Throughout all the years, we've always
known January to be a very tough month, we had great times in December and now
many barely have petrol money – JanuWORRY. As the years have gone by I have
found that I am becoming smarter and as such manage my December money better so
as to live through Jan, but it’s still TOUGH. Queen Troll spoke to someone who
knows a little more about money and savings and here’s what came up (hope it
helps on the road to economic freedom)
Most individual’s I meet on a daily basis often
need the use of the following investment vehicles to address their financial
needs:
1.
Unit Trust (I call it “super
32days notice account”)
-
Different Funds/Portfolios are
chosen that meet the client’s investment goal return and risk profile.
-
Flexible investment vehicle.
(Invested funds are available on requested)
-
Advantage: Liquidity of investment funds
-
Disadvantage: Capital Gains Tax can be charged.
-
Use: Planning for
short term goals (less 5years). Example: Trips, Purchase of anything,
Education, building of capital, etc.
2.
Endowment
-
Fixed investment vehicle.
(Invested funds are available after a fixed period of time)
-
Advantage: No Capital Gains Tax charged
-
Use: Planning for long term goals (5years plus). Example: Education for
children, balloon payments, building of capital, etc.
3.
Retirement Annuity
-
Different Funds/Portfolios are
chosen that meet the client’s investment goal return and risk profile.
-
South Africa’s legal age to
access your RA is 55
-
Advantage: Tax benefit, government pays you as tax rebate your tax bracket on
your contribution towards your RA (i.e. If you are in 40% tax bracket and you
contribute monthly R10 000 towards your RA, the government of that
R10 000 will give you a R4000 rebate)
-
Disadvantage: High penalty fees for access of investment funds before agreed upon
fixed time.
So are you ready to invest?
A few facts:
·
Anyone and everyone, with
affordability (of investment type), can participate in investing of money and
shares. (Including a new born baby who through their parents can be an
investment owner/holder)
·
When markets are low it’s
always the right time to invest. At this time, the investment is “cheap” and
when markets are high, the investment has increased in price- which means for
someone pulling out, it could be right time (when markets are high)it would
mean they would have made a significant gain. When a financial goal arises,
like planning for children’s education, trips, purchase of property (which is
also investing) - it is always the right time to invest to ease the burden of
having to start at a later stage. Of
course anytime where it is certain that the initial entered investment will be
lost and there is a significant amount of money involved- one can pull out.
·
One important question that
needs to be addressed in every individual’s Financial Planning is: What happens
when I live too long? Meaning you need funds to fund that long life and your
different goals – Investing is a way of ensuring you are able to meet your
goals and have enough to take care of your long life.
As a beginner the hardest
thing in investing is STARTING, often we believe I must first have a lot of
money to invest, when it should rather be - let me invest so I can have a lot
money.
Investing need not be
confused with saving, investing looks at a more long term approach, which means
before one invests, they must have taught themselves how to save- this also
allows the investor to have liquid capital in times of need from savings,
instead of interrupting their investment goals.
Remember, the higher the risk in investment the higher the returns are likely to be.
If anybody would like to
speak to the Financial Adviser who helped the Queen with the above information,
here are her details. She is suitably qualified.
Cell: 072 442 5077/ 073 767 3480
Email: ntsako.khosa@liblink.co.za
Courtesy of QueenTroll and Loulou