In the past decade there has been a dramatic increase in the number of participants and competition in the fund management industry.
The private client arena offers a wide array of unit trusts, including SATRIX funds for investors to invest in, and while clients are not required to be involved in the decision-making, they might find the number of options bewildering. There are currently more than
1 000 unit trusts available locally and over 80 000 offshore.
A range of investment options
Individuals seeking more comprehensive service, including share portfolio management and financial services such as retirement planning, income tax compliance and the creation of trusts can select from a range of trust companies, private banks, stockbrokers, assurance companies and specialist fund management companies. If investors want to participate actively in the management of their share portfolio they might decide to use the services of a stockbroker specialising in private clients.
As individuals, investors must shop around for the company that has products, or will structure products, that meet their specific requirements. Intense competition in this market and large differences in fund performance, make the choice of an adviser an important decision for any investor. It is no longer sufficient to invest in funds without taking into consideration the volatility of a particular fund relative to another as standard deviation, which measures the upside and downside of a portfolio over a period of time. This measurement will prove far better when understanding the risks associated with individual investments. Selecting a top performer does not guarantee future success. Past performance is a guide and nothing more. Teams change regularly and you may find that the performance achieved was the work of a team that has subsequently moved elsewhere.
Factors that need to be considered when deciding on an adviser include:
- individual financial circumstances and income requirements
- the need for capital growth, particularly in view of inflation
- reporting requirements
- the amount of personal attention you want
- the price you are prepared to pay
- your appetite for risk
- your existing portfolio, including direct shares and unit trusts
Beware quarterly reporting
A further consideration is the culture of “quarterly reporting mania” that has developed in South Africa, in line with investment behaviour in Europe and America. This focuses on quarterly reporting and has its share of pitfalls, such as the risk of selecting a fund only on its short-term performance.
While performance is bound to fluctuate with market conditions, investors should not be overly concerned with quarterly performance. It should also be borne in mind that changing your investments frequently is expensive, and there is often the risk of changing just as the original investment starts to deliver a return. Another important point worth considering is the performance of the entire basket of investment – the performance as a whole, as opposed to the performance of the individual components. With the increasing sophistication of the investment medium and the vast number of products on offer, it is vital to ensure that you select a suitably qualified advisor who is familiar with the ever-changing investment environment.
Knowledge & skills
The introduction of regulations governing financial advisors and, in particular, the issues relating to the provision of appropriate advice, has resulted in new levels of expertise.
Advisors have to be more proactive in their assessment of investors’ requirements. This means more contact with the investor to ensure that the advice provided is still in line with the required risk and needs objectives of the individual.The advisor may have to charge clients more for the service and they would be well advised to pay this increased amount if the advice enhances the understanding between investor and advisor, and ensures that clients’ needs are met.
Finally, investors must never lose sight of their original objectives and, if they change, this must be communicated to the financial advisor so that, where applicable, the investment portfolio can be appropriately restructured. I always like to remind investors that if they are investing in anything to do with growth assets (equity, property and hedge funds), their time horizon must be at least seven to ten years and beyond.
Digital Options With Olymp Trade – Online Trading Made Simple
Remember that communicating with others makes progress easier, so feel free to share with your fellow-traders any time and increase chances of your success!
Innovation in trading – is gain without pain possible?
In our modern age, trading has helped a lot of people earn handsomely. However, originally it was a complex exercise, involving a considerable investment of time and financial resources to understand the market. That has restricted its acceptance among people who wish to trade but have a busy schedule and limited budget.
The problem seems to have been solved to a great extent with digital options – a special form of a financial instrument. While it requires relatively less time to learn, it also reduces the risk exposure, which accounts for the growing popularity of digital options. With this type of trading, your investment amount doesn’t have to be equal to the underlying asset’s market price. So, even if the minimum price of a stock index unit is $100, you can take an exposure of just $1 on this.
A platform, which has achieved loyalty of over 16 mln. customers, despite being a late market entrant, is Olymp Trade. The company provides particular ease of use and a comprehensive educational kit, so we will use this example to explain how digital options work.
Olymp Trade – a closer look at digital options
This type of trading requires an investor to anticipate the price movement of the underlying asset in a short term. On the Olymp Trade platform the asset range includes currency pairs, commodities, cryptocurrency, various stock indices and some individual stocks. A trader would then need to place an “Up” or “Down” call relative to the strike price, without having to bother about how far the price would move. You are also required to specify the time limit for keeping the trade open – it is called expiration time, and could last from 1 minute to several hours.
