BUSINESS NEWS - It is admirable that you want to buy your first car in cash.
A car, which falls in the category of a lifestyle asset, is not an investment.
It is generally accepted that the value of a car depreciates significantly over time, with some estimating that after only two years a car is worth half of what you paid for it.
So, by buying a car in cash you are already saving a considerable amount in interest charges.
However, besides the price of the car, it is also important for a future car buyer to factor in the cost of having comprehensive insurance on the vehicle when assessing the affordability of the car you are interested in.
Prior to making any investment decisions, we believe it is important for an investor to understand the type of return he/she can expect during the required investment period and to know how the money will be invested.
We highlight that it is impossible to know from one year to the next which asset class will be the best performing.
For example, last year local equities were one of the worst-performing asset classes, with a return of 2.63% for 2016.
However, this year local equities are the best-performing asset class, with a return of over 12% year-to-date.
Any investor should therefore be aware that there are many different factors that can have an impact on market returns, including local and international interest rate movements, geopolitical events, currency swings, among others.
All of these factors can result in short-term market volatility and capital fluctuations that can be difficult to go through at that time.
Nevertheless, investing in a good, balanced unit trust has historically delivered decent returns.
A unit trust, which allows a group of investors to pool their cash and invest in various asset classes, is managed by a fund manager who invests in accordance with the regulations and mandates of the funds.
Unit trusts are registered with the Financial Services Board (FSB), which affords investor protection.
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