For most investors, their primary goal is saving towards their retirement. They want to be able to stop working knowing that they have accumulated enough to maintain their standard of living.
However, the reality is that the majority of South Africans don’t get there. Most people struggle to retire well.
Speaking at The 2016 Moneyweb Money Expo Gary Kayle from The Money School said that most often this is because people underestimate how much of their income they need to save to reach their objectives.
“You can’t expect just time and compounding to work for you,” he said. “It requires large amounts of your earnings to retire adequately, especially if you want to do it young.”
A hindrance many people face, however, is that the standard of living they look to maintain while they are working does not allow them to save sufficiently.
“The level of lifestyle that you pick now while you are investing absolutely determines your ability to build wealth,” Kayle said. “I just find people choosing the wrong level of lifestyle, chewing up their ability to invest effectively to achieve their goals.”
Annabel Dallamore from Stock Shop said that it’s also very important for investors to understand the products they use. It is essential to know where their money is invested and the costs involved.
“Don’t get sold on something you don’t understand,” she said. “If you don’t know exactly what you are buying, don’t buy it.”
Kayle agreed, and said that investors have to take the time to develop their financial knowledge.
“The difference between most people and wealthy people is that wealthy people will spend the time educating themselves,” he said. “You can only be in control if you understand your investments.”
Dallamore added that there are many resources people can use to develop the know-how to support their financial journey.
“If you have someone in your life that you trust who has some financial know how, talk to them,” she said. “Read as much as you can, read the newspaper every day, understand the markets. There are a lot of free resources online too. Moneyweb is a great place to go.”
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