How To Teach Your Child About Investing

 

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How To Teach Your Child About Investing
By Andrew Beattie

Have you taught your children about investing? As they become aware of money and other financial concepts, it is vital that you arm them with investment tools that can last a lifetime.
Children mature at different rates so it may take time before they’re ready to tackle concepts like portfolio creation and asset allocation. However, the basics of investing can be taught quite young. Before your kids start cruising the Internet to check company profiles, you should explain risk and reward. Risk is the possibility that an investment loses some or all of its value while reward is the gain that an investment earns over time.
Let’s sketch a brief picture of two common investments: debt securities and stocks.

Stocks & Debt Securities
Stocks are variable risk, variable return investments. On the whole, they are categorized as high risk and high return. Make it clear that many risks involved in stocks can’t be predicted because corporate records can be tampered with or CEOs can lie but, despite those outliers, the stock market has risen consistently in the last hundred years, offering healthy returns.
A bond is a low-risk, low-return investment. Typically, bonds pay a small amount over the prime interest rate and are backed by stable institutions (usually banks or governments). You can buy lower rated bonds that offer better returns but they can default and you can’t necessarily count on getting the income when expected. Given the complexity of these instruments, you may wish to start your child with stocks and explain that bonds become more important later in life.

Keeping Your Child’s Attention
Show your child what stocks you own. Interesting companies might get their attention – plane manufacturers like Boeing, sports gear specialists like Nike, technology companies like Apple – look at the company’s investor relations page with your child to learn how much they earned, what they make and how many people work for them. Then ask your child what company he or she would like to buy. Kids have favorites even if they are not aware of them. For example, Facebook and Disney are popular with most children.
Once you have introduced your kids to basic concepts, sit down and let them select a company. If you have the money, buy the stock and look at it at least once a week to show how investments can rise or fall. If you don’t have the money, make an model online portfolio and track stocks for fun.
When your child is older, you can provide a more in-depth explanation of stocks and other investments. Eventually, you want to let your children buy their own stocks. Your child may have enough cash diligently saved up in a savings account by the time he or she is interested in investing. Don’t put it all into a bond or the stock market, but invest a third in each and keep a third in savings. This will allow your child to compare the returns of different types of investments.
You have two options if your child doesn’t have money to participate in the learning process. You can use your own cash to open a small brokerage account for your child to make investments or build a model portfolio of stocks that your child wants to buy some day. In the latter case, you will need to find innovative ways to maintain their interest.
Allow your child to make real decisions and take real risks. Money may be lost but the purpose of the exercise is to familiarize them with investing and part of this process is learning that investments have advantages and disadvantages. Whatever the outcome, the experience of gaining and losing money will be valuable.

The Bottom Line
If you pick stocks with your children when they are young, they will get a sense of the financial market’s up-and-down cycles. This understanding will prepare them for dealing with market fluctuations and making informed decisions when they grow up.

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Read more: How To Teach Your Child About Investing https://www.investopedia.com/articles/pf/07/childinvestor.asp#ixzz5Jd43H1jN

Struggle to secure home loans

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Fin 24 -Younger buyers are starting to struggle to get on to the first rung of the property ladder, said an industry analyst.

According to BetterLife home loans statistics, over the past 12 months, home loans granted for between R500 000 and R1m, declined from 40.2% to 38.6%.

However, this drop in percentage of home loans to younger people is not due to a decline in demand, said BetterLife Home Loans CEO Shaun Rademeyer.

“[T]he percentage of home loan applications being made by first-time buyers has actually increased over the past 12 months from 46.1% to 47.5%.

“But the banks are becoming increasingly cautious when it comes to approving new loans and are applying very strict credit qualification criteria,” said Rademeyer.

Statistics show banks currently decline almost two-thirds (66%) of home loan applications.

BetterLife’s data also showed that on average buyers over-50 are currently paying about twice as much for their homes, compared to buyers under-30. But over-50’s only pay about 30% more on their monthly bond repayments in relation to under-30’s.

“Buyers aged 50 to 60, are paying an average of R388 000 as a deposit, which takes their average bond down to R949 000 and monthly repayment to R9 475. The average deposit size for over-60s currently is R674 000, which puts their average bond at just over R1m and average monthly repayment at around R10 000,” said Rademeyer.

