Must I invest in SATRIX?

One upon a time, in a galaxy far, far away, we could invest in Shares or an Endowment Policy, that was about it!

If you had a lot of money you invested in shares and if you had a little and the word "shares" scared you, you invested in a policy. Now the funny thing is that buying a share and buying a policy can be exactly the same thing and if you are afraid of shares, you should be more afraid of a policy. Why, because some policies are only a bunch of shares tied together and sold as a bundle called a policy. So as a matter of fact, you should always specify the type of policy you want to invest in.

Fortunately things have changed and computer systems enabled the investment product providers to offer us a huge choice of different ways to invest. Unfortunately with the increase in choice came the increase in confusion regarding what to choose!

Now one of the best ways to invest in South African shares is with a relatively new product called SATRIX.

Why do I like SATRIX investments?
Because in all investments you get risk you can manage, and risk you can't. With SATRIX you can decrease the manageable risk because of the following:

• The product "SATRIX" is regulated. There is a watchdog to ensure no funny stuff happens.
• Via SATRIX you get a little bit of a lot of shares which decreases your risk. (diversification)
• The investment can be sold easily. (liquid)
• The cost to invest is low.

You can however not get away from the fact that it is an investment in shares, which can make or lose money with no guarantees!

Now I am not going to give you all the detail about the SATRIX investment plan, you can and should go to the website: http://www.satrix.co.za/ and read it yourself. What I can mention is that the cost to buy is 0.10% of the investment made compared with up to 1.5% if you should trade small amounts of shares via a Stockbroker, and when you sell, the cost is 0.10% again. Other than that you get charges about 0.80% per year for management fees which is not more than any other equity Unit Trust.

How does it work? Very simply it is a group of shares that is listed on the South African Stock Exchange, packaged together. So when you buy the SATRIX share, you actually get all the shares in the package and not only one share.

You get different packages of SATRIX as well. The ones I would consider are the following:

SATRIX RAFI : This is a package of 30 or 40 shares that passed certain criteria which distinguishes them from the other few hundred listed shares because of their current valuation and potential. The RAFI selection process has proved to be very successful in the USA for many years.

SATRIX DIVI : This is 30 or 40 of the shares that pay the highest dividends. Now, this is cool because not only do you get the potential growth in the price of the share, but you also get the almost tax free income during the year which you can re-invest or use.

The oldest SATRIX fund is called the SATRIX 40. If you invest in this one you invest in the biggest 40 companies in South Africa. I do not believe that bigger is always better. You might get a nice fast run on them but that doesn't mean that they will provide the best returns over time.

To sum up: Instead of going to a stockbroker or insurance company to buy shares or Unit Trusts or even a equity policy, just go online, complete the SATRIX Investment Plan, print, sign and mail or fax to SATRIX and you will have one of the cheapest, best regulated and diversified equity investments in South Africa.

You need only R300 pm or R1000 lump sum to open an account!

So if I had R20 000 now to invest for at least 5 years or longer. I would invest R4000 pm for the next 5 months via debit order into the Satrix RAFI.

Feel free to use the comment button to send me questions or remarks.