Investing 101… in 2025
Published on 25th February, 2025 at 11:09 am
If you get caught up in the alphabet soup of ETFs, UTs, RAs, etc… you’re in the right place. We’ll set you on the straight and narrow.
Reading time: 10 minutes
If you’re just starting your financial journey, setting up a new investment can be a daunting task – and even if you’re a seasoned investor. With so many options available, you can quickly get lost in financial jargon. We chatted to Duma Mxenge, Head of Business and Market Development at Satrix, to get the low-down, as well as Jiten Singh, Elite Sanlam Financial Planner.
One of the most common questions people ask is, “What is an ETF?”. In this article, we’ll break down the basics of investing, focusing on exchange traded funds (ETFs) and how they can be a great starting point for new investors.
Understanding ETFs and unit trusts
Let’s start by understanding the differences between ETFs and unit trusts, which are both popular investment tools and allow for a diversified asset portfolio. However, their trading mechanisms differ.
Unit trusts are priced once a day after the market closes, but ETFs are listed on stock exchanges and can be bought and sold throughout the trading day at live prices.
“For new or first-time investors, the biggest drawcard for ETFs is that they can invest in a fund that’s listed on the stock exchange,” Mxenge says.
Get your financial advisor involved
Being a first-time investor, you may be overwhelmed by information or may be tempted to follow trends. Talking to a financial advisor can help you understand the different investment options and make the right choice.
Read more: Speaking to a financial planner is free – so what’s the catch?
The right investment for you may depend on your life stage and financial goals. Generally, younger investors can afford to take more risks, allocating a larger portion of their portfolio to equities (e.g. stocks and shares), which tend to offer higher returns over the long term. Conversely, as you approach retirement, the focus shifts to protecting your capital, leading to a more conservative investment strategy.
Singh gives some questions to consider with your advisor:
- Do you have a short-term, medium- or long-term goal for savings and investments?
- How risk averse are you – conservative, moderate or aggressive?
- Will you need access to the funds, and what length of time do you plan on investing for?
Singh’s tip: Always consider the tax implications, fees and charges, whether your investment is regulated, and what recourse you have should things go wrong.
A common rule of thumb is to allocate your equity investments based on your age. The formula is 100% minus your age. For example, if you’re 40 years old, a typical allocation would be 60% in equities, says Mxenge. However, everyone’s financial situation is unique, and seeking advice from a financial advisor can help tailor your investment strategy to your specific needs.
Singh says Satrix and other ETF providers, such as Easy Equities, offer a great starting block for new investors, as they are accessible, cost-effective, and allow for medium to long-term financial goals.
Watch out for these investing red flags
If you’re like most people, you may be relying on recommendations from friends or family to choose your investments. That can be a great place to start – but don’t neglect your due diligence. Check the company name and check that it is registered and licensed by the Financial Sector Conduct Authority.
Be wary of high-pressure sales tactics and being pushed into a quick decision. Remember that if an investment sounds too good to be true, it probably is.
Mxenge’s warning: Promising guaranteed returns is a red flag!
Sanlam Life is a licensed life insurer, financial services provider and registered credit provider (NCRCP43). The Sanlam Money Saver credit card and Wealth Bonus Lifestyle benefits are products of the Sanlam Reality programme, which is offered by Real Futures (Pty) Ltd, a subsidiary of Sanlam Ltd. the licensed controlling company of the Sanlam Limited Insurance Group. www.sanlam.co.za
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