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A woman’s guide to financial freedom in South Africa

Many South African women believe that achieving financial freedom is nothing more than an elaborate dream.

In fact, research indicates that approximately one-third of wealthy women believe that the stock market is too risky for them.

Financial freedom for Women

A harsh reality that we face is that women tend to leave their financial matters to their husband or partner instead of taking charge of their own financial future.

Furthermore, women also have the tendency to ignore the importance of financial planning entirely.

Combine this with the fact that women are generally faced with different challenges and financial risks compared to men and we can clearly see why it’s crucial for women to take responsibility for their financial future.

Studies conducted internationally indicate the following facts:

  • Only about 15% of women who are married or living with a partner actually feel responsible for planning for their own retirement
  • At least half of all women have jobs which are low-paid, traditionally female positions and without a retirement plan in place
  • At some point in their lives, 90% of women will be solely responsible for their financial situation
  • Only about 40% of women sign up with their employer’s pension plan
  • Retired women receive only half of the average pension benefits that men receive
  • About 75% of women become widowed at an average age of 56. 25% of these women become broke within just two months of being widowed

Be prepared and well educated

Regardless of your situation or income, saving money every month should be your number one priority. Then, knowing how and where to invest your money becomes the next important task.

For example, buying the newspaper and reading over the financial section regularly will help you pave the way to gaining valuable financial knowledge.

Having an understanding of the financial world and how it works is the first step to empowering yourself and making informed financial decisions.

Furthermore, seeking help from a financial advisor can help you achieve your financial goals. Financial planners are professionals who are able to assess your situation and advise you on the best products or services for you.

Planning for retirement is an ongoing journey

Take the time to inform yourself about the different retirement plans or investment options that are available for you.

When making a decision, it’s important that you have an idea of what you want your retirement to be like. This will help you stay on track with regards to making your retirement dream a reality.

Take control of your financial independence

Women tend to spend more time away from the workplace than men do. This is often as a result of being on maternity leave and being responsible for looking after their sick children for example.

This means that women are likely to accumulate less retirement savings than men do. Therefore, taking charge of your financial affairs has become top priority and every effort should be made to make the time to financially prepare yourself for the future.

In the cases where a woman is a housewife who claims she cannot save because she isn’t earning a salary, there are several ways to cut costs in such a way that it frees up finances which can be used to save.

For example, instead of your husband buying the most expensive car, rather consider buying a modest car and saving the balance that would have been spent on monthly instalments.

There are several other ways of cutting back unnecessary spending and rather investing that money. To put it into perspective, if you save just R1000 every month for the next 30 years with an annual return of 10%, you will have accumulated more than R2 million.

A good place to start is to reassess your monthly budget and identify where you can cut back on unnecessary costs in order to save more.

Save every possible penny

Essentially, there is no amount too little to save. Every single rand will benefit your financial future. Go out for one less dinner, buy one less dress or pair of shoes per month and start building your foundation for a comfortable retirement.

Compound growth and time are your financial friends. If you manage to save R1000 a month at an average of 10% interest per year, you will have saved:

  • R204 844 after 10 years
  • R759 368 after 20 years
  • R2 260 487 after 30 years

Where to invest?

There are, in essence, only four “places” in which you can invest whether it be a unit trust, pension, annuity or policy:

  • Cash – money market or what banks have on offer. Your return comes from the interest rate offered
  • Equities – company shares. Your return comes from capital growth and dividends
  • Bonds – corporate and government. Your return comes from the interest rate offered
  • Property – your return comes from capital growth and rental income

Simplify your investments by investing directly rather than using expensive methods like endowment policies. Your long-term investments should be concentrated in areas where your money can grow exponentially such as property and shares.

Common investment myths – Don’t be scared of equity unit trusts and shares

  • “You must first understand JSE before you can invest in shares.” The fund managers in equity unit trust funds decide which shares to hold and are capable of making the best decisions for on your behalf.
  • “It’s not a good time to invest in shares.” In fact, it’s always a good time to invest in shares, especially if you do it monthly.
  • “It’s just like gambling.” The only way you can lose all your invested money is if the company goes bankrupt.
  • “The stock market is only for rich people.” You can invest as little as R500 a month in equity unit trusts.

Women are better investors than men

Studies have shown that when women decide to apply their minds and educate themselves on all things financial, they are actually better investors than men.

This is generally because men have a more aggressive approach to investing than women do. Females tend to do more research before making a final investment decision.

Olemera Financial Services Johannesburg - Helping you achieve financial freedom

Financial freedom is possible if we use the right resources and commit to building a solid foundation for our future.

There are many ways in which we can invest our money and make it grow. Contact Olemera to find out more about our financial planning services.

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