Mutual Funds Investopedia defines a mutual fund as "an investment vehicle that is made up of a pool of funds collected from many investors for the purpose of investing in securities such as stocks, bonds, money market instruments and similar assets. Mutual funds are operated by money managers, who invest the fund's capital and attempt to produce capital gains and income for the fund's investors. A mutual fund's portfolio is structured and maintained to match the investment objectives stated in its prospectus." ( http://www.investopedia.com/terms/m/mutualfund.asp ). Various mutual funds are available to the defensive investor and these funds on average require a monthly contribution or a hefty lump sum. For graduates entering commerce a monthly contribution would probably be the safest option. If one has to follow the value investment methodology prescribed by the great Benjamin Graham, then it would be most appropriate for the defensive investor to invest in ...
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Tread carefully
Treading carefully...... Markets are reaching all time highs and this leaves the investor (both enterprise and defensive) with the notion that a market correction or bubble might occur soon. So what can you do to prepare yourself for this potential market correction? Here are a few options at your peril: 1. Cash pile-up: At the current rate of returns on the stock markets, this seems like the worst option as cash savings can not provide returns in excess of inflation. However, there are two main benefits to this: It provides a buffer against any market corrections; and It provides flexibility to buy again after the market has been corrected and prices have fallen a lot. 2. Small Caps: Instead of focusing on the Top stocks on the market, consideration should be given to small caps that are value stocks and that will not be affected as severely as large caps in the case of a market correction. Some small caps on the JSE to consider include: ISA Holdings Limited (P/E of 10...
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