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Question
Posted by: Wiener | 2004/02/04

In need of some financial direction...


Good day Anton, hope this finds you well!

I wonder if you may give me some financial / life advise... I am a 23 year old male... working / studying hard and trying to earn a decent living and plan for my future. Along this journey, one of the things i am learning is that you need money to make more money! Which is a lil' hard if you do not have that much money to start out with!

I already have a retirement fund set up in which i am paying R270 a month... I have started a saving plan (5years) with sanlam in a fund of funds last year of R160 a month and just have opened another savings in the beginning of this month also at R160 in a funds of funds type investment... and I am planning to do so every year for the next 5 years... so that once a year from then on i can get a pay out once each one of the savings hits maturity... sort of a nice yearly bonus to myself!

The thing is every 3 months I recieve profit share on top of my salary from my company of a few thousand rand (+/- R2000 depending on sales). I have found myself in the past blowing this money on useless goods that contribute to nothing!

Could you recommend what i may do with this money, savings, investments, schemes etc... so that it can help me more in the future!

Someone recommended a unit-trust savings to me? Also was told about property syndication where you buy shares and draw a salary type off it every month if it was a good investment!!! What are your thoughts and advise on this?

Would you consider buying a house to be a good investment? cos I am renting at the mo and it is killing me to have to pay someone elses bond for them... but i am going to have to do it until i can get a decent sized loan from the banks for a place of my own!

I hope you can guide me a little in each one of my questions...
& If you have any other / further advise you would like to pass on to me... it will be much appreciated!

Thank you,
Wiener

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Our expert says:
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Hi Weiner,

Thanks for a comprehensive comments.

I must start off by complimenting you on a very responsible approach to financial life at a still relatively young age - you will reap the rewards for that down the road. My advice within this site is really limited to medical aspects of finance, but will gladly provide you with some comments on things that you have raised.

In general, studies of people who are financial secure in retirement versus those who battle to make it - the single biggest influence was whether the person owned their own house or not. You can not beat bricks and mortar, particularly where it provides a roof over your head.

At your age a maximum contribution of around 15%, including your employers contribution, should be enough to sustain your standard of living into retirement. Even then it probably will provide more than is required as many of your day to day expenditure should disappear.

All the modern day self help books do encourage you to spend some money on yourself for enjoymnent, of around 10% of your income. Do it and do not feel bad other wise you spend your life working and getting no pleasure.

In deciding on the best types of investments you need to consider: the expected return on the investment, the duration of the investment, the liquidity of the investment, the extent to which there is risk (that is whether you can loose you money or not earn the return you were expecting or both), the costs of the investment, and to a slightly lesser extent the other investments that you have.

Personally property is king for me, but as you say you need to build up the deposit and the costs of entry are quite high - but then you do not have to pay rent at the moment which would disappear. Buying does have its challenges, rates and maintenance can be quite expensive. Perhaps you could consider buying and sub-letting a room which will help with the bond installments for a period of time. I then invest my retirement fund monies in equities on the market. A more likely, and perhaps effective, alternative is to find a partner to go into a property together, in that way you have shared ownership.

Interestingly enough I think your studying is the best investment you are making at the moment because of the competitive nature of the employment market every thing you can do to yourself to improve you will put you that little bit ahead of the competition and get you the job and therefore income that you aspire to.

Good luck and regards

The information provided does not constitute a diagnosis of your condition. You should consult a medical practitioner or other appropriate health care professional for a physical exmanication, diagnosis and formal advice. Health24 and the expert accept no responsibility or liability for any damage or personal harm you may suffer resulting from making use of this content.

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Our users say:
Posted by: Wiener | 2004/02/09


Afternoon Anton,

Thank you for all the advise... please know it is much appreciated! I have taken note and will be giving it some serious thought and attention!

Kind regards
Wiener!

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