MONEY CLINIC | I have R50k to invest. Which investment product should I invest in to grow my portfolio?

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A Fin24 reader looking to grow his investment portfolio seeks to find the best product to invest in.

He writes:

I have R50 000 to invest but where can I invest it as I just matriculated and I’m looking for an investment vehicle that will help me grow my investment portfolio?

Khwezi Jackson, Junior Investment Consultant at 10X Investments, responds:

First, let me commend you for being responsible for your financial future at such a young age.

As a young individual, I imagine you thinking of things like maybe going to varsity, definitely gaining your independence, starting a career and maybe even launching your own business, and perhaps travelling the world. You also find yourself at the beginning of your financial life with some money to invest. Good for you, for taking the time to think about what is the best way to invest this money.

It is probably not a good idea commit to a long-term investment yet because a lot of changes can and will take place in the next few years. The last thing you want is for your funds to be tied up in a retirement annuity when, for example, you want to self-fund your business or pay a deposit on your first flat, only to be told you can access your funds only at age 55. 

I would like to propose a three-bucket approach in a unit trust investment.

Short term:

You could invest R10 000 into a portfolio that is geared to protect your funds against inflation and any market volatility. These funds need to be heavily invested in cash and bonds. This fund will be for your short-term needs.

Medium term:

You can invest R20 000 in a fund that has equal split between aggressive and defensive funds. This fund will cater for your medium-term needs, such as taking a vacation after you have completed your studies or paying for relocation costs if you accept a job in another province.

Long term:

You can invest R20 000 in a fund geared to give you long-term growth. A large part of this fund must be invested in equities as shares perform better than other asset class in the long term.

There is no formula to life. No one knows what the future holds for you. The most important thing for you right now should be to keep your options open so you are in a good position to take advantage of opportunities that present themselves. Good luck!

Questions may be edited for brevity and clarity.

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