On 31 August 2009 trading starts for the fifth Make a Million competition. Last year, instead of buying actual shares for their competition portfolios, entrants had to buy single stock futures (SSFs) for the first time – a slightly more complicated and riskier game.

Buying an SSF does not mean buying the share; it means buying exposure to the share price movement. Because you don’t have to deposit the full value of the shares you’re interested in, a little money can go a long way – or really burn you if the price moves in the opposite direction than you thought it would!

How does an SSF work? You normally deposit about 15% (called margin deposit) of the amount that the shares would have cost you, but enjoy full exposure to the share movement. For example, if the shares are worth R10 000 when you buy your SSF contract and the share price subsequently increases by 10% (R1 000), your 15% (R1 500) margin deposit will yield a R1 000 profit – a return of 67%. But if the share price falls by 15%, for example, you lose your entire margin deposit – a negative return of 100%. If you need more examples, have look at my previous blog on how an SSF works.

How does buying SSFs differ from building a long-term, traditional share portfolio? With an SSF account:

• You could lose more than your capital when the share price falls quite sharply. (You may want to set up a stop-loss with your position to prevent this from happening.)
• You could leverage your profits, as you need to deposit only a fraction of the value of the underlying shares.
• You are usually less concerned with the business fundamentals of a company, as you could have lost either your margin deposit or your patience long before you see the true value of the company reflected in its share price. SSFs are more suitable to share traders than long-term investors.
• It’s easier to short a share. (Shorting is selling a share that you don’t own with the idea of buying it later at a lower price and making a profit.) If you believe that the share price is going to fall, you can just instruct your broker that the SSF contract is a short position.
• You generally pay lower brokerage.

And how does playing the Make a Million competition differ from holding a normal SSF account with a broker? Well, in exchange for standing a chance to win that million, you need to put up with a few restrictions:

• You can only deposit R10 000 per competition entry, of which R9 000 is used as your margin deposit and the remaining R1 000 acts as an additional buffer which earns interest. Nothing stops you from opening several accounts, though.
• Unlike a normal SSF account, you cannot deposit extra funds into a Make a Million account. When you have lost your margin deposit due to the share price falling, you are out of the game.
• You cannot keep your position open after the last day of the competition. Before the close of trading on 13 November 2009, you need to have only cash and no more share exposure in your Make a Million account. With a normal SSF account you could continue your exposure for as long as you please and just roll the 3-month contract over from one quarter to the next.

SSFs are great instruments for those stock market players who want to gear up their capital seven-fold and don’t mind losing that capital when they make the wrong call.

In less than a year, South African banks have dropped their prime lending rate from 15.5% to 10.5%. Under normal circumstances, one could expect some exuberance among consumers, but not this time round. Business confidence is low and consumers have witnessed retrenchments, property and equity markets losing much of the value that they’ve built up over the past years, and credit becoming scarce almost overnight.

Businesses would love you to channel the extra money left in your pocket after the bond rate cuts towards their cash registers, but should you not rather channel it towards your own bond repayments? Conventional wisdom screams ‘yes’ to the latter. And if you use our Killing your bond calculator, you may be pleasantly surprised at how big a difference even an extra R1 000 per month could make to your remaining bond term. If, for example, you still owe R500 000 on your bond and need to pay the bank R5 400 every month, depositing an extra R1 000 with every payment should decrease your repayment term by six years.

But settling home loan debt first is not necessarily the right answer for everyone. Running into cash flow problems is the cause of many foolish financial decisions, like selling fixed assets at the worst time in the market or applying for personal loans at much higher interest rates than the average home loan rate. Therefore first set up your own emergency fund – a high interest earning money market account containing about three times your monthly cost of living – for those times when the going may get tough. Owners of business start-ups or businesses still struggling with their cash flow, may want to build up an even larger cash buffer.

There are also ways of spending your extra money that could provide you with a much higher return than the interest on your bond. Enrolling for a course that increases your annual earning potential is one example of such a high-return investment. It seems like the average MBA graduate, for example, can expect his or her tuition fees back in the first year after studying – in the form of a much higher salary.

