Investment questions from the (South African) internet [video] - Rands and Sense by 10X

Rands and Sense by 10X is a video platform dedicated to giving South Africans the information they need to feel confident in making informed decisions about their financial futures. Join Bianca Philogene, Portfolio Manager at 10X, as she tackles reading a fund fact sheet, Kruger rands as an investment, alternative investments like impact investing, and a whole lot more. We've summarised the main talking points below as well.

• 00:18 Reading a fund fact sheet
• 01:40 How to invest with a longer time horizon in mind
• 03:00 How to deal with friends and family making bad financial decisions
• 03:48 Are Kruger rands a good investment?
• 04:38 With R10k per month to invest, how to get the highest return after 5 years?
• 05:30 Alternative investments (e.g. impact investing) in South Africa
• 07:01 Index funds vs actively managed funds - which performs better?

Understanding Fund Fact Sheets

Some of the key elements to look for when reading a fund fact sheet:

• Information block (risk profile, time horizon): Risk profile is often dependent on time horizon; if you are investing for longer, you can afford to be in a higher risk portfolio, as you have longer to wait out potential market downturns.
• Costs: One of the biggest determinants of investment success. Did you know that a 1% difference in costs can mean up to 30% less money in retirement?
• Performance history: How the fund has performed over time, relative to the appropriate market benchmarks.
• Asset allocation: What asset mix (e.g. equities, bonds, cash, property) makes up the fund.

As the graph below shows, costs can have a huge impact on the return on your investments, especially those that relate to the long-term, such as your retirement investments. If you feel like your current investments could do better for you, get a free cost comparison or speak to one of our highly-experienced consultants.

Don't put all of your eggs in one basket: The power of diversification

Diversifying your investments is a good idea, as it reduces the risk associated with any one investment suddenly not performing. Also, diversification has the following benefits:

• More stable returns
• Protection against unexpected market movements (e.g. the effect of Covid-19)
• Emotional stability in investing - you won't be sweating about any particular stock!

Diversification provides a buffer against market volatility and helps maintain a steady course towards your financial goals. It's also one of 10X's core investment strategies. Check out our range of diversified funds here.

When friends and family make poor financial decisions

• Educate with simple resources
• Offer encouraging suggestions
• Know when to step back

Watching friends or loved ones make poor financial decisions can be an emotional experience, but there's only so much you can do. Approach the situation with care, try and provide helpful resources and encouragement, but remember that ultimately, you can't control their choices.

Are Kruger rands a good investment?

• Gold itself can be difficult to access, and could be expensive
• You need to protect a physical asset!
• You can get exposure to gold without owning it by buying a gold ETF on the JSE

While Kruger rands offer a tangible way to invest in gold, before looking at alternative investments like Kruger rands, ensure your investment foundation is solid, including retirement savings and an emergency fund.

How to get the most out of a shorter-term investment: balancing risk and return

Factors to consider:

• Investment horizon
• Risk tolerance
• Diversification needs

Looking for higher returns over the short-term often comes with increased risk. For a five-year investment horizon, a balanced fund approach might be more suitable than an all-equity portfolio, offering a mix of growth potential and stability. If you want to find our more about what kind of investment might be suitable for you, chat to one of our experienced investment consultants.

Alternative investments in South Africa

Alternative investments provide an interesting avenue for investors looking for a place to make discetionary investments, but they should be considered after a solid investment base consisting of an emergency fund, retirement investments and more traditional vehicles such as a Tax-Free Savings Account. Investors need to consider:

• Initial investment requirements: can be higher than traditional vehicles
• Liquidity concerns: It's often difficult to get money out of an alternative investment
• Fee structures
• Whether they have the required expertise

Active vs. Passive Investing: What the global data says

• Globally, on the whole, passive funds outperform active managers
• Performance varies across asset classes and time frames
• Consider index funds for long-term equity exposure

Passive index funds have shown consistent outperformance across various markets. For long-term equity investments, low-cost index funds merit serious consideration. Check out 10X's range of index tracking funds here.