Save or Invest?

Save or invest?

IT'S IMPORTANT TO DO BOTH

And reduce the risk that you won’t save enough for retirement

WHAT IS SAVING?

Saving is putting money aside for future use – or spending postponed.

When you save money for future use, you put that money aside with a goal in mind.

It may be your annual holiday, your child’s university education, or your emergency fund for a rainy day. Your objective is to not spend the money now, but to save it for a particular use in the future.

If you hide this cash in a drawer, you are saving, not investing. Left alone, that money will not grow by any amount or in value. On the contrary, it will actually lose value because of inflation. It will be worth less in a year's time than what it is worth today.

WHAT IS INVESTING?

Investing is what you do with money to earn a return.

When you invest, your objective is to earn a return – which is to grow your money.

The constant rise in the cost of living, known as inflation, steadily eats away at the purchasing power of your money. In other words, you can buy less in a year's time with the same amount of money.

Simply depositing your money in a bank will not grow your money or beat inflation. You should rather invest in assets that deliver a higher return that beats inflation over time. A tried-and-tested way of doing this is in higher-risk assets such as shares, which may prove volatile over the short term, but deliver inflation-beating returns over longer periods.

The value of GOOD advice

The value of getting financial advice from a qualified financial adviser should not be underestimated and is highly recommended. It may help you reach your goals.

Speak to a financial adviser to help you consider your options.

Contact Alexander Forbes Individual Advice Centre (IAC):

Tel: 0860 100 444 or Email: iac@aforbes.com

Summary and conclusion

Financial markets continue to be influenced by geopolitical developments, particularly those that affect global trade among the big economies. In addition, we have serious challenges to deal with in South Africa, many of which could take years to resolve. However, there are some positives amid these unfavourable conditions – when things are bad, investors tend to expect them to remain bad. For those who are patient, this creates opportunities for markets to perform better in the far-off future – off the base of lower prices. Our Trustees remain focused on maintaining the Fund’s well-considered investment strategy, in order to achieve the Fund’s long-term objectives. The most important thing that you can do is to remain disciplined, saving as much as possible for your future retirement and keeping your savings invested for as long as possible.