Johannesburg – With the financial year end only two weeks away, investors have a last-minute opportunity to look at their financial situation and maximise the benefits of investing your money before 28 February 2022.
We spoke to Jack Edwards, Marketing Manager (SA) for CAPEX.com, an international trading and investment platform. “The financial year end presents opportunities for investors that they shouldn’t let slip. It’s worth taking a few minutes out to look at your current savings and investment portfolio to see how you can potentially boost your returns and legally minimise your tax exposure,” says Edwards.
Edwards provided us with his “Three Advantages” to invest before 28 February.
1. Tax benefits: By investing in tax-saving instruments such as a Tax-Free Savings Account (TFSA) before the financial year end, you can fully utilise your annual allocation. Every South African is allowed to invest up to R36 000 per year in a TFSA. All growth, capital gains, interest, and dividends inside of your TFSA is tax free.
2. Compounding returns: Investing early allows your money to grow and accumulate returns over time, due to the power of compounding. The earlier you invest, the more time your investments have to grow and earn returns. This is a good time to look at your current portfolio and see if there’s better ways to invest your money for greater returns.
3. Diversification: Investing before the financial year end allows you to diversify your portfolio and spread your investments across various asset classes, thereby reducing your overall risk. It’s the proverbial “eggs in one basket”. You may want to spread your investments across REITs, ETFs, Shares, Stocks, Crypto, as well as trading in Forex.
CAPEX.com is an online trading platform which specialises more in short-term trading, rather than long-term investing. We wanted to know if this should form part of an investment strategy.
“Trading is considered a high-risk investment strategy and definitely shouldn’t be your only investment plan, but there are definitely some advantages of trading Contracts-For-Difference (CFDs),” say Edwards.
But before we delve into the advantages you have to understand that a CFD is a contract between a buyer and a seller that stipulates that the buyer must pay the seller the difference between the current value of an asset and its value at contract time. CFDs allow traders and investors an opportunity to potentially profit from price movement without owning the underlying assets.
“One advantage is CFD brokers like CAPEX.com gives you greater access to global markets compared to traditional instruments available in South Africa. The p platform allows you to trade in multiple instruments as well, including stocks, commodities, crypto, and currencies.
“CFD trading offers flexibility in terms of trading strategies, risk management, and position sizing. This can help investors to tailor their trading approach to their specific needs and objectives,” continues Edwards
One of the other big advantages of using a CFD broker and their platform like CAPEX.com is the potential for leverage, which can amplify returns. Leverage refers to the use of borrowed funds to increase the potential returns of a trade. With leverage, a trader can control a larger position than their actual capital, potentially magnifying profits. For example, a leverage ratio of 10:1 means that for every R1000 of capital, the trader can control a R10 000 position.
However, it is important to note that leverage can also increase risk, and investors should use it judiciously. If the position loses 10%, the trader would lose all their capital. Therefore, traders should be cautious when using leverage and have a well-defined risk management strategy in place
“Another thing to keep in mind,” says Edwards, “is that CFD trading requires active management and close monitoring, which can be appealing to investors who prefer a hands-on approach to investing. However, if you prefer to park your investment and wait for growth, then this is not the strategy for you.”
Edwards invites anyone who is interested in CFD trading to visit their website, https://capex.com/za and to open up a free demo-account. Everyone visiting the website also gets free access to the CAPEX Academy which will teach users how to use the platform and how to trade. Access the academy here.
CAPEX.COM/ZA is operated under license in South Africa by JME Financial Services (Pty) Ltd, an authorised Financial Services Provider and regulated by the FSCA FSP number 37166.
CAPEX.com is a leading global trading platform providing its users with expert insights, tools, and resources to make markets accessible to a worldwide audience and offering a tailor-made trading experience. Its professional trading platforms, robust technological infrastructure, and transparent trading conditions have propelled it as one of the most respectable brokers on the international stage.
Anchored by a global presence and regional expertise, CAPEX.com holds operating licenses from Cyprus Securities and Exchange Commission, Abu Dhabi Global Market Financial Services Regulatory Authority, the Financial Services Authority (FSA) in Seychelles, and the Financial Sector Conduct Authority in South Africa.
Trading leveraged products involve a significant risk of loss.
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