Company shares? Collective investments? Property? or Crypto?
Which one is right for you?
You will always get different answers from different people when you start asking how much to invest and where. This is because the stock market or the investment world is not a one size fits all; different risks come with different rewards and setbacks.
“Cheap shares”, “Penny stocks”
Companies with a low share price are usually companies trading at a share price below R5. Let’s call them cheap or penny stocks. These companies may at times be classified under small and micro market caps.
Trading below a share price of R5, these companies tend to be associated with high volatility, which means that there is a greater risk of losing a portion of one's investment capital. This also means there is a possibility of the company delisting. In contrast, seeing high returns could also be a possible outcome as you are investing while the stock is at a low price and has the potential to grow exponentially.
Medium-priced and expensive shares.
Suppose higher risk and volatility are not for you. In that case, your options may be stocks within this price bracket, trading above R5. A company with a share price above R5 usually offers lower risk and lower reward. These companies are typically more established businesses that have been around for some time.
Medium and large market cap stocks usually come at a higher price, but you can still invest in them with any amount you've got. This is due to EasyEquities' unique offering which allows you to invest in a piece of a share, while still getting all the benefits of owning the whole share - including dividends and growth in value.
That being said, it's important to note that the nature of all stocks is that they move in value constantly, no matter what the share price is. This is why it's important to always have a long-term point of view when it comes to investing, so that you have the opportunity to ride out these market fluctuations over time.
An example of how differently priced shares have fluctuated, rewarding shareholders with different returns over 7 years:
Max RTN = Return on investment over 7 years | Daily move = Daily fluctuation (on 0% as market was closed)
You can read more on the companies here
Diversifying your portfolio
Diversifying your investment portfolio doesn’t have to be company shares only. Other diversifying options expose you to different asset classes.
Invest in multiple companies, or just an ETF or Unit trust?
ETFs and Unit Trusts
Instead of worrying about what right company to choose, these investment vehicles offer exposure to different asset classes such as stocks, commodities and bonds; under one investment. Focused on more than one asset, ETFs and Unit Trusts are known for protecting one against a loss from a single stock or company investment. They are made up of more than one stock or price-determining asset, making them less risky than single stocks.
If you are a property lover, R100 can make you a rental property shareholder without worrying about maintaining the property yourself.
EasyProperties offers the opportunity for ordinary citizens to be shareholders, including fractional entitlement that qualifies for dividend payouts.
All things Crypto?
For someone who loves Crypto but is not into the risk associated with single crypto assets and coins, EC10 automatically exposes you to the top 10 crypto assets. Like other collective investments, the assets tracked in the EC10 bundle change based on their market capitalization, so instead of investing in each one individually, you can invest in them all at once with EC10.
So depending on your risk appetite, time horizon and goals, R100 may bring greater returns but with greater risks, while lower risks can offer lower returns.
Source: EasyEquities. Returns are not guaranteed. Past performance is not indicative of future performance. Performance figures constitute actual performance between 6 May 2014 to 23 August 2021. EasyEquities does not act in its capacity as an FSP when allowing you to buy and sell crypto assets.