Property, Equity, Bond and Cash investment
Making a decision when it comes to investment becomes very hard. Some investors prefer direct investment and some prefers indirect investment. Both options are good for investors. But one requires less money to start investing in indirect investment, and need a lot of money to start investing in direct investment. You can buy Cash, property, equity and bond as units through Asset Management Companies. Direct investment means you have title deed for property or share certificate for equities. Therefore, you will be managing your own investment portfolio.
All you need, will be diversifying your portfolio very well so when anything happens. With well-balanced investment portfolio, you will be safe against volatility. Weighting asset classes for your investment portfolio, for example equities, or shares. It will cost you time and money to conduct research. You may have to consult experienced investors who will assist you with analysing assets you want to invest in.
Indirect investment into property
You may invest into property by buying unit trusts or endowment. And these options are available through asset management companies like Liberty Life and Stanlib. Buying units is cheaper and you can contribute small amount of money monthly. You can pay as little as R500 per month. Professional Fund Managers will manage your portfolio and do their best outperform inflection and grow your portfolio. If you want to invest for short period, then volatile investments like these are not advisable to a client. These are long term investment and your appetite for risk determines the type of portfolio that you may need to invest in. Financial Advisor will assist you with determining your risk appetite.
Direct investment into property
Investing directly into properties requires sufficient money to pay for the property, and lawyers to transfer the property to your name. You may buy property cash or you may apply for mortgage bond with bank. However using the latter, you will be charged interest on money you borrowed to buy residential or commercial property. Your monthly instalment then will include both principal debt repayment and interest payment. Please note, about 80% of monthly instalment will be directed to interest and the rest to principal debt.
Interest rate may be charged as Prime Rate, or Prime Rate Plus, or Prime Rate Minus. But bank that funds you, will decide based on certain factors they have to take into account. If you considered a high risk, a lender will charge higher interest rate. The investment is high-risk but you will need to have insurance in place to protect your asset from disaster and other events.
Property for rentals or used for business office
If the property rented out or used by your business as an office. The interest portion is deductible as an expense against property income generated. And the wear and tear is also deductible against your income as an expense.
The Amortisation Table
The Mortgage Bond or Loan table below shows breakdown of loans. The table starts from 1 to 20 years which. There are different columns. Assuming instalment is payable annually.
- Opening Balance – the amount you started a year with
- Payment – Annual, the annual instalment paid
- Annual Interest, interest paid for the year
- Principal Payment, is the portion of instalment that goes to principal debt
- Closing Balance, is the balance you have at the end of the year.
Input cells: Bond Amount, Deposit, Annual Interest and Period -Annual
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