We all know that putting a little money away each month can be highly beneficial to our bank balances and future lifestyles but just how much do we need to save, and what does it really entail? We consulted an expert financial mind for some well-rounded advice and tips on how to make money even when bad economic times hit. Whether you’re saving for a car, keen on investing in the stock exchange or just looking to put a little away each month for a rainy day, it’s time to get serious about saving.

When Is The Best Time To Plant a Tree?

We asked Andrew Ludwig, Investor Relations and Marketing Manager at Tower Capital, a Johannesburg-based hedge fund management firm, the question everyone doesn’t like the answer to – “when is the best time for a person to start saving?” His response was quite simply: “When is the best time to plant a tree? Now! Even though many of us are living hand to mouth and trying our best to make ends meet, the moment that someone has any sort of disposable income to put away, it’s important that they start saving immediately.”

We all know it vital to start putting money away, but where do we begin?

New Regulations Make Saving Easier For Everyone

Unveiled during the 2015 Budget Speech, the South African government is making moves towards enabling consumers to save money more easily. By actively focusing on moving consumers away from a culture of credit and steering people towards the habit of saving, it’s hoped that more and more South Africans will be able to create healthy futures for themselves. As an initiative that works to turn South Africans towards a culture of savings, Tax-Free savings accounts have become available, whereby consumers can stash up to R30 000 per year. The country’s financial institutions have already set up their offering for this type of account, with all the big banks adding tax-free savings accounts to their service portfolio. 

But what does that mean in real terms for the South African consumer? Andrew illustrated it using a simple example:

“If a person deposits R2000 a month into a tax-free savings account and continues to do so for twenty years, they could end up an amount of R1.2 million in their savings accounts, thanks, in part too, to compound interest”. 

General Guidelines on Saving

The second question about savings that most people don’t really want to hear the answer to is: “What percentage of my income should I be saving each month?” There are a number of recommendations around savings made by multiple sources. For example, the 50/30/20 simply divides your income into 50% necessities; 30% discretionary income and 20% savings (including long and short-term savings goals). But that’s not necessarily an attainable savings goal for many. Andrew recommends a minimum of “10% of your income to be put away each month.”  

Creating An Investment Portfolio

Of course, savings accounts are the first step to watching your money grow, but as a means to create even more growth, a solid investment portfolio can serve you even better. Moreover, the more knowledgeable you become about your investments and the more experienced your selected broker is, the more likely you are to create true wealth for yourself. Employing the skills and experience of a professional asset manager will mean your money and investment portfolio is well managed by expert hands.

But What Happens When Bad Times Hit?

A little glance at the headlines tells us that global economies are struggling and there’s talk of collapse or crash in the not too distant future. Many would therefore assume that investing in the stock market could leave people out of pocket but, thanks to expert brokers and asset managers, this is not the case. Hedge fund management firms can offer clients downside protection services through hedge fund strategies, meaning that clients’ assets are protected even when economic crises hit.

What Is Sophisticated Investing?

Hedge fund management firms like Tower Capital take a close look at market discrepancies, assessing under- and over-valued companies that are listed on the stock market and, by utilizing research and forecast methodologies, uncover the companies’ true value. By applying this research to market trends and taking into consideration their investors’ requirements, Hedge Fund Managers can create viable and highly beneficial investment options for their clients, and offer customers an all-important downside protection through hedge fund strategies. Andrew also related to us: “South African Hedge Fund Managers are some of the best in the world. We’re highly regarded on a global scale so consumers can rest assured that their money is in good hands. Because we could may be in for turbulent times as we reach the end of a Bull Market cycle, the skills of our great Hedge Fund Managers will be in high demand.”

But Why Invest In Africa?

As a developing continent, Africa is teeming with opportunity and the need for infrastructure and expansion is strong. That’s why it makes sense to invest in Africa, as it’s here that many industries are making great gains. A quick look at mobile technologies, for example, shows that the possibilities that have emanated from even the simplest of handsets. Mobile payment platform, M-Pesa has created countless opportunities for consumers and investors in Kenya, with reports now showing that it’s having a big impact on other African countries too, like Lesotho. With 90 billion US Dollars forecast as being ring-fenced for infrastructure development in Sub-Saharan Africa, it would make good financial sense to invest here. Bearing in mind too, that retail companies have experienced great success in Africa, with companies like Mr Price, Shoprite and Woolworths expanding every day. And, as the country gets richer and its citizens more money-wise, the middle class will grow, meaning that the demand for banking and financial services will increase. 

Where Do I Sign Up?

Now that you’ve given it some thought and are keen to get investing or start saving straight away, take some time to consider your options and learn about the different ways you can start creating future wealth for yourself. Consult your broker, chat to your bank and draw up a budget that works for you. Most importantly, start today.