Make your investment decisions the talk of the town

If the topic of high interest investments comes up at the dinner table, do you jump in and contribute your view or is this your cue to take a long bathroom break because the topic intimidates you?

Many people are put off by investment talk because they think it is for the super wealthy; people who have “people” who turn their millions into billions overnight through one or other investment policy.

Yes, there are prolific celebrity investors out there who have put their fortunes into a solid investment plan and are reaping huge benefits. Actor Ashton Kutcher is a good example. He has a $500 000 (over R7-million) stake in Uber, which is today worth millions of dollars and also has money investments in Airbnb, Spotify, Soundcloud and Shazam.

Let’s face it, not everyone has the multi-million fortunes these celebs do, but that does not mean you have to shy away from financial investment.

So, what is the difference between investing and saving? The two terms are often used interchangeably but there are distinct differences between saving and investing:

  • Saving money is an important part of financial security, for now and for the future. It is about putting money away regularly, preferably into a savings account which offers you a high interest rate. You have easy access to your money and the interest rate is usually fixed. Take African Bank’s Fixed Deposit account as an example. You can earn South Africa’s highest interest rate with just R500. Your interest rate does not change for the duration of your savings period and you get to choose whether you want your interest paid out every six months, 12 months or on maturity. There are short-term investment options for different budgets.
  • Investing is when you take the money you have saved a step further, to build long-term wealth. You can invest in the stock exchange, in unit trusts, in a business or in property, for example. These are all investment vehicles which could secure you financial peace of mind for your retirement … if you invest wisely. One bad investment can ruin you financially but if you invest wisely you will come to the point where your investments make more than you are contributing each month.

What should I know before I make a financial investment?

  • Is your financial goal a short or long term one? This question is an important guideline to when you will start and what type of investment products you choose.
  • Before deciding you are going to put R2 000 a month into a savings account as an investment into your future, be sure you can afford this.
  • Your debt should get attention first. There is no point in neglecting your debts because you want to save money to invest in a property. Bad debt will give you a bad credit history.
  • Create an emergency fund alongside a savings account. Consider something like a money market account. At African Bank you get above-market returns with access to your funds at short notice. You only need R500 to open the account.

What is most important to remember is that the greatest of investment journeys start with the first step.

You do not have to be super wealthy or an investment guru. With the right financial advice and guidance, your journey can start today.

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