On the Money. Budding stock market investor Jarryd Neves, of BizNews, sends out an invitation to everyone who wants to ask questions about share investing – but is too embarrassed to ask. Write to [email protected] And tune in for his regular Monday column: On the Money
If you’re a regular reader of this column, you’re undoubtedly aware of my burning desire for property ownership. The idea of owning my own house has been a dream of mine for quite some time.
The reality of this rather lofty dream is that property is very expensive, especially if you’re a beginner investor (like me). In this world of instant gratification – with its fast food, speedy internet connection, and social media – more experienced investors will have a polite chuckle and tell me to be patient, that things take time.
And I agree with that 100%. But it’s not just the novelty of property ownership that appeals to me, but also the investment potential. Not only is the purchasing of property an investment in itself, but it can be used to garner further income. Not only will the property (most of the time, at least) appreciate in value, but renting out your apartment or home will allow you to bolster your income.
The downside to this is that it requires a sizeable chunk of cash upfront, just as a deposit. Properties also tend to involve plenty of upkeep and maintenance, putting many people off the idea.
However, there is a way to get into the property market without any of the drawbacks. By now, I’m sure you’ve heard of EasyEquities. The innovative platform has brought share investing to the masses, allowing numerous South Africans to accumulate wealth on the stock market – something that was out of reach for many before.
The company has a sister, called EasyProperties. It works in the same way as EasyEquities in the sense that it allows for fractional investing. Let’s take Naspers, for example. At the time of writing this column, the share price was sitting at over R3,600 for one share. In South Africa, that is out of reach for many. However, the platform allows investors to purchase a fraction of a share, while still enjoying the potential growth benefits.
Recently, Rupert Finnemore of EasyProperties joined the BizNews Power Hour to discuss the property investing platform:
“EasyProperties launched about a year ago. We go and find really good property deals. We raise capital to purchase those properties through an IPO (initial public offering) and allow people who have wanted to invest in property – but haven’t had an opportunity to due to friction points – to be able to do so.”
Finnemore says that EasyProperties has eliminated those friction points (like cost or capital) for investors, allowing investors to invest in really good opportunities “either at good discounts or high yields, from as little as R1”.
From as little as R1. Quite frankly, that’s incredible. Not only does this allow individuals who were financially excluded to invest in property, but it also allows them to invest what they can afford – very important, in these tough economic times. As someone who has a growing interest in property investment, this is right up my alley. If you’re a beginner investor, it should be up yours as well.
I’m currently earning R20,000 a month. I have no idea about saving and investing. My question is this: How much should I be saving a month? I want to save for a house but I realise that retirement saving and emergency money is important too? How would I break this down?
The sooner you start, the better for your financial future. As a general rule of thumb, one should aim to save at least 10 – 20% (before taking inflation into consideration) of your monthly income if possible. The most important – or more immediate – goal is to save towards an emergency fund. Your emergency fund should cover at least three, preferably six months of your monthly living expenses and be invested in a structure that is easily accessible in the case of an unforeseen emergency.
Your living expenses are those expenses most vital for your survival. We have all seen the importance of having an emergency fund during the Covid-19 lockdown pandemic, as countless individuals around the globe lost their income completely through retrenchments or business closure.
After an adequate emergency fund is in place, your focus should be on saving towards less imminent and more long-term needs, such as retirement and the possible future purchase of a property. Irrespective of your various long-term needs, it remains crucial that a certain percentage of your monthly savings are allocated or invested solely for retirement purposes in order to attain the indissoluble benefits of compounding interest.
A good place to start would be a tax-free savings account, which has several benefits and has proven to be a valuable component of an overall financial strategy. Remember, the less you save, the longer your retirement horizon becomes. Read more about the steps to devise a financial plan here: Five investment tips.
- Danine van Zyl is a Financial Advisor at Brenthurst Wealth Fourways.
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