Back to Basics in 2023

Need-to-know basics to build your wealth

- By Tlotliso Phakasi

Whether you’re a late investment bloomer or you’re hoping to join the working world and begin building your financial dynasty in 2023, it’s never too early (or too late) to start learning about the world of investing—and how to achieve your financial goals. To get you started on your journey, we provide a quick breakdown of the basic concepts and jargon you need to know in the first of a 2-part series.

What is investing?

Saving involves the accumulation of cash funds, usually by setting aside a portion of each of your pay cheques. By contrast, investing means buying financial assets such as shares, bonds, property, or cash instruments in order to earn a pro- fit and grow your wealth.

If you were to buy a house, for instance, you would hope that the value of the house would gradually increase over time, so that you could one day potentially sell it at a profit.

Likewise, if you buy shares in a company on the Johannesburg Stock Exchange (JSE), you hope that the value of the company—and therefore your shares— will increase over time, until they are worth more than you had paid. This increase in value is called a capital gain.

Also, while you wait for the right time to sell your shares, the company may further reward you for being an investor by paying you dividends, or a portion of its profits.