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Why debt is the new big thing in investment | MyPR.co.za

MyPR: Why debt is the new big thing in investment:

Wealth Migrate

Why debt is the new big thing in investment

Investors need to be aware of the long-term trends so they can make decisions that grow their investments, this means being well-informed about developments around the world and educating yourself on how these changes can affect you and your investment.

By keeping a wary eye on the trends and patterns, you can stay well ahead of the curve no matter what new trends appear – and the one that seems to be coming to the fore at present is debt.

Debt investments, including bonds and mortgages, provide fixed payments to investors and tend to be less risky than equity investments. They also usually offer lower, though more consistent, returns.

They are much less volatile than equities and investors can generally avoid the nausea-inducing highs and lows of the stock market. Mortgage investments come with set interest rates and are backed up by collateral in the form of property.

Since the 2008/2009 global financial crisis many banks have been in disarray, and one of the results of this is they have pulled back from financing property. The gap they have left has been filled in many cases by private equity firms, including Black Rock. These firms generally have low gearing (loan to value ratios) and can earn attractive monthly, quarterly or annual fixed-income returns.

This now-widespread trend used to be available only to sophisticated investors, private equity firms or real estate investment trusts (REITs), but technology has made it accessible to many more people, even investors with smaller investment minimums.

While the Covid-19 pandemic has increased the uncertainty levels, things have been fairly tumultuous for the past few years. Uncertainty tends to make investors move away from capital growth and head for fixed income, with its built-in lower risk.

This is the reason debt products have become more popular.

A big plus for these types of investments is that in the event of a default, a debt investment comes ahead of an equity investment, so it is inherently a less risky choice. In bear markets debt products are favoured as they allow investors to manage the downside more aggressively while still focusing on income.

No matter where you decide to put your money, there is always some risk when investing. However, an educated investor will make smarter, better-informed choices. Wealth Migrate, for example, is committed to educating investors through its Wealth University, among other online offerings, to ensure that investors do not make expensive and heart-breaking mistakes with their money.

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The Geological Miracle of the Witwatersrand

The very existence of Johannesburg is a geological fluke. Unlike most major global cities, Johannesburg was not built near a river, a coast, or a natural harbor. It sits 1,753 meters above sea level on a rocky ridge called the Witwatersrand (Ridge of White Waters). This ridge is the edge of the world’s largest known gold deposit, formed over 2 billion years ago when an ancient inland sea began to evaporate, leaving behind layers of gold-bearing conglomerate.

When George Harrison, an Australian prospector, stumbled upon an outcrop of gold on the farm Langlaagte in 1886, he triggered a “gold rush” that changed the course of African history. Within a decade, a dusty collection of tents and wagons transformed into a permanent city of brick and mortar. The “Main Reef” proved so vast that it eventually produced nearly 40% of all the gold ever mined in human history. This geological wealth dictated the city’s layout: the mining belt runs east-to-west across the city’s center, creating a physical divide between the wealthy northern suburbs and the industrial, working-class south. Today, while most mines within the city limits have closed due to the extreme depth and cost of extraction (some mines reached over 3.9 kilometers underground), the physical legacy remains in the form of “mine dumps”—massive yellow-white hills of crushed rock and sand that define the Joburg skyline.