A very interesting question almost every investor asks themselves is: "If I want to invest money, do I need to buy a property, keep my money in the bank to earn fixed interest rates or invest in stocks?" This is a difficult question to answer simply. All of us have an ambition to invest our hard-earned funds as optimally as possible to ensure we maximise returns. This question is particularly important considering that a one or two percent difference in annual returns significantly impacts the longer-term result. A look at the figures To try to answer this question, the figures should be thoroughly investigated. The following table shows the annual average returns of shares (measured by the FTSE / JSE All Share Index), money market yields (SteFI Composite Index) and direct residential real estate (average prices of South Africa). This draws a comparison between the potential returns that an investor in the stock market can earn in a bank account versus direct property. Once the figures are taken into account, it is clear that an investment in equities over the long term provides the highest yield. Also, we saw that direct property prices experienced a boom period during 2002-2007 with an average annual return of 18.2%, and began to show signs of slowing (2008-2016) by delivering an average return of 3.8%.
However, the choice is more complicated than simply considering returns over different time periods. Every South African knows that Cape Town property growth will be more attractive than property yields in smaller towns up-country. So geographical location must be taken into account. If the average annual return of the Eastern Cape (7.8%) is compared with that of the Western Cape (9.3%), it is clear that location plays an important role. This phenomenon is further accentuated with the stagnation of the overall residential property market compared to metropolitan areas, especially Cape Town which still experiences a boom in house prices. The impact of rental income It is also important to understand that the above figures exclude rental income. This component ensures, on average, 5% - 8% additional returns per year in rental yield. The issue of rental yields is more applicable if direct property is bought with cash as opposed to using bank financing. If the rental income is taken into account (at the lower limit of 5%), property falls into the same category of return as equities over the long term (14.65% vs. 14.79%). The choice of investment vehicle will depend on a set of additional factors. These factors are briefly highlighted below. If you would like to invest in a Unit Trust or find out more information, please contact Kevin or Thato, email: invest@daberistic.com tel no: (011 658-1333) Written by: Jan Vlok Source: Sanlam
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Allan Gray - Increase in the daily electronic collection limit from R500 000 to R1 million24/11/2015
The Payments Association of South Africa (PASA) has recently increased the maximum limit for electronic fund collections to R1 million. In complying with the new limit, we will increase our maximum electronic fund collection amount from R500 000 to R1 million per account per business day, effective 7 December 2015.
How will this change affect you? Prior to the increase, transactions that required us to collect amounts greater than R500 000 from investors’ bank accounts took place over multiple business days. Going forward, the increased limit will enable us to collect up to R1 million per account per business day, thereby reducing the amount of days it will take to perform large collections from investors’ bank accounts. On the 15th of September Charles de Kock, Portfolio Manager for Coronation Capital Plus Fund and Balanced Defensive Fund, updated financial advisers on the current investment landscape, the performance and positioning of these two funds. Click below to view the presentation.
Conversations with Coronation September 2015 |
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