Investment Opportunities Flashcards
Investment definition
When money is saved in order to make it grow
Major Asset Classes and Risk (4)
- Cash: Low risk
- Property: Moderate to High risk
- Bonds: Moderate risk
- Equity: High risk
Diversification definition
Spreading the investment risk between various asset classes
Risk Profiling (3)
- Investment timeframe
- Financial position
- Risk and return considerations
Investment Strategies (4)
- Conservative Investment Strategy
- Defensive Investment Strategy
- Balanced Investment Strategy
- Growth Investment Strategy
Conservative Investment Strategy
High income, maintained capital investment, low risk
Defensive Investment Strategy
Stable income, growth in capital, low risk
Balanced Investment Strategy
Income and growth, moderate risk over a medium time
Growth Investment Strategy
High risk, long-term capital growth
Retirement Annuities
Monthly premium in return for a lump sum and monthly pension
Pension Fund
Retirement savings plan contributed to by employer and employee
Endowments
A savings plan with a monthly amount paid, for a time period, and then paid out after
Bull/bear market
Bulls are optimistic investors who think share prices are going to go up.
Bears believe share prices will go down
Preference shares
Holders can participate in the profits of the company before dividends are declared
Spread
Difference between asking price and bid price
Market capitalisation
Share price of a company multiplied by the number of shares in issue
Rights offer
Offer to existing shareholder to have first option to buy new shares
Blue-chip shares
Shares in the most solid companies in the market
Green-chip shares
Company meets environmental issues requirements
Black-chip shares
If company is BEE compliant
Dividends
The portion of the companies profit that goes to shareholders
Strategies to Limit Losses (2)
- Stop-loss Strategy: A specific cap is set and shares are sold when they hit the cap
- Rebalancing: Adjusting portfolio so half is invested in equities
Unit Trust
Group of investors who ‘pool their capital’ to invest in financial markets
Methods of Investment (8)
- Retirement anuities/Pension fund
- Endowments
- The stock market
- Unit Trusts
- Cash
- Collectibles
- Off-shore investments
- Debentures
Debentures
Loan to a company
Capital Gains Tax
Comes in when an asset is disposed of. Either make a loss or a gain, is the difference between buying and selling
