CHAPTER 1: INVESTMENT CONCEPTS
Two to create
ways Neale :
SPECULATION INVESTMENTS
'
NOTE
; Gambling is NOT
>
> venture your money on an purchase an asset with the an investment
Of but decision
activity with an
expectancy purpose of : a to
large retaining for
°
return after a short time it a considerable execute an
activity
I I )
period 1
year ) period of time > 1
year without any
knowledge of
> >
Degree of expertise but Either increase the value or what the outcome
, risky to
a return be
provide reasonable
may .
INVESTMENT SPECULATION
Term Long term 1St years ) short term ( I -2 most )
years
motive Requires reasonable Requires considerable return
return
INVESTMENT OBJECTIVES
•
SPECULATION :
'
asset ( ) With
Buying an
property ,
Stocks , Options , Cattle the
goal to sell it for a substantial Profit within
1
year
>
High risk
2.
INCOME :
>
Buy an asset with the aim to
generate income
>
property rental , shares dividend ,
fixed deposit Interest
3.
TAKEOVER AND MERGER :
'
Buy a second
neighbouring farm 1 farm more
effectively
( Kalahari ) Telkom ( Noetel ) MTN ( Tetcom )
>
Take alot , ,
,4. CAPITAL GROWTH :
( R 't
I
Buy house for R 500000 and sell it after 10
years for R 5.5 Million capital growth )
" "
> Gains Tax
capital the capital amount
pay On growth
>
purpose =
to protect the
purchasing power of their
money
1 to obtain a capital growth that atleast current inflation rate
Try
= .
5- CONTROL OVER RAW MATERIAL DISTRIBUTION CHANNEL :
'
set of interdependent organisations involved of a product service available
in the process making
for use consumption
>
Farmer buys neighbouring farm to gain access to the river
>
Shoe manufacturer buys a number of retail shoe stores to sell his manufactured shoes exclusively
to these stores .
that gives you guarantee
anything
E- G. Stocks shares
FINANCIAL INSTRUMENTS AND FINANCIAL SECURITY A bond ( corporate or
governmental /
Future option
FINACIAL INSTRUMENTS FINANCIAL SECURITY •
>
1
Monetary contract between parties and Financial instrument that can represent :
and a collective term for all assets
°
Investment as an owner ( share)
,
units of Creditor 's relationship
•
that are tradable
or capital ,
.. with
company governmental
•
Emphasis =
tractability of the value body ( debentures bonds )
that serves
°
The rights to ownership represented by
paper as
security as
•
Value paper can either be a virtual or an option
real document Emphasis =
guarantee function of financial other assets
E G
ability to of to serve
◦
E- G. you apply
transfer ownership as
guarantee security when
-
.
an asset from 1 person to another for a loan overdraft facilities s parent signs as
>
sell shares .
security for student who takes out a loan in case
of default payments
.
1
Equity
-
based financial securities include shares
> Debt -
based financial securities include bonds .
, mmmm
{shares
{www.wu :}
>
Small Units Of Ownership that the capital Of a consists of
company .
'
companies issue snares
1 purpose =
to raise
money from investors to expand merge , acquire land buildings PPE settle debt ,
, ,
purchase equipment
> Shares issued to the public
>
Limited
liability .
'
Investors buy shares
company 's equity
>
Stake in
>
Share in its profits in the form of dividends
>
Aptitude to vote at general meetings of shareholders .
> Share certificate ( past )
↳ >
proof of ownership ( paper document ) now non -
existent clue to demote realisation
↳
Today shares =
purchased electronically & held in electronic accounts
Mmmmm
(
C Bonds Gilts & :}
LWWWWWWWJ
◦ BONDS :
Tractable debt instruments issued
by corporations CHARACTERISTICS OF BOTH :
Referred to as Debentures •
Loans that must be repaid on a future date ( maturity
date )
• GILTS : ◦
Fixed interest must be paid periodically to owner
Tradable debt instruments issued by state Market tends around issue
◦
price to vary price
or semi -
state institutions ( Kwasi -
State ( par value ) as market interest rates rise / fall
institutions ) >
little
Offer opportunity to make capital gains ,
RSA 's Gilts ( state ) and ESKOM Gilts but are still included in portfolio because
( semi state )
provides fixed
-
it the investor with constant ,
income .
cnnnnnnnnnnnnnn
( securities
exchange
LWWWWWWWWU :} '
company that creates the
opportunity for potential buyers and sellers of a
security
to come together for trading .
