Watches can now double as fitness trackers… and if you ask anyone who has one – they are considerably more aware of their activity. Sure – they may not actually exercise more, but with an easier way to monitor how active they are, they are more likely to change any behaviours that they are unhappy with. Building on this principle comes a brand new wearable…

A hip new bracelet by Sanlam called the MNA NAM bracelet has been marketed as a fashion accessory that helps the wearer to remain conscious about their spending habits. There is a QR code embedded in the bracelet design that allows you to scan and save, instead of scan and spend, as is often our forte in today’s technologically advanced culture of consumerism.

The bracelet is linked to a WeChat wallet, powered by Standard Bank, and you can transfer any amount of money from your bank account to this wallet, which helps you to save for short-term goals with the ease of simply scanning your wrist. Saving has never looked this good, and the more you wear the bracelet, the more valuable it becomes. It is also linked to a competition where you stand the chance to win a custom-style piece by Ngxokolo by scanning and saving.

A recent trial of the bracelet was recently analysed on Maya on Money and makes an interesting comparison about the bracelet with a FitBit. Just like a FitBit tracks your daily steps and heightens your awareness to take a few extra steps and exercise a bit more, this new bracelet could act as a constant reminder of your savings goals.

The bracelet doubles up on the goods — not only is it a stylish accessory that has been designed by South African fashion designer, Laduma Ngxokolo, but it also acts as a reminder to not make any impulsive purchases and to become more mindful about spending on non-essential items.

Its psychological power ultimately still lies with the owner of the bracelet but, according to the article, “it is a clever concept to use designer fashion to stop impulsive fashion spending”, and raises the question of whether tech wearables could change our money habits.

Maybe tech wearables provide just the incentive and reminder that people need to contribute to helping them achieve financial goals and advance in their understanding of their financial health. Could fashion help the future of finance?

It’s important when buying an investment property to do your homework so that your property becomes an asset rather than a liability. While astute investors can make good money, there are significant holding costs and initial fees, and a property is not as liquid as other investments.

An interesting article in City Press reviews the considerations that savvy investors should take into account.

It is important to be aware that even in high growth areas like the Western Cape, property does not always outperform shares and, over the past decade, residential property has actually underperformed the JSE. Contrary to what some people believe, buying an investment property is not necessarily less risky than investing in the stock market.

If you had invested 10 years ago, an investment linked to the average return of the JSE, with dividends re-invested, would likely be worth more than an investment property and the holding costs would have been significantly lower. However, people are still keen to invest in property as there is there is the ability to leverage a property, and a steady rental income can significantly boost your overall return.

The good news for property investors is that there are signs of improvement in rental yields in South Africa. According to FNB property economist John Loos, relative rental yields will start to rise as property prices start to weaken this year, which means that now could be a good time to consider buying an investment property. Loos expects average gross yields to gradually increase to 9.3% during 2017. However, it’s important to be realistic about annual rental increases as, according to the Tenant Profile Networks (TPN), escalations are only currently at around 5% per annum, but running expenses – such as levies and rates – may be increasing at a faster rate.

If you are considering buying an investment property, some experts have some important advice. Tommy Nel, Head of Credit at FNB Home Loans, warns against trying to time the market. Don’t get carried away with get-rich-quick tips and big talk, and don’t just view property as a simple way to make a fast buck. He believes that if you have at least a five-year time horizon and don’t buy in a property bubble or in a degenerating area, then property can deliver a reasonable return. However, it does also require achieving good occupancy levels.

Andrew Van der Hoven, Head of Home Loans at Standard Bank, emphasises that it is important to fully understand your financial position before making any decisions, as there are costs involved — such as insurance, garden services, renovations, and rates and taxes — that easily add up. He advises that you should have at least three to six months’ worth of payments in reserve to cover any costs if a tenant defaults on rent or if you can’t find occupancy. Before you make any purchases you should do your research about the property and be sure to have the house examined for any defects, such as electrical, structural or plumbing issues.

You should also do significant research on the area and take the time to find out the average property value and the rental demand in the neighbourhood. If it is close to schools, universities or offices, then you may be able to find tenants easier. It is also important to do your research on tenants, and review the TPN Credit Bureau, which has a database that provides information on tenants’ payment behaviour and whether they can afford the rental.
Before you buy a property, be sure to do all the calculations to work out whether the rental you will receive, minus the costs and maintenance, will make it a viable investment or not. For a property to be a good investment, it is important that your rental yield is sufficient to cover your costs, and to take into consideration that there is the risk of mortgage interest rates increasing.

