Financial immunity in uncertain times...

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BUSINESS NEWS - In a radio interview with Amoré Bekker on Tuesday 10 August 2021, Marius Kruger from our PSG George Central office recommended the following valuable 10-point plan for financial immunity:

AVOID BAD DEBTS: Debt may seem inevitable, but it should be kept as low as possible, and settled as quickly as possible. There is cheap and expensive debt (i.e. debt with lower interest rates and debt with higher interest rates). A home loan is an example of ‘cheap’ debt, but a brand-new car is ‘expensive’ debt (i.e. with a higher interest rate). Clothing accounts and credit cards are also examples of ‘expensive’ debt. Rather use a debit card, which only allows you to use money that’s in your bank account. Debt can leave you in a very weak financial position. Get rid of bad and expensive debt by paying it off as quickly as possible, and avoid getting into debt again.
SAVE FOR AN EMERGENCY FUND: If you don’t have an emergency fund you will not be able to survive a financial crisis. No matter how careful you live your life – without an emergency fund you are not prepared for the unexpected. Without the safety net of an emergency fund your life can be derailed.
SAVE EARLY FOR RETIREMENT: How long you save is much more important than how much money you save. It’s about time in the market and the appropriate portfolio for your risk profile. Plan and start saving in time for retirement to achieve financial immunity for the future, otherwise you will realise too late that your capital is insufficient when you cannot earn an income any more.
COVER ALL RISKS BY INSURANCE: Protect yourself and your loved ones. You cannot predict what comes your way, no matter how careful you are. This is something the current Covid-19 pandemic has taught us. The earlier you start with insurance the cheaper it will be. Major financial damage leaves major financial gaps. Just imagine the consequences if your factory has been burnt down in Natal and you don’t have any insurance. Protect your family in the event of your unexpected death. Get a reliable adviser to assist you with this.
ENSURE YOUR WILL IS UP TO DATE: Even though a will is just a document to assist your surviving family, you must ensure proper planning is done. Obtain expert advice in drafting your will.
PAY LESS TAX: Obtain the services of an expert to do your tax planning, making your investment portfolio as tax efficient as possible. For example, invest in a tax-free savings plan or a retirement annuity, using the tax saving to boost your emergency fund.
SET PERSONAL INVESTMENT AND SAVINGS GOALS: Again, find an expert to assist you with these goals. Stick to your savings and investment goals by regularly checking, in consultation with an expert, whether you are still on track to achieve these goals.
USE YOUR SAVINGS SPARINGLY: If you buy items you don’t need, eventually you may be forced to sell items that you do need. Beware of adverts and special offers, and buying items you don’t need at all. Avoid any unnecessary shopping spree. Beware of saying, “I wish I can afford to live the way I live!” Exercise self-discipline and teach your children the same discipline. If you find it difficult, don’t go shopping. Beware of ‘retail’ therapy when you feel emotional.
REVIEW YOUR PLAN REGULARLY: Take your portfolio to someone who can assist you in reviewing and updating your plan. Review your projections and make the necessary adjustments to achieve your goals.
WORK ON YOUR RELATIONSHIPS WITH FAMILY AND FRIENDS: If you have neglected these relationships over the years, it is very sad when you have a lot of money but no-one to share it with. Rich people often die of loneliness, with a lot of money in the bank. Wealth has no meaning if you neglect relationships with family and friends and end up alone. Don’t set aside all your money for retirement – also reap the benefits while you are still young and healthy.