I received a question regarding Satrix

Unfortunately this question was from anonymous and I have to provide my answer in public rather than in person. Perhaps it is a good thing because the debate about Index tracking funds like Satrix vs Actively managed unit trust funds is in the spotlight again.

When the market as a whole is down, the market as a whole will bounce backup as we saw after the crash of 2008. It is more cost effective to be in an index tracking fund like Satrix in those circumstances.

Currently the JSE is close to its level prior to the 2008 crash and not very cheap so an Active Fund Manager's fund like Coronation Top 20 can perform better than the Satrix fund because even though the market as a whole re-rated upwards, some quality shares might have stayed behind. A good fund manager will be able to identify such shares and outperform the Index.

If you have decided to go for Satrix anyway, I would rather invest in the "Smart" Satrix funds like Satrix Divi and Satrix Rafi because the companies in the portfolio are not included purely on size.

Hope this helps!

Gold!

Yes, gold is over $1 600. Do I have to buy now? Well, consider this:

• Most novice investors buy an investment when it has reached its peak, and sell when it is at its bottom. This is a better way of losing money than gambling!
• Gold is not even back to the inflation adjusted level it was at the all time high in 1980. So, if you bought at the top in 1980, you are still making a loss on your investment on an inflation adjusted basis after 31 years.

For the last 51 years gold was an investment where if you bought it at the right time, you made mega bucks, but if you bought it at the wrong time, you lost mega bucks. You also do not get any interest or dividends when buying gold.

So, if you feel lucky, buy gold when you get the urge. Just remember that you might have to wait for 30years to get your money back, without any return!

If you buy a portfolio of shares on the other hand, there are also times where you have to wait for 10 years to get capital growth on an inflation adjusted basis, but at least you receive some dividends while you wait.

In most instances, you can determine the fundamental value of a company. Gold is driven more by sentiment than anything else. After everything is said, understand that gold has had a fantastic run over the last 5 years on the back of financial uncertainties in the world. If you buy now, make sure you can wait for a very long time before you have to sell again.

Lastly, if you decide to go ahead and buy gold, rather buy the ETF on the JSE called Newgold, rather than coins or gold mining company shares.

Happy gambling!