Don’t party your money away

Start investing in your twenties and make sure you don't touch that money. Money web

Investing has always been something that many people assume will happen when they come of age. The older they get, the more money they’ll make and then maybe they’ll think about investing.

Being in your early 20s and starting out in the working world doesn’t mean that you should just pay your bills and party the rest of your salary away. At this stage, you have to start thinking about making your funds grow – getting your money to work for you. What is investing? We invest money in businesses or in banks to get more money in return over a period of time. Head of advice at Old Mutual Lizl Budhram says: “Investing is where you have capital, or a fairly large sum of money, and you invest that with the objective to achieve a return that’s more than inflation.”

The process requires time, understanding, but – more importantly – savings.

Budhram says if you, as a 20-something, have already started saving your money, you’re on the right path. Keep saving, budget your savings and then to make sure you manage and adjust your investments to meet your changing goals and needs.

“Make sure you continue making the contributions – you’ve made a commitment that you are going to put away this amount every month. Make sure you stick to that and avoid the temptation to use it for unnecessary expenses.

Petri Redelinghuys, a trader and the owner of Herenya Capital Advisors, says investing begins with understanding your money and knowing what the best way is to grow your money.

Where do you begin?

Begin by educating yourself about all the different options that are available. There are a variety of sources and tools that can assist you in making the right decision when entering the world of investing. There are simple options like unit trusts and then there’s the more complex company, property and asset investing.

Redelinghuys says: “Before you start just blindly investing into things, you need to start self-educating around investment.”

Budhram says that it’s important to look at options that suit your personal needs and your budget.

The beginner investor should start with an option that has more structure and is safer. Her suggestions for new investors to consider include: A unit trust; A savings policy; A retirement annuity; A tax-free savings account; Exchange traded funds. These options allow you to enter the investment market in a secure and structured way.

The simplest way to start investing is to work through a unit trust company, an insurance company, or a bank.

“What makes it safer is that you have a whole host of assets or shares, so if one asset performs badly, there are others to pick up your portfolio, therefore every year, you are more likely achieve reasonable growth.”