Find out more about investing in art, parking bays and alpacas! Wait… did you say alpacas?
For some, the idea of investing conjures up images of men in dark suits, flashing computer screens and baffling terminology. But not all investments have to be like this. Here is a list of some of the unusual investments that South Africans are making.
Buying and selling farm animals is one of the simplest models of investing to make a return. You have to make sure that the animal stays healthy and grows or breeds, and then you sell it or its young for a profit. Since most would-be investors don’t have sufficient grazing space in their back gardens, farmers are now offering the public the opportunity to invest in livestock like cows or alpacas to reap the benefits. You purchase the animal, you pay the farmer a “maintenance fee”, and you get the income from the sale of its young or, in the case of the alpaca, its wool.
For example, in the case of a cow, you pay around R10 500 to purchase the animal, and pay the company R295 a month to take care of it. The cow’s offspring are then sold for around R4 500. There are a number of variables, including insurance fees in case the cow dies, and fluctuations in the weight of the calf and the price of beef, but the returns are there if all the elements work in your favour.
If your cattle investments really pay off, you could one day even work your way up to owning a share in rare game or big-horned buffalo and realise returns of up to 37% annually like some of South Africa’s captains of industry.
Property investment used to be the domain of big business. But recently, crowdfunding has allowed individuals to invest in small portions of property developments and realise the returns that used to belong only to large-scale investors. Global property crowdfunder Wealth Migrate has recently been granted a South African licence by the FSB, and will be offering South African investors access to developments for as little as $1 an investment.
And if you’d like to buy a piece of property that you’ll actually own, you can pick up a CBD parking bay in Johannesburg or Cape Town for R50 000 to R120 000, and continue to earn a monthly rental of R500 to R1 200 for perpetuity. “Although these parking bay opportunities are difficult to find, they offer great returns, and cost you nothing other than the upfront purchase price and very low levies,” says Ivo Nestel, a property broker with Broll.
If you don’t know anything about art but you know what you like, then buy what you like. Obviously, there are art investors who purchase and sell pieces strategically, but for an entry-level investor with little knowledge of the art world, the idea is to buy artworks that appeal to you, with the possibility of making a profit along the way.
“I wouldn’t advise that you purchase art purely for the sake of investment, because you never know what’s going to happen to the artist’s career or whether you’ll be able to buy or sell,” says Lerato Bereng, an associate director at Stephenson, a gallery in Johannesburg. “But generally speaking artworks appreciate more than they depreciate, so approach it cautiously, research the artists to see if their career suggests that they will have a future in art, and then buy pieces that you like.”
You can pick up reasonably priced works at affordable art fairs – the Turbine Art Fair in Johannesburg and That Art Fair in Cape Town are great places to start.
for people who want to invest in unusual projects, there is a wealth of opportunity.
As you can see, for people who want to invest in unusual projects, there is a wealth of opportunity. Of course, as with any investment, it pays to do your research and only take on an acceptable level of risk. They key is to be open to ideas, but not foolish about out potential returns. Until you really know what you’re doing, don’t invest large sums in untested concepts – and remember that diversification is the watchword of a successful portfolio, so try your hand at a lot of different investments to find the one that works for you.