property.
Investing directly on the JSE.
The JSE Allshare index calls for massive innovation to stop rapid decrease. It will still remain an interesting platform to create wealth from. If it is possible to invest your own money on the JSE it will save you some money by paying fewer fees. Just watch out - if you don’t know what you are doing you might lose all your money.
Mining companies will do well when the Rand is weak. South Africa is a net exporter of mined materials. This means that the majority of South African mined materials are exported (earning foreign currency). So, mining companies will see increase when their selling prices are higher due to the weaker Rand. Unfortunately, social economic and political happenings can have a big impact on the mining industry.
South African Industries wish it has the same reach as the tourism industry. World renowned for a Natural Wonder and countless tourist sites – South Africa is a tourist hot spot. With the way the Rand is behaving now, more tourists may consider visiting our nation. Find a way to invest in an established business or company if you wish to invest in the tourist industry. Beware, the South African Government is making it hard for tourists to enter the country, this may decrease the growth of the tourist industry.
A note for your portfolio
All your investments must show growth higher than that of the inflation rate. Your money will lose value if your investments don’t grow faster than the inflation rate.
There are South African industries that will have the potential of growth. There is, however, a very good reason for the risk involved with investing. Investing South Africa – it remains educated guessing rather than a specific science.