Investing - from the wonder years to the golden years

Shaun Ruiters, Executive of Business Development at PPS Investments

In the current economic climate, many investors are unsure how to navigate the state of affairs and emerge on the other side unscathed. During good or bad times, it’s important to remain true to your investment plan, regardless of the life stage you are in or the current state of the financial markets.

Investments must form part of a broader financial plan to ensure success. This financial plan must be suited to your individual circumstances and financial needs based on a short-, medium- and long-term horizon.

Some of the key considerations when it comes to incorporating investments into your financial plan include:

• Affordability – this is the guiding light when it comes to planning investments. You need to know what your budget is in order to determine what you can afford and align this accordingly to meet your financial needs.
• Set investment goals – this refers to the financial milestones that you would like to achieve which are closely linked to the investment period. These goals also help to determine which products are suitable to reach those goals and will help you prioritise goals based on affordability and prevalence at that life stage.
• The investment period – whether it is short- (less than 5 years), medium- (5-15 years) or long-term (15+ years), will determine the investment product and level of investment risk required to reach the investment goal.
• Life stage – this is broadly categorised as a particular period and the corresponding financial priorities at that stage of your life. Examples of different life stages include: student, established professional, or retiree. In the case of those who have children, their financial needs will include things like life cover, education savings, long term retirement planning, household and car insurance, medical aid and more, depending on their individual needs.
• Risk appetite - this is another integral part of an investment plan and finding the right balance between risk appetite and desired returns is essential. Closely linked to your investment period, goals and life stage, the amount of risk you are willing to take may impact on your investment growth.

There is no one-size-fits-all approach to investing or financial planning. Every person should have a customised financial plan suited to meet their individual financial needs. The best time to start doing financial planning is when you leave university based on the fact that there are multiple life events that you’ll need to consider. By starting early, or as soon as you get your first pay cheque, you will become accustomed to saving and investing a portion of your income – it becomes part of your DNA rather than having to adjust your living standards down later in life to factor in savings or investments.

That being said, there is no better time than the present. No matter what age, getting started as soon as possible is also an advisable strategy for success.

A financial adviser is well-positioned to provide guidance and sound advice when developing a financial plan. It is highly recommended to use a financial planner in this process, regardless of how financially astute you may be. A fresh set of eyes can very well pick up on gaps or identify opportunities that you may have missed.