If you’ve ever considered investing your money but think you don’t have enough then we have good news for you. You don’t need to have a giant lump sum or thousands of rands extra every month.
With some research and the right advice, you could be on the road to a hefty payout in a year - or five or even twenty, if you can imagine that far ahead.
We spoke to Marietjie Oosthuizen, a senior financial planner at 27four Investment Managers, a leading local independent provider of customised financial management solutions, to find out where we should invest any extra cash we might have this year.
Marietjie told us that it is often said that most South African’s do not save, or at least not enough to meet their requirements. There are various reasons, she explains, and often it is a lack of financial literacy that hinders women from making better financial decisions.
“But things are definitely changing,” she says, “and women have a stronger presence in our economy and as leaders in the workplace. They are thinking about it and perhaps often have an even greater responsibility to be more financially savvy as champions of their homes and families. Access to financial markets have never been easier and minimum investment amounts can be low depending on the institution.”
When choosing long term investments, she says it all depends on the goal of the investor. “If you are saving to supplement your retirement income then a Retirement Annuity is best. If you are saving for a specific event such as a wedding, children’s education or a new car, then a Unit Trust or Tax Free Savings Account is a good idea,” she advises.
It is also important to diversify your savings and not have all your money within one product or company, but to rather contribute towards a few. This is where an investment portfolio comes in.
Your investment portfolio represents the collection of assets that you have contributed towards and can include stocks, bonds, property titles, options, and so on.
Some factors impacting your investment:
• If you’ve invested in a country that has less developed legal, political or economic systems there may be a higher risk of financial loss than in investments made in more developed countries.
• Fixed income investments can be impacted by interest and inflation rates.
• Investing in real estate securities carries the same risks as investing directly in real estate itself, where your investment outcome will respond to a variety of factors including economic and political conditions.
• The value of your investment may change based on the relative values of individual currencies.
Some investment options to suit all pockets:
Investment amount: R250
Suggested investment: ABSA Tax-free Investment Account
This account allows you to invest in a variety of funds, while remaining completely exempt from paying Income and Capital Gains Tax on your savings. It’s a relatively small amount to part with every month and tax-free investments grow faster than regular investments, but what makes this account so attractive is the fact that you won’t have to pay 40% of your accumulated savings to the tax man one day.
Investment amount: R500
Suggested investment: Nedbank Club Account
The peer pressure of a well-managed stokvel can be very effective in encouraging you to save money every month, and according to Ntombi Tisani, head of marketing at Old Mutual Personal Finance, the increasing buying power and growing stokvel footprint empowers members to demand more from service providers.
Nedbank’s Club Account requires just three signing members and a R100 opening deposit. The account offers unlimited withdrawals and charges zero account maintenance or transaction fees, so get your squad together and start saving.
Investment amount: R1 000
Suggested investment: 27four Asset Select Prescient Fund of Funds
This is a multi-asset moderately high-risk portfolio, where your money is spread out across several risky assets that may prove fruitful one day. This means that you risk losing some of your investment total, but if things go well you will come out with much more than someone who invested the same amount in a low risk portfolio. This is more suitable if you’re interested in a long-term investment.
“You must check the fees involved in any investment and compare what is out there,” Marietjie advises. “All investors should feel empowered and never be scared to ask questions, to discuss their fees and options, and get the best from their service providers.” Fees include the transaction costs relating to the buying and selling of the fund's underlying assets and are a necessary cost in administering an investment portfolio.
Not all investments are created equally, and it is important to ensure the company you save and invest with is registered with the FSCA, a body that is tasked with regulating the financial services industry. Marietjie also says that when in doubt as to the safety of a suggested investment portfolio, stick to the golden rule, “If something sounds too good to be true, it normally is!”
Sign up to W24’s newsletters so you don't miss out on any of our hot stories and giveaways.