If you want to buy an investment property, you may need to be prepared to put down quite a big deposit and be able to fund any monthly mortgage installments from your salary, as banks cannot consider any potential income streams from the property that do not already exist. Ewald Kellerman, Chief Risk Officer at Absa Retail, emphasises that it is also important to keep in mind that the income you receive from a rental property is taxable. “Interest on a bond and some maintenance costs are often allowed to be deducted as an expense, which can reduce the taxable amount considerably. Certain capital gains exemptions also only apply to your primary residential property, but not to an investment property. Make sure that you take this into account when calculating total return, and consult a tax practitioner to understand the full tax implications.”

If you have both a residential home and an investment property, you would, therefore, want the bulk of the mortgage to be on the investment property, in order to benefit from tax deductions.

Buying an investment property can prove a very fruitful exercise if you have critically analysed certain factors and considerations. However, it is not always a successful short-term proposition, depending on your financial circumstances. There are risks and running costs involved, and it is important to not rush into any decisions blindly.

Do not hesitate to arrange a meeting if you are considering investing in a property, so that you can be sure you understand the costs, potential returns and how they fit in with your current financial situation.

National Wills Week is from 11th to 15th September 2017 and is a time when participating attorneys in South Africa will draft new, basic wills free of charge. To make the most of this time of year, simply contact me and let’s help you sort out your will!

However, if your circumstances are not simple enough to take advantage of a free basic will, it’s still worth making the effort at this time of year to draw up a will that suits your circumstances. You never know what the future holds, so it’s best to face this reality sooner rather than later.

HOW A WILL CAN BENEFIT YOUR LEGACY
In a recent article published on Wills Worldwide by Cindy Leicester, the author highlights the importance of having a will to ensure that your assets are disposed of after your death in accordance with your wishes. This is called ‘freedom of testation’. If you pass without leaving a valid will, your assets will be distributed according to the provisions of the Intestate Succession Act, which are generally fair and ensure that your possessions are transferred to your spouse and children.

However, you should be aware that your assets may not be left to the person of your choice, there can be unnecessary costs involved, and it can take a long time for an executor to be appointed. If there are no clear instructions on how to distribute your assets, this can result in additional unhappiness or even conflict among your family members, at an already difficult time.

DIY OR USE A PRO?
Drafting a will on your own or by using a web-sourced template can sometimes be sufficient, but these will not be applicable if you are residing outside of your country or origin, if you have young children, if you have assets in different countries, if you are part of a blended family, or if you are likely to inherit money yourself. These are just a few of the factors that would not be covered by a DIY basic will.

Attorneys are qualified law professionals who can establish your needs and offer professional advice on any problems that may arise, before forming your estate plan and drafting your will. They should have the necessary legal knowledge and experience to ensure that your will not only complies with your wishes, but is also valid and meets the requirements of the law.

If you are unsure whether an attorney is in good standing, it’s worth contacting the relevant law society or asking for advice. Once you have chosen an attorney with which you feel secure, you can arrange a one-to-one meeting in which you will be required to bring your passport or identity document to prevent fraud.

If you wish to arrange a meeting to discuss tax and insurance before you sign your will, do not hesitate to get in touch. A bit of foresight, preparation and research is key to ensuring that all your affairs will be dealt with in the best way possible for your loved ones after you’re gone.

The temperature is starting to climb and it’s almost safe to leave your scarf at home. Spring is in the air and, as flowers bloom and citizens emerge from hibernation, it’s the perfect time to start afresh with some spring cleaning. Once you’re done dusting the shelves, take a look at your finances and see where they could do with a polish too.

This summary of a five-step guide that was published on Clark will help you to clean your financial cobwebs to start the spring season with vigour.

1. Evaluate your financial situation
First things first — you can’t make any changes until you know what you’re dealing with. Start with the big picture by looking at your assets and liabilities, then work your way down to the nitty gritty by reviewing your monthly expenses and budget. Do you manage to keep to your budget every month or is it unrealistic? Your budget should be life-centered – allowing space and provision for the priorities that you have set.

Ask these kinds of questions for all your money matters to work out if your financial processes are working for you or not. A healthy financial situation is simply one that fits your needs and goals — if it’s not working for you, fix it.

It’s also worth taking a few minutes to review your bank statements to make sure everything is in order and there is no fraudulent activity, overdraft fees, or charges for services you don’t use anymore.

