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The simple yet unseen truths about investing

The simple yet unseen truths about investing

As National Savings Month draws to a close, you may wonder how best to put your savings to work. But in a world full of false truths and endless choice, deciding how and where to put your money is not always obvious and could even feel daunting.

You can get one step closer to securing your financial future by allowing your money to grow by way of an investment. And it’s easier than you think.


The key to starting is simply to understand your own individual needs and to know who you can trust.

Before you invest, you just need to consider how much you can afford to put aside each month and for how long. Answering these two questions will help you to make the choices that are right for you.

1. How much can you invest each month?

Consider how much money you have left over every month once you have paid all your essential bills and living costs. This way you can reprioritise your savings goals ahead of non-essential spending. Most of us don’t think about where we can cut back on non-essentials like that unnecessary subscription to an online service you rarely use. Every extra bit helps when it comes to saving for your future.

For ease, make a habit of putting money aside as soon as you get paid every month. You can do this by setting up a debit order of, say, R500, into a unit trust fund, or as little as R250 into a tax-free investment.

2. How long do you have to invest?

The simple principle is that the longer you leave your money to grow, the greater your potential growth. Depending on your financial goal, the time you need to invest your money can vary from a short time (between 1 and 3 years) to longer term (5 years and even up to multiple decades).


When investing for your retirement, it’s best to start putting away money as young as you can and stay invested for the long-term. But we know how hard you work and how much you have to juggle in your life.

When it comes to your money, your priority is paying the bills. With any money left over, it’s easy to get caught up spending it on the latest and greatest things and experiences – Maybe you indulge in a spontaneous holiday or treat yourself to a ’today only’ special on your favourite shopping site.

The idea of saving often takes a back seat. It may seem like something that you can put off until next month. In reality, next month can very often turn into next year – and before you know it the years have passed and you haven’t saved a thing.

Why is this a problem? Because one day you will stop working (or work less) and you will need money for your retirement. You might think you can just save more later – when you are earning more and are more settled in life. You might think saving is one of those things you can do after you’ve paid off your studies, bond and your kids’ education, right?


There will always be things that you need to spend money on now, but it’s really not a good idea to neglect your financial future. It’s important to start building it today, little by little over time. And the longer you wait to start saving, the less time will be on your side.

To show you just how important it is to start saving early, even just a small  monthly amount, rather than leaving it until later, let’s have a look at John and Thando.

Thando invested R500 pm in the Coronation Balanced Plus Fund* when it launched in April 1996. Today, his investment is worth just shy of R800 000.

John also invested R500 pm but he only started saving 10 years later than Thando. Today, his investment is worth just over R150 000. Even if John doubled the amount that he started investing in April 2006, the value of his investment today (about R307 000) would still be considerably less than that of Thando.



The power of compound interest

How is it possible that Thando ends up with so much more than John? It’s down to the power of compound interest. The principle is simple: The returns that you earn on your invested money over time also start earning returns.

Earning returns on your returns is truly putting your money to work through the power of compounding. It means that the longer you leave your money to grow, the greater your return over time.

So start investing today. A simple way to go about this is to embrace the habit of paying yourself first – every month when you get paid. Set up a debit order, say R500, into a unit trust fund. Unit trust funds are a great way for investors to access financial markets. Once you’ve made your fund selection based on your individual needs, your money is put to work. Remember that you can also channel a portion of your unit trust savings into a tax-free investment (up to R33,000 every year*). By investing tax free, you pay no tax on interest, capital gains or dividends, giving your total investment growth that extra boost.

If you’re unsure, you can speak to an independent financial advisor who can help you decide how to invest. You really will thank yourself in the long run.

Learn more about the unit trusts we offer here.

*Based on performance as at end June 2019. For more information about the fund, please view its comprehensive fact sheet here:

Coronation is an authorised financial services provider. Trust is Earned. DM


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