Women are in control of more money, whether you earn it, manage it for your family, or inherit it. More women are starting to out-earn their partners and become the main breadwinner. Whatever money you control, it’s important to learn how to save and invest it wisely, so that you can maximise it for yourself and your family.
One of the first lessons is understanding the difference between saving and investing.
Saving is when you put money away with a short-term view, so that you can cope with an emergency, or build up cash for an item that you can’t currently afford.
Investing, on the other hand, is a long-term exercise where you aim to grow the real value of your money. It involves buying assets which will yield good returns in the future and exceed inflation. These assets include, but are not limited to, shares, property, mutual funds and bonds. While there are risks involved, these investments are likely to give you a better outcome over the years than keeping your cash in the bank.
A wide array of investment products are available, each with advantages and disadvantages. For example, shares tend to outpace inflation in the long run, but they can be volatile – you may see the value of your investment decline in the short term. It’s also important to understand if there are minimum or maximum contributions, and how easy it is to access your money.
Joining a unit trust is one straightforward way to invest. A unit trust is a portfolio of shares, bonds and other asset classes, chosen and managed by professional fund managers. Investors’ funds are pooled, and the manager buys assets on behalf of the fund. The assets are split into equal units and sold to investors.
Some benefits of unit trusts include:
- You can access stock exchanges without investment knowledge or experience;
- Professional investment managers manage the funds;
- You can access your savings in 48 hours;
- There is diversification, which lowers risk;
- Unit trusts are highly regulated and you’re unlikely to be a victim of fraud; and
- There is a high level of transparency about costs and details of the underlying portfolio.
Keep in mind that unit trust fund managers will receive a service fee. This includes the initial fee, an annual management fee, and administrative and custodian fees. The combination of these fees varies from fund to fund and it’s important to weigh fees up against performance.
An easy way to find out more and empower yourself is by visiting a personal finance website like Justmoney. Established 10 years ago, it provides busy and digitally-savvy South Africans with easy access to financial products, services and information. It does this by partnering with trusted financial brands and creating informative, trustworthy advice. Here’s a link to a helpful Justmoney article on whether one should save or invest; and another on whether unit trusts are a good investment. To speak to one of their advisers who can help you choose the best investment options, click here.
“Knowledge is power, and Justmoney makes it easy to access information that’s current, reliable and straightforward,” says Justmoney Commercial Manager Sarah Nicholson.
Old Mutual Life Assurance Company (SA) Limited is a licensed FSP and Life Insurer