2. Cut any unnecessary costs
Lifestyle inflation is hard to avoid and it’s easy to get sucked into the trap of spending way more than we need to. This spring, take the time to review whether anything unnecessary has creeped into your budget and become more of a burden than a bonus. Decide what you really need to live a happy life within your means, and cut back on anything that isn’t helping you to lead a carefree existence. If you can’t cut some costs completely, see if you can at least reduce them a bit.

Also review your debt payments to ensure you’re not paying more than you have to. If you have a credit card, for example, try to look for a 0% balance transfer card. Then try to keep paying the same amount on the card each month so that you can clear your debt quicker.

3. Check your investments and insurance
As life changes, so do our needs with regards to investment and insurance. Make sure that you’re aware of what your insurance covers and that everything is up-to-date if you’ve had any major changes recently. Also make sure that your beneficiaries are listed correctly and that everything is clear in the event of an emergency.

Do similar checks for any savings plans. Investigate any contributions, asset allocations or fees that are unclear in your investment portfolio, and arrange a meeting if you’re unsure as to how anything works. Ensure that everything is still in line with your risk appetite, and don’t hesitate to ask questions if concerned.

If you have time, it’s also worth getting a credit report to check that everything is correct, and consider investing your tax refund if you were given one so that you won’t be tempted to spend it.

4. Organise any clutter
Are you not quite sure where all your tax returns are hiding? Can you dispute an incorrect charge by locating your statements at the click of a finger? If not, then it’s time to keep track about all aspects of your financial situation for ease and efficiency.

A little organisation goes a long way, and this could be as simple as dedicating a filing cabinet to all your paperwork, or creating folders on a computer or in a cloud for different aspects of your financial regime. It doesn’t have to be fancy, it just has to work for you; and it will save you a lot of hassle in the long run.

5. Reconnect with your goals
Financial goals and priorities can shift for reasons in and out of our control, so it’s important to check in with yourself to see if you’re on track to to achieving what’s important to you.

If you’re way off path, don’t worry — just review your goals and make sure that they’re SMART (specific, measurable, actionable, realistic and timely). Rethink your priorities and reconsider your plan of action if need be.

Make a habit of checking in with yourself so that you can achieve your financial goals and make them a reality. Put a spring in your step and get cleaning in any financial nook or cranny that you’ve been leaving to gather dust for too long.

An article published on Maya on Money about the 10 key themes investors must not ignore in 2017 inspired thought about a word that gets used a lot in the world of investments — commodities.

The key takeaway from this should be that commodities traditionally move in opposition to stocks, so they can be a good way to diversify an investment portfolio — either for the long-term, or during unusually volatile periods.

Let’s take this opportunity to review what a commodity is and how they affect investments.

What is a commodity?
A commodity is a marketable good or service that is produced to meet a demand. A commodity is essentially uniform across producers, and this uniformity is referred to as ‘fungibility’. For example, oil would be considered a commodity, but Levi’s jeans would not be, as consumers would consider them to be different from jeans sold by other companies. When traded on an exchange, a commodity must meet specific standards, which is known as a basis grade.

A commodity market is a virtual or physical marketplace that is dedicated to the buying, selling and trading of raw or primary products. There are currently about 50 major commodity markets in the world that facilitate trade in approximately 100 primary commodities.

Types of commodities
Traditional commodities fall into two main categories — hard and soft commodities.
The term ‘hard commodities’ tends to refer to natural resources, such as metals (eg. gold, silver and copper) and energy (eg. crude oil and natural gas). While ‘soft commodities’ comprises of livestock (eg. cattle and sheep) and agricultural products (eg. wheat, rice, sugar and cotton).

Over the past few years, however, the definition of ‘commodities’ has expanded to also include financial products, such as foreign currencies and indexes. Technological advances have also led to new types of commodities, such as mobile phone minutes and bandwidth, being exchanged.

Why are commodities of interest to investors?
Commodities can have a big effect on investment portfolios, which is why “continued support for commodities” was listed in the article on Maya on Money as a trend not to be ignored. The article highlighted that commodities “have been trending higher for a year now. The demand side has been strong, which has been driven by China over the past three quarters. A supply contraction and potential consolidation, which is not yet materialised, will be incremental key drivers.”

Basic economic principles of supply and demand tend to drive commodities markets, so lower supply increases demand, which equals higher prices (and vice versa). For example, a major disruption, such as a health scare among cattle, might lead to a spike in the generally stable demand for livestock.