Since there is no need to gauge the extent of movement, analysis of parameters like where to put ‘stop loss’ or when to book profit is not necessary – and this makes the process so much simpler. Profitability per each trade is always known beforehand, and with Olymp Trade it may reach 80-90%. Another essential point is that a trade could be sold back to the market, if the trend behaviour contradicts your forecast. This flexible approach allows to recover some of the invested money, if it’s not possible to lock in profits.
Developing a strategy that works
Since options is only intraday, fundamental analysis has almost no relevance. As a result, most of the trading happens employing technical charts. Yet, you cannot ignore the opportunity to trade based on news flow, which could actually generate higher returns than technical analysis. So, even if you are not connected with, say, Australia but sudden floods have caused huge supply disruption in the country, you could place a ‘Down‘ trade on AUD. However, one needs to be careful when analyzing the news. For instance, even if the employment figure is higher than last month, the currency could lose sharply – in case it is lower than expectations. Conversely, even if the GDP growth is negative, the currency could see a rebound if it has survived the crisis with minor damage.
The other benefit of news-based trading is that you can earn multiple times with the same news or insight. For instance, if you think dollar is going to rise substantially over the next few hours due to Fed’s move, you can place an ‘Up’ trade with a five-minute time frame. After this trade has expired, you can put another trade with the same ‘Up’ position if your judgment has turned out correctly and you still expect the price trend to continue.
Another asset class that has gained lot of limelight recently is cryptocurrencies. They are highly volatile – and this is tricky on one hand, but lucrative on the other. Olymp Trade gives you an opportunity to trade in crypto while keeping your risks limited.
Using Olymp Trade for crypto saves you the hassle of opening another account, which is usually time-consuming and involves several verification processes. More importantly, you would have to disclose a lot of personal information, which may not be very attractive proposition because the crypto-industry is still evolving. As for reliability and security, which is vitally important in trading (no matter crypto or traditional assets), Olymp Trade can guarantee it all – the company’s activities are supervised by the International Financial Commission.
The chart below gives an idea of Bitcoin price movement on a typical day. One can see clearly that there is sufficient volatility in the price to make money here.
While you cannot own or store crypto with Olymp Trade, you can certainly earn from its price movement. The platform offers a dozen different cryptocurrencies to trade, including the top ones like Bitcoin and Ethereum. However, the returns generated for this asset class vary substantially: from 10% to 80%. You also need to note that these returns keep varying all time through. So, if you traded on an asset generating 80% return at a particular time, please confirm the offered returns when placing the next trade – as it may not be the same.
How can I really profit, if I choose trading options?
We have mentioned different trading methods – from the time-tested assets to the modern-day cryptocurrencies – and it only makes the tip of the iceberg.
In order to understand the process more deeply and start profiting, one should have a systematic approach to learning. But of course your self-study should be based on trustworthy sources. We recommend taking a look at the Olymp Trade’s “Education” section, where one can find well-structured lessons and webinars dedicated to trading. The platform provides a free demo account, so the users can put their new skills into practice straight away. The benefit here is working with platform features without depositing real money. Use virtual currency for demo trading, and take as much time as you need before getting ready to open real deals for real profits.
Online trading is a very popular kind of business nowadays. If you visit Olymp Trade page on Facebook, you will find a lot of proof to that, meeting people for whom trading has become one of the main pursuits in life. Remember that communicating with others makes progress easier, so feel free to share with your fellow-traders any time and increase chances of your success!
11 Things You Need To Know About Bitcoin
The cryptocurrency has had a tumultuous existence so far.
11 Bits about Bitcoin
Even the most tech savvy among us have a hard time wrapping their heads around Bitcoin. It’s a hot topic and a frequent point of discussion among investors, entrepreneurs and stock traders, so you should want to know all about it.
For starters, here’s an overly simplified explanation of Bitcoin: It’s a digital currency (there are more than 800 now) that isn’t controlled by a central authority such as a government or bank. It’s created by “miners,” who use computers and specialised hardware to process transactions, secure the currency’s network and collect bitcoins in exchange.
Supporters say it allows for more secure transactions over the internet. That’s in part due to blockchain, a technology that records cryptocurrency transactions chronologically in a public digital ledger.
Bitcoin is only eight and a half years old, but it’s the oldest and most highly valued cryptocurrency out there. In such a short time, it’s had a rocky and controversial history, but it’s also attracted a fair share of high-profile supporters.
Click through to read 11 bits about Bitcoin that will make you at least sound like you know what you’re talking about next time it inevitably comes up.
