Written by John Stuart on February 5th, That most investors think you need gigantic amounts of money to start investing. What if I told you that you could become an investor right now with as little as R? You could either start saving money each month and grow a pot of cash for you to eventually invest….

Two great vehicles are ETFs and Unit Trusts. The beauty of these is that they allow you to start investing from as little as R a month! This obviously depends on the fund as each have different minimums. But by doing so, month after month, you can slowly build up your holdings and portfolio, which would give you more investment options down the line. I personally love ETFS! And I really believe every portfolio should include them in some way, shape or form.

ETFs offer you diversification at the click of a button, are extremely tax efficient, flexible, easy to use and are very cost efficient. This makes them the perfect beginners investor tool. The other great thing about ETFs is that you can gain access to a number of different sectors, usually reserved for the bigger portfolios, all with a few hundred rand each month.

The government also understands how important it is for you to put away for your retirement, and have even gone as far as creating a tax free savings account you can use to specifically invest in ETFs.

That means you can put that money back into your portfolio and let it compound as long as you invest it. There is a monthly limit though, and for the time being you can only invest a maximum of R2, per month every year with an annual limit of R33, The one difference you also need to know about ETFs and Unit Trusts is that as a general rule ETFs are passively managed whilst Unit Trusts are actively managed.

Passively managed funds simply track sectors and indexes, whilst actively managed funds have an actual fund manager behind them pulling the strings managing the fund. The problem at this level of investing is that active funds translate to higher fees.

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And the last thing you want to do is pay more than you have to on your investments. At R10, most brokerages are willing to talk to you in terms of opening an account. This seems to be the popular minimum account size for a lot of brokers across the country. The same could be said for the reverse though….

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But it also depends on how you invest at this point. You see, whether you buy R or R5, worth of stocks, your transaction costs will normally amount to around R And this is extremely important, because it makes it a lot easier for you to make money in stocks. Growing an account that way is tough, and not recommended. So that would only get you two different companies to invest in. Another investment option you could look at are new property developments. How this works is you can put down a smaller amount, say R5, — R10, on a R, property.

Pop a tenant in the property on day one and you could start making money immediately! They are risky though, and trading is an entirely different ball game to long term investing. You can find more about trading the market here and here.

Once you start getting to the R30, mark you can start looking at building a stock portfolio. Keeping my R5,per-stock rule in mind, R30, can allow you to invest in up to 6 different companies.

This gives you some diversification in your portfolio. Obviously that R30, is a good starting point. But you need to be prepared to put this money into the stock market for the long-term.

The whole point of investing is to let your money and gains compound, thus growing your portfolio exponentially in the long run. Remember, the key to investing successfully is time in the market.

One important point to remember is that your age and where you are in your investment journey should also dictate how you invest. But how old you are, and your investment experience should also indicate where else you should put that money. Alternatively, you can consider equity Unit Trusts funds that invest in stocks. Although riskier and more volatile, these can yield high returns if you stay in the market long enough.

And for those closer to retirement you should consider cash or a fixed income Unit Trust. Another investment option you could look at with this amount of money are undervalued properties.

If you uncover the right opportunities, you could create positive equity from day one! The goal here is to find properties selling for less than their real value.

That means, from day one, the undervalued property can increase in equity value. Undervalued properties also tend to require a larger deposit than new developments.

So you could end up having to put down anything from R30, to R50, or more. At this stage, and with this amount, you can look to the long term with a far broader perspective.

You can start to build a really diversified portfolio and start including other asset classes and instruments. Things like preference shares, bonds, stocks, ETFS, Unit Trusts, commodities, offshore stocks, property etc.

You can also look at different portfolios as well. You can run more than one at the same time you know!

You could run a defensive portfolio, a core portfolio, a dividend portfolio and so on. The more you have to put in, the greater the options you have to invest. And you can tackle the market in a far broader, more diversified fashion.

Outside of stocks, two other options you can look at are on the property side. With this amount of money auction houses could be hiding some real gems for you to invest in. Well thought out and well planned auction investments allow you to make the most money in the shortest period. Auctions are a world unto themselves, and going in with little to no knowledge is extremely risky.

Buying broken down properties and fixing them up is a fantastic way to increase the value of a property and sell it at a healthy profit.

One tip to keep in mind is that any money needed to fix up the property itself needs to come from your pocket. Alternatively, another option you could or should consider investing in is a retirement fund. By doing so you open yourself up to great tax incentives.

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You see, these savings vehicles are specifically designed to protect, and more importantly grow your retirement nest egg. Successful investing is less about how much you have, and more about what you do with it.

If you have a smaller amount to invest, look at ETFs or Unit Trusts and pay in a monthly amount towards them. The last thing you want to do is pay your broker at the expense of your growth….

Once you start getting to the R30, mark you can start to build a diversified portfolio.

And it totally rings true today. All you need is the right information, some hard work, the willingness and hunger to sweat it out, and successful investing will be something you do on autopilot. John Stuart Content Director The Money Lab. My Profile Profit Plans Toolbox Logout. The Best Ways To Invest R1, to R, Written by John Stuart on February 5th, When I hear this my blood boils….

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The Money Lab is an independent research house and not a registered financial services provider. We provide investment and trading ideas, but do not give personal investment advice. Before investing please seek professional advice from your stockbroker or financial adviser.