Slumping commodity prices can also provide opportunities for investors. However, investing in commodities can easily become risky because they can be affected by eventualities that are difficult to predict, such as weather patterns, epidemics, natural disasters, and even politics. Donald Trump’s proposed policies, for example, have kept commodity traders and producers on high alert recently. As a result, it is important to carefully consider your risk appetite and the length of time you have until you wish to achieve your goals, as this will affect the recommended allocation of your portfolio to commodities.

As with all parts of your portfolio, it is important to ensure you have a solid understanding of what you have allocated and why. Don’t hesitate to arrange a meeting to discuss commodities further, and don’t be afraid to ask questions if you’re ever unsure of any terminology.

When you were younger, did you have any idea what you wanted to do when you grew up?

Perhaps you now have children who at some point will need to consider their options and will need guidance, or perhaps you are at a stage in your life when you’re considering a change in career yourself. You may simply be interested in developing your understanding of which way the world is heading.

Whatever your incentive, an article that we found in a recent issue of HSBC’s magazine, Liquid, gives a good insight into five growing industries that could provide a successful career.

The author of the article emphasises how it’s important to focus on the big picture when choosing a degree, as any time spent at university will pave the path of learning – both socially and academically. Most business leaders are interested in well-rounded graduates who are adaptive to change and devoted to continuous development.

It is, therefore, important for anyone looking to continue with higher education to explore beyond the boundaries of their course curriculum and develop a range of skills that are of interest.

Here is a brief summary of the five fields that HSBC consider to have the most potential for growth in the future.

1. Alternative energy
Concerns about climate change and our carbon footprint have instigated greater research into alternative energy, which has led to notable developments in hydrogen power, wind power and solar power. Solar energy has become more efficient and less expensive in some parts of the world over the past five years, making solar power a US$3-billion industry. As these new technologies become more widely accepted, these industries will potentially create more careers for scientists, mechanics and managers.

2. Financial Services
There are several careers that deal with the management of finances, besides the traditional banking roles. Accountants are still in high demand, as are financial planners and analysts, due to more and more people needing help with their retirement planning and personal finances in unstable climates.

3. Information Technology
Our reliance on computers and mobile devices is greater than ever, and the world of technology continues to be one of the fastest growing industries in the USA, with unemployment at a steady low of 2.6% in this sector. The five most valuable companies in the world are all technology companies, so IT skills are incredibly valuable and can lead to careers in network and data analysis, or software development.

4. Healthcare
In addition to doctors and nurses, the healthcare industry relies on a diverse array of other professions, such as home health aides, pharmacists and physical therapists. With an increasing aging population, healthcare workers are in high demand, and “data from the US Labor Department indicates that 4 millions jobs will be added to this sector by 2018” to fill in the gaps in this industry.

5. Agriculture
Interestingly, agriculture is currently the fastest growing course at UK universities. This is arguably because it is a very diverse industry, which is not only for farmers. Graduates can go on to offer consulting services, develop agricultural technology, and work in research. The strong business focus of the subject teaches students how to forecast cash flows, put together business plans, and calculate margins, making them highly employable to food retailers and suppliers.

In a world filled with more course and career options than ever, it is advisable to start planning for the future to ensure that goals can become a reality. Annual undergraduate fees can be very expensive in countries like the UK, USA and Australia, so if one of your dependents wishes to study overseas, it is important to start saving sooner rather than later, and review your options to maximise your financial capacities.

Before we chat about the current asset allocation environment, let’s quickly roughly describe the term for those of us who may be unsure of what this means. Asset allocations broadly refer to the actual investment options – ie. when you invest money, it needs to go somewhere, and some of these options are called asset allocations.

Since South Africa was relegated to ‘junk status’ by two credit ratings agencies, investors have witnessed some currency depreciation, a shaken local equity market and a jump in bond yields. However, the aftermath hasn’t been quite as apocalyptic as some may have feared. This is mainly because the downgrades didn’t come as a huge shock, and many people had followed advice to prepare in advance and structure their portfolios in a way that would handle an uncertain investment environment.

Negative investor sentiment is still a major issue in South Africa, but fortunately, most people’s long-term investment strategies remain relatively unscathed. An article by Moneyweb summarises the current situation well, and provides some interesting insight to asset allocations.

Here’s a brief overview of some interesting considerations:

1. Bonds
Since the downgrades, bond yields have seen a significant leap, but some investors see this as market overreaction and consider it as an opportunity to increase exposure to this asset class.

