Getting into the habit of Investing with EasyEquities
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South Africans are swimming in debt: an alarming 78% of household income goes towards debt repayments.
With the financial stresses we’re dealing with on an almost daily basis, it begs the question, where does the average South African find money to save or invest to begin with? And once they’ve found it, how do they make that leap from savvy saver to informed investor?
The fine line between saving and investing is often a blurry one. A case in point is the money you put aside every month for your retirement. Are you saving for retirement or investing in your future? EasyEquities user Georgina Read breaks it down for us here quite nicely. Essentially, she says, in saving you put your money towards something but the point of an investment is that it makes you money.
Whether you’re saving or investing, the bottom line is that you’re going to need money to put aside on a regular basis. The difference of course are the goals and outcomes.
When it comes to saving it’s quite simple and most of us understand the concept: You open a savings account, do your best to deposit money on a regular basis and earn minimal interest. Or, as many South Africans do, you join your local stokvel, pay a specified sum on a monthly basis and receive a lump sum, every so often, with little or no interest gained (and as long as sis’ Mavis doesn’t disappear with your money come December. Believe me, it happens). You could also place it under your mattress and pray your house doesn’t burn down. Simply put, the options are almost infinite … some are just smarter than others.
There is often a perception that investing is too expensive or too complicated for the average Joe. Those are just some of the obstacles standing between a great many South Africans and their first step to becoming avid investors. And, of course, finding money to invest in the first place.
How then does an already cash-strapped South African develop and get into the habit of investing? Our friends at EasyEquities suggested these six simple and actionable solutions to help get you going.
Get to grips with your budget:
The first thing you have to understand is where all the money is disappearing to, and quickly put a plug on all those minor leaks that may be sinking your entire ship. Finding a budget planning tool shouldn’t be a tall task, as a quick Google search reveals a bunch of free resources on the internet. Once you have a realistic view of your financial situation you can take appropriate action to improve it, and who knows, you may even be pleasantly surprised.
Curb your spending
The best way to get out of debt is to stop getting yourself into debt. Of course some debt is warranted – if we had to save enough to buy our homes for cash, the majority of us would be on the streets or renting permanently. But do you really need to buy that expensive pair of jeans on credit? Decide on a monthly or weekly spending allowance and stick to it.
Get knowledgeable
It’s going to take a little more than a stroke of luck to be the next finance magnate. As investment guru Warren Buffett put it: “Risk comes from not knowing what you’re doing.” Simply put, if you don’t understand where your money’s going and what it’s doing, you are taking a risk. At the same time, you don’t need to feel like you have to have a Degree in Genius to start investing – you already know the brands that you trust, love and are prepared to give a chunk of your salary to each month. Why not become a shareholder in those businesses?
If you want to up your investment smarts, EasyEquities’ blog and social media platforms are a great place to start. Share your investing experiences, connect with others in the community and access valuable information. This is suitable for both experienced and novice investors alike. And if you still feel a little overwhelmed, we’ve simplified things even further with our new baskets offering. This allows you to buy shares, picked exclusively by the cream of the asset management crop or a well-known personality, taking the guesswork out of putting together that first winning investment portfolio.
Aim at nothing and you hit it every time
As with all areas in life, without clearly defined financial goals, the motivation to keep at it may simmer down with time. Your best shot at successfully getting into the habit of saving and investing is to set tangible targets to work towards, and an action plan on how to get there. So whether it’s for that pair of jeans you won’t be putting on credit or a down payment on your first home, define your strategy and start working towards attaining your goals.
Bust the debt, save, or do both? That’s the question, but what’s the answer?
Life happens. We get so caught up in the day-to-day business of basic survival we forget that taking care of our future selves is just as crucial as taking care of our current selves. The truth is, the longer you put off tackling issues such as retirement, the more you’re going to need to play catch up, or simply brace yourself for less than ideal future prospects. Difficult as it may seem, it’s important to take care of both. Of course, how you go about doing it depends entirely on your financial situation.
For example, if the interest on your debt is higher than the interest you’re earning on your investment, it may be smarter putting greater effort into getting rid of the debt. But it doesn’t mean you’re off the hook when it comes to saving. Investing on the EasyEquities platform will cost you next to nothing. From as little as R5 (cheaper than a can of soda), you can own a piece of your favourite brands; a good way to get you on your way to establishing healthier financial habits.
And lastly…
Just get going
The only way you’re going to get into the habit of investing is by becoming an investor. So stop dreaming and start doing. Remember, R5 is all takes!
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