Financial experts share the investment tips they would give to their younger self

Financial experts share the investment tips they would give to their younger self

Published on 25th May, 2022 at 02:47 pm

How many of us at age 18 thought about our financial future? Nowadays it’s recommended to start saving as soon as you get your first salary. However, many of us are guilty of not doing this in our youth. So, what lessons do experts share, and what can younger investors learn from them? To help you on your financial journey, we asked, “What investment message would you share with your younger self?”

#1: Take advantage of time

“The younger you are, the less sacrifice you need to make to your lifestyle due to the smaller contributions you need to make to reach your saving goals. The longer you wait to start saving, the more you’ll need to save every month,” points out Martin Lessing, regional manager: North at Glacier by Sanlam.

Madri Jacobs, an investment specialist at Brilliance BlueStar Financial Advisory Services, authorised by Sanlam, agrees. “The most important investment lesson [for me] was to start investing early and to aim for regular contributions to my investments. Compound interest is a very powerful principle in growing wealth!”

#2: Learn the basics

If you’re in the position to start investing, start with the basics: budgeting. “It helps bring structure to your financial world, and is essential to help you manage your finances,” says Jaco van Schalkwyk, Certified Financial Planner® at Plan-B BlueStar, authorised by Sanlam. “A financial road map gives you the clarity and understanding needed to stick to your goals,” he adds. “Adopt the 50/30/20 rule. Divvy up your income and, after deductions, allocate 50% to ‘needs’, 30% to ‘wants’, and sock away 20% for savings/investments,” he suggests.

Need help creating a budget that works? Use our free budgeting templates.

#3: Don’t invest in something you don’t understand

Claude van Cuyck, executive director and portfolio manager at Denker Capital, says: “Understand that the value of any business is determined by the present value of the cash flow that you can generate over the life of the investment.”

And don’t use debt to invest in risky assets, says Cuyck. Not only could you lose your money, but this would also expose you to having to pay the debt for nothing in return, too.

Before you invest, speak to a trusted financial planner. Plus, as a Reality Core, Plus or Health member, you’ll earn up to 8 000 tier points!

#4: Have a clear vision for your (financial) future

Thinking about your future can be daunting, but having a clear vision of it could lead to greater financial success. “[The future] looks different to everyone, and it may even change at different stages of your life,” says van Schalkwyk. So, before you make your first big purchase or make a large investment, think about your future self and the life you would like to liveIf you’d like to retire early. Consider things like how much money you would need to fund your life after retirement, then work towards that goal.

Are you saving enough for retirement? Use this tool to see how you’re tracking.

#5: Don’t panic if shares lose value

“You can take a long-term view towards investing in higher growth assets, as you have time to recover when stock markets are volatile, or even if they decline sharply,” says Lessing. “Markets always recover, and when you’r younger, you have time on your side. This often presents significant buying opportunities (when markets fall), and you can benefit from rand-cost averaging ⁠– ie buying investments at an average lower price because you’re buying regularly over a longer time.”

 #6: Just start (even with a small amount)

Investing isn’t only for the wealthy. It’s for anyone with a little extra money. “Start with something; no matter how small the savings amount, it can grow substantially and surprise you in the future,” says André Wethmar, senior financial planner at FinPrufe Wealth BlueStar, authorised by Sanlam.

“Investing even a small percentage of your income early on helps to create consistent behaviours and set up good savings habits, giving you one of the greatest advantages in investing – time,” adds Lessing.

Want to start investing? Find out how to start investing with as little as R100.

#7: Stick to the plan

“Stay focused on your initial goal and enjoy future rewards. Your investment journey may have many ups and downs, but that is a natural part of life,” says Wethmar.

“Invest in a variety of investment instruments such as shares, bonds, property and alternative instruments, locally and overseas, according to your appetite for risk. Remember that the primary financial goal is to beat inflation and accumulate wealth ⁠– growing the buying power of your money,” concludes Lessing.

Want to invest, but don’t know where to start? Speak to one of our financial experts.

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