If you’re in the early stages of your working career, you probably know that you should be investing some of your money, even if you’ve adopted the “soft saving” approach taken by many young people. A methodology which prioritises immediate experiences, like holidays, over long-term goals, like retirement.
CEO of international money transfer fintech Future Forex, Harry Scherzer asserts that a sound investment strategy is still important regardless of your goals. “Whether you want enough money for a three-month sabbatical or long-term financial freedom, you must ensure that every rand you put away is working as hard as possible,” he says. “Of course, knowing that you need to invest is very different from knowing where to invest, especially for young people just starting their financial journeys. With a little bit of basic knowledge, however, you can ensure that you have the best start possible.”
Scherzer is well-placed to provide some of that knowledge, as well as a few tips for budding investors. Not only is he a business leader in the financial space, he’s also a qualified actuary and, at 30, is young enough to know how many career-starters feel about investing. With that in mind, here are his top six tips for young investors.
Avoid leaving money in the bank and opt for equities instead
While most parents start their children’s saving and investment journeys off by opening a bank account for them, Scherzer believes that traditional bank accounts are best kept for transactional purposes only.
“With inflation eroding the purchasing power of money over time, keeping it in a low-interest savings account can cause your wealth to stagnate or even decline,” he says. “Consider investment opportunities with the potential for growth to stay ahead of inflation.”
Instead, as the Future Forex CEO points out, young investors should put their money into equities, which tend to provide better long-term returns compared to cash or bank accounts.
“If…
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