Publications
Partners
Cape Town - Have you thought of putting something away for a rainy day or special purpose?
Thinking beyond your immediate needs and creating a comfortable nest egg will always stand you in good stead, says Henry van Deventer, head of business development at financial advisory company Acsis.
South Africans are notoriously bad savers and as frequent appeals to Fin24's Money Clinic attest, it's all too easy to fall into the debt trap.
“The majority of South Africans are battling to save towards a nest egg and are instead turning to debt to fund their lifestyle," says Van Deventer.
"It’s been reported that nearly half of credit active consumers are struggling with debt repayments and with continually rising living expenses, such as petrol, electricity and food prices, the debt situation is likely to get worse for individuals before it improves.”
Another disquieting trend is that the average age of consumers falling into debt has fallen from 42 to 34 in the last five years. “This figure is extremely startling as these individuals are unlikely to save for a nest egg.
"It is advisable for individuals to start saving when they begin to earn a salary as the sooner you start saving, the more time your money has the opportunity to grow and ultimately ensure a healthy financial future.”
He adds that no matter the situation you may find yourself in, whether you are in debt or only starting to save for your nest egg in your forties, it should not prevent you from making a move in the right direction.
“It may seem like a daunting task putting extra money aside on top of a long list of monthly expenses, but it is never too late to start saving.
"While repaying your debt as quickly as possible should be a priority, it is still possible to put some additional money aside each month.”
And when in comes to what is optimistically termed the golden years, the scenario gets even bleaker. "A nest egg is vital in terms of a comfortable retirement as many individuals find themselves without the sufficient funds to support their current lifestyle when they retire,” says Van Deventer.
Charn Swart, a financial planning coach with Acsis, provides five simple steps to get you on track to build your nest egg right now:
• Contribute to a retirement fund
A retirement annuity, pension or provident fund plan is a savings vehicle that offers individuals a tax-efficient way to save for retirement. Because of the tax benefits, investors get a significantly better return over time.
• Start today
There is no better opportunity to save for retirement than today. Many individuals think it is impossible to save each month due to debt repayments and monthly costs such as bills, rent and food but this can be done by cutting back on a luxury each month, such as a dinner at a restaurant.
• Create a budget and stick to it
It is astounding to see how much money falls through the cracks if we do not keep track of our daily expenses.
Drawing up a budget can be very efficient for consumers that struggle to save. Checking how well you managed to stick to it at the end of every month is, however, the most important part of the exercise.
• Evaluate your spending
We tend to vastly overestimate how much happier those pricey little luxuries will make us.
When the time comes to replace big ticket items like your car, television, home or lounge suite, try to resist the temptation to buy something bigger and fancier.
• Look at basic investment options
A typical low-risk investment will see your money double every 12 years. Being more aggressive, in a prudent way, will allow your money to double every six years.
This means that a R100 000 investment made at the age of 41 will be worth almost four times as much (R1.6m versus R400 000) if a more growth-geared option is chosen upfront.
Choosing an appropriate investment strategy - and sticking to it - is one of the most important decisions you can and should make.
- Fin24
*Share your story, tell us your tips and get published.
Thinking beyond your immediate needs and creating a comfortable nest egg will always stand you in good stead, says Henry van Deventer, head of business development at financial advisory company Acsis.
South Africans are notoriously bad savers and as frequent appeals to Fin24's Money Clinic attest, it's all too easy to fall into the debt trap.
“The majority of South Africans are battling to save towards a nest egg and are instead turning to debt to fund their lifestyle," says Van Deventer.
"It’s been reported that nearly half of credit active consumers are struggling with debt repayments and with continually rising living expenses, such as petrol, electricity and food prices, the debt situation is likely to get worse for individuals before it improves.”
Another disquieting trend is that the average age of consumers falling into debt has fallen from 42 to 34 in the last five years. “This figure is extremely startling as these individuals are unlikely to save for a nest egg.
"It is advisable for individuals to start saving when they begin to earn a salary as the sooner you start saving, the more time your money has the opportunity to grow and ultimately ensure a healthy financial future.”
He adds that no matter the situation you may find yourself in, whether you are in debt or only starting to save for your nest egg in your forties, it should not prevent you from making a move in the right direction.
“It may seem like a daunting task putting extra money aside on top of a long list of monthly expenses, but it is never too late to start saving.
"While repaying your debt as quickly as possible should be a priority, it is still possible to put some additional money aside each month.”
And when in comes to what is optimistically termed the golden years, the scenario gets even bleaker. "A nest egg is vital in terms of a comfortable retirement as many individuals find themselves without the sufficient funds to support their current lifestyle when they retire,” says Van Deventer.
Charn Swart, a financial planning coach with Acsis, provides five simple steps to get you on track to build your nest egg right now:
• Contribute to a retirement fund
A retirement annuity, pension or provident fund plan is a savings vehicle that offers individuals a tax-efficient way to save for retirement. Because of the tax benefits, investors get a significantly better return over time.
• Start today
There is no better opportunity to save for retirement than today. Many individuals think it is impossible to save each month due to debt repayments and monthly costs such as bills, rent and food but this can be done by cutting back on a luxury each month, such as a dinner at a restaurant.
• Create a budget and stick to it
It is astounding to see how much money falls through the cracks if we do not keep track of our daily expenses.
Drawing up a budget can be very efficient for consumers that struggle to save. Checking how well you managed to stick to it at the end of every month is, however, the most important part of the exercise.
• Evaluate your spending
We tend to vastly overestimate how much happier those pricey little luxuries will make us.
When the time comes to replace big ticket items like your car, television, home or lounge suite, try to resist the temptation to buy something bigger and fancier.
• Look at basic investment options
A typical low-risk investment will see your money double every 12 years. Being more aggressive, in a prudent way, will allow your money to double every six years.
This means that a R100 000 investment made at the age of 41 will be worth almost four times as much (R1.6m versus R400 000) if a more growth-geared option is chosen upfront.
Choosing an appropriate investment strategy - and sticking to it - is one of the most important decisions you can and should make.
- Fin24
*Share your story, tell us your tips and get published.
