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Guide: How to Start Investing Your Savings

Finance & Money

Posted on Tuesday, July 6, 2021

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Scary as it is, it’s equally exciting to enter a stage in your life where you start talking about ‘investments’. That means you’re growing! The reality is that we may not be able to reach all of our goals now, but we can reach them at a later stage if we prepare, plan and invest in them over a period of time. Fortunately for us, there are many good investment options out there. But there are things you need to know and establish before hopping into investment. So here’s the lowdown on the basics.

> Are you ready to start investing?

 

Now that we’ve mastered how to save money, let’s learn how to invest! Believe it or not, investing requires you to prepare your mind and learn as much as you can. It really isn’t as simple as waking up one morning and deciding you want to invest. If any of the below describe you, you’re well on your way to starting investing: 

 

  • Your savings cover large and unplanned expenses.
  • You have additional cash on the side every month.
  • You are looking to grow your wealth.
  • You have time to read and learn about investing.

 

What’s your plan?

 

Having a clear idea and plan for your investments better informs how you invest your money, where you invest it and for how long you invest it. There needs to be a bigger picture for you to stay motivated and stick to the plan, whether it’s building a legacy for your children, maintaining your standard of living long after you’ve retired, being able to live out your lifelong wish of buying your dream house or renovating, or even taking that dream trip.

 

<subhead> Investment options

 

There are several investment options in South Africa. Investing your money in the right place can be the difference between you gaining high profits and little to no growth. It’s important that you have an understanding of why you’re investing, so you can establish and have an idea of when you’ll get returns on your investments. You must also be aware that there are different types of investments that come with different results at different times. The three most common types are:

 

  • Short-term investments. These can easily and quickly be converted into cash – they are usually sold within a period of 3 to 12 months.
  • Long-term investments. These are investments that you plan to maintain for longer than a year. Sometimes they are kept for years before being cashed out.
  • Speculative investments. These come with a higher risk because they can easily lose value. However, they equally yield great returns. 

 

What do you benefit from investing?

 

Other than having your money grow, there are many benefits associated with investing your savings.

 

  • Your investments can provide an income even after you’ve retired.
  • There’s room to earn long-term returns and profits.
  • Choosing to invest your money offers an opportunity for it to grow faster than it would in a savings account.
  • With the growth gained from investing comes potential to outperform inflation.
  • Investing can help you meet other financial goals, like your children’s school/tuition fees, faster.
  • Some investments are tax saving. Tax-free savings accounts (TFSAs) and retirement annuities (RAs) are two of the options available.

 

 

<subhead> The benefits of having a financial planner

 

If this is foreign territory for you, it is always wise to seek the advice of a financial advisor. Having a financial advisor to guide you and show you the ropes comes with many benefits, such as:

 

  • An accessible accountability partner – they know your goals and plans and hold you accountable and remind you of the ‘why’ behind your setting up the goals and plans.
  • Help with making informed decisions – they are on the inside, which means they have access to factual and accurate information.
  • A lighter tax burden – financial advisors help you sort your finances and portfolio out in the most tax-efficient way.
  • Sound guidance and advice – your financial advisor is someone you can lean on who knows the tricks of the trade, with the added benefit of trust.

 

Now that you have the basics, spread your wings and take your savings to the next level. To creating generational wealth! 

 

The information in this article is for information purposes only and does not constitute professional advice.

 

References

 

  1. https://financebriefly.com/best-investments-in-south-africa-for-beginners/
  2. https://www.cbn.co.za/featured/what-are-the-best-investment-options-in-south-africa/
  3. https://www.investopedia.com/terms/s/shorterminvestments.asp
  4. https://www.investopedia.com/terms/l/longterminvestments.asp
  5. https://www.investopedia.com/terms/s/speculation.asp
  6. https://www.carpenterbox.com/blogs/the-value-of-advice-4-benefits-of-using-a-financial-advisor/
  7. https://www.moneyweb.co.za/financial-advisor-views/9-reasons-to-engage-the-services-of-a-financial-planner/
  8. https://www.bmogam.com/ctf/benefits-of-investing/
  9. https://thecollegeinvestor.com/16912/5-benefits-of-investing/
  10. https://www.moneyweb.co.za/financial-advisor-views/how-to-get-sars-to-pay-back-the-money/
  11. https://businesstech.co.za/news/business/451348/here-are-4-tax-saving-tips-when-it-comes-to-investing-in-south-africa/