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Published on December 20th, 2017 | by Jones

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Why you need to be investing right now

You might think you don’t need to invest. Not yet, anyway. You’re still young, you think to yourself. But you couldn’t be more wrong. It’s actually the perfect time for you to invest for your future. Now, while you’re young and just starting out in your career. Now, before you want to get married, have children and buy a home. Because if you can’t figure out how you could possibly afford to invest now, you’re probably not going to be able to invest when you have a spouse and two kids to support.

If you aren’t sure about the importance of investing, think about this: how much interest did you earn on your savings account last year? Probably not much at all. Savings accounts only earn minimal interest rates. They aren’t intended to be the place where you keep your money for the long-term. That is why it’s important that you invest for your retirement.

Do you have debt to pay off?

Whether or not you start investing right this minute depends largely on whether you have any short-term savings needs or debts. Do you have a fully-funded rainy day fund with at least a few months’ worth of living expenses? It’s time you set up one of those and start contributing towards it. Do you want to buy a car or possibly even a home in the next few years? If so, you’re probably better off not investing. Your money might actually be better off in a savings account.

But don’t hold off from investing for too long. You see, when you invest, thanks to the power of compound interest, your money can grow at a rate which savings just can’t match. Compound interest is when interest grows on top of interest, and this is incredibly powerful.

Don’t avoid investing for too long

The unfortunate but unavoidable truth is that it can be difficult to save and invest. Cost of living is becoming increasingly high with petrol, food and electricity prices increasing often. It can be difficult to find work, with an unemployment rate of 27% across South Africa. Starting salaries for the recently graduated are low.

But while it seems impossible for you to save right now, it’s not impossible. It can be done. Make some sacrifices and you’ll soon have some spare cash which you can use to invest. If you buy fast food often or go out for drinks with friends on a regular basis, you could use that money to invest instead.

You can’t afford not to invest

The difficult truth is that you really can’t afford not to invest right now. Putting off investing for your future and not investing while you’re young will mean that you’re going to have to work so much harder to afford a comfortable retirement. You’ll either have to work for far longer in your old age or put away much more money each month when you do start investing.

And when you are working, it’s essential that you keep your job for as long as you can. Go to work daily, do your best, try to go the extra mile where possible and stay out of any kind of trouble. Finding yourself in some kind of legal trouble at your workplace could really set you back financially for the foreseeable future. That’s why it’s important that you know where you can go for affordable and trustworthy legal advice.

One in four

Research has found that just one in four millennials is investing. That means only 25% of young people are putting money aside for their futures. This might be a problem for them as they won’t be able to enjoy a comfortable retirement. Government currently gives an old age pension of just R1600 for pensioners over the age of 60 and R1620 for those older than 75. Can you imagine living on just that for the rest of your life? That’s why, even though it might seem difficult, investing while you’re young is really important.

The good news is that you don’t have to invest much money at all if you start while you’re young. Just putting away about R500 each month during your 40-odd-year career could see you retiring with as much as R5 million – more than enough to ensure you enjoy a comfortable retirement.

So, it’s not easy to think about putting money away now, while you’re young, that you’re not going to have access to for the next 40 years. But it is important that you do. Otherwise, you might just find yourself having a very unpleasant and uncomfortable retirement.

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