Statistics show that buyers aged 20 to 30 are currently paying an average deposit of around R90 000, which puts their average bond at R682 000 and their average monthly repayment at just over R6 800.

Fin24 previously reported that South Africans are turning to unsecured debt to service home loans. About 30% of homeowners borrowing short-term unsecured debt, DebtBusters CEO Ian Wason told Fin24. This is in order to keep home loan payments up to date.

 

Source: https://www.fin24.com/Money/Property/younger-buyers-struggle-to-secure-home-loans-20170606

Tips for debt-free new year…

FIN24- If you’re setting your financial goals for 2018, it is a good time to include matters like protecting your finances, being financially free and getting rid of debt woes, according to Matthys Potgieter, spokesperson and debt expert at DebtSafe.

Potgieter highlights seven significant steps you can incorporate into your 2018 financial resolutions:

1. Re-evaluate your monthly expenditure to make room for savings

It’s easy to miss the small and ad hoc bills that all add up.

However, if you calculate and pin down your expenses on a budget sheet, you’ll know exactly what your actual spend per month is and what you can save. This will also help you draw up an accurate budget that truly reflects income and expenditure, so that you can prevent accidental budget overspending.

2. Check your credit record and make sure the info on it is correct

Do you know what your current credit profile looks like?

You can download your record once a year for free. Visit the websites of TransUnion, XDS or Experian.

It is always good to know that your credit record is in check. Be alert and make sure there’s nothing fishy going on with your credit score. If you see something suspicious, sort it out right away by getting in contact with the relevant credit bureaus.

3. Stop playing victim and put an end to your reckless borrowing

You are responsible for your debt and finance management. If you are not going to control your spending splurges, nobody else will.

Don’t be a blame-shifter. Instead, do the necessary research and compare rates and costs from different credit providers to see if you can afford a loan(s) or item(s) before applying for any credit.

4. Catch up on your reading and become financially literate

It is about time that you read up on the National Credit Act and regulations, the National Credit Regulator, the Consumer Tribunal and what alternative dispute resolution agents (like the credit bureaus, debt counsellors, the ombudsman for banking services or the credit information ombudsman) involve.

You won’t just broaden your consumer rights knowledge, but you’ll also create a money-savvy culture for yourself by being a financially clued-up person.

5. Put a dent in your debt

Consider one of two options when trying to get rid of your debt:

  • Make use of the so-called snowball effect by paying off your smallest debt first (like a clothing account); or
  • Use the avalanche method, where you pay off your debt with the highest interest rate first – like your credit card.

6. Protect your debt

Debt obviously has a negative connotation, so how are you supposed to “protect your debt”?

Life happens and you must therefore protect what is most important to you. You don’t want to leave your loved ones with a debt mess, do you?

Make sure you have credit-linked insurance to take care of yourself and your loved ones when unpredicted (or in some cases predictable) things happen like temporary or permanent disability, retrenchment and maternity leave as well as death.

7. Talk to professionals in the financial field

Talk to your financial adviser or banker, and get their feedback and support.

Fin-24: Sanlam warns investors of Steinhoff setback

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FIN-24: Steinhoff’s share price collapse has knocked about 1% off the annual returns of typical Sanlam investors, the Cape Town-based financial services group said in a market announcement.

The share price of the embattled global furniture retailer [JSE:SNH] has dropped over 90% this month, after its CEO Markus Jooste abruptly resigned and it announced that PwC was investigating “accounting irregularities requiring further investigation” in its books.

The Stellenbosch-headquartered group’s 2017 audited results are on hold, and it has warned investors to not rely on the figures contained in its 2016 results.

Steinhoff is now facing at least seven different probes in Europe and South Africa, as well as a number of possible investor lawsuits.

Sanlam said that in a “typical balanced portfolio” of an investor, Steinhoff exposure would have accounted for approximately 1.1% of the portfolio assets on 1 December 2017.

At the time Steinhoff shares were changing hands at about R55 a share. At 12:40 on Wednesday, shares were trading at R4.61, down 1.5% from their previous close.

Sanlam said the steep share price decline would cut the returns of typical shareholders by about 1%.

Investors who held a larger Steinhoff weighting in their portfolios would be worse affected. “The negative impact on the return of a South African Swix Equity index fund would be approximately 2.1%,” it said.

