Rands and Sense with Buhle Langa

Adapting your attitude towards money as you age

HAVING a financial plan is the first step you need to take when setting out your goals and how you plan to reach them. Your financial plan will change at different stages of your life – it should not remain static. Your needs will look different as you move through various phases of your life: from your early years in your career, to becoming established in your career, preparing for retirement, and your life in retirement.

The younger years

Investors in their 20s will have at least 40 years over which to accumulate their retirement savings and should focus on growth. In this stage of your life, aim to keep your savings invested in the most suitable investment vehicle for you. Look for consistent long-term performance and keep your retirement savings invested between jobs to benefit from compound interest over the long term.

A high allocation towards growth assets such as shares and property and an allocation to global markets could benefit you greatly. During this stage you will focus on planning for and creating your wealth. The choices you make will decide where you ultimately end up in the most vulnerable time of your life, retirement. Consider a healthy contribution rate to your retirement fund of a minimum of 13 to 15% of your salary and investing in more aggressive investments or portfolios. In turn, this should help you reap the rewards of the highest possible returns, compounded over the years leading up to retirement.

Middle-age investors

People in this phase are starting to earn and spend more and are most likely trying to pay off debt. Because of higher earnings and possible tax savings, first try to top up your compulsory investments (money going into retirement funds) as much as possible before building on discretionary investments, such as unit trust funds.

The retirement years

Retired investors want to minimise risk and keep up with inflation. Your main objective would be to choose an appropriate income annuity option (either a life annuity or living annuity) that would best suit your retirement income needs.

Two to five years before retirement, your focus needs to shift towards protecting your savings that you have accumulated over the years.

This also highlights why withdrawing your retirement savings before retirement is seldom a good idea and can be detrimental to your quality of life during your retirement years.

Discretionary investing for rainy days

In any life stage, make sure you have enough emergency savings so that any unplanned and urgent expenses do not derail your longterm goals.

Being prepared financially makes the world of a difference when you have to deal with a car breakdown, the death of a loved one, or the birth of a child. With the correct financial planning advice, you can structure your investments and insurance without being caught off guard. A Certified Financial Planner can assist in building your financial wellness by analysing your unique financial situation and offering a holistic approach to finding the appropriate solutions for you.

The perfect financial plan will not only look at making you financially well during your lifetime, but should also look at making sure that your affairs are taken care of even in the event of death.

22seven goes #datafree with a brand new financial management tool

Jikku Joseph (pictured) and Gour Lentell

The popular budgeting app 22seven has launched 22seven lite, a datafree version that will give thousands more South Africans the tools to manage their finances so that they can plan better and save more.

● 22seven lite is released in collaboration with popular messaging super app, Moya.

● It is totally free to use, requiring no airtime or mobile data.

● It is 100% safe and secure, using bank-level encryption to protect users’ privacy. 22seven was launched in 2012, with the ambition of empowering people to take control of their finances. Users can see all their money in one place, and the advanced transaction categorisation engine generates a personalised budget based on actual spending, which allows users to manage their money with confidence.

“More than 400 000 people currently use 22seven,” says Managing Director Jikku Joseph. “But the app requires wi-fi or mobile data. Research showed that millions of South Africans don’t want to download another app or spend more money on data, which makes them reluctant to use 22seven.

“That’s why we built 22seven lite. Our goal has always been to offer financial tools to all South Africans and we believe that our new, datafree platform will help us achieve that goal.” 22seven lite is accessed via Moya, a datafree messaging super app. Moya is free to download from the Android app store: look for 22seven lite in the “Discover Money Services” section of the app. Users only need an email address to sign up for 22seven lite. Once signed up, they can link bank accounts, store cards, investment and loan accounts. 22seven lite then uses this information to help users track their spend and budget much more easily.

“We are very pleased to partner with Moya. They share our vision of making our life-changing service widely accessible, and they are committed to help us grow a financially confident South Africa,” says Joseph.

22seven has stringent data privacy controls, which are shared by 22seven lite. The same bank-level encryption is used to protect users’ private information.

“The user connects accounts by entering their account login details, but those details are never seen by human eyes. It’s read-only, nobody can transact on the accounts in 22seven lite,” says Joseph. 22seven is also backed by Old Mutual and is insured like a bank, so your money is safe. Since launch in 2012, South Africans have securely linked more than 1.3 million accounts to 22seven.

“By offering more people the tools to take control of their finances, we hope to grow a money management culture in South Africa – and hopefully in other African countries one day,” says Joseph. “We want to help more people make better financial decisions through knowledge and awareness.”

Jikku Joseph is Managing Director at 22seven, and Gour Lentell is CEO at Datafree