by COREEN van der MERWE
FINANCIAL planning is a skill every modern woman should possess. Women are generally more independent and financially savvy than 20 years ago, with millennial women especially more confident in understanding and participating in the investment world, but far too many women still either don’t invest or delegate the task to someone else, be it a spouse or financial advisor.
The bottom line is that the more involved women are in their own financial well-being, the greater their ability to not only become financially independent, but to recognise good opportunities.
One of the biggest misconceptions when it comes to the world of finance is that it’s “a man’s game”. There’s been a strong growth in the number of female investors over the past couple of decades, and if the numbers show anything, it’s that a woman’s approach to investing is definitely different to that of her male counterpart – and that’s not a bad thing. Women may take longer to make decisions, but they tend to avoid unnecessary risks, and are often better long-term investors because they stick to their long-term goals instead of trying to beat the market.
Don’t know where to start? Your first step should be to contribute to a South African retirement annuity (RA). You can contribute up to 27,5 percent of your salary to a RA.
Next, you can look at contributing to a tax-free investment account. You can contribute R33 000 annually to this type of account that doesn’t trigger any dividend, interest, income or capital gains tax.
After that, you can look at diversifying by contributing to an offshore investment. This can either be in your name, an offshore trust or an offshore retirement plan in a zero-tax jurisdiction like Guernsey, for example. The Sovereign Group offers various offshore investment vehicles in jurisdictions like Malta, Gibraltar, Isle of Man or Guernsey.
The broad principles for investing are the same for everyone, men and women alike.
The earlier you start to save, the better – the effect of compound interest is astonishing!
Take a long-term approach. Your goal should be to beat inflation, which is probably one of our biggest threats in South Africa.
Make informed decisions before you invest. You must understand the various levels of fees and the risks involved in every option. If this means that you are going to take a bit longer to decide how you invest, that is your prerogative.
Try not to touch the funds that you are saving and investing in your retirement plans unless it is absolutely necessary.
So, go ahead. Take the first steps to your financial independence today. It will not only give you higher returns, but the financial resources to deal with the unexpected.
To further unpack such financial planning matters, Sovereign Trust SA will be hosting experts in the field of offshore retirement planning at its fifth annual International Retirement Seminar in Johannesburg on 21 August and in Cape Town on 24 August.
The event is aimed at financial advisors who counsel clients on international pension planning, and family trust lawyers who advise on international pension structures – providing a platform for financial advisors to build trusted relationships with industry thought leaders and key influencers in order to better service their clients’ offshore retirement needs.
COREEN van der MERWE Managing Director: Sovereign Trust (SA) Limited
– CAJ News