Six steps to get your finances sorted in 2019

10 Jan 2019

Karabo Sekhoto & Ingrid Booth

Digital content specialists, Investec

This year, instead of making fitness promises that you have no intention of keeping, why not get your personal finances in shape? On this Investec Focus Radio podcast, five of our experts share their tips on saving, investing, life insurance and keeping yourself safe from fraud.

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Six financial resolutions for you

Listen to this podcast on Focus Radio to get tips on saving, investing insurance, cybersecurity and estate planning.

1.      Get rid of short-term debt

 
With interest rates increasing, debt is a lot more expensive. Rene Grobler, head of Investec Cash Investments believes getting rid of short-term lifestyle debt like credit and store cards should be your number one priority because it is the most costly form of debt.
 
“If you really want to set a goal for yourself for this financial year, it’s to clear out that expensive debt. It burns through your disposable income in the form of interest and it really isn’t, in many cases, necessary.”
 
Do you really need that overseas holiday or that fancy new car? Grobler advocates “rightsizing” your lifestyle to suit what you can afford so that you can retire in the lifestyle you’ve become accustomed to.
 

2.      Save at least 15% of your salary

 
How much should you be setting aside every month? It’s really dependent on what your goals are, but “the rule of thumb is that you should be saving at least 15% of what you get paid on a monthly basis,” Grobler. “And then you need to take into account other expenditures and other savings goals that you might have on top of your retirement plan.”
 
“Many people are only putting away the bare minimum required in terms of an employee plan – 5 – 7% - that really isn’t enough to keep you in a lifestyle that you need.”
 
While you may be able to get control of your expenses, you might need some help with long-term planning. “Many people think that you need to have lots of money to have a financial advisor, that’s not true. Many financial advisors will help you even if you have just a little bit to save.”
 
READ MORE: Why do we struggle to save?
Rene Grobler
"Many people are only putting away the bare minimum required in terms of an employee plan – 5 to 7% - that really isn’t enough to keep you in a lifestyle that you need."

Rene Grobler, Head of Investec Cash Investments

2.      Look for investment opportunities amidst the turmoil

 
Neil Urmson from Investec Wealth & Investment warns against being too pessimistic in the current investment cycle, saying that there is a “60/40 chance that South Africa has a cyclical problem as opposed to a structural problem”. Smart investors should watch the markets and as asset prices decline, “add to your portfolio in the areas where assets become cheap”.
 
READ MORE: Investing? Don't follow the herd
 
 

3.      Get your life insurance up to date

 
Your life insurance policy needs to change as your circumstances do, for example, you’ve got a new job or have more children. “You must update your life cover as your earning and your level of debt change,” says Michael Goemans, CEO of Investec Life. The same applies to benefits like disability or income protection.
 

Tip: If you switch jobs you level of life and disability cover included in your company retirement funds might change, so it’s important to adjust your level of personal cover accordingly.

Michael Goemans, Investec Life
"You must update your life cover as your earning and your level of debt change."

Michael Goemans, CEO of Investec Life

5.      Revisit your will

 
In today’s globalised world, families are no longer necessarily living in the same country. “You need to be mindful where your beneficiaries and your assets are situated,” says Rene Van Zyl from Investec Fiduciary & Tax Advisory, “as these two factors will have a significant impact on your wealth preservation.”
 
Tax authorities around the world are increasingly exchanging information with one another, so you also need to review your current estate plan in light of all the tax changes.
 
READ MORE: To will or not to will
 
 

6.      Become more selfish with your information

 
“People are giving away their information too easily,” says Kevin Hogan, Fraud Risk Manager of Private Banking at Investec. At the click of a button, an online retailer could have access to your cell phone number, your ID, your street address.
 
“Big online retailers probably spend millions on security, as opposed to a one-man-band start-ups. Make sure that whoever you are giving your data to knows how to protect that data and that they are reputable.”
Talking about the two most common areas of vulnerability for cyber fraud, Hogan says: “Phishing emails and password management are responsible for 99% of all cybercrime. If we just fix those two, you would probably solve the potential risk of cybercrime in your personal life and in your business life by 99%.”
 
His top two tips to protect yourself online? First up, “Do not use links to go to login screens. You must type in the URL every single time”. Secondly, do not use the same password on multiple accounts. Sounds easy, but how can you remember so many different passwords? Hogan suggests using a password manager or simply writing down your passwords in secure locations.

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