7 March 2019
It’s always a good time to save. During challenging times, people often choose to invest in risk products in order to secure capital for their families. It’s also smart to come in as an investor when the markets are down. You get better value for your money.
As with any client, I would look at your income and establish a budget – differentiating between the must-haves and nice-to-haves. A lot of my clients earn good money and spend good money! It’s vital to prioritise expenses and cut back on the nice-to-haves, which leaves you with more to save. It’s also important to understand the value of compound interest, which rewards savers for staying invested over the long term.
I advise my clients to set up a debit order to save or invest a regular amount automatically. I also encourage them not to view this as a grudge purchase or even an expense – it’s an investment in their financial security.
Your primary goal should be to get out of debt. Pay more into your bond or car, for example, to save on interest. Then, it’s worthwhile setting up a contingency fund using a tax-free savings vehicle – to cover unforeseen expenses without getting into debt. Supplementing your retirement savings is also essential. The pension or provident fund you have with your company is unlikely to cover all your expenses during retirement, so it’s advisable to make provision for a retirement annuity so you can bridge gaps in an extremely tax-efficient way.
Firstly, take advantage of a tax-free savings vehicle on top of your longer-term retirement savings. This provides accessibility to your investment, whether you need to fund your children’s education or deal with an emergency expense. Secondly, never stop saving! Even when you dip into an investment, maintain your regular payments. Finally, you’re never too young to start saving. My grandson is my youngest client – he got his own tax-free savings account at the age of one month!