SA Paralympic medalists must invest winnings to reap long-term rewards

Peter Atkinson, Technical Portfolio Manager at the Financial Intermediaries Association of South Africa (FIA)

South African Paralympic Gold Medalists, including the “Blade Runner” Oscar Pistorius and swimmer Natalie du Toit, who will all receive R400 000 in cash from SASCOC for each gold medal received should make the most of their winnings by choosing to invest

This is according to Peter Atkinson, Technical Portfolio Manager at the Financial Intermediaries Association of South Africa (FIA), who says when people receive large sums of money - whether in the form of inheritance, settlements, lottery winnings or sporting achievements - one of the most common financial errors that they make is that of short-termism. “Consumers often focus their thinking on the short-term rather than the longer term picture. As a result, their immediate wants or needs tend to take priority over provision for the future.”

Atkinson says this is often evident in people cashing in their retirement policies in order to fund purchases such as home improvements, a new car or even luxuries such as holidays. “We are noticing that funds are still being channelled away from investments to meet immediate cash needs.”

He says it is crucial that consumers start to make themselves aware of their true savings requirements. “People need to start taking their financial commitments seriously and have an overall financial plan in place that addresses both their short and long-term needs. If they do not do this, then what may be classed as poor savings habits now can prove to be potentially disastrous a few years down the line.”

It is important to bear in mind that in today’s uncertain environment there are both potential investment opportunities as well as possible pitfalls, so getting proper advice from a reputable financial intermediary is critical, says Atkinson. “A financial adviser can make recommendations based on someone’s personal financial circumstances and steer them in the right direction in terms of meeting their financial goals.”

Atkinson says financial planners can help people to devise a financial plan, and make sure that clients not only adhere to that plan but also help them to get back on track if they do deviate. “People can be so easily tempted to disregard well formulated plans. Employing a skilled financial planner can be compared to the role of a coach for the Olympic Games competitors; just as they assist athletes to stay on track with their overall fitness program in order to meet their long term goals such as winning a gold medal, financial planners can assist consumers to better realise their financial goals.

“People who receive large amounts of money must resist the immediate temptation to spend the money and should rather use the opportunity to reap the long term benefits of a fruitful investment by seeking the advice of a qualified financial advisor,” concludes Atkinson.