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A Fin24 user wants to know about his investment in the Satrix 40. He writes:
I have invested in Satrix 40 on a monthly contributing R300 and am re-investing the share payment.
Is it the right decision or not? I decided to invest for a year.
Mike Brown, managing director of etfSA responds:
Undertaking an investment by a regular debit order is a popular and successful way of building up savings.
A R300 per month investment buying Satrix 40 securites each month at the ruling price of the securities on the day, means that the investor will soon build up their holdings of Satrix 40 securities.
Reinvesting the dividends received each quarter from Satrix 40, also means that extra Satrix 40 securities will be purchased with the dividend income.
By capitalising dividends in this manner, this also helps to build up savings.
Over the past year and up to January 15 2014, R300 per month invested in the Satrix 40, would now be worth R4 042.
A R3 600 investment up front as a lump sum would currently be worth R4 311.
Where a debit order investment comes into its own, is if pursued over a period of time.
The value of a R3 600 lump sum investment in Satrix 40, based on the the actual history of the Satrix 40 price on the JSE, after three years, would now be R5 505, but a R300 every month debit order over three years would have a current value of R14 569.
The key to recurring debit order investments is to keep this monthly investment going for as long as possible.
In which case, rand cost averaging and persistency of investment pays off and the capital acculumation over time can be remarkable.
The choice of ETFs used for savings can also be important.
With over 60 ETPs now listed on the JSE to choose from, the investor is not confined to just the Satrix 40.
The table below, shows returns for three different products, Satrix 40 ETF, Satrix INDI 25 ETF and the DBX Tracker MSCI USA ETF.
Clearly, an investment in the DBX Tracker USA ETF or Satrix INDI 25, would have comfortably outperformed a Satrix 40 investment over this time period.
- Fin24
Do you have a pressing financial question? Post it on our Money Clinic section and we will get an expert to answer your query.
I have invested in Satrix 40 on a monthly contributing R300 and am re-investing the share payment.
Is it the right decision or not? I decided to invest for a year.
Mike Brown, managing director of etfSA responds:
Undertaking an investment by a regular debit order is a popular and successful way of building up savings.
A R300 per month investment buying Satrix 40 securites each month at the ruling price of the securities on the day, means that the investor will soon build up their holdings of Satrix 40 securities.
Reinvesting the dividends received each quarter from Satrix 40, also means that extra Satrix 40 securities will be purchased with the dividend income.
By capitalising dividends in this manner, this also helps to build up savings.
Over the past year and up to January 15 2014, R300 per month invested in the Satrix 40, would now be worth R4 042.
A R3 600 investment up front as a lump sum would currently be worth R4 311.
Where a debit order investment comes into its own, is if pursued over a period of time.
The value of a R3 600 lump sum investment in Satrix 40, based on the the actual history of the Satrix 40 price on the JSE, after three years, would now be R5 505, but a R300 every month debit order over three years would have a current value of R14 569.
The key to recurring debit order investments is to keep this monthly investment going for as long as possible.
In which case, rand cost averaging and persistency of investment pays off and the capital acculumation over time can be remarkable.
The choice of ETFs used for savings can also be important.
With over 60 ETPs now listed on the JSE to choose from, the investor is not confined to just the Satrix 40.
The table below, shows returns for three different products, Satrix 40 ETF, Satrix INDI 25 ETF and the DBX Tracker MSCI USA ETF.
Clearly, an investment in the DBX Tracker USA ETF or Satrix INDI 25, would have comfortably outperformed a Satrix 40 investment over this time period.
- Fin24
Do you have a pressing financial question? Post it on our Money Clinic section and we will get an expert to answer your query.
Disclaimer: Fin24 cannot be held liable for any investment decisions made based on the advice given by independent financial service providers.
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