FOR those Zululanders lucky enough to receive a bonus this year, financial experts have cautioned against spending it ‘willy nilly’, but rather to make use of one of numerous investment options available.
‘Investing for the first time can seem daunting and overwhelming, but should be an exciting and empowering experience,’ said Mellony Ramalho, African Bank’s Group Executive: Sales, Branch Network.
‘There is nothing more thrilling than putting your money into a product knowing you are going to see it grow over time.’
Ramalho urged investors, especially first-timers, to draw on others’ experience before making any investment decisions.
‘Do your research, ask questions and compare various products.’
She said the key is finding products that meet the investor’s objectives – how much is to be invested, what returns the investor wants to see, and the duration of the investment.
Explaining the difference between savings and investments, Ramalho said savings are low-risk funds that must be available on demand, while an investment is generally an account in which funds are invested over a period of time and not needed for many years.
‘In other words, an investment is an account which is used to grow your money.
‘If you want to save for something in the long-term, you may choose to invest your money rather than put it into a general savings account,’ she said.
Comparing low- and high-risk investments, Ramalho said the higher risk the investment, the higher the return, and the lower risk the investment, the lower the return.
‘Investments involve greater risk but yield much greater returns when left alone long enough to ride out the turbulence of the stock market.
‘An assessment of finances, to see how much can be invested, is essential before investing.
‘From instant access savings, to notice accounts and fixed-term accounts, there are numerous options available.’
Ramalho said the most important thing to remember is to stay the course.
‘You want your money to grow, so make sure you stick to your commitment.
‘Ideally, investing should be seen as a long-term commitment so you have the greatest chance of getting the best returns.’
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