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In this article we provide readers with a list of alternative investments for South African investors to explore. We look beyond South Africa's stock market the JSE, and focus on innovative and different investments South Africans wouldn't have dreamt about making a couple of years ago.
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So looking for investments other than the usual shares, unit trusts and properties?
Lack luster returns from the markets recently (especially the local markets), financial fraud not picked up by auditors (as was the case with Steinhoff), declining company profits and profit margins has made not only South African. but investors the world over look for alternative markets to invest in as well as different asset classes private small scale investors could not invest in in the past. The alternative investments we will take a look at include:
- Bullion Vault
- Easy Equities Off Shore investing
- Fed Group's Impact Farming investments
- Whisky Direct Invest
Bullion Vault
This online platform allows for small and large scale investors to invest in bullion (which in the past has been prohibitively expensive for small investors). The following is explained on Bullion Vault's website.
So if you are keen on making investments in gold, silver or platinum Bullion Vault may be a good place to start.
Visit them at: Bullion Vault
The image below shows a few quick stats regarding Bullion Vault
- BullionVault changes all this. It enables people from all over the world to own professional market gold, silver and platinum and keep it in any quantity in officially recognized bullion vaults in locations around the world.
- All BullionVault bullion is held in Good Delivery form. So when you come to sell, your buyer is able to trust the purity and weight, which is guaranteed by BullionVault itself because we know that you never had the chance to corrupt it.
- So the dealing spread for gold is typically 0.4%, about one-tenth of the equivalent cost charged to private customers for gold coins and small bars.
- You can buy just a small portion of a bar. You can trade on-line in increments as small as 1 gram - currently about $37 for gold.
- BullionVault is not a unit trust / mutual. There is no 5% front end subscription load. When buying gold, silver or platinum on our order board you pay a commission whose maximum rate is 0.5%, falling progressively when you invest above $75,000 to the spectacularly low rate of 0.05%. When buying or selling at the Daily Price you pay a flat commission of 0.5%. Daily Price orders placed in British Pounds, Euros or Japanese Yen incur an additional 0.3% currency-switching fee.
- Storage charges for gold are down to wholesale rates of 0.12% pa ($4 per month minimum) with insurance included. That's less than a tenth of the storage fees charged by retail banks, and less than one-third the annual fees charged by typical exchange-traded gold funds (ETFs). Storage charges for silver and platinum are 0.48% per year ($8 per month minimum).
- BullionVault users also save money because they deal directly with each other, willing seller to willing buyer, by using our order board.
- You make a further big saving at settlement time too. You don't have to arrange for expensive armoured courier bullion collections.
So if you are keen on making investments in gold, silver or platinum Bullion Vault may be a good place to start.
Visit them at: Bullion Vault
The image below shows a few quick stats regarding Bullion Vault
Easy Equities US dollar offering
Easy equities makes it easy for South Africans to buy some of the best known brands and companies listed on US markets, What makes this offering even better is the fact that one can buy a set US Dollar amounts or enter your own amount that you want to invest, and you can decide whether the said investment is a recurring or once off investment.
Even better is the fact that if you only have a small amount of money to invest, say $20 dollars and you want to buy Coca-Cola shares (currently at $45 dollars a share) you can buy a portion of a share. So for your $20 you would get 0.44 Coca-Cola shares.
This is a great way to get exposure to shares listed on US stock exchanges and to invest in some of the biggest brands and companies in the world. It also provides a great way in which investors can take money out of South Africa and invest it outside the borders of South Africa. Not the fees paid to banks are pretty steep to move money out of SA via SWIFT payments so when considering this make sure enough money is transferred so that the SWIFT fees doesn't eat up half the money you were planning on transferring out of South Africa.
See and read more regarding Easy equities offering at: Easy Equities
The image below shows just some of the US listed stocks you can buy on Easy Equities easy to use platform
Even better is the fact that if you only have a small amount of money to invest, say $20 dollars and you want to buy Coca-Cola shares (currently at $45 dollars a share) you can buy a portion of a share. So for your $20 you would get 0.44 Coca-Cola shares.
This is a great way to get exposure to shares listed on US stock exchanges and to invest in some of the biggest brands and companies in the world. It also provides a great way in which investors can take money out of South Africa and invest it outside the borders of South Africa. Not the fees paid to banks are pretty steep to move money out of SA via SWIFT payments so when considering this make sure enough money is transferred so that the SWIFT fees doesn't eat up half the money you were planning on transferring out of South Africa.
See and read more regarding Easy equities offering at: Easy Equities
The image below shows just some of the US listed stocks you can buy on Easy Equities easy to use platform
FedGroup: Impact farming
A relatively new concept in South Africa is the impact farming offering from Fedgroup. They allow investors to invest into individual blueberry bushes that yields a crop twice a year, or in bee hives which pays out when honey is harvested twice a year or investors can invest in solar panels in which investors receive a monthly payment as those using the solar panels pay for the electricity supplied by the solar panels. Fedgroup impact farming has a very effective app through which investors can buy into any of their product offerings. Withdrawing funds is extremely easy too. The images below shows the current product offerings investors can invest in via the Fedgroup Impact Farming Application
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The current offering is R300 per blueberry bush, R4000 per bee hive and R5000 per solar panel. For more information visit Fedgroup's website. FedGroup
Whisky Invest Direct
And lastly we get to our personal favourite alternative investment which is Whisky Invest Direct (created by the same owners of Bullion Vault) it allowes investors to buy small chunks of pure alcohol aging and maturing in barrels. Costs in the past has made it almost impossible for small time investors to invest in casks of maturing whisky. Whisky direct buys newly casked barrels of whisky from known and reputable distillers and then sell the casks in smaller amounts (1 litre of pure alcohol) so that small time investors can get exposure to the lucrative whisky market.
