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01 Jul 2010 17:47
Peru wants to invest R1 000 for 120 months with an annual escalation.
Maya replies: You are looking at an investment for 10 years, which would be a long-term investment. The risk of investing in equities (stock market) would be lowered by the fact that you are investing monthly so you do not need to worry about market timing.
Based on this, an equity investment would make sense.
Investment analysts are saying at the moment that you can expect an average return of about 10% from the stock market—but this could be higher if the economic recovery continues.
So if you investment R1 000 a month for 10 years (I am leaving out the escalation because you did not stipulate the amount), you would expect to have about R200 000 at the end of the period.
The million-dollar question is: What investment product is going to give you the best return over 10 years? That is a question for a crystal, ball but there are some basic points:
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