Financial Planning - What are the things everyone should know?
What is the best sort of investment at the moment?
I am 22, just starting... earning my income. What is the best plans to setup financial security for my future?
This can range from advise on savings accounts/fixed savings etc all the way to when/where and how to begin investing in property or chucking money at a certain life policy or share on the stock exchange.
Lemme know your thoughts for a secure financial future.
Save. You can't really build up any sort of strong financial position without first having developed the saving habbit. Start by saving 10% of your monthly income and putting it aside. Try to get this up to 20%, 30% and ideally 50%. As you grow in your career be very aware, and try to avoid of what happens to most people on the planet and that is: as income rises, so do expenses.
If you have savings, you'll be in a much better position to take risks with things like investments or even becoming an entrepreneur.
Yes, when you can build (save) a crisis account for emergencies then you can look into other things like short term and long term. No point in putting money aside when you have nothing for those "surprises" coming up in life.Originally Posted by C-Bear
Save. You can't really build up any sort of strong financial position without first having developed the saving habbit. Start by saving 10% of your monthly income and putting it aside. Try to get this up to 20%, 30% and ideally 50%. As you grow in your career be very aware, and try to avoid of what happens to most people on the planet and that is: as income rises, so do expenses.
If you have savings, you'll be in a much better position to take risks with things like investments or even becoming an entrepreneur.
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Ah to be young again... so full of potential and mistakes yet to be made...
Seriously the only problem with saving from a young age is that, at that age, there's usually not a lot of spare money to be had to pad your nest with.
So that leads to two real-world recommendations:
1. Second-hand stuff is fantastic: I talk about second-hand cars, houses, furniture (if your bum is an accurate diagnostic of carpentry) and other 'expensive' stuff. The allure of 'brand-spanking new' stuff can be gotten a bit later (10 years is a bit later) when you've got the savings and the better income. And a bit later the "new stuff" will not be "New Citi Golf...." but a "New Honda S2000"... or actually a decent second-hander S2000 in good nick because once you're in the habit of being an expert in what it is that you're buying (so you can spot a good buy), it's thankfully a hard habit to shake.
2. Endowment policies I have a fondness for and have come in handy and they work as a nice surprise gift for later. It's like a forced payment savings account and once again, it gets you into a good habit of setting some small sum aside for savings. The maturity periods are usually 5 years and up meaning it's not a contingency reserve but a form of piggy bank savings.
I have found that savings do NOT come from giving your money to someone else to hold, in the faint hope that they will somehow make it grow faster than inflation.
Savings comes only from NOT SPENDING MONEY! And also not paying a banks interest charges, all for the sake of being recklessly impatient (called buying on credit) when you're still young.
Final word. Always set aside what you can afford and not what the insurance salesmen say you must. And once you've decided on what that amount is, set it aside and discount it as a form of spending. Resist the temptation to include these savings / investments / annuties into your mental bottom line when making important decisions like whether or not to splash out. Always work with what you got NOW.
Oh and one more thing MrG, to answer you:
I will say simply this: Never put your money where your mouth (and mind and heart) isn't.This can range from advise on savings accounts/fixed savings etc all the way to when/where and how to begin investing in property or chucking money at a certain life policy or share on the stock exchange.
OR
Never invest in something you know nothing about or have little real interests in simply because "everyone else is doing it".
Stock markets are a very good example of a VERY complex entity that have their own specialised knowledge set and require real-world trading experience before you can even comprehend what's going on. Never mind actually making money.
Life Policies like retirement annuities are all much the same. Made of some funny optimistic maths that insurance companies only use to calculate their projections and not your level of risk and resultant premiums.
Which is what a Retirement Annuity is: A kind of long-running insurance policy really that pays your back a portion of the premiums you put in and takes about half of that in "Fees".
Property also makes for very expensive mistakes. The practical guide to property is: Only buy it for using it or when a someone else wants to use it. So if you're ever considering buying a piece of land as "an investment" (err more closer to a speculative put), if you have no real use planned for it, then you'd better make damn sure that there's someone else who wants that land more than you do and is willing or will buy it from you.
(which is a micro-example of the Stock market)
Last edited by EffKay; 19-06-2011 at 12:52 PM. Reason: Typing without glasses yields bad spellink.
Well I'm 23, I started my own investment account which I also use as a savings account 2 years ago. I got into the market at the best possible time. I tripled my investments in less than 10 months.
I would suggest you look at the Sanlam I-Trader competition going on at the moment, and most banks also have the option for you to create a virtual portfolio. Start by experimenting with it, you do have to put in some time to make sure you don't piss away your money. Stick to big companies, if they fail the country is in for some shit. I personally only trade with mining shares.
As for savings, Capitec have the best interest rate for a savings account with a balance of less than R10 000. 6%, any of the big 5 will give you less than 4. Look at money market accounts if you don't want to have "admin". Nedbank have a great account called a "Just Invest" account, then again the interest rates are piss poor.
Look at how your medical aid can help you save. Discovery have a brilliant system where if you are of a certain "health" you get a different status and thus you can save 10% on flights with BA etc. etc., after 3 years you get some of your medical scheme payments back. There are loads of ways to save money. I have not done enough market research to give you a holistic view.
Best advice is never to buy anything on credit.
I am in the process of a creating a website to cater for these questions that you have, if want specifics just send a pm my way
Satrix w/ monthly payments to increase it. Safe, easy & foolproof.
Not going to try & explain anything more complicated on a forum. Got a ton of flak last time round for some more adventurous suggestions...
I'll also add my 2c in here.
I'm 25 and started working about a year ago. I've been drinking it away. Thought it was a big party ya know. And now I have a baby on the way..
So anywho. I've just opened up a savings account with Capitec. I earn a decent salary. I tried buying a second hand car ('01 Polo Playa at R50k) but was denied because I don't have a credit rating and have always paid with cash.
Just opened up an Edgars account and gonna go shopping next weekend.
People told me to get a credit card, I'm like fuck off etc. I hate having debt.
If you ever plan on buying a car and taking a personal loan, you need a credit history. Best go open up an Edgars account now. You need a credit record of at least 3 months.
Last edited by Kuga; 19-06-2011 at 10:12 PM.
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