It may seem contradictory to buy bonds at a time when many people are concerned about the government’s ability to repay capital and service its debt, but some investors believe that the potential yield is still worth the risk.

2. Geography
Post-downgrade, the South African Rand has come under pressure, but many investors believe that the currency is still strong enough to justify moving some funds offshore. If you have limited international exposure, the window of opportunity is arguably still open to add to your offshore assets.

3. Equity
Share prices of companies that don’t have a significant offshore component to their earnings, such as banks and retailers, have come under severe pressure in South Africa. It’s, therefore, worth considering some exposure in your local equity portfolio to ‘safe’ Rand hedges that earn most of their income outside of South Africa.

Since the credit downgrades, pockets of potential value have emerged in the South African market. It is challenging to get the timing right on these cheap local shares but they may provide nice rewards in the long-term if you do.

In our post-downgrade society, it is important to not have emotional reactions to crises. Rather, you should maintain an active interest in your portfolio and stay true to your investment philosophy once you have ascertained your risk appetite and financial goals. Don’t hesitate to arrange a meeting to discuss your asset allocations and investment opportunities in this post-downgrade environment.

Dealing with money matters can feel like negotiating a minefield for many couples, which is highlighted in this article by Maya on Money.

Money has been cited to be the biggest reason for divorce, and differing attitudes towards money in any relationship can cause friction. So let’s take a look at some basic ‘money personalities’ and you can decide with which you most identify. This may not only help you to manage your relationships, but also how to go about managing your wealth creation.

1. The Spendthrift
A spendthrift tends to be extravagant and spontaneous with regards to money matters. However, sometimes they can be irresponsible and need protection from making financial mistakes and getting into debt that they can’t afford.

2. The Saver
Someone who saves may have quite modest tastes and needs, and long-term they may well reap the rewards of their cautious approach. However, their financial prudence and love for budgeting could be a turn-off for someone who is not that way inclined.

3. The Cinderella
Maya Fisher-French refers to the ‘Cinderella Complex’ in her article when she considers a woman’s unconscious (or conscious) desire to be cared for. Some people are simply looking for a partner who can spoil them, which Fisher-French refers to as a Blesser.

4. The Financially Independent
Other people make it their main focus to become financially independent so that they can manage their money and responsibilities on their own. They pride themselves on working hard to become financially organised and not needing to rely on anyone else. This type of person may fret about being pulled down by someone who is less financially astute.

5. The Power Hungry
Power plays can arise if someone uses money to wield power over their partner. The adage, “he who holds the gold, makes the rules,” may be true in some relationships – especially if there is a big difference in earnings. Money can create a shift in power that can be easily abused if both parties are not careful.

According to the article, sometimes “different money personalities can be compatible” as a balance can be achieved so long as each partner recognises the strengths they are bringing to the relationship. For example, a Saver can help a Spendthrift to avoid some financial miscalculations, while a Spendthrift can teach a Saver to loosen up and enjoy splashing a bit of cash sometimes. Likewise, someone who enjoys spending money on their partner could be compatible with someone who enjoys money being spent on them.

However, at other times, opposing attitudes can create contempt or power struggles. According to the article, difficulties sometimes arise when it is the woman who is the main breadwinner, as some men find this emasculating. This is a challenge that is increasingly being faced by high earning women. When the shoe is on the other foot, however, many women do not mind having a strong, financially successful partner.

The key is knowing what type of money personality you and your partner have, and to find synergy in your relationships. It’s not necessarily a question of having the same attitude and approach to money issues, but rather finding compatibility and compromise.

We live in uncertain times, so it is natural for many parents to want their children to have financial security, without money worries on top of everything else. Many parents also wish to build their wealth to such an extent that it will be passed down for generations to come, and a recent article published in Maya on Money examines the use of trusts to create intergenerational wealth and ensure a financial legacy.

No matter how much money you wish to leave for your offspring, here are eight basic points to consider if you’re thinking about setting up a trust.

1. Due to the high investment tax paid by trusts, they are only efficient if you definitely intend to leave the assets in the trust for future generations. If you plan to sell the assets during your own lifetime, then setting up a trust isn’t necessarily the best move for you.
2. There is no minimum amount to set up a trust, but it needs to be registered at the Masters’ Office in the region where the majority of assets will be held.
3. A trust can be set up on death, so long as you make this provision in your will.
4. It is only possible to donate ZAR100,000 a year to a trust without incurring donations tax.
5. It is important to be adequately insured, and the proceeds of a life insurance policy can be paid to the Trust.
6. It is also important to note that a South African Trust cannot hold offshore assets.
7. A trust cannot own a tax-free savings account so these would have to remain separate to the trust.
8. A trust must have an independent trustee – such as a trust company, auditor or lawyer – to deal with legal requirements and administration. This comes with additional costs to bear in mind.

