For any readers that are joining me for the first time, this series of posts sets out to track some investment options for people whose lives don’t revolve around finance. And, basically, to show that the Warren Buffett strategy of investing in the passively-traded equity ETFs is a pretty solid bet.

Here is a list of the more important posts:

  1. Week 0: The Investor Diaries: Naspers and Tencent – where I explain what investment options are available to someone with R3,500 (or thereabouts).
  2. The Investor Diaries: Week 3, and Investor Profiles – involving an allocation of personality to each investment-type. Which was my way of trying to make it interesting (it lasted about 3 weeks).
  3. In The Investor Diaries: Week 7, I decided to start breaking down the economic data for laypeople. And I started by picking some indicators.
  4. In Week 9, I talked about the “political narrative” of the indicators (which was basically an explanation of how certain economic indicators are there to allow comparison of SA with other countries).
  5. In Week 10, I talked about the “historical narrative” of the some of the other economic indicators – because they tell you how SA is improving or not over time.
  6. Then I realised that doing a once-off investment of R3,500 is actually pretty inaccurate – as most people save monthly. So in Week 12, I started tracking a new set of portfolios – as though the investors had a once-off investment of R3,500, with regular monthly investments after that of R1,000.
  7. Then, in week 20, I had a fun moment when Bloomberg had a data glitch with the db x-tracker MSCI World ETF.

Which brings me to today.

The Individual Once-Off Investors

22 weeks in:

Screen Shot 2014-08-20 at 6.50.33 AMAnd because graphs are prettier than tables:

Screen Shot 2014-08-20 at 6.51.00 AM

Now obviously, the Contented Pragmatist AKA Satrix SWIX ETF guy is pretty much the core of my more risk-averse self – so I’m a bit delighted by how he’s bearing up (first).

Although before anyone asks – this question does have a lot to do with fees. For smaller investors attempting to invest through their online banking facilities, those transactions costs and monthly fees just eat away at returns. For example, on a R3,500 investment, monthly fees of R19 mean that you’ll need to return more than 6.5% per year just to break even. That’s quite a burden.

But it does get alleviated if you’re constantly increasing your investment…

The Regularly-Saving Monthly Investors

Screen Shot 2014-08-20 at 8.21.06 AMAnd because graphs are still prettier, even if you invest monthly:

Screen Shot 2014-08-20 at 8.22.08 AM

The fun thing about this graph is that you can pretty much see, from the outset, that by far your greatest return comes from the habit of saving each month.

At this point, many people might start to say “Well, I see that actually, the FNB Share Builder isn’t doing so badly, eh?”

Here’s why:

  1. The larger your investment, the less onerous the fee component becomes (because paying R19 per month to manage R8,500 is a better deal than paying the same to manage R3,500 #math).
  2. But also, because I chose at the outset to invest in Naspers (because I’m a contrarian sort of soul).
  3. Being contrarian basically means that you buy against the market.
  4. So I was regularly buying while the market was low (have a look at the Naspers line in the Individual Once-Off Investor graph).
  5. And I was therefore well placed to benefit from the Naspers recovery.
  6. Going forward, that might change. Because if Naspers is peaking, and I’m regularly investing at the peak, then obviously, I’m going to be well placed to lose on the drop-off.
  7. I’m just throwing the caution out there. Because at this point, if I were holding Naspers shares, I might be considering a sell-off, and then investing into something else that the market currently dislikes.

The Indicators

Here’s what Week 22 looks like:

Screen Shot 2014-08-20 at 6.50.21 AM

Much has remained the same. As it does. But here are some graphs anyway:

Screen Shot 2014-08-20 at 6.49.14 AM
Bond yields are going down – so the bond market is improving. Presumably, now that the market has calmed down after last week’s African Bank panic.
Screen Shot 2014-08-20 at 6.49.25 AM
The exchange rate is weakening. Because it is. I’m just not convinced that anyone can really explain the short-term trend of exchange rates.
Screen Shot 2014-08-20 at 6.49.36 AM
Anyone feel like investing in gold? You could earn a return of general flatness.
Screen Shot 2014-08-20 at 6.49.46 AM
Crude oil continues to go down, thanks to a supply glut from the US and Saudi. Also, world fuel consumption has come down slightly. Or so I’ve read.
Screen Shot 2014-08-20 at 6.49.56 AM
Equities – still on the up.


Until next week!