Don’t gamble with your financial future

During the Global Financial Crisis experienced through 2007 to 2009, dubbed the worst recession and depression since 1929, most economically active people in South Africa managed in some way or another to weather the storm. The reason for this is that the South African Banking system was shielded by avoiding irresponsible lending mainly due to the National Credit Act of 2007.

The human psyche is fascinating: during the Global Financial Crisis when the prime overdraft rate was 15%, people found it difficult to save. The lag effect of this is that although the prime interest rates have come down 5% since the worst period, people are generally still battling to save for their future.

According to Rob Formby, director of Retail Operations at Allan Gray, saving for retirement is of prime importance and July being "savings month", he states that this is a good time to start saving effectively.

The following facts are well-known by most but we believe it is worthwhile repeating: if you are 30 years old and wish to retire in 35 years time at age 65, you will need to save approximately 12% of your salary to retire comfortably. If you delay this decision by 10 years, leaving only 25 years to your retirement, the percentage rises to 21%.

Saving for retirement requires a disciplined approach like resisting the pressure to spend in favour of a strict saving mentality and disregarding market dips as these dips provide money managers to buy shares at low valuations, which can only benefit you over the long term.

Yes, treat yourself from time to time but remember to compartmentalise your investments for specific situations so that you do not have to dip into your retirement savings.

This skill of compartmentalisation is one major area where Silke Financial Services can help you and put you on the right track.

Silke Financial Services offers advice on funds at all levels of risk. We research the market in order to find the most appropriate funds at all risk levels. Remember - don't make the mistake of disinvesting if you are a long-term investor.