Personal Finance with Maya Fisher-French

2014-09-03 08:00

Dazed and confused? Our experts guide you through the financial maze

Share Trading

Shadrak writes:

I want to start investing on the JSE and have read about Top Trader Markets, which will charge me R18?200 to set up the portfolio and R250 a month to maintain the portfolio. It also provides share-tracking software that will enable me to trade successfully with the knowledge of which shares to pick and drop at certain times. Is this a good way to start investing?

Ridwaan Moolla, a stockbroker, replies:

Looking at the company website, it seems Top Trader Markets is basically selling you a software package that will provide technical analyses of

the stock market. Companies such as these are likely to come under closer scrutiny from the Financial Services Board (FSB) and valid stockbrokers are upset because such companies create false expectations for investors with promises of “making money before lunchtime”.

Share trading is not about making a quick buck. Most reputable stockbrokers will provide a free, basic technical analysis. If you are starting out as a share investor, the technical analysis program you are sold by companies such as Top Trader Markets is probably going to be very complex, resulting in confusion.

As a novice investor, you are much better off making a debit order investment – for example, R300 a month via FNB Share Saver.

If you have a capital outlay of R18?000 available, you would earn a much better return investing in an exchange-traded fund such as the Satrix Top 40, which gives you access to the top 40 stocks on the JSE.

When you are approached by companies such as Top Trader Markets, you should be asking:

»?Are you or your sales agents accredited by Financial Advisory and Intermediary Services? If so, what is your financial services provider (FSP) number? (You can then check the FSP number on the FSB’s website at

»?Are you a registered stockbroker? (This information can be double-checked with the JSE, which maintains a database of registered stockbrokers.)

Preserving pension funds

Julian writes:

I’m currently working in the private sector and will soon be moving to the public sector. Unfortunately, I cannot transfer my pension funds to the new employer. What will be the best way to keep this money safe and growing until I retire?

Nico-Louis Minnie, the head of wealth management platforms at Liberty Investments, replies:

Ideally, you would want to transfer your pension to your new employer. However, if, as in your case, you are unable to do so, you have two options when it comes to preserving your retirement funds:

»?The proceeds from your company pension fund can be transferred to a preservation pension fund. This option is available through all major insurers and asset managers, such as Liberty and Stanlib. It gives you the flexibility to move between investment portfolios that match your appetite for risk; or

»?You can move the proceeds to a retirement annuity that will give you the ability to contribute to the pension in the future by means of regular or ad hoc contributions.

Is it a scam?

Motlatsi writes:

I have come across a business called Round Fund, which I found on a marketing technology website. Please explain in simple terms how you make money from it.

City Press replies:

This website has all the markings of a scam. It appears to be an “investment” that earns you excessively high interest rates. In effect, you get a 50% return in 45 days. But then it also claims to sell budgeting and betting tips.

Nowhere does it explain how it makes its money or who is behind this business. Who would you go to if your ­money disappeared?

Rather than providing details on the business, it spends more time explaining how to make a deposit into their account. It is also a very amateur website. This is very clearly a scam, so stay far away from it.

Unit trust saving

Cordelia writes:

I’ve been saving R2?000 a month since January in a 32-day notice account, but I am not earning much interest. Should I invest in a unit trust?

City Press replies:

You need to decide what this investment is for.

If it’s for a short-term goal and you will want to cash it in within the next year, you do not want to take too much risk and should rather leave it in the 32-day notice account.

But if you’re planning on saving for the next three to five years, you should look at an investment that can give you growth over that period, such as a unit trust or exchange-traded fund.

Selling debentures

Primrose writes:

I have certificates from debentures given to me by my previous employer. What can I do with them? Nico-Louis Minnie, the head of wealth management platforms at Liberty

Investments, replies:

This is quite an interesting question, especially since it is called a debenture and not a bond. Debentures are like bonds issued by companies and they can pay regular interest, a final redemption payment, or both.

They are not actively traded and the issuer maintains a debenture roll, which contains the details of the debenture holders. They are all fixed term and since they are not actively traded, one generally has to hold them to maturity, when the issuer will pay out either cash or shares, depending on the actual wording of the contract.

You need to get in contact with your previous employer to find out when the debenture matures and will be paid out. You should also find out if you’re entitled to any regular interest payment or if all the interest is paid on the date of maturity.

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