INVESTING IN YOUR TWENTIES

The best time to start saving money is in your 20s. 
Here’s how to safeguard your future

IT ’S exciting landing your first job and having your own money to spend. You can buy expensive clothes, furniture and gadgets, go clubbing with friends and enjoy fun-filled holidays. But before you ‘go overboard, the first thing you should do with your pay cheque is work out how much you can save every month and how you can invest some of the money.

 If you don’t, you’ll suddenly wake up in five to 10 years’ time and you’ll have nothing to show for it financially. This is what almost happened to 28-year-old Richard Nkabinde, a marketing manager from Harrismith. ‘While I was at school I worked hard while watching people driving expensive cars, living in fancy houses and eating in five-star restaurants.

 I decided I wanted that lifestyle, too,” he says.
‘At the beginning of my career, I spent money on family holidays and weekend getaways, celebratory events and anything I desired. When I turned 27 I realized I didn’t have a savings, retirement or investment plan and that scared the hell out of me,” he remembers.

Richard then asked his pens ion fund administrator to recommend a financial advisor to him and he now has an investment plan in place. “I bought a townhouse with a friend and we rent it out, and I’m looking for another property with B&B potential,” he says. ‘I also recently bought shares in a business and have a retirement annuity to supplement my pension.”
Joburg financial advisor Onalenna Disipi, who works at Liberty Retail SA, says before you can start investing your money you need to understand the importance of saving.
She advises people to look at their salary statements and work

with how much income they have at their disposal. “Define a goal and start saving towards that goal. If you earn R5 000 per month, it’s possible to put away R200 per month. In three years’ time it’ll get you to R8 125 (at a net rate of return of 8 per cent per year, assuming inflation will be 6 per cent per year).
‘If you earn R5 000, you can potentially save R2 000 per month and this will get you to

R81 250 in the same time period,” says Onalenna.
Not only is saving important for deposits on big items such as a car or a house — but also for unforeseen events. Once you have a savings plan in place you can turn your attention to investing your money.
Starting early is important, Onalenna notes, especially when it comes to your retirement.

‘We typically work for around 40 years and have to survive for 20 to 30 years once we’ve retired. If you don’t save while you’re earning an income, you won’t have enough money for your retirement,” she says.
Savings and investments do require discipline but with a goal and financial freedom as a guarantee, the sooner you start the better.