Liberty Advisory Services
There are always so many demands on your savings pool – you have to put money aside for emergencies, plan for your retirement, save for a deposit on your house and that is before you have even thought about the kids' education. With all these needs, it is hard to find enough savings to cover all of them or even where to start. The only strategy is to prioritise:
Where to save: Ask your bank for no fee savings accounts where your money is available within 24 hours.
Priority no.1: Emergencies
Emergencies are one of the main reasons people get into debt. Life happens and when it does you need to have a plan. Every household should have some money put away for emergencies. Author Dave Ramsey recommends starting with a realistic goal of at least R10 000 put away for emergencies. If you have to dip into it for an emergency then prioritise to replenish it. Your longer-term goal is to build up an emergency fund of three months of household expenses.
Where to save: Ask your bank for no fee savings accounts where your money is available within 24 hours.
Priority no. 2: Debt
Pay off short-term debt. Paying off debt is a form of savings as you save money by paying off your debt faster. If you are sitting with short term debt that is costing you 20% a year, there is no point in investing for 12% a year.
Where to save: Start with your smallest debt. Once that is paid off it frees up money to pay off the next debt and so on.
Priority no. 3: Retirement
Use your tax benefit to plan for retirement. Don't waste the retirement tax benefit provided by government. If your employer doesn't have a retirement fund then take out a retirement annuity.
Where to save: Start with your smallest debt. Once that is paid off it frees up money to pay off the next debt and so on.
Priority no. 3: Retirement
Use your tax benefit to plan for retirement. Don't waste the retirement tax benefit provided by government. If your employer doesn't have a retirement fund then take out a retirement annuity.
Where to save: Your company retirement fund or a retirement annuity. Liberty has a wide range of retirement solutions.
Priority no. 4: Life goals
Your medium term savings goals are all determined by where you are in your life. If you have just started working and plan on buying a house, then your priority would be to save for a deposit on your home. If you have children your priority may be saving for their education.
Where to save: There are a range of products that can meet your needs. Speak to your financial adviser about the various options:
- A multi asset unit trust that can invest across equities, cash, bonds, property and offshore makes for a good medium term investment vehicle.
- Education policies can help create the discipline in saving for your child's future.
- Fundisa, the government and industry initiative for tertiary education savings is available at Standard Bank and STANLIB.