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What Should I Know Before I Invest My Hard Earned Money?

How to invest and see the returns.





How to invest to obtain maximum returns

Most South Africans do not retire with enough money. The main cause of this relates to individuals who leave companies and do not preserve what’s already been saved for them in their retirement fund.

Related: Three Funds You Can Tap into Right Now

Consequently they lose out on the eighth wonder of the world – namely, the power of compound interest. Money invested on a monthly basis or even a lump sum only starts to really grow 15 to 20 years later.

Investment Options

You have three choices:

  1. Take the money and pay tax on an amount above R22 500. The balance will be taxed at 18%. This is a very low tax. However, you always get this benefit up to R600 000. If you take the cash now, then, when you retire, the first R300 000 is tax free, the next R300 000 will be taxed at 18%, but SARS will deduct what has been previously taken.
  2. You could put this into a retirement annuity but then you are locked in until age 55.
  3. A preservation fund could be an option. Both options 2 and 3 are tax neutral. The advantage of the preservation fund is that you can withdraw the money at any time, subject to the tax formula above.

It’s also possible to service debt with this money. If you choose this route, always settle your most expensive debt first in the following order:

  • Micro lending
  • Credit card
  • Overdraft
  • Bond

While I encourage individuals to pay off their bonds, one also needs to save so that by retirement not only do you have a home paid for, but you also have an income. There is no point being asset rich and income poor.

Is property the best way to invest?

It has been long proven that the foundation of wealth invariably starts with the ownership of property.

If you can afford it, then it is preferable to purchase residential property as this has proven to be a sound medium to long-term investment. Because of the challenges presented by the National Credit Act, and a CPIX inflation that hovers above the 6% mark, The South African property market is presently a buyer’s market.

Due to the prevailing economic factors, the supply of property is greater than the demand. This means that you are likely to find yourself in a position to drive really good bargains.

Study recent surveys

The FNB Residential Property Barometer is a quarterly survey of a sample of estate agents in the country’s major urban regions, aimed at obtaining their opinions on a wide range of issues pertaining to conditions in the residential property market.

Estate Agents who took part in the most recent survey believe that the banks’ strict lending criteria and high deposits on home loans are to be blame for the low levels of demand.

In addition, although interest rates have dropped, there is still upward inflation pressure on food, petrol and other commodities, which acts negatively on disposable income.

Educate yourself

No one can tell when the market will bottom out, there is also a danger that those who wait too long will miss the boat and find themselves buying on a rising market.

It is wise to educate yourself about the residential market and area in which you are interested. To do this visit show houses in the area, go to the Deeds Office and consult with aligned, independent agencies and mortgage originators to find out what prices homes in the area are really being sold for.

When Ask Entrepreneur spoke to Chairman and co founder of Private Property Holdings, Justin Clarke, to find out where he sees current activity and profitability in the residential market in South Africa, he said:

“This is the proverbial question, and it is best for me to give you an opinion. The four different indices published on house price movement show that the statistics can be translated very differently, but this is how I see it. I have no doubt that the most activity is still in the R300k to R800k house price range, but owners, buyers and sellers in this range are most exposed to the market conditions, they are most affected by interest rate changes, and increases in the cost of living.”

Clarke explains that this market is so active because of the economic climate:

“While employment is on the decrease, and there are fewer jobs in the market, jobs in this range favour new incumbents into the market who may have been in shared accommodation or the upwardly mobile township dweller, who strives to live in the suburbs and now can. Also seller’s activity includes those who are forced to sell due to their own financial circumstances and the overexposure they have to cost of living increases. The majority of economic indices show price deflation in this market, so although it is very active, sellers are accepting lower prices for their properties, and this the effect of the banks tight credit criterion.”

Outlook for the next 12 months

Clarke supports the theory that house prices will remain flat for 12 months. There are three reasons for this:

  1. Finance: We have entered a more conservative era and I can’t see banks changing their credit outlooks dramatically. They will definitely loosen up, but we will not see a feast like in the previous five years where they “”bought”” business just for market share.
  2. Supply: There is still some settling which has to happen. The banks have very high levels of distressed home loan accounts, and many of these sellers will need to offload their properties to recover from their high level of debts. Also Developers sit on large volumes of unsold inventory, which they are offloading into the market when the market will pay the price, so the volume is not evident, but I believe it is significant.
  3. Confidence: “Confidence takes time to build, and property will not be the hot topic it was in the last half decade. It will take time to turn.”