A new section of the Taxation Laws Amendment Act, 2016 came into effect in March 2017, with the intention of preventing people from using trusts to avoid or reduce donations tax and estate duty.

In an article published on MoneyWeb, a certified financial planner clearly emphasises that “if a trust was created simply to save taxes, it may not serve that purpose any longer. Depending on the reasons for establishing a trust and the value it offers, it may be worthwhile considering more cost- and tax-effective alternatives to hold your shares or any other asset(s) in a trust.”

It is important to understand the consequences of these tax changes if you have an existing trust, and to be aware of the implications of new trust structures if you’re considering whether it is the appropriate choice for you.

Do you nod along blankly when someone talks about unit trusts, or do your eyes glaze when you hear the word ‘annuity’? Do you wish investment terms weren’t so complicated or full of abbreviations?

It’s easy to get confounded by the use of financial jargon if you haven’t been trained in the financial services industry or been exposed to the world of investments before. But don’t let that put you off.

It’s just a question of learning the language, as you would try to speak German if you went to Berlin. No one is born with an innate knowledge of how to order in a Bavarian restaurant if you’re not from Germany; first you have to learn the vocabulary and then you need to experience it firsthand to cement your understanding.

So, to simplify matters and avoid any confusion, here is a quick explanation of five key terms that you’ll hear crop up again and again if you take an interest in your wealth management.

1. Dividend
A dividend is a portion of a company’s earnings that are distributed to shareholders. The dividends can take various forms but is most commonly a distribution in cash or as a portion of a share of the company. Furthermore, companies have their own policies as to when and how much of earnings are distributed in the form of dividends.

2. Bonds
There are many types of bonds, but in simple terms, a bond is a way of borrowing a sum of money – to be repaid by a fixed date in the future, with interest in the meantime. The buyers of bonds are essentially lenders, which means that if you buy a government savings bond, you become a lender to the federal government.

The interest rate received is often referred to as the bond’s yield, and is the compensation that the investor receives for ‘lending’ their hard-earned money. According to an article published by Investopedia, “bonds are often referred to as fixed-income securities because the borrower can anticipate the exact amount of cash they will have received if a bond is held until maturity.“

3. Annuity
An annuity is a type of investment account that uses retirement savings to generate a regular income stream after you retire.

There are two types of annuities – fixed and variable.

The key feature of a fixed annuity is that you enter into a contract with an insurer who subsequently guarantees a set income for life. This income is dependent on a number of factors such as your age, gender or whether the payment will be level or increasing. The annuity payment is guaranteed by the insurance company, so it is a good option for those who are risk averse (don’t like risk).

With a variable annuity, the risk of the investment is transferred to the annuitant in that his capital and subsequent annuity is dependent on market performance.

4. Unit Trusts (called Mutual Funds in the US and UK)
According to an article published by The Balance, a “mutual fund (unit trust) is a pooled portfolio. Investors buy shares or units in a trust and the money is invested by a professional portfolio manager” who invests the capital in an attempt to produce an income and capital gains (profit) for the investors. The pool of funds is collected from many investors who wish to invest in stocks, bonds and similar assets.

One of the main advantages of unit trusts is that it offers investment vehicles where small investors have access to diversified, professionally managed portfolios in which each shareholder participates (wins or loses) proportionally in the gain or loss of the fund.

5. Asset Allocation
In order to invest your money, you essentially need to give it to someone who will in theory use it to make a profit by working with your assets (invested money), and you then enjoy the profits from that. If they make a loss, you make a loss too. That’s the risk you take.

Asset allocation is therefore the process of deciding how much money, based on your appetite for risk and objectives, is invested in the different available asset classes – such as equities (stocks), real estate (land and property) or commodities (eg. gold and silver).

These are just five key terms in a lengthy glossary, but this summary serves to emphasise that if you’re ever unsure of anything, don’t continue with just a vague understanding. There’s nothing to be embarrassed about, so please do not hesitate to ask for clarification to ensure that you completely understand any terminology used and how it applies to your financial situation.