Tag 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.  

Money management tips for students

Students are usually young people suddenly thrust into financial responsibility. Before, they might have found themselves under the care of their parents. Now, they’re thrust into the deep end, where have to balance their studies alongside merely surviving. Anyone would struggle but the chances are students haven’t had as much experience – let alone savings – to make it on their own all of a sudden. Here’s what they should be considering.

Managing loans

Many students deal with student loans, since education costs are enormous. This means they can consult financial aid officers at the university they’re studying at. Alternatively, some countries, like South Africa, offer a National Financial Aid. As South Africa Info highlights:

“Much of an National Student Financial Aid Scheme loan can be converted into a bursary, which does not then need to be repaid, depending on one’s academic progress. A 100% pass rate would result in a 40% bursary rebate on an NSFAS loan.”

Of course, this is dependent on countries. It’s important students understand what is required for their loans. This means, going in, they can begin budgeting properly and knowing what they can do to reduce the total repayment – for example, achieving a 100% pass rate.

Saving properly

As we noted, a lot of responses to managing a loan has to do with saving properly.

The only way to put saving structures in place is to have proper budgeting. Students must calculate what they need and how much they will have, then prioritise. Presumably studying means students won’t be indulging in too many luxuries, instead focusing their energies on those areas to get higher grades (as we noted, this can also mean reducing financial burdens on loans and, indeed, increase chances of obtaining bursaries).


One form of saving students must begin considering early is investing. This means instead of putting lump sums away, we direct our funds into areas where money can work for us, without input.  

There are a range of options to consider from unit trust investment to property, though the best option for young people is probably the safest. Of course, the safer an option the lower our chances of reaping greater rewards.

Being able to manage our finances is a very important life skill for anyone, especially those entering the business world. If we want to create a new, financially-savvy generation of entrepreneurs, we must encourage smart money management.

Money tips to avoid

Most of us have little idea about what to do with our money. Those who are experts have either spent years of their life studying or have a knack for it the rest of us don’t. However, that doesn’t stop us trying to obtain advice from more successful people. The problem is we have to take a lot of advice on faith alone – since, naturally, we are not the experts.

Too often this advice might initially make sense, but actually be revealed to have the opposite outcome. Let’s examine some.

“Buy a house, never rent”

When you live in a house or apartment, you always have to pay for it – whether this is in terms of a bond or rent. This is usually done with monthly installments. A lot of people claim that instead of paying regularly into a landlord’s account (rent), rather put that money into the bank to pay off a mortgage (buying). After all, the money has to go somewhere so why not toward a goal that lands up with the place being yours?

This sounds like good advice. But there are some problems.

First, buying is not ideal for those interested in moving around. Young people in particular usually want to experience the world, travelling and working wherever the job takes them. Second, it can be beyond the price range of many people – especially these days – to buy a home. Interest rates have skyrocketed since the days of the previous generation, when houses and property were far cheaper in comparison to wages and salaries. Third, landlords are typically the ones who have to fork out money to repair property, not tenants. This reduces costs to you.

Patricia Jennerjohn, a financial planner who operates Focused Finances in California told Nerd Wallet: “Buying a home is not a rational financial decision…It’s an emotional lifestyle decision that has financial ramifications.”

“Always go to college”

These days we often hear stories about people in their late thirties still paying back student loans and other fees. Tertiary education is expensive and hard work. Not everyone is suited to it. Indeed, more employers are recognising that not all jobs require tertiary education. Many see more value in training individual employees, rather than waiting for someone to qualify from a university.

As one expert noted in the Times Higher Education Supplement: “No, not everyone should go to college…[But everyone] should have the option – really have the option – so we don’t miss talent based on prejudice masquerading as toughness.”

“Rent a car, never buy”

We all need to move around. The difficulty is knowing whether this means investing in a car or not. It could be that using public transport or renting a car could be sufficient, yet in the long run this won’t make sense. We can look at private car sales for good deals and, indeed, remind ourselves we can get something back when we’re done with the vehicle. It’s not simply money gone forever, but more an investment in ourselves and our mobile freedom.