Wishnia's Word |
July 2013
So here we go, halfway through the year with some
stormy weather and
some stormy market
conditions.
But just as we know that
summer will come, so
will markets improve. I
thought that a brief
explanation of some
terminology that is often
used might be useful.

Stellenbosch
University Graduation Ceremony 2012
Bonds
This is an interest-bearing debt instrument, traditionally
issued by governments as part of their budget funding
sources, and now also issued by local authorities
(municipalities), parastatals (Eskom) and companies.
Bonds issued by the central government are often called
"gilts".
Bond issuers pay interest (called the "coupon") to the
bondholder every 6 months. The price/value of a bond
has an inverse relationship to the prevailing interest rate,
so if the interest rate goes up, the value goes down, and
vice versa.
Bonds/gilts generally have a lower risk than shares
because the holder of a gilt has the security of knowing
that the gilt will be repaid in full by the government or
semi-government authorities at a specific time in the
future. An investment in this type of asset should be
viewed with a 3 to 6 year horizon.
Collective Investments
Are investments in which investors' funds are pooled
and managed by professional managers. Investing in
shares in the long term has traditionally yielded
unrivalled returns (even more than property and other
asset classes), offering investors the opportunity to build
real wealth.
Dividends
When you buy equities offered by a company, you are
effectively buying a portion of the company. Dividends
are an investor's share of a company's profits, paid to
him or her as a part-owner of the company.
Earnings per share
This is a measure of how much money the company has
available for distribution to shareholders. A company's
earning per share is a good indication of its profitability
and is generally considered to be the most important
variable in determining a company's share price.
Investing in General
Question: With regards to timing would you think that it
is more important when you go into an investment, or
when you come out of the investment?
Answer: Timing the market is often pure luck, therefore
being invested and not lying in cash for the long term is
more important. Therefore when you actually decide to
mature your investment is usually more important.
Fear or greed will just lead to poor decision-making
whereas time in the market with investments in good
companies and fund managers (and passive investment
strategies, like Evolve) will lead to good returns and
satisfied investors in the long run.
Achieving financial freedom is possible - it just requires a bit of determination, focus and a little commitment.
Network Corner
Q&A Instruments
Industrial Temperature
Daniel Wishnia
060 379 7625
info@qainstruments.co.za
1Tightship
Graphic Designers
Jo-Anne & Gary
011 550 5345
jo@1tightship.co.za
gary@1tightship.co.za
Thank you for your valued support.
My business has been built on your referrals and your
continued support is greatly appreciated.
Cheers
Stephen
PREVIOUS NEWSLETTERSMarch 2013 December 2012
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