By Cay-Low Mbedzi

(You could also win R1000!)

Are you ready for the #6MonthsRiskChallenge? This challenge involves investing just R100 per month in low-priced stocks (what some call “penny stocks”) on the JSE. I will choose five lucky INVSTRS at random at the end of the challenge, who will each receive R1 000 in their EasyEquities accounts.

The #6MonthsRiskChallenge doesn’t just challenge you financially, but mentally as well.  The challenge involves developing your mindset to make a monthly investment of at least R100 for the next six months. You can choose to invest all your money in one company or spread it out among many different shares.

In my opinion, the habit of consistency and commitment in financial management can play a crucial role in developing your personal wealth. If you are able to keep up your investment of R100 or more over the months, you could see some impressive growth figures. The point is to keep doing it, month after month – no matter how old or young you are; no matter if you are a man or woman, boy or girl. Anyone and everyone can participate in the stock exchange, and it doesn’t have to cost you a lot. Even as little as R100 per month.

But what is the #6MonthsRiskChallenge? And why have we chosen penny stocks?

Traditionally, penny stocks were those valued at less than one rand, hence the term “penny”, which is the British equivalent of a cent. But because of the excellent returns delivered by the JSE over the years, we have increased the scope of the definition, for the purposes of this challenge, to five rand. This will also give you more choice of shares to invest in.

Small to medium cap stocks are often seen as the most neglected on the JSE. This challenge will force us to focus on stocks priced between 1c and R5 which we, as retail investors, can commit to for the next six months. The #6MonthsRiskChallenge will contribute thousands of rands (maybe even tens of thousands) in funding for the companies that fall into this market cap bracket.

Don’t see the good in these small “cheap stocks”? To give you a better idea, small “cheap stocks” mostly very volatile. They have potential for outrageous growth over time, so this means R100 alone can get you sometimes thousands of shares, at the price of cents. Always remember, the cheaper the stock the more of a shift you can expected at the slightest change price.

Say a share costs 0.02 cents. If it rises to 20 cents, that’s already a 1 000% return. So your R100 will now be worth R1 000! If, over the years, your share hits the R1 or R2 mark… just imagine! That’s when you know your R100 investment risk was worth it.

I love the saying, “Where there are cents, rands can be made.” This means there could be potential for growth where a share is still in cents, or at least less than R5. You need to make it your responsibility to identify the right company that shows significant potential for growth through the dealings or acquisitions they are making, etc.

A perfect example would be ArcelorMittal, which has already risen by more than 1 200% over the past six months, from 32c to R4. This is just one example, and there are many more.

Penny stocks over the past few months globally have been showing significant growth. Despite the risks associated with these stocks, global attention, especially amongst retail investors, has shown a trend of great returns – sometimes in a shorter time than expected, sometimes longer.

Some in this challenge will make great returns, while some may drop out. But that’s what makes it fun, because any day can bring a surprise in the share you’ve purchased.

How the challenge works

Simply invest R100 or more per month in any company valued at R5 or less, for six months. You can invest all your cash in one company, or spread it across different companies.

The easiest way to invest is through EasyEquities. On the site or the app, you can scroll through available stocks (without clicking on them) to see what their selling price is, as well as get an idea of their recent performance.

Visit https://easyequities.io from your mobile or desktop browser, or download the EasyEquities app in your app store. Log in or register, then scroll down to the “SHOW ALL PRICES” tab. From there it’s just a matter of choosing your penny stocks to invest in. (Make sure your account is funded before you try to buy any shares.)

But wait… are there risks involved?

Well it’s called a RISK challenge for a reason. Of course, all stock investment has the risk of losses. But overall, putting your money in equities is a very sound investment. So, yes, you could lose a portion of your R100 over time, but on the bright side you’ll receive hundreds if not thousands of shares for only R100, which could mean fantastic exponential financial growth over the years.

And remember this is a personal development challenge which is determined by your financial abilities and commitment. Risks will always be there; it depends if you feel it’s worth it.

Appreciation can be endless, but depreciation is limited to what you’ve invested. The question is, is your R100 per month worth the #6MonthsRiskChallenge?

How to enter

Send an email to caylowraphael@gmail.com with your name, email address and EasyEquities account number. Then start your investment journey! It’s as simple as that.

We will do the lucky draw on 1 November 2021.

Feel free to share your progress on social media using the hashtag #6MonthsRiskChallenge.

Happy investing!