> New listings , trading
>
( JSE ) ( NYSE , )
Johannesburg Stock Exchange ,
worldwide LSE
Two to create
ways Neale :
SPECULATION INVESTMENTS
'
NOTE
; Gambling is NOT
>
> venture your money on an purchase an asset with the an investment
Of but decision
activity with an
expectancy purpose of : a to
large retaining for
°
return after a short time it a considerable execute an
activity
I I )
period 1
year ) period of time > 1
year without any
knowledge of
> >
Degree of expertise but Either increase the value or what the outcome
, risky to
a return be
provide reasonable
may .
INVESTMENT SPECULATION
Term Long term 1St years ) short term ( I -2 most )
years
motive Requires reasonable Requires considerable return
return
INVESTMENT OBJECTIVES
•
SPECULATION :
'
asset ( ) With
Buying an
property ,
Stocks , Options , Cattle the
goal to sell it for a substantial Profit within
1
year
>
High risk
2.
INCOME :
>
Buy an asset with the aim to
generate income
>
property rental , shares dividend ,
fixed deposit Interest
3.
TAKEOVER AND MERGER :
'
Buy a second
neighbouring farm 1 farm more
effectively
( Kalahari ) Telkom ( Noetel ) MTN ( Tetcom )
>
Take alot , ,
,4. CAPITAL GROWTH :
( R 't
I
Buy house for R 500000 and sell it after 10
years for R 5.5 Million capital growth )
" "
> Gains Tax
capital the capital amount
pay On growth
>
purpose =
to protect the
purchasing power of their
money
1 to obtain a capital growth that atleast current inflation rate
Try
= .
5- CONTROL OVER RAW MATERIAL DISTRIBUTION CHANNEL :
'
set of interdependent organisations involved of a product service available
in the process making
for use consumption
>
Farmer buys neighbouring farm to gain access to the river
>
Shoe manufacturer buys a number of retail shoe stores to sell his manufactured shoes exclusively
to these stores .
that gives you guarantee
anything
E- G. Stocks shares
FINANCIAL INSTRUMENTS AND FINANCIAL SECURITY A bond ( corporate or
governmental /
Future option
FINACIAL INSTRUMENTS FINANCIAL SECURITY •
>
1
Monetary contract between parties and Financial instrument that can represent :
and a collective term for all assets
°
Investment as an owner ( share)
,
units of Creditor 's relationship
•
that are tradable
or capital ,
.. with
company governmental
•
Emphasis =
tractability of the value body ( debentures bonds )
that serves
°
The rights to ownership represented by
paper as
security as
•
Value paper can either be a virtual or an option
real document Emphasis =
guarantee function of financial other assets
E G
ability to of to serve
◦
E- G. you apply
transfer ownership as
guarantee security when
-
.
an asset from 1 person to another for a loan overdraft facilities s parent signs as
>
sell shares .
security for student who takes out a loan in case
of default payments
.
1
Equity
-
based financial securities include shares
> Debt -
based financial securities include bonds .
, mmmm
{shares
{www.wu :}
>
Small Units Of Ownership that the capital Of a consists of
company .
'
companies issue snares
1 purpose =
to raise
money from investors to expand merge , acquire land buildings PPE settle debt ,
, ,
purchase equipment
> Shares issued to the public
>
Limited
liability .
'
Investors buy shares
company 's equity
>
Stake in
>
Share in its profits in the form of dividends
>
Aptitude to vote at general meetings of shareholders .
> Share certificate ( past )
↳ >
proof of ownership ( paper document ) now non -
existent clue to demote realisation
↳
Today shares =
purchased electronically & held in electronic accounts
Mmmmm
(
C Bonds Gilts & :}
LWWWWWWWJ
◦ BONDS :
Tractable debt instruments issued
by corporations CHARACTERISTICS OF BOTH :
Referred to as Debentures •
Loans that must be repaid on a future date ( maturity
date )
• GILTS : ◦
Fixed interest must be paid periodically to owner
Tradable debt instruments issued by state Market tends around issue
◦
price to vary price
or semi -
state institutions ( Kwasi -
State ( par value ) as market interest rates rise / fall
institutions ) >
little
Offer opportunity to make capital gains ,
RSA 's Gilts ( state ) and ESKOM Gilts but are still included in portfolio because
( semi state )
provides fixed
-
it the investor with constant ,
income .
cnnnnnnnnnnnnnn
( securities
exchange
LWWWWWWWWU :} '
company that creates the
opportunity for potential buyers and sellers of a
security
to come together for trading .
> New listings , trading
>
( JSE ) ( NYSE , )
Johannesburg Stock Exchange ,
worldwide LSE
