We need to start thinking more long-term when it comes to saving money. We tend to focus on saving up for a deposit for a car or saving up for a holiday at the end of the year. That’s all good and well but we also need to have long-term investments.
South Africans don’t have a good saving culture, we are great at spending, myself included. (http://www.fin24.com/Savings/News/South-Africans-among-the-worlds-worst-savers-20150707 )
It’s not enough that we have money in our cheque/savings account with your bank. We need to explore other options that are easy to undertand and meet your investment needs.
As someone young, the investment opportunities are endless and we have one important aspect on our side when it comes to investing and that is – TIME!
Investing/saving has been made lot easier with the products on offer. Have a look at the tax-free savings account that the government has introduced. It’s a great opportunity to save and not pay any tax on your interest. This allows you to have great returns which will make your back-pocket smile.
Let me highlight the rules of the investment game:
Rule number 1:
This the most important rule hence its at number 1. Create a standing/debit order for your investment/saving. This is very important becase many people only save after they have paid all thier expense which means you save very little or nothing.
The guideline is to save approx 10% - 15% of your income, this guideline will differ for different people.
Rule number 2:
You should only start investing once you have paid off your credit card, store accounts or any other debt besides your car (if you have the money to pay it cash then do it) and your bond.
If you start investing while you have all this debt it would technically eat into your returns for example, if your credit card payments are at 16% per year and you are making a return of 13% on your investments you have a -3% deficit.
Rule number 3:
Do invest in products that you do not understand. This makes it very difficult for you to understand the structure and what would affect that product,
In the next article, I’ll be cover more rules you should keep in mind when investing.
Rule number 4:
Try by all means not to withdraw funds from your investment unless you have reached your goal, rather reduce your expenses.