The birth of Bitcoin
The proof was then published to a cryptocurrency mailing list in 2009. Nakamoto left the project in 2010 and disappeared, but other developers picked up the work.
Bitcoin’s birthday is Jan. 3, when Nakamoto mined the first 50 units of the currency.
An elusive creator
The true identity of Bitcoin’s creator has never been confirmed. Newsweek claimed to have found Bitcoin’s creator in 2014, identifying Temple City, Calif, resident Dorian Satoshi Nakamoto. He has vigorously denied it.
In 2015, an Australian entrepreneur named Craig Wright said he was Bitcoin’s creator, but he couldn’t produce the evidence to support his claim.
Whoever Nakamoto is, that person is very rich, as the creator is estimated to have mined a million bitcoins in the currency’s early days.
Very expensive pizza
The first transaction involving bitcoin was reported on May 22, 2010, when a programmer identified as Laszlo Hanyecz said he “successfully traded 10,000 bitcoins for pizza.”
As of June 14, 2018, 10,000 bitcoins are worth about $64.8 million.
Fintech has become a disruptive force in the financial sector that is threatening the current status quo of banking and finance. The main beneficiary of that is the consumer.
You can spend bitcoins
While it may not seem like it, people continue to use bitcoins to buy stuff.
Federal Bureau of Bitcoin
At one point, the U.S. government was one of the largest holders of bitcoin.
In 2013, after the FBI shut down Silk Road, a darknet site where people could buy drugs and other illicit goods and services, it took over bitcoin wallets controlled by the site, one of which held 144,000 bitcoins.
Investors have been making a killing by bidding on government-seized bitcoins.
A mountain-sized setback
In early 2014, Bitcoin suffered a devastating loss after the alleged hacking of Mt. Gox, a Japanese exchange.
About $460 million of the currency (in 2014 value) was stolen. It was the largest loss of bitcoins ever and raised concerns about how secure the currency was.
The billionaires’ takes
Warren Buffett, perhaps the most famous investor in the world, was not so keen on Bitcoin one of the only times he addressed the currency.
“Stay away from it. It’s a mirage, basically,” he told CNBC. “The idea that it has some huge intrinsic value is a joke in my view.”
Fellow billionaire investor Jamie Dimon, chief executive of JPMorgan Chase, had even stronger words about Bitcoin:
“You can’t have a business where people are going to invent a currency out of thin air. It won’t end well … someone is going to get killed and then the government is going to come down on it.”
But not all billionaires are against Bitcoin. Mark Cuban has said its value is inflated, but he recently invested in a venture capital fund that backs cryptocurrency. Richard Branson, however, has spoken more optimistically about it.
The rise and rise of digital currencies – and how they’re affecting your business.
Wealthy twins and a smart teen
Other notable investors in Bitcoin include Cameron and Tyler Winklevoss (the Harvard-educated twins who sued Mark Zuckerberg claiming that Facebook was based on an idea they’d had).
They invested $11 million into Bitcoin in 2013, an amount said to be about 1 percent of all bitcoins in circulation at that time. The Winklevoss twins have been petitioning the SEC to create a bitcoin exchange traded fund.
The agency rejected the idea earlier this year.
Another is investor and entrepreneur Erik Finman, who invested $1,000 into Bitcoin when he was 14 years old and is now a millionaire.
Celebrities want in
Celebrities have also expressed enthusiasm for the cryptocurrency.
Actor and Goop founder Gwyneth Paltrow advises Abra, a Bitcoin wallet, and Ashton Kutcher, Nas and Floyd Mayweather have all invested in Bitcoin start-ups.
Support from a big financial institution
In August 2017, Fidelity Investments became a rare standout among financial institutions in embracing Bitcoin and other cryptocurrencies.
The company allows its clients to use the Fidelity website to view their bitcoin holdings held through digital wallet provider Coinbase.
“This is an experiment in the spirit of learning what these crypto assets are like and how our customers may want to interact with them,” Hadley Stern, senior vice president and managing director at Fidelity Labs, told Reuters.
A hard fork
On Aug. 1 2017, Bitcoin experienced what’s being called a “hard fork” as a result of a few issues, including the limited number of transactions that can be processed per second. Essentially, the cryptocurrency split into two, with Bitcoin Cash debuting.
Here’s how Rob Marvin of PCMag explains the situation:
“The Bitcoin fork speaks to a fundamental ideological rift over what’s more important: Preserving the decentralised nature and independent control of the Bitcoin network, or accelerating transaction speeds to make the cryptocurrency more viable for mainstream ecommerce and payments.”
