Question:
I am a newbie investor. At the moment, my 'portfolio' (if that is what I can call it at this stage!) consists only of one investment flat which is worth R350 000.

Aside from putting extra money into my bond, please let me know how I can invest to counter the effects of inflation. I don't know much about investing, but I know that every time inflation goes up your salary loses value. How can I invest to prevent this, especially since I don't really know how the stock market works and also bearing in mind the current state of our economy and the volatility of the JSE?

Is it a good idea for me to invest in something like art (which I know a lot about) until I have a better knowledge of how the stock markets work?

Answer:
The short answer is to start educating yourself about the stock market if that?s the way you want to go. At the end of the day most investments are affected by the stock market so you can?t really avoid exposure.

A safe entry to the markets is through unit trusts and SATRIX. The selections of stocks are pretty much made for you. These are, however, medium to long term investments. Log onto www.satrix.co.za and you will get an idea of how it works.

Long-term investing in the stock market is your best bet for beating inflation.

Unless one is really clued up about the market investing in art can be a risky business. Art can be very dependent on trends and fashion ? nothing scientific here. In addition, it is not the most liquid investment as it could take a while to find a buyer.

In tough economic times people put purchases of this nature on hold. Unless you can pick up a Picasso for a R1000 I would be cautious.

In the meantime go and see a financial adviser who can help you formulate a strategy.

Diversification is the key to building wealth so a good investment portfolio would consist of a structured retirement vehicle like a retirement annuity, property, stocks and interest bearing products like a money market account.