Category Archives: Money

Investment, frugality and other ways to retire right

coinsEveryone wants to create a life of success and stability. In this world, the only way to do that is to have enough wealth accumulated to live off. Naturally, you can continue to work and earn an income, but the majority of people will not have such an opportunity. To that end, it’s worth considering what kind of steps will aid you in achieving a better financial future. It will not be easy, but it will be harder still if you don’t act now. Let’s consider some ways you can begin taking steps to help retire right.


The most obvious way to obtain wealth is to accumulate it slowly. This allows you to put away a small amount each month, leading to a large outcome benefiting you at the end of your working life. Savings accounts rely on compound interest. As The Calculator Site summarises:

“Basically, you’re getting paid to do nothing more than keep your money in one place (a savings account). You don’t need to juggle finances. You don’t need to try and calculate monthly or annual returns – it’s all done for you. At its simplest, the investment vehicle you put your money into will give you interest on the interest they’ve already paid you. Money for nothing – seems like a good deal. And the banks just keep on giving. As long as you leave your money in an account, it will continue to accrue interest.”

By simply leaving money alone, you can benefit enormously. But this means having the money in the first place. To get this money requires its own thinking and interventions.

Be frugal

A common issue is that people struggle to think long term. As Forbes’ Gregg S. Fisher points out, this is known as self-control bias.

“[this is] the common condition where people fail to act in pursuit of long-term goals due to a lack of self-discipline. Workers know logically that they need to save more for retirement, but they struggle to forgo present consumption, owing to lack of self-control, an emotional bias. Consider Warren Buffett’s simple definition of investment: ‘Investing is forgoing consumption now in order to have the ability to consume more at a later date.’”

Before tackling the topic of investing, it’s worth thinking about how you can be frugal. There are large and small changes you can make to your life that will lead to more savings. In their comprehensive list of ways to be frugal, Money Crashers points out how avoiding speeding tickets is one easy way to reduce unnecessary expenses.

“The next time you have somewhere to be at a specific time, set your alarm for 15 minutes earlier than you would ordinarily. Not only do you stand to save money by driving the speed limit, you might also save your life – or someone else’s.”

Furthermore, you can get flagged by insurance companies as reckless, if there are tickets linked to you. This could mean paying more for your premiums years into the future.

Also, if you don’t need a specific item right now, consider waiting for a sale. Items that are luxuries should be considered thoroughly before buying. Remember that the money that goes into an expensive luxury item could end up benefitting you far more if it’s put away in a savings account, to let compound interest take effect. It’s more valuable in this way, than for any one single item. Another way to think about it is like this: the money saved can end up buying two luxury items in the long term, rather than just one now in the short.


Naturally, the other common option is focusing on investments. There obviously exists specific investment plans focused on retirement, but you should consult with brokers to look wider. If possible, investigate as many as possible, including tax free options.

Unlike savings, investments are more risky, but ideally you will have diversified where you put your money. This means both savings and investments. In this volatile economic climate, it can be difficult and people might opt for the safer option. But investments are significantly better for acquiring wealth, since they have larger returns and tend to overcome inflation.


As Fin24 noted, it is possible to think of alternative uses of your money for retirement:

“If you decide to save for retirement on your own, you can choose to receive your full salary (which attracts tax) and then save a portion of this money towards retirement. A more efficient strategy would be to utilise a company pension fund and contribute the maximum amount possible to achieve the tax deductions available in terms of pension savings.”

New tax laws are also allowing for better, smarter responses to savings and tax deductions. As Business Tech highlights:  “It is envisaged that workers will be encouraged to save (more) through retirement funds, to curb old-age poverty and excessive dependency on relatives.”

By thinking broadly about your money, you can find an optimal solution. Your life can eventually lead to a smooth retirement but it won’t be easy. The time to start is now.



