Last year, I started a stokvel with three other ladies that included my aunt, my mom’s best friend and a close family friend. We opened a stokvel account and saved for a year but realised at the end of last year that our returns were not as great as we had anticipated. I think that my assumption was that if you save a lot of money over a 12-month period, the returns are automatically greater than when saving a small amount over a short period. Also, because it’s a stokvel account – I just assumed that the returns would be a bit more pleasing.
Because July is National Savings Month, I thought I should share the banking investment tip that I received recently from a very reliable source. When we talked about the prospect of me saving money in an investment account for a year or so – I was advised that the best banking investment account is the one that requires R20, 000 to open it. I know that most of us do not have R20K lying around waiting to be invested, especially with everything going up these days. I was therefore advised to first open a normal transactional account using a banking app, then put into it at about R5000 for four months. Because I would have saved R20K in four months, I would be able to open the investment account and then use the transactional account to transfer the R20K already saved to the new account.
I was assured that this investment account is the one with the most returns or interest. And what was comforting to hear was that after opening the investment account with R20K – in the months that follow I could save a smaller amount adding to what is already there. I was still curious about the stokvel and other investment accounts that didn’t require an initial opening amount of R20K, and I was told that these ones are almost pointless to those who are looking for great returns. Also, what will be important is that once I start making monthly deposits – these amounts need to be consistent and not less than R5K.
What I learnt from this exercise is that at times we open investment accounts without checking if the returns are actually worth it. We are also told that to invest we do not need a lot of money because other investment accounts need only R100 to open. What is never made clear is the difference in returns. Regardless of the fact that we are experiencing tough times at the moment with everything exceptionally expensive from petrol which has ripple effects on food prices, to electricity and everything else around us – it’s still important for us to move to a culture of saving. I’ve given you this tip not because all of us can actually afford to save at the moment but I’m hoping that when you’re all ready to invest – then you will make the right choices. Where possible, try and avoid the mistakes that I made in the past where I didn’t do my homework very well.
My past investment attempts never worked because I had access to my money anytime – this tempted me to tap into it whenever I had what I referred to as ‘emergencies’. Access to this money was never good for me because I ended up not meeting my investment goal. I’d like to take up this investment when I can because I have a specific investment goal in mind. For me to meet this goal – I will need to have a lot of discipline and sacrifice a lot of things for the next year or so. I do feel though that it’s time I made the right decisions when it comes to savings and investments – in fact, this should be a complete overhaul of how I handle my finances as a whole.
To youngsters that are reading these columns – more so those that have just started working, please take the time to learn about how to manage your finances while it’s still early. Try and avoid the mistakes that us adults have made over the years. Most importantly, learn about savings and investments now so that you can reap the rewards of your sacrifices when you get to our age. A life without a solid financial backup plan is literally a life where one lives from hand to mouth on a monthly basis until a good financial decision is made.
Miranda Lusiba is the Founding Director of Strangé Consulting – a boutique PR Agency specialising in Communication, Freelance Writing, Media Relations, Reputation Management and Media Training.
