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Writer: Jana Visagie, Assistant Portfolio Manager, PSG Wealth Hermanus
There are a myriad investment options available, even with as ‘little’ as R500 per month. The important factor is to start investing from an early age, and to increase the contribution over time. Individuals have unique circumstances, and everyone has different needs and objectives. A qualified investment adviser will assist in identifying the appropriate investment vehicle.
I would like to make use of the expertise of a proper financial services company. Do I need to invest a certain amount before I can use such a company?
Each investment company has its own minimum investment requirements. As mentioned, however, you can invest from as little as R500 per month at most investment houses. Financial advisers, typically, negotiate a management fee for their services.
I am 35 years old and earning just enough to stop renting, buy a house and pay the monthly bond. I am wondering if I would be better off continuing to rent, and instead put the additional money, about R5 000 a month, into an investment account. What should I do?
This is an age-old dilemma and each of the options has its merit. In any market, the question revolves around your specific financial situation and requirements, rather than one versus the other. Being a homeowner is a big financial responsibility (bond repayments, additional costs associated with homeownership), but your property’s value might appreciate, which leads to potential growth in your personal wealth. Renting a property allows more flexibility, but the rental on a property is likely to increase year-on-year and there is no guarantee that a lease will be renewed when it expires. You will need to consult a qualified adviser to assist you in making the right choice, given your circumstances.
What percentage of my monthly gross salary should I be investing every month? Is there a hard-and-fast, tried-and-trusted rule?
It is extremely difficult to give any percentage as a rule, especially as each investor is unique. Factors such as age/investment horizon and affordability play a huge part in determining an appropriate contribution. For example, one strategy is to start at the ‘end goal’. How much money – in today’s terms – do I need at a specific point in the future (at retirement, or whatever the goal may be – perhaps a college fund or buying a new house or vehicle) to sustain my standard of living? One can then determine, using certain assumptions, how much to save or contribute to an appropriate investment fund on a regular basis. As a general guideline, for people who start saving at a relatively young age (early to mid-20s), 10 percent of gross salary (before tax) is accepted as a fair, minimum savings target.
Retirement annuities are confusing to me…Read more: https://thevillagenews.co.za/get-money-advice-from-a-professional/