Extra Money?

R1 million to spend

If Clarke had R1m to spend in property in the next six months this is how he would invest: “I love property, and have looked around at other investment classes recently. I still will bet on property in the current market. Look at the auctions, especially on because the opportunity is incredible and you can find great buys. We always talk about “average” in the movement of the market, but I have bought property recently at 50% of the banks valuation. It is out there,” he says.

So what would he buy?

“I can only say you have to decide between property with low yield, (that your rental income falls far short of your bond) which is most likely to appreciate faster when the market turns, and high yield, low growth properties which you can pick up at cash positive positions.


Related: (Video) Financial Management Basics for Entrepreneurs

“Developers are facing exorbitant increases in getting land on which to build and the restrictions and costs of servicing are becoming ridiculous, and you can be sure that the cost of creating new houses will increase dramatically, which will pull the price of second hand properties up at the same time. Apart from holiday houses, time share or any leisure properties, you will do fine if you buy to the maximum of your price range.”

Where has Clarke recently bought?

“I am buying a small block of flats in the Johannesburg CBD at the moment, it is cash flow positive and you would probably find similar investments in your R1 million price. Otherwise you will be safe with 2 to 3 bedroom townhouse type unit in a secure complex, and try to be close to major places of work, but buy well, because you can.”

Another take

Ronald Ennik, managing director of Pam Golding Properties says: “The difficulty at the moment is the shortage of cash and it’s defining the market. South African’s do not have a “savings culture”” so the number of buyers are going to diminish. Little pockets will do well, for example, areas close to the rapid bus system and the Gautrain will result in people changing their lifestyle and these areas will become high-density areas – and great investment options.

“If I had a million to spend now, I would follow my own advice. But I must add some advice. Do your homework. Don’t buy property on rumours. Try to find out if there are plans that will uplift the area that you are looking into. Check your facts – there is no rush because the market is flat, so take your time.

Understanding the Markets

What are primary and secondary, money and capital markets?

Primary markets

Primary markets are markets dealing in the issue of new securities. In a primary market, the security is sold directly to the investor from the company or organisation itself. Primary markets are a vital part of the capital markets and underlying strength of the economy

Secondary markets

Once something has gone through its offering in the primary market, it will then be made available in secondary markets such as stock exchanges and through brokerage firms.

Once securities are on the market, they can be bought and sold based on demand. To make it to the primary market, they must go through an underwriting process to ensure that the company making the offering has completed all financial disclosures and has fulfilled all requirements necessary to make the offering.

Market makers are essential in the success of both the primary and secondary markets. These are firms, broker-dealers that hold a certain number of shares of specific securities to be traded. The firm assumes risk in doing so by investing its own capital

Making money off of your savings

While many will concur that is in fact no ‘easy’ way to make money, passive investments demand little to no involvement on the part of the investor. Passive investments include taking equity in someone else’s business or investing in the stock market.

Alternatively, you could peruse our Business Ideas Directory to find a type of business you are interested in starting – this would constitute an active investment. Be aware that all investments contain inherent risks, do your homework and seek professional advice from a business and/or financial advisor.

Share trading workshops

Standard Bank Securities offer courses throughout the country and many of them are free of charge. It’s recommended that one attends a beginner’s workshop such as an ‘Introduction to Investing’ which covers the basics and takes about five hours. From there you can take advanced courses and follow a specialist path.

Log onto the Standard Bank web site, and then select online share trading where you will find lots of useful information.

Are SA Retail bonds a wise choice as an investment vehicle?

With regard to SA Retail Bonds, the money is invested with the South African Government and is therefore a safe investment. Interest and capital are paid electronically into your bank account. It is a paperless investment (there are no physical certificates) registered in your mother’s name. If she has an urgent need for cash, she can take an early withdrawal after 12 months, subject to payment of a penalty.

“What you need to think about is how often you need to access funds. For example if you invest in the most conservative fund at Allan Gray, such as the money market fund, you would probably earn 6.2%, while a riskier fund, such as equity funds, can earn 8.5%,” says consultant Jaweed Allie of Allan Gray.

The return is high

The RSA Retail Savings Bonds have been designed as a savings product for South Africans. If you have a South African ID number and bank account with a financial institution in South Africa, you can participate in South Africa’s saving scheme. A two year fixed rate offers 8% interest, while a three year rate offers 8.25% and a five year fixed rate offers 8.5%.

