If you read our first piece on the money myths that are holding you back from saving and investing, you’ll be familiar with some of the negative self-talk that is preventing you from building your wealth. Still worried or feeling ambivalent? We tackle three more very common reasons people are resistant to building an investment portfolio.

It’s hard to get started

Well of course it’s hard to get going if you don’t know how to start or what you’re working with in the first place. Working with a financial adviser (or your own spreadsheet if you’re not ready to take the leap), you can determine your net worth – a snapshot of your current financial situation. What property do you own? How much do you earn, and what are your monthly expenses? Do you have an existing retirement annuity or plan through your employer? The next step is goal setting. When do you want to retire and how much will you need to live off when you do? (Prudential Investment Managers’ Goal Calculator and Retirement Calculator can help you do this.) Once you’ve done the numbers you can work with a financial adviser to plan a realistic investment portfolio. Part of your financial professional's job is to help you with a realistic budget, understand what savings is required and explain the investments being recommended.

I can’t find anyone I can trust with my money

When in doubt, ask for hard data. Sure it’s fine to check out the person who has been handling the finances of your parents or your best friend for years, but set up a series of interviews with them, as well as other alternatives, to see who is the best fit for you. Ask them to give you some examples of client portfolios and how they have performed – you could even ask them for some contact details so you can get a direct reference. Enquire which funds and investment managers they work with and why. Lastly, ensure they are qualified and registered. The Financial Advisory and Intermediary Services Act (37 of 2002) affects the way in which a financial services provider (FSP) conducts business and interacts with consumers, and guides consumers in their daily dealings with their chosen product provider. If they are a member, you are protected by some pretty airtight legislation. It requires them to be licensed (with the Financial Intermediaries Association of Southern Africa (FIA) and follow a professional code of conduct with specific enforcement measures. This includes a number of documents you will need to sign acknowledging you have had their fee structure explained to you.

It’s too risky

There is no doubt that the Global Economic Crisis of 2008 has left many with the jitters. Although it was an expensive lesson, tightening of regulations since then has left the global economy in a much more robust state. While many investors felt the knock, having a well-diversified portfolio would have softened the blow at the time. This means having a range of investments, each with a different risk tolerance associated with it. So, a high-risk investment may have suffered losses in the global dip, but those with a lower risk would have been more stable. This calculated risk approach is the cornerstone of diversifying risk.

You can invest with Prudential using the online application form. Alternatively, contact your financial adviser or our Client Services Team on 0860 105 775 or at query@prudential.co.za