Where should I save R5 000 a month?

I have R5 000 to save a month in addition to my retirement annuity (RA) fund contributions. What should I do?

Name withheld Marius Cornelissen, a financial adviser from PSG Wealth Menlyn, responds: The first step to take when you have additional cash flow to invest is to service any outstanding debt, particularly the shorter-term, high-interest rate types of debt, such as credit cards and revolving credit.

If that is not an issue (that is, you have cleared all your shortterm debt, including store cards), analyse whether your level of life, disability and critical illness cover is sufficient to meet any future hazards. Once these are addressed, consider additional investments aligned to your financial goals.

The term of any investment will determine which type of investment and asset classes should be considered.

Nothing prevents you from making additional contributions to your RA, as you will be able to benefit from such contributions at retirement.

If your expected investment term is long, you can also consider a tax-free savings account (TFSA). With a TFSA, you can contribute R3 000 a month up to R36 000 annually (with a lifetime limit of R500 000), with the benefit of not paying any tax on the returns. Any excess savings may then be allocated to a voluntary investment product in line with your risk profile and risk tolerance. I advise that you discuss your needs, allocations and fund selections with a qualified financial adviser.