Opinion / Blogs
Your first job turns you into a high-risk wealth-builder – Imara
14 Mar 2011 at 08:26hrs | Views
You've just landed your first job. For the first time, you've got money of your own. Now what? Do you invest or save? Go for a balanced mix of financial products or select just one option?
It doesn't matter!Making mistakes and losses is not such a big deal either. You can be bold and bounce back. High risk is almost certainly better than none at all.
You can choose almost any strategy you like. As long as you stick with it and put money away every month you are well placed to out-perform older peers.
You've got 40 years ahead of you and time in the market is the biggest plus-factor of all.
The good news comes from Imara Asset Management, South Africa, a firm that specialises in practical, personally tailored financial planning that salary-earners can implement and live by.
MD Lara Warburton says: "If you're young and have just entered the world of work, you can be bold. You can take risks. In fact, I would advise you to court them by going for equities, the highest risk category of the lot.
"On the stock market you lose big from time to time, but when you're young you can be fearless, knowing that the market always recovers and hits new heights. That's why equities always beat inflation in the end and give the best long-term returns of any asset class.
"Even if you are ultra-cautious and play it safe, it doesn't much matter because you will still beat the vast majority of South Africans by simply squirreling money away month by month to assure a comfortable retirement."
The „miracle' of compounding holds true for equities as well as interest-based products. Reinvesting interest or dividends substantially enhances the value of your portfolio.
"Consult a financial adviser, certainly," says Warburton. "But don't be put off by talk of risk, product complexity and the need for diversification. Get the adviser to educate you in risk and return and the value of time in the market. Then commit to the long haul.
"If you go for a high-risk strategy, you may need to de-risk a little every few years as your recovery time reduces. But this is no hardship as you will need to subject your savings plan to a periodic health check in any event.
"For now, be bold and go for it. Time creates great opportunities. Make the most of them."
It doesn't matter!Making mistakes and losses is not such a big deal either. You can be bold and bounce back. High risk is almost certainly better than none at all.
You can choose almost any strategy you like. As long as you stick with it and put money away every month you are well placed to out-perform older peers.
You've got 40 years ahead of you and time in the market is the biggest plus-factor of all.
The good news comes from Imara Asset Management, South Africa, a firm that specialises in practical, personally tailored financial planning that salary-earners can implement and live by.
MD Lara Warburton says: "If you're young and have just entered the world of work, you can be bold. You can take risks. In fact, I would advise you to court them by going for equities, the highest risk category of the lot.
"On the stock market you lose big from time to time, but when you're young you can be fearless, knowing that the market always recovers and hits new heights. That's why equities always beat inflation in the end and give the best long-term returns of any asset class.
"Even if you are ultra-cautious and play it safe, it doesn't much matter because you will still beat the vast majority of South Africans by simply squirreling money away month by month to assure a comfortable retirement."
The „miracle' of compounding holds true for equities as well as interest-based products. Reinvesting interest or dividends substantially enhances the value of your portfolio.
"Consult a financial adviser, certainly," says Warburton. "But don't be put off by talk of risk, product complexity and the need for diversification. Get the adviser to educate you in risk and return and the value of time in the market. Then commit to the long haul.
"If you go for a high-risk strategy, you may need to de-risk a little every few years as your recovery time reduces. But this is no hardship as you will need to subject your savings plan to a periodic health check in any event.
"For now, be bold and go for it. Time creates great opportunities. Make the most of them."
Source - Byo24News
All articles and letters published on Bulawayo24 have been independently written by members of Bulawayo24's community. The views of users published on Bulawayo24 are therefore their own and do not necessarily represent the views of Bulawayo24. Bulawayo24 editors also reserve the right to edit or delete any and all comments received.
