Money myths that are holding you back

While working with money often comes down to spreadsheets and number crunching, there is also an undeniable emotional factor to your finances. You’re only human! You’re bound to be swayed by the opinions of others, while family role models and experiences have certainly shaped your longer-held attitudes towards money. If you’ve been putting off a solid investment plan based on these, it’s time to shrug off the misconceptions you’ve absorbed along the way and forge a more prosperous future. Have you been hanging on to any of these money myths?

Only rich people invest

While it may be true that having more disposable income gives you more scope to invest, time is equally as powerful a money-making tool as hard cash. When you start investing is more important than the amount of capital you start with. With a long-term investment fund, the investment returns are constantly reinvested, so over time the input and output snowball. So, if you start investing a small amount in your twenties you can easily build as much wealth over 40 years as a person in their thirties who suddenly wakes up and starts stashing away big chunks of money.

The wealthy don’t all move their money around offshore funds or have VIP access to investments. For most of them it’s simply about following a sound strategy that seeks to grow their wealth over time. This includes working with a financial adviser who actively manages their investments based on their individual needs and goals, and ensures they are well diversified to protect them from losses. Advisers will also help avoid damaging knee-jerk reactions to short-term market moves ( like selling stocks after a fall in the equity market, or moving money offshore after a fall in the rand).  

I don’t earn enough to save

A number of Prudential’s funds require a minimum monthly investment of R500. These include the Prudential Balanced Fund, the Prudential High Yield Bond Fund, and more. Think about it – R500 is about half a trolley of grocery shopping, but invested can build you a healthy nest egg over time. Think back to your starting salary. At that time you couldn’t afford a car, and dining out at a plush restaurant for your anniversary was out of the question. Then you got a raise and your lifestyle began to improve. You keep thinking you will begin to save and invest when you are earning more, but in truth your expenses will likely just increase as you earn more. Ring-fence some of your earnings for savings now, and adapt your lifestyle around your remaining income.

Small purchases don’t make a difference

Coffee. It’s the not-so-guilty morning pleasure you pick up on the way into your office daily. The R20 flat white may give you a quick rush of energy, but it’s literally flushing nearly R5,000 through your system every year. There are dozens of examples where you can save small amounts of money each month by simply doing a little legwork. When last did you get a quote from an insurance broker to see if you could reduce your premiums? That annual health check your life insurer offers will only take you half an hour to complete, but could cut a couple of hundred rand off your monthly fee. Add up these micro spends and you’ll be surprised how much cash you’ve been able to release. Invest it, and… well you know the rest.

If you’re not already investing with Prudential, contact your financial adviser or our Client Services Team on 0860 105 775 or at query@prudential.co.za