Diversification: Free Lunch or Fool’s Gold?
“Diversification is protection against ignorance. It makes very little sense for those who know what they’re doing.” (Warren Buffett) This is all very well, Warren, but we can’t all afford excessive risk. For this reason, Harry Markowitz coined the phrase that diversification is the only free lunch in investing. The concept is that owning a […]
Is There Really Much Difference Between Investing and Gambling?
According to the Cambridge Dictionary, a gambler is “a person who risks losing money in the hope of winning a lot more money.” An investor, on the other hand, is defined as “a person who puts money into something in order to make a profit.” Several pots on the boil One of the biggest differences […]
Should Investing Be This Sexy?
“Opportunity is missed by most people because it is dressed in overalls and looks like work.” (Thomas Edison) According to the most recent Forbes 400 list, which names the richest people in America, hedge fund manager Ken Griffin is worth $35 billion. That makes him the 22nd richest person in the US. He is also far […]
Tax Tip: Must-Do Top Ups in February
RAs: The big one Retirement Annuities (RAs) offer significant tax breaks as contributions to the investments are tax-deductible, and the growth within the funds is tax-free. (No income, dividends or capital gains tax applies.) You can contribute a maximum of 27.5% of your taxable income to retirement funding each year, up to a maximum of […]
How to Avoid Getting Burnt by the Next Investment Bubble in 2024
“We cannot reason ourselves out of our basic irrationality. All we can do is learn the art of being irrational in a reasonable way.” (Aldous Huxley). The madness of crowds None of us are rational investors. We’re humans – fuelled by fear, overconfidence, and sometimes greed – to survive. Psychologists have long argued that we […]
Did 2017 Change the Way You Invest?
“What we believe is heavily influenced by what we think others believe.” (Thomas Gilovich) Do you remember 2017? It wasn’t that long ago, but few of us can probably recall what markets did that year. For the record, it was a great year for stock markets. The JSE All Share Index was up 21%. The […]
Think You’re a Rational Investor? Think Again
Chances are you think you make rational decisions – about investments and about life. But science has shown that this is not the case. Accepting that you are not a rational investor is one of the first steps to achieving investment success. B is for bias Broadly speaking, there are two types of bias. Cognitive […]
Should you be an Optimist or a Pessimist With Your Money?
“Both optimists and pessimists contribute to society. The optimist invents the aeroplane, the pessimist the parachute.” (George Bernard Shaw) Cast your mind back to the middle of March 2020, when fears around Covid-19 sent the JSE into a spiral. The All Share Index dropped more than 25% in just a few days. Pessimism about how […]
Why do People Invest in Property?
Wealth buckets Property is one of several asset classes, the others being equity (shares or unit trusts), cash-related products (like money market products), and bonds. Here are some of the most important benefits of investing in property: It can provide a passive income that requires relatively limited involvement on your part. What’s more, you can generate a […]
The Stock Market Indices to Watch When Monitoring Equity Performance
As old as the hills Since 1602, investors have been winning and losing their fortunes on the stock market – and today is no different, with many investors betting it all on the latest, greatest thing. In 2000, it was the dot.com bubble when tech shares reached stratospheric highs and fell off a cliff the […]
