Simply saving your money in a bank account is not enough because inflation will erode the buying power of your cash. You need to find a way to ensure that you expose your money to the growth potential inherent in the markets in order to secure your future financial stability.
There are a number of products in which you can save or invest your money. Each product is structured to meet a selection of investment needs.
Choosing the fund that’s right for you is a lot simpler than you might think. Look at your personal circumstances and decide what it is you want to achieve.
There are three key areas to determining the right investment for you:
- The length of time you have to invest;
- The amount of risk you are willing and able to take,
- And thirdly the amount of money you have to invest.
What is a reasonable time horizon?
Key to determining the right investment for you is the length of time you have to invest.
Because money invested generates returns which are reinvested to make even greater returns (compound interest), the longer you have to invest the more opportunities you can take.
Thus the longer you have to invest, the higher you can expect your returns to be.
We believe 5 years to be the optimal time period. But we also know that different people have different needs, so whether you’re saving for the future, need an income now or looking for both income and long-term growth we have a solution for you.
Risk means different things to different people
It really does depend on your particular circumstances and how much of your total asset base you plan to invest – is it a small or significant portion of your discretionary savings – or all?
The greater the risk, the greater the potential
With investments, the greater the risk, the greater the potential for higher returns, and by risk we mean exposure to equities and property.
Financial markets move up and down
You need to think about your ability to remain invested should there be a short-term dip. This will determine what type of fund will be right for you – the more diversified the lower the risk.
Multi-asset funds diversify risk across asset classes and typically meet the needs of most investors
Let your money grow
All you need to get started is R 250 – R500 per month or a lump sum of R5000.
The earlier you can begin saving, the more time your money will have to grow, as the mechanism of compounding causes the rands that you save in your youth, to be worth more than the rands you saved near your retirement.