Entrepreneur Magazine is South Africa's top read business publication with the highest readership per month according to AMPS. The title has won seven major publishing excellence awards since it's launch in 2006. Entrepreneur Magazine is the "how-to" handbook for growing companies. Find us on Google+ here.

1 Comment

1 Comment

  1. Fred Peterson

    Dec 5, 2014 at 14:47

    Loan offer at 3% interest rate if interested, apply now at or

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(Infographic) The 10 Things You Should Cover In Every Investment Pitch

If you want to wow potential investors, you need to cover your bases.

Matthew McCreary




If you’ve ever watched Entrepreneur’s original series, Elevator Pitch, then you’ve probably seen smart founders make dumb mistakes while pitching their ideas to potential investors. They might flub an answer or get tongue-tied, or they might just be a little boring. Other times, you might notice that something seemed off about a pitch, but you can’t quite put your finger on why.

Investors are gambling every time they put money into a new project or idea. Your job when pitching is to prove to them that you’re worth the risk. That means you’ll need to not only show them the possible upside of what they have to gain, but also be clear about what they could possibly expect to lose and their odds. In other words, you need to give them a holistic view of what you do, not just the one good idea.

You might have pitched an investor yourself and thought you crushed it, only to hear that the investor isn’t interested. If that’s the case, there’s a chance the pitch was missing one of 10 essential elements.

This infographic by Buffalo 7 breaks down 10 slides you should have in your next investment pitch deck. If you’re not presenting formally, though, you can still keep track of these aspects in your head and make sure you cover each one. They include:

  1. The vision, where you concisely explain your idea.
  2. The problem. Why is your vision necessary or helpful?
  3. The opportunity. What is the market size, and how can you position yourself to earn a share of it?

Related: How To Pitch Your Business, Product Or Idea To Industry Experts

This is just the start, though. Check out the infographic below to see the rest of the slides you need when pitching investors.


This article was originally posted here on

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‘Shark Tank’ Investors Reveal Top 5 Tips To Make Your Business Famous

Is your business worthy of fame? If so, pay attention to what the Sharks have to say …

Eric 'ERock' Christopher



Shark Tank

Shark Tank enters its tenth season as popular as ever. Over the past decade, millions of people have watched fascinated as entrepreneurs pitched their business ideas and startups in the hopes of winning an investment and support from self-made millionaires and billionaires.

The multi-Emmy® Award-winning reality-based show has had a tremendous impact on the business world and has been a major influence on the increased popularity of becoming an entrepreneur. Over the years, the show has evolved into one of the world’s top platforms to launch a business and recently reached an astonishing $100 million in deals offered in the Tank.

I was recently invited to attend a private event hosted on the set of Shark Tank to celebrate their 10th season and met with all the Sharks and most of the guest Sharks for the current season. This year’s guest list includes luminaries:

  • Charles Barkley, Hall of Fame NBA star and TV analyst
  • Alex Rodriguez, legendary baseball player and businessman
  • Rohan Oza, an iconic brand builder and marketing expert
  • Sara Blakely, founder and owner of SPANX brand
  • Matt Higgins, the co-founder and CEO of RSE Ventures and vice chairman of the Miami Dolphins
  • Bethenny Frankel, TV celebrity, author, and founder of Skinnygirl brand
  • Jamie Siminoff, the CEO of RING, who rejected an investment offer in season 5, but went on to sell his company to Amazon for a whopping $1 billion.

My better half was also invited, and we arrived promptly on time at Studio 24 inside of Sony Pictures Studios in Culver City, CA. We were greeted by the cordial staff who informed us that the Sharks were still filming the last takes of the day. After several minutes, we were invited to chat with the Sharks on the main floor where nervous entrepreneurs excitedly pitch their companies to the investors under the bright lights of the studio set.

I was curious to know what excited the Sharks the most about their tenth season and what they believed to be the best advice for an entrepreneur to help make their business famous.

1. Create an ingenious product

When asked, Lori Greiner said, “It’s a mix, right? Of smart marketing and ingenious product. For example, Scrub Daddy was a technology. So, taking that one sponge, which was revolutionary, changed the whole sponge arena. We now have, to date, 20 different SKUs, and we have 30,000 new retail locations and 170 million in sales. That’s what takes it from one idea to a global brand.”

Of course, skillfully promoting your product on a platform like QVC is another excellent way to make your business famous. The day after the Scrub Daddy episode aired, Greiner helped CEO Aaron Krause sell their entire inventory of 42,000 sponges in less than seven minutes on QVC.

