Investing for the 30s and 40s

AVOID LIFESTYLE INFLATION: INVEST SPARE CASH

Spend only a reasonable amount on luxuries and fun.

Your 30s and 40s is usually the phase in your life where you build your career, family and asset base. Most importantly, the financial decisions you make during this period will have a direct impact on the level of comfort you will enjoy in retirement.

Do you fall prey to lifestyle inflation and perpetually need to keep up with the Joneses and the Khumalos?

Overindebtedness can ruin you; managing debt appropriately is critical to long-term financial success.

Set a level of lifestyle you are happy to achieve; once you get there you can keep pushing the level higher. This will ensure you are able to invest any spare cash and bonuses and not spend it on new cars and excessive holidays.

You should plan to spend only a reasonable amount on luxuries and fun, as part of a well-thoughtout and constructed budget, that focuses on wealth creation and accumulation.

Irrespective of when you begin to accumulate wealth, a successful plan will require a long-term investment strategy, discipline and an understanding of your ability to stomach volatility and risk in the present market.

Here are a few tips:

Focus on retirement planning – there is a tax benefit in this and growth within compulsory structures is tax free. Note, restrictions to these funds apply at retirement – make sure you are aware of them.

Calculate what you should be investing to achieve your desired income level in retirement.

Do not fall prey to lifestyle inflation. You will inevitably experience some level of buyer’s remorse and it is really difficult to return that car or house once you have bought it.

Revisit your financial road frequently and monitor your successes often, as this keeps you motivated along the path or make corrections should they be required.

Ensure you are insured correctly and adequately – this is not optional, it is crucial.

Join the medical aid fraternity in SA before the age of 35 to avoid late-joiner penalties that will stick with you for life.

Keep track of your health – stay fit and healthy.

Claire van Wyk is a Discovery Certified financial advisor