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Types of Investments in South Africa |
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Different Types of Investments in South Africa
Money Market Funds
Money Market Funds are investment funds (unit trusts) where your money is managed by an investment professional that pools your money with that of other investors and strives to achieve the best possible rate of interest for you. A number of different money market instruments from a number of different institutions are used, and thereby diversifying your risk away from one company. These are very conservative investments.
Unit Trust
A unit trust or collective investment is a trust formed to manage a portfolio of securities in which small investors can buy units. Your money is managed by an investment professional that pools your money with that of other investors and creating bulk buying power. The risk profile attached to these funds depends on how the weighting of the various securities is structured. Unit trusts invest in equities (shares), bonds (gilts), and various fixed interest instruments including money market funds.
Endowment
These are life insurance products used for investment purposes. Like life insurance products they have a life assured and beneficiary, but only accumulate the investment amounts paid by the investor plus the growth. The minimum period for the investment is 5 years after which the amount can be withdrawn tax free. However, within the fund any interest and rental income is taxed at 30%. This type of investment is best used for forced savings only.
Shares
These are shares in a company that can be bought and sold. For most individuals access to shares in companies is easily gained in companies that are listed on the stock exchange. Individuals, through a registered stockbroker, can buy and sell shares on the stock exchange such as the Johannesburg Stock Exchange. Nowadays, including in South Africa, you can do the buying and selling of shares yourself online. This is still done through a registered stockbroker.
Please note that specialist advice is advisable when considering your investment options as this is a complex topic specific enquires can be made to the contributor of this article, Incompass Financial Services
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