THE money TIP

CityPress - - Business -

When it comes to in­vest­ing in stocks and shares it can be hard to pre­dict which ones will do well and which ones will dis­ap­point us with poor per­for­mance. This is why di­ver­si­fi­ca­tion is so im­por­tant. Lance Solms, head of Itrans­act – a robo-ad­vice plat­form – says this is best achieved through an in­dex fund. “For young peo­ple it’s widely rec­om­mended that you start out by in­vest­ing in ex­change-traded funds (ETFs). Set­ting your risk is about de­cid­ing the right as­set al­lo­ca­tion be­tween stocks and bonds. As a young in­vestor, you should be set­ting up your port­fo­lio to max­imise the re­turns you will re­ceive in the long term.” An­other rea­son to con­sider ETFs when be­gin­ning to in­vest is that they have low fees. This saves you com­mis­sion ex­penses and man­age­ment fees and may pre­vent cash losses when the price of your stock de­clines. “In­vest­ing for your fu­ture should not be a grudge pur­chase – you need to set goals and stick to them, speak to your fi­nan­cial ad­viser and get your port­fo­lio on track. In­vest­ing should be sim­ple,” says Solms.

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