Steinhoff was for years seen as an integral part of many SA share portfolios.

Once in the top 10 of the JSE by market capitalisation, the “Ikea of Africa” now risks dropping off the list of the top 100 biggest JSE companies altogether.

Update: Rand soars Ramaphosa optimism, dips under R 13.10/$

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Cape Town – The rand strengthened more than 3% to trade under R13.10 to the US dollar amid optimism that Deputy President Cyril Ramaphosa would be victorious in the race for ANC president.

By 23:59 in New York trade the local unit was trading 3.08% firmer at R13.09 to the greenback from an intraday low of R13.52 and an overnight close of R13.50/$.

The campaign of Ramaphosa’s strongest opponent Nkosazana Dlamini-Zuma was dealt a triple blow when courts in Bloemfontein (Free State), Pietermaritzburg (KwaZulu-Natal) and the Bonjala region (North West) ruled against branches in those regions.

All the decisions come on the eve of the start of the ANC’s national elective conference on Saturday and the vote for party leader on Sunday evening.

“There is a general optimism in the market that Cyril Ramaphosa is looking like the likely winner of the ANC conference, this after the court decisions about North West and KZN that seem to have dealt a blow for the Nkosazana Dlamini-Zuma campaign,” said TreasuryOne currency dealer Wichard Cilliers.

“We are still of the opinion that it is too close to call and either party can still win the conference,” he told Fin24 by email.

News24 reports that the Free State High Court in Bloemfontein barred several branches from attending the national elective conference after the court nullified the party’s provincial conference.

In Pietermaritzburg, the KwaZulu-Natal High Court granted an application for leave to appeal, brought by the provincial executive committee (PEC) of the ANC, which is led by chairperson Sihle Zikalala.

However, Judge Rishi Seegobin effectively ruled that the PEC would remain dissolved, pending the outcome of the appeal to the Supreme Court of Appeal and any subsequent appeal to the Constitutional Court.

This means that the PEC, which supports Dlamini-Zuma, will lose its 27 voting rights allocated to each province for the ANC’s national elective conference.

Meanwhile, in North West disgruntled ANC members won their court challenge to have the Bojanala regional conference nullified.

The group went to court asking for an order to set aside the 40-branch general meeting and to nullify the regional conference held on September 24.

Rand powers through R13.30/$ as NDZ campaign suffers triple blow

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The rand strengthened more than 1.8% on Friday to below R13.30 to the US dollar amid optimism that Deputy President Cyril Ramaphosa would be victorious in the race for ANC president.

By 16:38 the local unit was trading at R13.26 to the greenback from an intraday low of R13.52 and an overnight close of R13.50/$.

The campaign of Ramaphosa’s strongest opponent Nkosazana Dlamini-Zuma was dealt a triple blow when courts in Bloemfontein (Free State), Pietermaritzburg (KwaZulu-Natal) and the Bonjala region (North West) ruled against branches in those regions.

All the decisions come on the eve of the start of the ANC’s national elective conference on Saturday and the vote for party leader on Sunday evening.

“There is a general optimism in the market that Cyril Ramaphosa is looking like the likely winner of the ANC conference, this after the court decisions about North West and KZN that seem to have dealt a blow for the Nkosazana Dlamini-Zuma campaign,” said TreasuryOne currency dealer Wichard Cilliers.

“We are still of the opinion that it is too close to call and either party can still win the conference,” he told Fin24 by email.

News24 reports that the Free State High Court in Bloemfontein barred several branches from attending the national elective conference after the court nullified the party’s provincial conference.

In Pietermaritzburg, the KwaZulu-Natal High Court granted an application for leave to appeal, brought by the provincial executive committee (PEC) of the ANC, which is led by chairperson Sihle Zikalala.

However, Judge Rishi Seegobin effectively ruled that the PEC would remain dissolved, pending the outcome of the appeal to the Supreme Court of Appeal and any subsequent appeal to the Constitutional Court.

This means that the PEC, which supports Dlamini-Zuma, will lose its 27 voting rights allocated to each province for the ANC’s national elective conference.

Meanwhile, in North West disgruntled ANC members won their court challenge to have the Bojanala regional conference nullified.

The group went to court asking for an order to set aside the 40-branch general meeting and to nullify the regional conference held on September 24.