Best budgeting principles: The road to wealth begins with investment
Let us look at the different investments for those who are not wanting to go into the stock market directly. First step is to have three months salary stashed away in cash via a money market if you have more than R50 000 or in an interest bearing account. If you are close to retirement or have a wedding or large event coming up an extra month salary could be put into a 32 day call account.
If you are saving for an event that will take place in the next 24 months and you do not want to be tempted to spend 32 day call accounts and fixed deposits are great, but I am not a fan of waiting to get my money and I encourage discipline in my financial mentorees.
Now then what are our aims: saving for the rainy day, saving for wealth creation or savings for retirement?
For the wealth creation in saving my first choice would be Unit trust or collective investment schemes.
- No restrictive rules
- Access to cash
Off shore unit trusts have traditionally higher minimums, so I like investing via the south african offshore collective investment schemes.
My first point of call would be to use my R30 000 for a tax free savings plan. The features of this plan are:
- Uses After tax money
- No income tax
- No Capital Gains Tax
- No Dividend tax
- R30 000 per annum
- Immediately available but will decrease the overall life time limit of R500 000
Stay tuned for part two of Best budgeting principles: The road to wealth