WHERE CAN I invest AS A STUDENT?
Iam a 22-year-old student currently doing my in-service training, which will end in February. I have total disposable income of R2 200 a month. Through City Press’ articles, I have been introduced to the world of investment and I want my money to grow. Should I invest in property and what is a financial adviser?
CITY PRESS REPLIES:
It is great that you want to start using your disposable income for investing – the earlier you start, the better. However, you need to have a holistic plan in place. Here are some points to consider:
Put money away for an emergency: Good intentions can be ruined when one is faced with an emergency. This is one of the main reasons people take on debt, so you should start by putting some money into an emergency fund.
Try to save at least R10 000 in a high-interest bank account where there is no risk to your money.
Building up a nest egg: Property can be a great investment and we will be featuring a reader who has started a successful property business next week, however, you need to know what you are doing – and you need to do your research. You also need significant capital to start.
Once you have built up your emergency fund, consider investing in a low-cost, tax-free savings account for the next five years.
This will help you build up capital should you wish to buy a property or start a business – or you may just want to keep adding to the investment.
A financial adviser: The right financial adviser can be a great partner in helping you formulate your financial strategy and continue advising you over time as your plan grows and changes.
Increasingly, there are financial advisers who work on a fee basis so that they can give you advice irrespective of how much you have available to invest.
These advisers understand that this is a longterm relationship and not just based on a one-off commission sale.
The Financial Planning Institute of Southern Africa is a good place to find a referral (fpi.co.za).
Be careful of schemes: When you are young, there may be the temptation to invest in a scheme that your friends say will make you rich overnight.
These are invariably scams and, in the end, you lose all your hard-earned money. Money is made over time through investing and through hard work.
No one can offer guaranteed returns above that of the current interest rate.