But these higher-yield investments seldom guarantee their returns, while you can be pretty certain that putting extra money into your bond will decrease your repayment term and will have the same effect on your pocket as earning interest at your bond rate. Without having to pay tax on it.

I don’t recall the exact moment that it happened, but I know that before the end of our first week of camping under the plane trees, watching the sun set over the river and the medieval city wall of Avignon, Provence had me under her spell. Though previous visits to street-savvy Paris, snowy Chamonix and serene Mont St. Michel proved that other regions in France also have their charm, the South has been luring me back like a homing pigeon since that first visit in 2001.

How can you enjoy the best of Provence without breaking the bank?

Start by choosing a quieter time of the year for your holiday. This year, in a momentary lapse of reason, we travelled in the middle of the French school holidays (normally running from the week-end closest to Bastille Day until the end of August). Bad idea. Not only is accommodation significantly more expensive, but you also have to contend with thousands of camper vans, cyclists and irate French drivers for roads that surely could only have been intended for two placid horses passing. Rather go during the six weeks of early summer (from 1 June to 14 July) or during early but still sunny autumn (September).

Try and book your flights more than five months in advance to get the early bird prices, or alternatively search for last-minute special offers. Check which airline is the cheapest by using a flight comparison website like travelstart.co.za. If you are flexible about your travelling dates, Travelstart searches the days around your specified dates for the cheapest fares. For example, the best deal for a return ticket from Johannesburg to Marseille in June 2010, all taxes included, is currently quoted at slightly over R8 000. If you prefer to take the train from Paris to Provence, the best quote for a return flight from Johannesburg to Paris during June next year is currently under R6 000. A return train ticket for two from Paris to Aix-en-Provence, for example, in the best price (not flexible) 2nd class retails for R1 662 (price for two people travelling together).

After years of struggling to navigate the official French railway site in French, I’m very happy to now see Raileurope.co.za not only quoting ticket and rail pass prices in South African rand, but also providing online tips on how to travel cheaper through France. I just wish I’d found out sooner about the discounts when you buy tickets in groups of two or more people (called Saver tickets), as opposed to solo travelling. I would have made friends right there in the queue with travellers to the same destination!

Whether you would need a car, depends where in Provence you’re going and what you’d like to do and see. Holidayautos.com is one of many sites comparing quotes from different car rental companies to find you the best price. But watch out. They – like their competitors – raise the prices every time you re-request a quote. It’s therefore best to use someone else’s computer to just browse for quotes and then make the final booking on your own computer. You can prepare to pay between R2 500 and R3 000 for seven days’ car rental. Remember to add diesel and toll fees to your budget, although a good French road map can help you to avoid toll roads and stay on the more scenic routes.

What about accommodation? If you own a comfortable home in a sought-after part of South Africa, home exchange is something to consider. Camping is also very popular in France and if you’re a nature lover you may find it difficult to choose between the many well-kept sites along the rivers. Tranquil Camping Bagatelle on the opposite side of the river from bustling Avignon remains one of my favourites – and they charge about 10 euro per night for two people sharing a tent. But if you’ll be more than two people travelling together or you prefer home comforts, and you want to stay in one area for a week or longer, you’d probably be better off renting a holiday home. This year I used Holidaylettings.co.uk and found a particularly good deal – a 3-bedroom, 2-bathroom home just south of Avignon for only 90 euro per night (if you don’t mind bringing your own linen and towels).

Good food and wine is probably one of the top reasons for going to France in the first place. But exceptional night-time dining does not come cheap and if you’re on a budget, you may want to restrict yourself to only a few such outings during your trip. Lunch time is different, though. Even top-end restaurants have a set 3-course menu at heavily discounted prices, and often a glass of wine and a shot of espresso are included in the fixed price. And don’t miss out on the French custom of buying fresh fruit, vegetables, cheese, tapenade, saucisson and warm just-baked bread at a different market every morning.

The good news is that many great Provencal activities – hiking, swimming in the lakes of the Verdon, strolling along the cobble-stoned medieval streets, admiring the French sense of style in towns like Avignon and Aix-en-Provence, or playing boules late afternoon – are free. You’d probably find that, once you’re there and your accommodation is paid for, you don’t need much more than 50 euro per person per day. Bonnes vacances!