Long Term Investments
There are also other longer term investment options open to you. The first and probably best one to consider is property investment. Buying your first house is just that, property investment. Why pay a landlord's bond off when you can be paying off your own. Property prices in South Africa went crazy a few years ago. Now even though the property market has seen a rather significant decline in recent times, it is still a very attractive option. Due to the recession, property prices have dropped drastically and this allows first time buyers a breather into the market. If you already own a property, you would have seen some depreciation but don't fear! It's only a matter of time until the market recovers and things will return to normal and the property you own will appreciate nicely.
There are many different options to consider when buying property as well. From my personal experience, buying off plans can save you a significant amount of money. Although you have to wait for the development to complete before you can occupy or rent out the property, you won't have to start paying off the bond until the occupation date. This kind of property can also be a very good option for a second property that you can use as a rental. Not only would you have bought the property at a lower price, thus lowering your monthly premiums, you would then be able to get most, if not all, of your bond payments in rentals. Tenants may also be more attracted to a newly built house or apartment where the developer, rather than the landlord, will take care of the 'snags'.
Another good alternative are 'fixer uppers'. These are houses or apartments that require some work to get them back up to scratch. Be wary of these though. When inspecting the property prior to sale, take a building contractor with you to establish exactly what kind of work you will need to put into the property. A building contractor will be able to give you relatively accurate cost and time estimates. This could save you a lot of headaches in the future.
Investing in emerging markets, such as South Africa, India and other developing countries are attractive options. This is particularly true for American and Western European investors. This is on account of the strong currency exchange rates enjoyed by those countries. The trick is that when the global recession kicked off in 2008, American and English investors started pulling their money out of emerging markets. The funds were needed at home to try and avoid the recession becoming as bad as it has. This illustrates the main danger with investing in emerging markets. Accordingly, South African markets saw an immediate drop in response to the credit crisis in the States. We have recovered quickly though, thanks to legislation put in place by our government, such as the National Credit Act. Our markets are likely to weather the storm in spite of it being likely to be a somewhat bumpy ride.