Many older people are struggling to survive financially. It has become akin to a disease all over the world. Let's call it "poor pensionitis". This saddens me, because it really is, in most cases, a preventable and even curable disease.
First I want to address 'young' people. (Nowadays I regard anybody under 65 as youngsters).
When you were really young (I mean when you were an infant) your parents took you to a doctor or a clinic to be inoculated against a variety of diseases. Without those jabs, you probably wouldn't have survived. You should be inoculated against financial disasters now to prevent the disastrous financial woes so many older people are suffering from. The 'inoculation' I'm talking about, is simply to save something every month. Do I hear you say: "I can hardly afford to feed, clothe or educate my family, and here you are asking me to save? Are you crazy?" Actually you are crazy if you don't save. Saving is simple for everyone no matter how small your salary is. Let me explain:
The 'Cappuccino' Solution.
Capuccinos cost abour R23 per cup (I'm using this merely as an example, so don't go telling me that cappuccinos are cheaper or more expensive). Do you actually need to drink a cappuccino every day? Of course you don't! So save that R23 per day and you will have R690 to save every month. (That's R8280 per year at 0% interest or R82800 in ten years!) Substitute the cappuccino for anything that you really don't need. Off-hand I can think of thousands of commodities, expensive holidays, you-name-it that I have splurged on through the years that I could ill afford. Had I saved a fraction of the amount I spent on those 'cappuccinos' I could have been a multi-millionnaire today. Think about how many 'capuccinos' you consume every day. If you stop doing that and put that money away in an investment medium, you have started the process of inoculation. So I hear you ask, "Yes, but where can I invest without my investment being eaten up by inflation and taxes?" Let's talk about taxes first.
The Tax Bug
One of the main 'germs' causing the disease of 'poor pensionitis', is the exhorbitant taxes even pensioners have to pay, in spite of the fact that they have worked hard during their long lives and contributed millions to the fiscus during that time. So what are you going to do about that? Live with it, that's what! There are a few things you can legally do to reduce taxes, but this is a subject for an entirely new article, so all I'm going to say about that, is: "Get some good expert advice!"
So where or in what do I invest?
There are many books written on this subject, so there is no way I can answer this question in one short article. I would rather tell you what NOT to invest in. The first 'investments' I would stay away from and avoid like the plague are the many 'get-rich-quick' schemes that have ruined the lives of so many people. The old adage 'If it sounds too good to be true -- it is too good to be true' should be your motto.
The second investment medium I would avoid is savings accounts in banks. Having said that, every month I do put a small amount into a bank savings account for a specific purpose. (In our case, travel). In other words I put the amount in there to keep until we use it. What I'm talking about is putting large amounts of money in savings accounts, thinking that you will 'make some money' or even get rich. Unfortunately in the long term, the money you have 'saved' and the small amount of interest you will be paid, (even compounded) will mostly be consumed by inflation and taxes.
The third 'investment' I would avoid is endowment insurance. So many people are 'talked into' endowment policies by insurance agents only to find that the wonderful-sounding 'illustrative value' of the policy is nowhere near the stated amount when you eventually get paid out. I'm not saying that life insurance is unnecessary or bad... I'm saying that as an investment medium, endowment insurance stinks. Buy the least expensive insurance you can afford, which is life-insurance, until you have accumulated so much money in your proper investments that you can be regarded as 'self-insured' and discard, or make your life insurance policy 'paid up'.
So where do you invest then? This will depend on your so-called 'risk profile'. But whatever your risk profile, you should be investing in the following three categories: 1) Property 2) Cash and 3) Equities. Thirteen years ago, a few friends, family and I started an investment club.It's whimsically called 'The Okes Investment Club.' At the moment we have about R1.3 million invested, in spite of the fact that some members only contribute about R250 per month. To give you an example of what can be achieved: One of our members signed a debit order with his bank to pay R828 monthly into the Okes Club on behalf of his family. The family now has over R250000 to their credit!
Whatever your profile, get yourself educated about the different forms of investment and ask for expert advice. Having said that, please be careful, there are many so-called experts that will help you from the frying pan into the fire. That is why I preferred to educate myself. There are some amazing programmes available for download that will teach you about investing on the stock exchange. If you are still scared to do it yourself, for heaven's sake go and speak to a broker.
Now I'm going to address the 'old toppies'.
I celebrated my 76th birthday two days ago. When I was almost 50, I lost everything through unwise decisions and mistakes which I will not go into here. It was the best thing that could ever have happened to me. I believe that at least once in their lives, everybody needs to be in deep doo-doo with only their noses sticking out. It is a great character-builder and will show you - once you have pulled yourself up and out of the sh*t by your bootstraps - that you are a survivor and that it really wasn't that bad after all.
During 1989 I lost my job when the principal vet told all us assistants that he was selling his practice. Somehow I managed to convince a bank to lend me the large amount of money I needed to buy one of the principal vet's branch practices with absolutely no collateral! Since then I've built it up and sold it to my assistant last year.
So, could I now at age 74 retire? Not on your Nellie! Fortunately I started investing in 'passive income' 'vet shops' since 2004. I now have three of them and an internet business that keep me out of mischief and provide me with enough to live on comfortably. But, I only managed to start investing for my 'old age' about 13 years ago when I started the Okes Investment Club.
So why am I sharing my abridged life story with you? Well, if you're older than 65 and you are struggling to make ends meet, maybe my story will inspire you and motivate you to stop complaining and start living. If you tell me: "But I'm too old to start something new!" I'm afraid you will not get any sympathy from me. I learn something new every day by simply sitting in front of my computer. I've completed a course in investing on the stock exchange through the internet. Through my website, where I sell unique products for both humans and pets, I have customers who are scattered all over South Africa.
If you say: "I'm too old to start using computers and things!" I'll tell you: "What nonsense!" or I may be tempted to use stronger words than that. Ask any of your grand-children from six years old to 40 to teach you, or if they do not have the patience or the inclination, tell them to go and jump in the lake and enroll yourself in a course. There are many of them advertised all over the place.
I hope I have influenced at least one person to either start saving or start a new career irrespective of age.
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