Make your money work for you


Wouldn’t it be wonderful if instead of constantly having to work for money, we could make our money work for us?

This is exactly what the term ‘investing’ means and it’s actually pretty simple. Investing means putting your money to work for you.

Are you making your money work for you?

Growing up, most of us were taught that you earn an income by getting a job and working hard… and indeed, that’s exactly what most of us do but there’s one big problem with this; if you want more money, you have to work more hours and there’s a limit to how many hours a day we can work, never mind the number of hours we want to work! This is where investing comes in… it’s our chance to earn money whilst we’re lunching or brunching, sporting or socialising.

You become an investor as soon as you put money into things that can earn income or grow in value. The general aim is to earn at least a return (after tax, if applicable) greater than the rate of inflation. Generally, the higher the return, the higher the risk the investment carries.

Types of investment vehicles

There are dozens of investment vehicles out there today, from stocks, bonds and term deposits to mutual funds, pension programmes and property. Each has pros, cons and varying levels of risk and reward.
What’s your investor profile?

Knowing your investor profile will help you work out the kinds of investments, and indeed mix of investments, you should consider.

Ask yourself these four questions:
1. Duration: How long do you want to invest for?
2. Returns: Do you want income or growth?
3. Liquidity: Do you need to be able to get your money easily?
4. Risk: What is your attitude to risk?


Ways to invest

• You can invest ‘directly’ through a bank (term deposits), a stockbroker (shares and bonds), a real-estate agent (property) or other brokers

• You can also invest ‘indirectly’ through a fund. In a managed fund or unit trust, for example, your money is pooled with the funds of other investors and a professional fund manager invests it in a variety of investments on your behalf


Top investment tips

• Set your goals
Decide what you are trying to achieve. Where do you want to be at some point in the future? What is your desired final outcome and what is your timeframe?

• Know your risk profile
You need to know what type of investor you are. Essentially, how much money are you willing to lose? How much volatility (ups and downs) can you tolerate? Consider the four questions above.

• Identify how you want to invest your money
What mix of investments suits your investor type? Bonds, shares, property, bank deposits? Will you invest directly yourself or use managed funds?

• Do your homework
Research, compare and contrast everything – or get someone to do that for you. Read newspapers, go online and talk to independent advisors

• Research corporate investment options
If you plan to invest directly in a company, find out which companies suit your type. What are the rates of return and the levels of risk associated with the return?

• Research the companies themselves
What does the company do? What markets is the company in? Who’s running the company? Have they ever been declared bankrupt? How is the company run? Does the board have independent directors? How has the company performed in recent years?

• Seek sound advice
Shop around for an independent and well-reputed financial advisor who you have confidence in

• Spread your risk
Spread your risk around different options and different companies e.g. balance more high-risk investments with investments in lower risk areas, like bank deposits or cash and bonds
Ultimately, the biggest difference between the wealthy and the less wealthy is that the wealthy earn interest and the less wealthy pay interest. Your hard-earned money is a tool to help you achieve your goals and the only way you can ever truly achieve financial independence is when your money starts working for you.


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