what is up ladies and gentlemen and welcome back once again to casual cash on this channel we talk
about finance we talk about investments and we also talk about personal wealth
and how you can build your financial standing grow your income and hopefully have more freedom and
choice in life in the process so today we're going to talk about one of my favorite types
of investments which is a low-risk passive income generating investment that grows slowly over time
these are the type of investments that should protect your capital if you ever need it
and pay you out dividends or income on a regular basis without you having to
do anything that means that you would still be making money even while you're sleeping
the beauty about passive income investments are that if you get enough of them you can formally
retire or perhaps put in a better way you would have the option to spend your time however you
want and choose the job or business that you want to do with your time or to do nothing but the key
is that you would have the choice so what we're going to do today is talk about this investment
which is a specific unit trust that i have in my own portfolio we're going to go through all
the details and the numbers and give you the information that you need and at the end i'll
show you my investments in this fund and the exact income that i've received from it and show
you how you can buy it on easy equities if you so choose and it's the right investment for you
now this investment came around for me when i was looking to put 25 000 rand into an investment
for my portfolio as you might have seen on the channel i do have some smaller riskier stocks
but in order to diversify the risk in my portfolio i wanted something safe and something that would
bring me income so i spent the next five days listing every single income fund that
was available to me at the time both local and offshore the list came to about 25 options and i
narrowed that down from there and after looking at the details eventually this fund came out on top
and i invested my money so in my mind at least it's the best option commonly
available in south africa for a capital save income fund so let's get right into it
the fund that we're talking about today is called the prescient income provider a2 and as the name
suggests it's managed by the firm prescience investment management prescience been around since
1998 so nearly a quarter of a century and its income fund is managed by a team of nine people
there's tons of information about the company on its website but let's start diving into the
investment itself very simply put this fund will give you roughly five percent income per year paid
monthly which slowly grows and its unit price should never lose value over any three months
so let's chat quickly about it not losing value we'll get into the income side of things but how
is that possible we've all seen stocks rise and fall on the jsc so how is it that a fund cannot
lose value well the fund claims that their aim is to return cpi plus three percent per annum through
a full interest rate cycle while proving stability by aiming never to lose capital over any rolling
three month period what that means quite simply is they invest in very safe assets like local and
offshore money markets bonds property preference shares inflation linked bonds and derivatives
so when you break it down and take a look at their funds monthly returns even when the pandemic hits
at this point over here and we went into lockdowns in march most markets dropped off a cliff and this
spin fund went down by only 2.8 and the next two months it went back up 1.9 1.1 making it higher
than february in just two months so right here is the graph of the unit price over the last six
months now you can see it goes up and down a bit but it has a slow and steady growth in its price
look we're talking very small movements maybe one to four percent a year but with low risk comes
low rewards at least on your money's capital but if you add in the distributions or the income it
tends to perform quite well especially when it's compounded now let's chat about the income side
of it which is where it really performs now when i said i went through a lot of income funds i went
in detail through 25 of the top income funds and i can tell you that many of them only give income of
one percent or two or three percent a year and for reference my investec account gives three
point seven five percent a year there was only a handful that had more than that and only about
five that had over four percent interest year but the president's income fund which i went with
has an average of five percent income paid out per year and the nice thing is that they
pay it every single month like an extra salary not all of the funds do that very few in fact
so if you invest a hundred round you should get 42 cents every month and five brand a year and as
the fund grows by a few percent a year the income will grow with it like an annual increase on your
salary now you can see here the amount varies each month the cpu which is cents per unit by the way
but you can see it's very similar each month now depending on what you want to use this
for you can use the money each month like an extra salary or reinvest it back and get
some compounding action to increase the income above its normal growth but that's up to you
now because this is casual cash i try to be open about the numbers so i'm going to show you the
units i have in the fund and the income they've generated and after that you can take a look if
they're right for you so i bought a total of 17 709 units of the prescient income provider a2
on the first of september 2021 at a price of one rand uh four one one seven cents
per unit that's a total of twenty five thousand round that i bought since then the unit price
has gone up slightly to 142 i've made 0.62 or 155 rand and 84 cents capital growth
but in terms of income i've put on the screen the income and the trading costs that i've received
since then but to make it easy it's a total of 342 rand and nine cents over three months
which is 114 rand a month about 1400 rounds a year 1 400 and exactly 5.47 income per year
uh higher than the interest of almost all bank accounts and with nearly as little risk so that's
everything you need to know about the prescient income fund a2 which for my needs was the best
income providing fund available in south africa if it's something you want for your portfolio
it's easy to buy on easy equities it's under the unit trust section and just search for the name
it's that simple as always don't take my word for it always do your own research and make
sure it's the right investment for you but that's it for today's episode i hope you liked the video
uh and you enjoyed the hard work that we put into it so you don't have to
and if you want more on finance investing personal wealth you're welcome to subscribe to the channel
where we also show all my investment decisions in my portfolio all the wins and mistakes
so you don't have to make them and any questions you're welcome to ask
in the comments but that's it and until then i'll see you guys next time cheers