Realise your investment goals step by step

Schalk Louw is a portfolio manager at PSG Wealth. (Picture: Supplied)
Schalk Louw is a portfolio manager at PSG Wealth. (Picture: Supplied)

Just like that, the new year is upon us and I believe so too are the new year’s resolutions that most of us have set for 2020. 

While we are usually quite excited about and dedicated to these resolutions at the beginning of the year, it tends to become more difficult to stick to them as we move deeper into the year. 

Things become busier once the year has kicked off, and before we know it, we get stuck in the same rhythm that made it difficult to stick to our resolutions the previous year. 

The sobering reality is that if you don’t invest in proper planning and apply strict discipline to achieving your resolutions, you will fail to do so.

The same focus and dedication you apply to your new year’s resolutions should be applied to your investment strategy and savings plans. 

For some this may mean a dream holiday at the end of the year after spending the holidays at home in 2019, and for others it may mean something more long term, such as planning for an all-important retirement. 

Whatever they are, the same steps you follow to achieve your new year’s resolutions can also be applied to achieving your investment resolutions in 2020. 

Do it for the right reasons

The purpose of this step is usually to shock you into submission. 

“If you don’t start paying attention to your weight immediately, you may soon face high blood pressure or high cholesterol, which can lead to heart attacks and more”, or “if you don’t stop smoking today, the probability of you contracting an array of lung diseases, including lung cancer, increases drastically”.

South Africans in general do not believe in setting aside capital over the longer term. 

South African personal savings as a percentage of personal income currently stands at -1.11%.

That means that for every R100 earned monthly, average South African earners are left with a negative amount of R1.11 in their pockets. 

According to 2018 data from National Treasury, only 6% of all South Africans will be able to retire comfortably, while a massive portion of working South Africans do not have access to an employee retirement fund. 

If you can openly admit that you will not be able to make ends meet with the current maximum elderly persons’ government grant of R1 780 per month allocated to citizens above the age of 60, it will serve you well to follow the steps outlined below. 

Set goals

Know what you need to achieve and identify specific reasons why reaching those goals will benefit you – whether it’s an estimate of costs for your next December holiday or how much you will need to retire comfortably. 

In most cases, it is advisable to consult a financial expert in this regard. 

Planning to reach your goals

This is where most resolutions fly out of the window. 

The moment you realise that you will need to cut back on your usual Wednesday or Friday evening socials in order to save money, those resolutions quickly become something you’d rather set aside for 2021. 

The key to success lies in the fact that your plans should be realistic and your goals achievable. 

For some it may be impossible to start off by saving R1 000 per month in order to reach the goals they set in step 2, so start with R500 instead, with the goal in mind to increase that amount every year. 

Investing R1 000 per month at a growth rate of 10% per year over a period of 20 years, will give you the same total as investing R500 per month, with an annual investment escalation of 10%, at the same growth rate. 

Gain some support

Don’t tackle your new year’s resolutions alone. 

Involve your family and friends and make sure that they are aware of your resolutions. 

Of course, it would have been much more fun to dine out or to spend money on something new and fun, but those extra savings can make a huge difference to your investment’s future value. 

By sticking to your resolutions, you may also inspire your friends and family to follow in your footsteps.  

Monitor your progress 

This doesn’t mean that you’re done with your savings strategy. Check your investment statements regularly in order to determine whether your investments are showing enough comparative growth, and more importantly, to keep track of your investment costs. 

A small saving in investment costs can lead to a huge boost in your investment performance over the long term. 

Also ensure that you get into contact with your financial adviser at least once a year to discuss your investment strategy and any possible changes to your financial situation. 

I wish all readers a prosperous 2020. May all your new year’s resolutions turn out to be extremely successful. 

Schalk Louw is a portfolio manager at PSG Wealth.

This article originally appeared in the 16 January edition of finweek. Buy and download the magazine here or subscribe to our newsletter here.

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