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Investment,

A matter of index

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The performance of an investment may be an investor’s main consideration to determine its success. However, it’s also important to measure how it stacks up against a relevant benchmark, often known as an index. If you’re a novice investor, it may be very beneficial to have a good knowledge of an index.

What is an index?

An index is a measure or indicator of something. In the investment world, it generally refers to a measurement of change in the financial market. Essentially, it measures the performance of an investment against listed securities or a specific industry.

It should be understood that indices are comprised of a hypothetical portfolio that represents a subgroup of the market – you can’t invest directly in an index. In South Africa, the Johannesburg Stock Exchange (JSE), FTSE/JSE All Share Index (ALSI) and Top 40 are prominent indexes.

Just like investments, no two indexes are the same. There are nearly 100 indexes in South Africa which means that investors can have a comprehensive overview of the performance of different industries.

As mentioned above, you can’t invest in an index, but investors’ can try to match their performance as accurately as possible – this is known as passive investing. Approaches to this type of investing include holding identical shares with equal weighting as the index that you choose.

Concentration

It’s vital to understand concentration because it can skew the performance of stocks in an index. Basically, if a stock has a higher weighting in an index, it’s performance can tilt towards the performance of the stock.

For example, Naspers makes up 20.35% of the ALSI. This means that fluctuations in the price of Tencent – a multinational entertainment and technology holding company (in which Naspers has a majority shareholding) can skew the performance of the ALSI.

To even out the slant, the FTSE/JSE Capped Swix All Share Index was introduced. This has aided the necessity of having a fair index that proportionately characterises the market.

It’s also important to note that an index can influence the stock of which it is comprised. The following example can help give you a better understanding of the principle. When a certain stock is added to a major index, the share price can potentially increase. The reason for this is that its inclusion as a prominent index can impact demand for that specific stock, which can drive up the unit trust prices.

Selecting an index

Here’s the crux of the matter. An investor should select an index that has an appropriate benchmark aligning with his/her financial objectives as well as restrictions of his/her portfolio.

An excellent example of an inappropriate benchmark is comparing a unit trust that is mostly invested in equities to the performance of a bank savings unit trust. Why? Because the risk of taking on equities is much higher than the risk of bank savings.

If all of this information is daunting, it’s worth speaking to an independent financial advisor. He/she has the knowledge to explain and advise, on which indexes align with your financial goals.

Here's how pink diamond investments can give high ROIs
Investment,

Here’s How Pink Diamond Investments Can Give High ROIs

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Since the year ’08, the world economy has been going through tough times where the number of nosedives is much higher than ups! This is the primary reason why traditional investment mediums are losing their credibility since they are unable to deliver satisfactory results.

Investors now are keener on putting their money into investment mediums that are secure, stable and doesn’t depend on the market conditions. Two of the most popular investment mediums in recent years are the real estate sector and pink diamond investments. Both of these are physical commodities and investing in tangible mediums has a lot of advantages.

This post can be considered as a dedicated pink diamond blog which is why we will be discussing how pink diamond investments can give high ROIs to investors. Please pay attention to the sections that follow:

Pink diamonds don’t need much room for storage and they are durable

Pink diamonds can be moved, stored, transferred and liquidated easily. Thus making transactions and upkeep much easier, compared to traditional investment mediums.

Furthermore, since diamonds are the hardest naturally occurring material ever known to humans, you wouldn’t need to worry about natural wear and tear of your invested diamonds.

This means you won’t be spending tons of cash to keep your invested diamonds safe and when you do sell them off, you will be reaping the benefits of impressive ROIs. Get the idea!?

Market conditions don’t affect them

Market conditions don’t affect pink diamond investments since they fall under the physical commodity category.

Furthermore, the diamond industry is not dependent on the global financial market meaning whether the market is up or down, the diamonds you have invested in won’t depreciate in value.

This is great since you will be able to get your hands on some cash easily, irrespective of the financial condition of your country at any given point in time.

It is a sensible decision, by all means

It is expected that there will be a rapid increase in the demand for pink coloured Argyle diamonds especially from large countries like the USA, China and India.

The reason is simple – the middle-class population in these countries now has access to large amounts of disposable income. Furthermore, the millennial mindset has changed over the years. Instead of spending excess cash, they are now investing in stable investment mediums like Argyle pink diamonds so that they can look at their retirement years with a smile.

Now if you take the expected rise in the price of Argyle’s pink diamonds and the global demand into account, investing in this stable medium makes sense, doesn’t it!?

Pink diamonds have increased in terms of value and demand over the years globally. Furthermore, the imminent closure of Australia’s Argyle mine in the year 2020 is making pink diamonds a rare item thus contributing to their exponential rise in value. To sum it up, whether you are a serial investor or someone who is looking to diversify their investment portfolio, go for pink diamond investments. For the best results, it is recommended that you get in touch with leading and renowned diamond investment solutions providers.