How to carve out a financially stable future

The future is quite terrifying for many of us, since we have little idea what could happen tomorrow. All of a sudden, our life could change because of forces beyond our control. Though we often try to prepare for the worst case scenario, our ignorance – whether willful or not – can still blind us to possible radical changes. To help protect ourselves and our families, we must begin considering ways to create a financially stable future. This will help create a solid foundation which could help lessen any negative effects life throws at us.

Budget and save

The first thing anyone must do when tackling their financial stability is create a budget. This means having firm knowledge about how much we earn against how much we spend. Within this, we can begin creating categories of expenses: necessities, luxuries and so on. By having firm numbers, we can see if we’re spending too much on luxuries and not enough on savings.

Obviously we can’t save what we don’t have – but it could be that potential savings are being squandered on unnecessary items we can live without. We can buy cheaper food, avoid frequent social engagements, drive less and so on. Money Crashers’ budget guide notes that budgeting is key to all financial decisions.

“Once you have an established budget, you will want to keep it in check. The discipline and associated knowledge that you are making good long term and short term financial choices will … take you from living paycheck to paycheck to being able to see the long term results of your disciplined savings and financial planning.”

Learn about investments

The stock market is a tricky beast. It takes years to learn the various mechanisms, rules, players and actions involved. This is why people tend to give their money to brokers and others who work daily with such complicated systems. We should investigate what investments are best for us, depending on our budget and plans. It could be that the simplicity of, say, Sanlam unit trusts are better suited than investing in property.

Work hard, get raises

One of the most important aspects of living is earning enough to live. We have to be able to make enough that inflation doesn’t catch us. Inflation means, basically, the value of our money decreases in terms of purchasing goods and services. R50 today buys far less than R50 of ten years ago. This is why we need to focus on salary increases, since we want to stay ahead or keep up with inflation. The salary we got a few years ago might have been able to maintain our lifestyle, but today, if we have that same salary, we can do far less with it. This is not a sustainable way of living – not to mention this provides no opportunity to save and create retirement possibilities.  

What to look for in investments

One of the most important ways that we attempt to secure our finances, whether as individuals or business owners, is with proper investments. Knowing what makes for good investment then is crucial to everyone, in terms of financial decisions.  Let’s consider what a good investment looks like.

What is an investment?

Broadly speaking, investment refers to something that will ideally generate income, profit or will appreciate in the future. As Investopedia highlights: “In finance, an investment is a monetary asset purchased with the idea that the asset will provide income in the future or will be sold at a higher price for a profit.”

Examples of investments that most people know and use are stocks, businesses and real estate. Each of these can be invested in, ideally leading to an increase in an investment’s value – which means, should we wish to cash out or sell, we will have more at the end of the day.

Naturally, this means there will be better and worse qualities defining what constitutes good investments.

What makes for a good investment

The first thing to consider is what the total value is of the company versus the stock. This means knowing market capitalisation. The Economic Times defines it as: “The aggregate valuation of the company based on its current share price and the total number of outstanding stocks.” We should speak to financial experts so that we aren’t overpaying for a company’s stocks. Bad investments are often a result of paying too much for stock, for companies that are in fact worth less in terms of market capitalisation calculations.

Second, we should know about a company’s overall growth and per stock growth. As one investment expert noted:

“Most investors focus on a company’s share price. They should spend more time looking at a related question – how many shares the company has, and whether that number is growing or shrinking.”

This has an enormous impact in terms of the financial decisions we make, since it could mean we get swindled easier.

Third, we must remove emotions from business investment. No matter how much we might love a business, relate to its staff and so on, these shouldn’t be sufficient reasons for our investment. While feelings and emotions can drive a business toward profits, that’s no guarantee.

All of this is incredibly important when considering what constitutes best investments in South Africa and around the world.  

Tips when considering equipment finance

Every business needs equipment to function. Data today is digitised, with information from clients stored in servers and hard drives, not folders or papers. We also use equipment just to complete our tasks: whether we’re farmworkers or cutting edge designers. Regardless of what we do or who we are, we do require equipment – but that can be hard to come by, especially given how expensive everything is these days. One solution is to attempt equipment finance, letting us receive the necessary funds while paying back in installments.