According to the company's website:
WhiskyInvestDirect is a new business which seeks to change the way some of the 3,000 million litres of maturing Scotch whisky is owned, stored and financed. The intention of the service is that self-directed private investors will, for the first time, profit from owning maturing whisky, in much the same way as self-directed gold owners can profit from owning large bar gold through BullionVault.
WhiskyInvestDirect gives private investors access to the market for wholesale maturing whisky – a physical asset held in bond with a growing global demand, limited supply, and a solid history of long-term appreciation. Before WhiskyInvestDirect, only distillers and other industry participants could trade maturing whisky and benefit from the returns it typically offers. Now, private investors can buy and sell maturing whisky on the same platform as professional participants such as distillers, blenders and bottlers.
The maturation phase of whisky production
On average, Scotch takes 10 years to mature. The distiller’s goal is to develop the market and brand for their product while the whisky is maturing. The difficulty for the distiller is in knowing 10+ years in advance how much stock they need to produce to support their brand. If they under-produce they cap the upside of their future brand potential. But if they over-produce they may find themselves over-borrowed and potentially risk the long term future of the distillery.
Unfortunately no-one can make a reliable sales forecast ten years into a brand's future. So because most independent single malt distillers consider the risk of over-production outweighs the marginal extra profit, the industry tends to under-produce. WhiskyInvestDirect solves this problem for distillers in a way no-one has done before, by offering them a new inventory solution. While the whisky is maturing it will be bought and owned by private crowd-funders who can benefit from its appreciating value. And when it is mature, or sooner, it can be sold via our on-line market place to the highest bidder amongst:
The image below shows the live order board where investors can buy and sell whisky's of different ages and maturity of various distilleries either directly from Whisky Direct Invest or from other private investors that owns the Whisky you are looking to buy.
Note there is a minimum £3 fee per month for storage, insurance etc, so those looking to move funds offshore to buy whisky should take into account the SWIFT fees the local banks will charge to move money offshore and take into account the minimum monthly storage fee of £3 . The bigger the investment the smaller the relative fee for buying and owning the Whisky. The image below shows the live order board where one can buy and sell litres of pure alcohol in much the same way one traders shares.
According to the company's website:
WhiskyInvestDirect is a new business which seeks to change the way some of the 3,000 million litres of maturing Scotch whisky is owned, stored and financed. The intention of the service is that self-directed private investors will, for the first time, profit from owning maturing whisky, in much the same way as self-directed gold owners can profit from owning large bar gold through BullionVault.
WhiskyInvestDirect gives private investors access to the market for wholesale maturing whisky – a physical asset held in bond with a growing global demand, limited supply, and a solid history of long-term appreciation. Before WhiskyInvestDirect, only distillers and other industry participants could trade maturing whisky and benefit from the returns it typically offers. Now, private investors can buy and sell maturing whisky on the same platform as professional participants such as distillers, blenders and bottlers.
The maturation phase of whisky production
On average, Scotch takes 10 years to mature. The distiller’s goal is to develop the market and brand for their product while the whisky is maturing. The difficulty for the distiller is in knowing 10+ years in advance how much stock they need to produce to support their brand. If they under-produce they cap the upside of their future brand potential. But if they over-produce they may find themselves over-borrowed and potentially risk the long term future of the distillery.
Unfortunately no-one can make a reliable sales forecast ten years into a brand's future. So because most independent single malt distillers consider the risk of over-production outweighs the marginal extra profit, the industry tends to under-produce. WhiskyInvestDirect solves this problem for distillers in a way no-one has done before, by offering them a new inventory solution. While the whisky is maturing it will be bought and owned by private crowd-funders who can benefit from its appreciating value. And when it is mature, or sooner, it can be sold via our on-line market place to the highest bidder amongst:
- other investors using the exchange;
- the original single malt distiller, now wanting more mature product to sell;
- one of the major blenders, needing mature spirit;
- our own blending and bottling company, James Eadie Ltd.
The image below shows the live order board where investors can buy and sell whisky's of different ages and maturity of various distilleries either directly from Whisky Direct Invest or from other private investors that owns the Whisky you are looking to buy.
Note there is a minimum £3 fee per month for storage, insurance etc, so those looking to move funds offshore to buy whisky should take into account the SWIFT fees the local banks will charge to move money offshore and take into account the minimum monthly storage fee of £3 . The bigger the investment the smaller the relative fee for buying and owning the Whisky. The image below shows the live order board where one can buy and sell litres of pure alcohol in much the same way one traders shares.
We hope the above gives investors a few ideas about what to invest in next, or where to consider looking at investing next. Note we do recommend a wide variety of asset classes to be invested in, but by suggesting the above investments we are not saying investors should not continue to invest in the stock market. A healthy and balanced share or unit trust portfolio should form the backbone of any investors portfolio. The ideas and suggestions mentioned above should be seen as supplementary to stock/ unit trust portfolio.
Disclaimer: We have investments in all four products mentioned above.
Disclaimer: We have investments in all four products mentioned above.