THE money TIP
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.