Bitcoin Cash allows larger blocks of currency and more transactions per second.
This article was originally posted here on Entrepreneur.com.
5 Worthwhile Investment Lessons I Learned From Warren Buffett
Patience in long-term investing is one lesson. Investing in what you understand is another – the reason Buffett steers clear of tech.
It’s one thing to be a good investor; it is quite another to know how to teach investing. Warren Buffett is spectacular at both and has over 50 years worth of financial and investment success to prove it.
Nicknamed the Oracle of Omaha, Buffett may not be the richest man in the world, but he is, by a great margin, the planet’s wealthiest investor.
He also dishes out free and priceless investment advice whenever he can, mostly through his annual letter to shareholders.
His sage words of advice can benefit everyone across the investment spectrum, from the Class A shareholders of Berkshire Hathaway to the average investor involved in low-key passive income investing.
Here are a few of these lessons Buffett has offered throughout the years that may help you, too, become a better investor.
1. Develop an investment mindset
It’s true that any of us can become investors, but not all of us can own and manage our investments ourselves. For that, we’d need a fully equipped investor’s mindset.
Related: Why Warren Buffett Doesn’t Worry
And that means putting in thousands of hours of intentional study to build your investment-skill level and mental aptitude.
2. There’s a power to practicing patience in long-term investing
Whenever Buffett uses the word “investment,” he specifically excludes speculators who are in the habit of hit-and-run investment (meaning purchasing, then selling off investments at the slightest northward tick in value).
This is why the Buffett-led Berkshire Hathaway has never split its Class A shares (which as of March were worth $258,000 per share) and only created Class B shares to discourage the creation of unit trusts. One of Buffett’s famous statements, which alludes to his preference for long-term investments, is:
“No matter how great the talent or efforts, some things just take time. You can’t produce a baby in one month by getting nine women pregnant.”
A real investor, in short, does not merely speculate; he or she makes informed and intelligent investment decisions and rides it for the long haul. That kind of investor eventually ends up with more success than the short-term kind.
Case in point: Berkshire Hathaway’s 2014 letter to shareholders disclosed that in the period extending from 1964 to that year, 2014, the company claimed an overall 751,113 percent gain.
3. Prioritise value over money
Sometimes, the amount of money we spend on something and the value we get back from our purchased item do not correlate.
Just because you purchased a Ferrari for $400,000 doesn’t mean that your overall quality of life will improve because of the car you drive.
Many people make the mistake of ascribing ultimate value to money. Buffett disagrees. An investor understands that the market prices of commodities and stocks are driven by demand, supply and general market sentiment about the company or commodity in question.
Buffett has a general formula for investing, especially in stocks. He suggests that the best time to invest in any business is when the price of its stock is lower than its intrinsic value. In simple terms, you should invest in companies when they are undervalued.
4. The human factor plays a big role in investing
Buffett’s decades of consistent success are further proof that the now largely discredited efficient market theory is flawed. Investing is both a science and an art, and Buffett believes that modern financial theory does not adequately take into consideration the artistic side of it – the human factor.
Human emotions and sentiment and intelligence affect the market much more than modern financial model is willing to admit. The latter makes things look too easy and straightforward, assuming that something that has never happened can happen.
The modern financial model leans more on past and present market data (physical science) than the human factor (behavioral science) when the reverse should be the case.
Buffett has suggested that controlling the emotions is much more important. According to him, “Success in investing doesn’t correlate with IQ … what you need is the temperament to control the urges that get other people into trouble in investing.”
5. Invest in what you understand
Drawing on his “circle of competence” belief, Buffett advises that you “never invest in a business you cannot understand.”
In other words, don’t choose businesses requiring knowledge outside your circle of competence, at least not until you have acquired sufficient knowledge to do so. Buffett lumps factors affecting a business into categories: The knowable, the unknowable, the important and the unimportant.
So, what he’s saying is that businesses are a good bet for investing only if their important factors are knowable – and known.
If you don’t have sufficient knowledge about a company, it becomes harder to hold long-term investments and predict what the company (and its industry) will look like a few years down the line.
Buffett, for instance, usually stays away from tech industry businesses; he puts most of these businesses in the “too hard” pile on his desk. He refers to investing in businesses you do not understand as trying to jump over seven bars when you should be looking for a one-foot bar (a business you understand) that you can step over.
Clearly, the Oracle of Omaha, over the years, has found and profited from plenty of those one-bar businesses.
This article was originally posted here on Entrepreneur.com.
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