27four Investment Managers
4th January 2016
Money management Tips for women in the new year
Financially-themed promises for improvement are, unsurprisingly, always among the most popular resolutions made each New Year. Unfortunately, only a few of resolution-makers are ultimately successful in their endevours.
Still, historically low odds of success nor uncertainty about the best resolutions to make should not discourage you from improving your financial habits in 2016. The decisions you make today can determine what kind of shape you and your money will be in for decades to come.
So I asked experts for some money management tip for the New Year and this is what they had to say:
Gugu Sidaki – spokesperson, FNB Wealth Manager
There are a number of factors to consider before committing your hard earned money. It is imperative that you do your homework and ensure that the investment is appropriate for your current circumstance and that the future prospects align with your requirements and objectives. Determine what your present situation is and what the desired future financial situation is. In other words, where are you now and where would you like to be in the future in financial terms. You also need to quantify how long you would like to invest for. Investing for less than two years is considered to be short term while between three and five years is considered to be medium term. Long term is anything in excess of five years.
Fatima Vawda, Managing Director, 27four Investment Managers
Bar the global financial crisis of 2008 (which in hindsight now appears as a small blip in the return profile of assets) saving and investing in South Africa over the last 10 years has been well rewarded for those investors who have been patient and steadfast. The last few months of 2015 have shown us that the days of double digit returns may well be a thing of the past for some time to come.
As we head into 2016 given a more uncertain economic outlook, how do we continue to grow our wealth and protect our precious savings? Firstly always remember to keep saving. The more putting money away becomes a habit the easier it is to do and the more you help your money grow by giving it time to compound. The future is always uncertain and every woman needs to strive to ensure that she makes provision for her own financial well-being.
The answer also lies in making sure that you know how long you are going to be saving for and then picking a product that is appropriate for that time period. Don’t pick an equity fund if you are going to need the money in a year or two. Shorter time horizons require low volatility investments, whereas for a longer time horizon (upwards of 5 years) the shorter term volatility is well compensated for in terms of higher longer term returns.
Bev van Nijkerk, a market segment specialist at Sanlam
Sanlam’s Retirement Benchmark survey has consistently shown that women save less but live longer than men. The 2015 survey in particular cites that women can expect to live 4 years longer, and therefore be in retirement longer, than men. At the same time, women are more likely than men to interrupt their careers for maternity leave and sometimes to raise children and take care of family members. All this contribute to women accumulating much lower retirement savings. So if there is one money management tip Sanlam can give to women for 2016, it is to not neglect their retirement savings because of short-term financial pressures. In the current climate of steadily increasing interest rates and where above inflation increases leave many of us more stretched each year, it can be hard to balance our budgets. But you need to be able to survive in your old age to reap the rewards of your working life. If you have to choose, your children can borrow money to study. However, you will no longer be able to generate an income and therefore you cannot borrow for retirement. So, have a financial plan that takes into account both your short-term and ling-term needs. Set aside at least 15% of whatever you earn every month for retirement – whether in a company pension fund, retirement annuity or other forms of savings. When you get a windfall, like a bonus or tax returns, use the proceeds to boost your retirement savings. The beauty of a windfall is that it enables you to boost your savings without having to make any cutbacks.
If you slip up from your plan, don’t beat yourself up. Don’t quit. Start again where you left off. If you have to change your strategy or plan a bit then do it. Just don’t quit. Remember, winning little battles leads to big victories.
Source: The Disruptors Blog