Plan for Retirement
Retirement is when you get to reap the benefits of decades of hard work. You get to spend time on your hobbies, giving back to communities or travelling. To do this effectively, you need to start saving when you're young.
If you’re starting your first job the last thing you want to be thinking about is saving for your retirement which could be 40 or 50 years from now. The thing is, it’s the perfect time to start. The more time you have on your side, the more opportunity your money has to work and grow for you. So, the best time to start saving for your retirement is when you land your first permanent job. The second best time to start is now.
Save for Education
Investing in an education plan is one way of ensuring your child gets the best education possible. We know it’s important to fund education but how much will it cost and can you afford to start now? It’s never too late to start!
The best time for education planning is around the time your child is born. That way you have lots of years ahead of you to save money in an education fund. If you didn’t start saving for education when your children were born then the next best time is now. Pre-school, primary school, high school and any tertiary education is going to cost money. The trick is not to let the figures scare you.
You’ll probably be able to absorb the school fees in your monthly budget so just focus on saving whatever amount you can on a regular basis. And, if you do run into difficulties you can simply stop your debit order and restart it again when you can (if you invest in a tax free account or unit trust) or make your policy paid up. In both instances you don’t lose your money. Or, if you have a policy you can make it “paid up” which simply means you can stop contributing and leave the policy until the investment term you’ve committed to (for e.g. 10 years) has been reached.
Imagine the peace of mind that comes from having an investment that allows you to save for your dreams and goals, gives you access to your money at any time, and offers you payment flexibility without any penalties. Not just that, a tax-free savings account in South Africa is an investment where you get your full investment return without being taxed on any of the growth you have earned.
Save for a Goal
How do I save money? How do I make my first million? We all want something more out of life – a car, a house of our own, a fabulous wedding or a holiday. In order to get this, and more, we need to save.
Ideally you want to get into the habit of saving or investing when you land your first job. The next best time to start saving is now. Start by downloading this simple budget planner. It’s an easy spreadsheet that shows you what you’re spending your money on. Include your income (what goes into your bank account on payday) and the amounts for non-negotiables like rent, transport costs, groceries, cellphone expenses and anything else that’s critical to getting through the month.
Now see how much you have left. You want to be putting away about 5 – 10% of your income. So if you’re earning R15 000 then you should be saving between R750 – R1 500 towards your goals or an emergency fund.
Why must I save money?
Because there are things that you want like a gorgeous Michael Kors handbag, a pair of limited edition sneakers, the latest iPhone or even a holiday locally or overseas. Saving even a little bit every month helps you get what you want.
Investing your money helps it grow in a number of ways - through compound interest and the increase in the value of the underlying shares or instruments.
It makes you financially independent - saving regularly ensures that you have less of a need for credit or loans and more money available to buy or do the things you want.
But I can’t afford to save…
Let’s look at some of the things you can probably do without every month and see how much you could be left with to invest.:
1 less take-away per week: R280/month
1 less bottle of wine per week: R320/month
1 less restaurant meal per month: R250/month
1 less new item of clothing per month: R500/month
1 less packet of cigarettes per week: R160/month
At Colonial, we believe true wealth is about more than just how much money you have. It is about being able to live the life you want. Wealth presents choices; whether sailing around the world or changing it.
Our advice-led philosophy is centred around you and your unique goals. Understanding your goals requires personal conversations and insights that will determine the most appropriate investment strategies over the short and long term.
Colonial assists you to realise your financial dreams by taking your lifestyle goals into consideration. We do this by partnering with top-calibre financial planners to create a holistic, integrated advice and investment framework.