Tips for seniors to capitalise on high interest rate

Head of Retail Investments at Nedbank, Sisandile Cikido, has pointed out that it is more important than ever for senior individuals (those 55 years of age and above) to assess their finances – not just to manage the negative impacts of the economic downturn, but also to capitalise on the positives.

She advises that they should make the most of higher interest rates to save for the tomorrow they want, as good financial choices made today play an even more important part in their overall well-being and how they continue to plan for the future.

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“As is the case with most grey clouds, the current increasing interest rate environment offers a silver lining in the form of higher growth on your savings,” Cikido explained.

She went on to say that for seniors – particularly those who rely on an income from their saved capital – it’s important to take full advantage of the current higher-interest earnings opportunities.

Five tips for seniors to optimise their money

Narrow down your goals: Cikido explains that as one gets older, it becomes increasingly important to map out a plan for the rest of your life. “Narrowing down your goals from what they may have been 20 years ago is a great way to home in on what really matters and a realistic plan to achieve it, including saving any money as required,” she said.  

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Think short- and long-term: Cikido emphasises that it is important to ensure that the narrower focus mentioned above still includes all aspects of one’s life, from health and living arrangements to retirement, legacy and estate planning and fun things like hobbies and travel.

She also highlights the importance of thinking and planning for long- and short-term goals, adding that most senior people save towards a combination of retirement, emergency funds and general life goals.

“This type of balanced view is very important because it helps you to choose the right combination of savings solutions to match each of these goals.”

Make sure you capitalise on better interest rates: According to Cikido, one of the main reasons people give for not saving is that they do not believe that the interest rates on savings accounts are high enough.

“The recent interest rate hikes, coupled with the uncertainty in the share investment markets, has created a very compelling environment for savings,” she said.

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Make that side hustle count: One of the consequences of Covid-19 was a decline in the income earned by a large number of seniors. Many have turned to entrepreneurial ventures, or side hustles, to supplement their regular income streams.

Cikido urges seniors to leverage that additional income for longer-term goals. “A successful side hustle is a great way to build up the finances you need for your long-term goals,” she said. “And with a little careful planning and a healthy pinch of self-discipline, it may be possible to leverage the current high-interest-rate environment by saving a portion of that extra income in a long-term deposit account to benefit from the power of compounding over time.”

“As we get older, our priorities typically start changing. New financial realities have an impact on our spending and saving actions, and good money management becomes more important than ever before in ensuring that we can enjoy the futures we want.

“So, while the current high interest rates are not going to last forever, taking full advantage of them today, via a well-thought-out savings plan, could lay a solid foundation on which to achieve the tomorrow you want,” Cikido concluded.

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