I have R500 000 that I would like to invest for my newborn son’s education. Should I invest everything in a high-risk unit trust, and if so, which one should I choose? Should I open it in his name or my own? Sanlam has a risk profile questionnaire that you can use to assess your risk appetite.
You will have to be able to stomach the short-term volatility and stay invested through the tough times. The investment will fluctuate. The investment will go down in value. The investment will have periods where it struggles to outperform even a money-market fund. Below I will show you a comparison between short-term, medium-term, and long-term funds. This will give you a bit of an idea of what to expect when investing in a long-term fund . Short-term funds aim to provide capital protection and some growth to keep up with inflation, medium-term funds aim to provide CPI+5% and long-term funds aim to provide CPI+6% even though their benchmarks are usually connected to a peer average or index.
Each ETF fund can only track one index. A unit trust fund manager can invest in a range of assets within one fund, such as equities, cash, bonds, property and offshore. Both of these investments offer a great way to access the market and start investing, and having a combination of both can be advantageous.
attooh I would find a suitable ETF and use the yearly dividends or profits to invest into a TFSA!
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