On average, 10% of South Africans are not interested in saving for the future, while 14% are said to be living beyond their means and struggling to keep their heads above water, according to the research.
“High-earning individuals must take responsibility and consider how much is enough to provide for their current as well as their future lifestyle needs. They must also understand the future impact of their current financial discipline or lack thereof,” says Old Mutual Wealth CEO Andrew Bradley.
“An investment plan that takes all these aspects into account is the only way to accurately determine how the assets they accumulate can best be grown to take care of all these needs.”
Here are Bradley’s fail-proof steps to wealth creation:
Focus on time in the market rather than timing the market
A sound investment strategy means sticking it out, even when market conditions take a dip or are seemingly low. This, says Bradley, is actually the most opportune time to continue and where possible, increase investments.
“It is important to continue investing through all market conditions and particularly during market lows when share prices are undervalued and a lot cheaper, so that you gain more during market highs,” he advises.
Understand time horizons and risk
According to the research, 23% of South Africans see no benefit in being loyal to a specific investment house and by default, long-term investment strategies. This, Bradley says, is a mistake.
“Time horizons are a major influence on an investment approach. The longer your perspective and the longer you are prepared to invest, the more options you will have with greater returns without increasing your investment risk.”
Diversify your portfolios
The old adage “don’t put all your eggs in one basket” definitely applies when it comes to investing.
“When deciding where to invest, it’s always better to cast your net widely. Don’t focus on the returns from the individual components of a diversified investment portfolio. Rather look at the performance of your portfolio as a whole.”
Keep investing over the long term
Compound returns, essentially growth on your growth, are king and the “most powerful force in investments”.
“This only occurs when you have been invested for a long period of time. Trying to make up for lost time will require a lot more allocated to your savings and can be dangerous if you chase unrealistic returns,” Bradley advises.
Ensure that your investment strategies are customised for specific needs
Bradley says people need to understand and be able to distinguish between the asset types that are vital to ensuring financial security, namely: business, lifestyle, investment and surplus assets.
Business assets are things like shares in a company or in the case of non-shareholders, the income you draw from your job.
Lifestyle assets are things like your house, cars and other assets bought to enhance your lifestyle.
Investment assets are the type of assets you should focus on growing continually because it is what you will ultimately rely on in retirement once those monthly paychecks stop flowing.
“Surplus assets relate to the amount of money not required to fund lifestyle needs. These funds can be risked to increase investment assets, to invest for future generations or to give back through charities or philanthropic foundations,” Bradley says.
“High-earning individuals must take responsibility and consider how much is enough to provide for their current as well as their future lifestyle needs. They must also understand the future impact of their current financial discipline or lack thereof,” says Old Mutual Wealth CEO Andrew Bradley.
“An investment plan that takes all these aspects into account is the only way to accurately determine how the assets they accumulate can best be grown to take care of all these needs.”
Here are Bradley’s fail-proof steps to wealth creation:
Focus on time in the market rather than timing the market
A sound investment strategy means sticking it out, even when market conditions take a dip or are seemingly low. This, says Bradley, is actually the most opportune time to continue and where possible, increase investments.
“It is important to continue investing through all market conditions and particularly during market lows when share prices are undervalued and a lot cheaper, so that you gain more during market highs,” he advises.
Understand time horizons and risk
According to the research, 23% of South Africans see no benefit in being loyal to a specific investment house and by default, long-term investment strategies. This, Bradley says, is a mistake.
“Time horizons are a major influence on an investment approach. The longer your perspective and the longer you are prepared to invest, the more options you will have with greater returns without increasing your investment risk.”
Diversify your portfolios
The old adage “don’t put all your eggs in one basket” definitely applies when it comes to investing.
“When deciding where to invest, it’s always better to cast your net widely. Don’t focus on the returns from the individual components of a diversified investment portfolio. Rather look at the performance of your portfolio as a whole.”
Keep investing over the long term
Compound returns, essentially growth on your growth, are king and the “most powerful force in investments”.
“This only occurs when you have been invested for a long period of time. Trying to make up for lost time will require a lot more allocated to your savings and can be dangerous if you chase unrealistic returns,” Bradley advises.
Ensure that your investment strategies are customised for specific needs
Bradley says people need to understand and be able to distinguish between the asset types that are vital to ensuring financial security, namely: business, lifestyle, investment and surplus assets.
Business assets are things like shares in a company or in the case of non-shareholders, the income you draw from your job.
Lifestyle assets are things like your house, cars and other assets bought to enhance your lifestyle.
Investment assets are the type of assets you should focus on growing continually because it is what you will ultimately rely on in retirement once those monthly paychecks stop flowing.
“Surplus assets relate to the amount of money not required to fund lifestyle needs. These funds can be risked to increase investment assets, to invest for future generations or to give back through charities or philanthropic foundations,” Bradley says.
