Investing 101: A Beginner's Guide to Growing Money in South Africa

Investing is about putting money into assets with the expectation that they will make money for you over time. It is different from saving, which involves setting money aside in a low-risk account that earns minimal interest. The goal of investing is to make your money work harder for you, helping you to achieve long-term goals like buying a home or building a retirement fund.

Phase 1: Preparation (Before You Invest)

Before you put any money into the market, make sure your financial foundation is secure:

• Set Clear Goals: Know **why** you are investing. Are you saving for a short-term goal (like a car downpayment) or a long-term goal (like retirement)? Your timeline affects the risk you can take.
• Handle High-Interest Debt: The interest charged on credit cards and loans will likely exceed what you earn from an investment. Consider settling high-interest debt first.
• Build a Safety Net: Ensure you have an **Emergency Fund** of at least three to six months' worth of living expenses saved in an easily accessible account.

Phase 2: Understand The Core Concepts

1. Risk vs. Return

Investments with the potential for high returns usually come with **higher risk** (meaning they can lose value). Safer investments offer greater assurance that you'll keep your money, but the rate of return may be lower.

2. Compound Interest

Compound interest means earning returns on your initial investment *plus* the returns you’ve already earned. The key to successful compounding is **time**—the longer you leave your money invested, the faster it grows.

3. Diversification

The principle of **"don't put all your eggs in one basket."** Diversification means spreading your money across different types of investments (e.g., local stocks, global property, bonds) to protect yourself if one sector performs poorly.

Phase 3: Investment Products Available

Phase 4: Getting Started

• Platforms: You can use online platforms (brokers) to buy and sell investments. Look for those with transparent, low fees. Platforms like **SatrixNOW** have no minimum investment amounts.
• Learn Before You Leap: Don't invest in anything you don't understand. Many platforms offer free educational resources.