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Thread: What to invest in in 2012.

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    Full Member kahoel117's Avatar
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    Question What to invest in in 2012.

    i have some spare cash that i want to invest .

    something with a reasonable return (better than the banks) for a short term. 2years +
    i already paid of all my debt like credit cards and other debt that i had for 2011.
    i currently have some money invested at allan gray, but obviously that is long term.

    any advice would be appreciated !

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    Im no expert but have found Unit Trusts to be a really good opportunity. Your money is managed by professionals who know what theyre doing, do it every minute of everyday while you're doing other things. It can be a lot of fun monitoring your money as information is updated daily and available on-line. We have found Allan Gray to be excellent but I'm sure there are many excellent Fund Managers. Go on-line and do a little research.

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    I also meant to add that I understand the beauty of unit trusts to be that there are so many different unit trusts offering a huge variety of risk profiles, enabling one to move across funds as and when one needs/wants to alter a risk profile. Funds also offer different return horizons - i.e. some offer quicker returns than others BUT beware the risks attached with higher returns are often also higher so caution is prudent. I have chosen to stick with large Fund Managers that offers a vast portfolio of funds, as moving funds fom one manager to another often costs more than keeping it in 1 manager portfolio.

    I've got to be extremely cautious as I am not a registered investment advisor and so not authorised to provide advice. I am talking purely from my own experiences and am legally prevented from giving advice, so you need to do your own research and take advice from an authorised advisor before investing.

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    Full Member kahoel117's Avatar
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    @gac
    thanks for the advice. currently i'm investing at AG. but that is purely long term. i have read about the rsa retail bonds, which is'nt that bad for the 2, 3 and 5 years.
    looking for an high return short term solutions.

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    Site Caretaker Dave A's Avatar
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    Quote Originally Posted by kahoel117 View Post
    looking for an high return short term solutions.
    Generally that implies fairly high risk. What would you consider a "high return"?
    The trouble with opportunity is it normally comes dressed up as work.

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    Full Member kahoel117's Avatar
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    @dave
    anything more than 15% ?

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    Site Caretaker Dave A's Avatar
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    Well my crystal ball is a bit murky at the moment in terms of what might be hot, but when in doubt look for value - a blue chip listed share with a low PE ratio.

    Here's an excercise for you - compare First Rand Bank to African Bank - which share would you pick?
    The trouble with opportunity is it normally comes dressed up as work.

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    Bronze Member Miro Bagrov's Avatar
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    A: First Rand.
    African Bank has shaky fundamentals. at least that's how I feel about it. However I would not invest in the banking sector in general.

    Something at/over 15%:
    A: I think that will be property. R100 000 Flat, Rent Income = 2000 * 12 = 24 000. 24 000/100 000 = 24% return
    Now if you do not have the cash, and you make the mistake of lending at 9%, you will receive 24-9 = 15%.
    Sorry, I ignore tax, because to each their own gross income after all.

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    Site Caretaker Dave A's Avatar
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    Quote Originally Posted by Miro Bagrov View Post
    A: First Rand.
    African Bank has shaky fundamentals. at least that's how I feel about it.
    I agree. The difference in every one of the key ratios is staggering. However, there is a pretty well known fund which is ploughing into African Bank like crazy.
    I just think First Rand looks like a bargain by comparison. African Bank is going to have to perform beyond stellar to produce anywhere near the same ROI any time soon.

    Quote Originally Posted by Miro Bagrov View Post
    However I would not invest in the banking sector in general.
    I don't know so much. SA banking has been a pretty good sector through all the ups and downs - and no real signs of much that's going to change that any time soon.
    The trouble with opportunity is it normally comes dressed up as work.

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    Bronze Member Miro Bagrov's Avatar
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    Quote Originally Posted by Dave A View Post
    However, there is a pretty well known fund which is ploughing into African Bank like crazy. .
    Shame. Hope no one's pension is there: Of course this will increase their Share price (but that does not make it a good share)
    There is a 40% - 50% chance of a recessionary dip over the next year or two. Banks shares will get devalued (well, most shares will).
    Secondly, the nett profit margin of a spaza shop is better than that of banks. Worst of all is that banks measure their profit in accounting profit while a spaza shop in cash. A lot of the profits are still to be realised.
    Banks have another problem: They keep a large bulk of their Current Assets in Trading Accounts. The value of which is susceptible to international markets. Another problem is that I expect the interest rates to increase within the medium term. Now if this happens, the bank will have larger defaults on their lending and it would have been better to buy a spaza shop than bank shares...

    Well - I'll say it
    The best investment for 2012 is a spaza shop which sells pies and airtime

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    AndyD (05-Jan-12)

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