A famous philosopher once offered the thought that if we were to live our lives backwards, that is to start old and get progressively younger, would we not be so much happier with so much more to look forward to?
Like all things it’s a matter of perspective. Our retirement should never be understood as a downgrading of our lives, when we are supposedly meant to step back from everything we have built up, and just slow down a bit.
Would it not be better if we were to understand retirement as the beginning of a new adventure in our lives, a time when we should be aspiring to do the things we never could during our busy professional and family lives.
“Retirement should be thought of as a new beginning. You have the time – and hopefully the money – to do whatever you like, whether it’s starting a new passion project, a new business or serving your community. The possibilities are endless,” says Nosipho Nhleko, Investment Product Specialist at Liberty.
Here are her five tips on how you can invest in the future you.
- Pay your future self
Every month, we see our pay checks diminish as we pay off our various debit orders, fund our necessities and sometimes even pass it on to our friends and families in need. But most importantly, the first person you should be allocating money towards, is you.
“When people put money into a retirement annuity or savings account, they sometimes feel like that money is just going to make money for the financial institution, but you’re actually paying your future self and letting that money expand,” says Nhleko.
“This lets you, once you get to retirement age, not have to be dependent on your children, and this also means that they’ll have better opportunities to grow their own finances,” she says.
- Retire the highlife now, so you can live your best life later
There are always expectations about how we live our lives and spend our money, whether they come from friends or relatives. If your neighbours are living the highlife, there should be no added pressure on you to live extravagantly and go into debt. Living within your means, reducing unnecessary expenses and using those savings to build your long-term goals is tough, but it’ll be worth it.
“It’s important to set realistic finance goals, but they can always be upgraded when life is going well. You can experience your own wealth, but you need to have a positive, realistic relationship with your money that isn’t influenced by other people,” says Nhleko.
- Check your investment statements
Your investment statement helps you understand where the money you are saving goes, and if you are on track with your goals – like your desired income during retirement. Making sure you know where your money is invested is key, and to manage your expectations of how that capital is growing and what those assets can do for you.
You can ask your Financial Adviser (FA) for projections which can give you the idea of where your portfolio could be in the next 5 years. “Of course, these projections are sometimes seen as a guarantee, but they are not as there are always a lot of factors at play in developing your investment. Growth rates vary, so it’s important to make sure you’re always aware of your risk,” says Nhleko. For example, higher risk investments are probably more appropriate for younger investors, as there is more time to recover in the event of a loss.
- Advice can get you to where you want to be
If understanding stocks, bonds and your tolerance for risk feels overwhelming – that’s totally fine, because you don’t have to be alone. A Financial Adviser is trained to help you understand the best ways to invest, and to give you the tools you need in your unique situation. If you don’t have all the details on the best ways to grow your wealth – such as tax-free savings accounts, retirement annuities and living annuities – it’s important to consult and find out what’s best for you.
“Your FA is there to help you manage expectations and invest in ways that respond to your life situation, and even worldwide economic events. An entrepreneur shouldn’t necessarily have the same investment portfolio than someone who earns a more regular salary. Everyone is unique,” says Nhleko.
- Protect your health, your income, your worth
Careers change. Markets can be shaken. Accidents happen. Because of this, nothing is more important than flexibility when it comes to your investments – especially the money that’s going towards your retirement. When the COVID-19 pandemic hit, Liberty allowed those with growing retirement annuities to pause payments without any penalties. This kind of flexibility is a part of the new philosophy towards retirement products by Liberty.
“Of course, you ideally don’t want to stop putting money towards your retirement so that you can meet your projected goals, but you shouldn’t be punished for it when life gets hard,” says Nhleko. There are other ways to ensure that your monthly earnings aren’t affected in cases of emergency. “Critical illness cover, income protection, disability cover. They’re all available to make sure that you can support yourself – and your family – in the worst-case scenario,” she says.