What is equipment finance?

As the Business Dictionary defines it, equipment finance is: “Any method of extending capital to businesses for the purpose of acquiring equipment.” The options vary between finance houses and the relationship with the business.

Why choose equipment finance?

We can see the advantages here. Indeed, some experts point out that even if we have the necessary cash to pay for costly equipment, it’s still wise to consider equipment finance. For example, while we might be able to pay for an expensive piece of equipment right now, this means an immediate, massive hit to our cashflow.

This also doesn’t take into account maintenance or emergency issues, further requiring dipping into our cash reserves. In fact, we might not have enough after purchasing to sort out emergencies, so we might need a loan anyway.

Instead, going for financing options means we aren’t hit by massive deductions and can manage repayments in a way that doesn’t jeopardise our cashflow.

But, like all forms of financing, we should be considerate about precisely what is meant by this transaction. Let’s consider two pertinent aspects when it comes to equipment finance.


One of the first questions we must ask is precisely what the financing will be for. All lenders will want to know this, too, of course – since they don’t just want to give the money to just anyone. Obviously, we want equipment that can aid us in obtaining profits. We must therefore carefully calculate the expenses for the equipment against how much it will return. We don’t want to get equipment that ends up costing more and making us less profit, after all. This immediately would disqualify us from consideration.


We must find a lender who can maintain an open line of communication, so both sides know precisely the details of the transaction. No one wants to be misinformed when it comes to money. This also means we must thoroughly understand the terms of any agreement reached.

By thoroughly engaging with calculation and communication, we will have a better basis to engage any transaction about financing for equipment. Ideally, this will lead to profitable business and a healthy relationship with a competent lender.

(Picture credit: PublicDomainPictures / Pixabay

What gets people to buy expensive things?

Most people are not rich, yet most of us still want a home and cars. The question is what motivates people to acquire items, usually beyond their means? Expensive doesn’t necessarily mean luxurious: After all, cars are necessary for travel and homes are needed if we want somewhere to live. Indeed, for most of us, we’re not talking about Ferraris or big mansions. Yet, even the least expensive will set us back somewhat.

What then drives us to get them?

Necessity and indulgence

Too often when discussing issues of why people buy expensive items, we assume that the items are not important. But as we noted, homes and cars are often necessities. This doesn’t negate that cars and homes can be luxuries, as any unbelievably large mansion or someone’s third or fourth car demonstrates. No one needs houses so large they take up nearly a whole field. And we can’t drive more than one car at a time.

Yet, rich people will and do indulge in such excess because they can. And, unfortunately, wealth is often tied to a sense of fulfillment according to researchers. This is so potent it leads even those who can’t afford luxury items to acquire them through credit. Writing in the Journal of Consumer Research, Marsha L. Richins concluded:

“Materialists are more likely to overspend and have credit problems, possibly because they believe that acquisitions will increase their happiness and change their lives in meaningful ways.”

This mindset doesn’t come from nowhere. Other researchers have shown the mere desire for items can be sufficient fulfilment. But again, this only shows us luxury goods not necessary ones.

What is necessary?

How then do we judge necessity when there is a heavy price tag? A good way is to consider a common, but fairly expensive item: cars. According to recent data, used BMW 1 Series from 2012 was the fastest selling car in the UK, in August. The car has proved reliable, safe and fairly recent. However, it’s not so recent that it’s priced at an exorbitant amount but not so old the technology is out of date.

Consumers are not looking for cars with parts that are difficult to acquire. Considering how quickly car technology advances, people also want safety as priority and fewer cars are safer than BMWs. The point is, cars are a necessity and consumers can make smart decisions to acquire the best one – without it being seen as an indulgence. Indeed, though it is a BMW, no one’s first thought when hearing about a used 2012 car is that it is a luxury vehicle.

The contrast here is that we are putting necessity above material desire, but still able to compromise for both. This is possible on all manner of purchasing choices. Everyone – whether seller or buyer – must keep this in mind as we enter an increasingly difficult financial future.