Investing money often sounds like an expensive and daunting task.
However, there are plenty of investment options available that don’t require you to have millions.
How much you save depends on what you want and what your goals look like – there are investment and savings options that require even as little as R300 per month.
Managing Director at Itransact, Lance Solms, shares tips on how to get started as a first time investor:
Savings accumulate and the interest compounds without taxes, as long as the money is not withdrawn, so it’s wise to establish an investment vehicle early.
“Another reason to start saving early is that usually the younger you are, the less likely you are to have burdensome financial obligations,” Lance explains.
“That means you can allocate a small portion of your investment portfolio to higher risk investments, which may return higher yields.”
Know your goals
Whether you’re saving for a Michael Kors bag or a car, knowing why you’d like to invest your money and how you’d like to see it grow over time are both key to making sure you stay on the right track.
List your goals so you can figure out how much they’ll cost, and how you can use investing to achieve them. Once you know what you want you can start planning and saving accordingly.
The best way to learn about investing is to develop your skills through research and the use of virtual portfolios. There are plenty of platforms on the internet that enable you to develop your skills and make mistakes.
Researching enables you to understand the complex financial terms and different investment options available to you before you seek advice from an expert.
As much as it’s important to get acquainted with the market, there are so many different investment vehicles to choose from like bonds, mutual funds, Exchange Traded Funds, property, stocks and more.
Getting an expert such as a financial advisor to help you make the right decision is important.
A good financial advisor takes on the the role of helping you reduce your financial stress, and makes the load lighter.
Cut down on your expenses
You probably aren’t saving because you think you can’t afford to. It’s as simple as changing a daily habit, for example, if you buy a R50 lunch during work every day, taking a packed lunch could save you R1 000 a month.
There are little things that you can cut back on, that will help you in saving up more money for you to invest. A little goes a long way.
“Smart, disciplined, regular investment in a diverse portfolio, can produce good long-term returns for retirement and provide additional income throughout an investor’s working life,” says Lance.