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A Fin24 user is currently saving R2 000 per month and wants to know how he can maximise growth. He writes:
I'm a 22-year-old software developer and part-time (final year) BSc IT student.
I earn an average junior level IT salary, but have zero financial obligations other than fuel - and no debt. I'm currently putting R2 000 per month into a Satrix Rafi account.
What else should I do to maximise the growth of my finances, instead of having everything just sit in my bank account? Is there a more risk, more reward investment path I could be pursuing?
My question relates to monthly contributions, of which I would like to invest around R3 000 per month somewhere. (Separate from the R2 000 I'm putting into my Satrix account.)
So, I'll end up investing a total of R5 000 per month.
Daryl Ducasse, an investment manager at Merkurius Capital Solutions, responds:
You have asked the eternal question: how do I make my money go so much further and become that much more?
There is no single response to this, but the short answer is yes, there are options.
My first inclination is to suggest warrants that are linked to blue chips. The amounts required to trade are usually nominal and the potential for profit (and loss) is great.
If it were my cash, I would continue with the Satrix strategy, introduce the warrants of an equal amount and perhaps place the balance into a money market account or a growth fund.
In order to make (but also potentially to lose) money through futures and warrants, the underlying equity pricing needs to be more volatile than stable.
In futures, you can either short (sell forward) the counter (meaning you believe the underlying counter will drop in price) or you can go long (buy forward) meaning you believe the counter will increase in price.
Warrants are less risky, but you cannot go short. You can only buy and sell as the underlying counter affords you a profit.
If the underlying counter does not move up or down in price much, there is little room for profit due to the entry costs.
Warrants are a cost effective way of getting an exposure to highly priced blue chips such as Sasol, Anglo American, etc.
Standard Bank Online Share Trading is the best platform in my view, but attend a few workshops first.
- 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.
Under the ECT Act and to the fullest extent possible under the applicable law, Fin24 disclaims all responsibility or liability for any damages whatsoever resulting from the use of this site in any manner.
I'm a 22-year-old software developer and part-time (final year) BSc IT student.
I earn an average junior level IT salary, but have zero financial obligations other than fuel - and no debt. I'm currently putting R2 000 per month into a Satrix Rafi account.
What else should I do to maximise the growth of my finances, instead of having everything just sit in my bank account? Is there a more risk, more reward investment path I could be pursuing?
My question relates to monthly contributions, of which I would like to invest around R3 000 per month somewhere. (Separate from the R2 000 I'm putting into my Satrix account.)
So, I'll end up investing a total of R5 000 per month.
Daryl Ducasse, an investment manager at Merkurius Capital Solutions, responds:
You have asked the eternal question: how do I make my money go so much further and become that much more?
There is no single response to this, but the short answer is yes, there are options.
My first inclination is to suggest warrants that are linked to blue chips. The amounts required to trade are usually nominal and the potential for profit (and loss) is great.
If it were my cash, I would continue with the Satrix strategy, introduce the warrants of an equal amount and perhaps place the balance into a money market account or a growth fund.
In order to make (but also potentially to lose) money through futures and warrants, the underlying equity pricing needs to be more volatile than stable.
In futures, you can either short (sell forward) the counter (meaning you believe the underlying counter will drop in price) or you can go long (buy forward) meaning you believe the counter will increase in price.
Warrants are less risky, but you cannot go short. You can only buy and sell as the underlying counter affords you a profit.
If the underlying counter does not move up or down in price much, there is little room for profit due to the entry costs.
Warrants are a cost effective way of getting an exposure to highly priced blue chips such as Sasol, Anglo American, etc.
Standard Bank Online Share Trading is the best platform in my view, but attend a few workshops first.
- 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.
Under the ECT Act and to the fullest extent possible under the applicable law, Fin24 disclaims all responsibility or liability for any damages whatsoever resulting from the use of this site in any manner.