Related: 6 Great Tips For A Successful Shark Tank Pitch

2. Leverage social media marketing


During my chat with Bethenny Frankel, she stressed, “Social networking is so important. Also being a little bit disruptive now … and you have to be creative. You have to be creative. The President was the most disruptive candidate that there’s probably ever been in history. He got people’s attention, and young entrepreneurs need to get people’s attention in some way. So be a little disruptive.”

Matt Higgins responded, “I’d say that you have to understand social and digital marketing. You can’t survive unless you understand Instagram, Snapchat or all the tools out there. You have to be contemporary.”

Barbara Corcoran claimed, “Every one of us successful entrepreneurs, for the last two years, were phenomenal at social media. It’s true. No exceptions.”

No smart entrepreneur will deny the power of social media when it comes to making your company famous. With more than 2 billion people worldwide using some form of social media, any business can put their business in front of a large audience, especially if they can create content that goes viral.

3. Build a community

Daymond John stressed the value of building a community. “You’ve got to build a community,” stated John. “Nobody needs to buy anything new in this world. They only buy it because there’s some form of community and/or need that you are supplying for them.”

John speaks from experience. He built a successful clothing empire by creating a vast community of his own via his clothing brand FUBU. John wisely invested in celebrity endorsements, making him an early pioneer of modern influencer marketing.

If you lack the resources to build your own community from scratch, you can leverage the power of others. Partnering with influencers who have cultivated their own communities allows you to introduce your product or service to larger audiences. In fact, some consider Shark Tank to be the world’s largest business influencer platform.

4. Devise a publicity hook to win earned media coverage

Barbara Corcoran also said, “I’d say you need a publicity hook. Some hook, angle or gimmick that grabs the attention unfairly from your competitors.”

Remember, Shark Tank is a unique combination of reality television, business acumen, and entertainment. Doing something unique, different, or disruptive can get you significant media attention and abundant free publicity… especially if you’re able to leverage that publicity and captivate the show’s producers, who decide your fate as to whether you’ll appear on the show.

Regardless if you want to appear on Shark Tank or not, being featured in the media is a way to differentiate your business from the competition and reach a broader audience. Be creative and willing to take educated risks when it comes to getting noticed by the media. You should always be actively building relationships with media representatives and ask for their insights when formulating your plan.

Related: Shark Tank Funded Start-up Native Decor’s Founder on Investment, Mentorship And Dreaming Big

5. Know your strengths and stay focused

When I asked for billionaire Mark Cuban’s insights, he thoughtfully replied, “Knowing your unique advantages, play to that, and your strengths. And focus. You know, what happens is very often people start with an idea, get a little bit of traction, then it gets hard. And when it gets hard, they start looking for other things to do as opposed to playing to their strengths. Because businesses aren’t supposed to be easy. You know, if they were easy everybody would already be rich, and we’d all be sitting on a beach somewhere. And so, when it gets tough, you gotta dig in and work hard. I’d say the final thing I’d add is that sales cures all. There’s never been a business that succeeded without sales. So, if you focus on selling … if you’re able to sell … and that’s something that is one of your core competencies, then you’ll be okay.”

These are wise words from one of the world’s few billionaires.

This article was originally posted here on

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The Best Way To Get Your Teenager To Start Investing Right Now

Jeff Rose advises a young fan on where to start his investment journey.




In this video, Entrepreneur Network partner Jeff Rose talks about receiving a letter from a young investor, who is looking for advice on how to begin investing.

Rose talks about the act of actually doing the investing versus worrying about reading books or asking others about the process. Taking action gets the most results, since you are able to make mistakes and start the learning process. Taking action also leads to more experience, which is to say if you begin investing as a teen, you will be much more savvy about investing as a twenty-something.

In answering this young investor’s concern about investment direction – the fan hopes to balance short-term gain and long-term gain, as well as to establish some padding for a future business – Rose turns him in one specific direction: A Roth IRA. When he was younger, Rose didn’t even know what a stock was until far into his college years; during this time, he discovered the Roth IRA and learned of its compounding power, as well as the accessibility of an initial investment.

As another route, Rose also mentions starting a business. This path, Rose explains, will help you achieve the most return on investment.

Related: Making International Investing Simple And Transparent – CybiWealth Digital Platform

Click on the video to hear more tips for a younger investor.

This article was originally posted here on

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