There are roughly 810,000 active stokvel groups consisting of over 11 million South Africans, collecting an estimated R50 billion annually. Nearly 40% of South Africa’s adult population are members of a stokvel. Recently there has been an increase in illegal pyramid schemes or Ponzi schemes, which continue to pop up around South Africa.
In order to survive as a species, people have evolved to be both risk averse and loss averse, to be fearful of such possibilities. But these attributes serve us poorly as investors. To be a successful investor, one needs to overcome that fear and to take calculated risks.
The advent of COVID-19 has led to people losing their jobs and seeking ways of securing their financial future against the current disruptions. Rather than wait for employment opportunities, people are taking matters into their own hands.
With an economy in the doldrums, South Africans are increasingly looking to make use of business and investment opportunities offshore. However, it’s important to note that as a South African resident, you are subject to certain exchange control regulations.
A question that’s not asked often enough is whether the way we go about retirement planning is necessarily the best way. All too often, this milestone is overshadowed by the pressure of whether we’ve saved enough to see us through our next life stage: a new stage in which our future is directly correlated to how well we’ve managed to plan in the past.
The global economy is likely to recover as vaccines are administered. Pair this with low interest rates and the huge fiscal stimuli injected into the world’s largest economies, and you have a solid recipe for risk-on sentiment. Emerging markets assets, like those found in South Africa, bask under such circumstances.
The JSE has issued a consultation paper proposing changes to the Listings Regulations to cut red tape and achieve an effective, fit-for-purpose set of regulations for financial markets.
History, of course, tells us that Ponzi schemes and financial scams are nothing new. However, their sophistication in the online space and in a digitally connected world are tailor-made for casting a wider, global net that lures potential investors with promises of 20% or 30% returns – or, in one recent incident, interest of 7% a week.
When investing, sometimes the best course of action is to do nothing. Having the ability to block out the noise, and look through the cycle, are some of the cornerstones to investment success over the long term. But what else sets successful investors apart?
For a beginner starting out with trading, the most important thing is to be informed. Ideally starting with a trading course of some kind is the best thing to do. Knowing how to open and close trades, finding a reputable trading platform and reading up on best practices are great places to start.