By Lindy-Lou Alexander, Head of Brand and Marketing, Consumer and High Net Worth, Standard Bank Group
It comes as no surprise that women are better at managing money. In fact, the data clearly shows that women have astute financial acumen.
With the representation of women in the workplace increasing – albeit not as at a rapid rate as would be liked – the financial needs of women are changing. With the basics of financial management in order, the next focus for professional women is to expand and secure a strong financial future.
Building a balanced investment portfolio that has a combination of various risk- and payment-term options is often the best place to start.
There are a variety of savings and investment options on the market. A selection of short-, medium-, and long-term financial products are available. These include tax-free savings, unit trusts, fixed-deposit offerings, share accounts, and a money-market facility as potential portfolio options. Each offering has a different risk profile and attention to detail needs to be paid to ensure that the right mix and contribution to each financial product will be made to meet financial goals.
It is also never too late to start saving for retirement.
Don’t limit investments to South African products – there are many international investment options, including purchasing foreign currency or purchasing shares in companies on foreign stock exchanges.
A slush fund, preferably containing at least three months’ worth of expenses, as a safety net in an account that provides reasonable interest but also allows easy access to cash, is advisable.
Financial back-ups for unforeseen events are highly recommended. While often seen as a grudge purchase, adequate insurance to provide for unplanned expenses, such as healthcare with a medical aid plan, car and home insurance, a funeral plan, income protection, and disability cover, will cushion the blow of unexpected occurrences.
Covering all legal bases is essential. This includes an updated will that has been created by a professional to suit the complexity of a final testament. Pre-nuptial agreements before a nuptial, be it in community of property or out of community of property, with or without accrual, need to be considered. Ante-nuptial or post-marriage contracts are possible – these are at the discretion of the High Court.
It is advisable to have all contracts, including business, supplier, lease, and employment contracts, scrutinised by a legal professional. In addition to ensuring that the legal document adheres to legislation, it also needs to be in line with legal precedents created by case law.
Reducing asset-based costs will increase the value of a portfolio. This is done by reducing the gearing of fixed assets that have the potential to increase in value, such as property, as well as paying off depreciating assets, such as a car, quicker.
This will not just increase the value of the portfolio, but also build a stronger credit record for any additional asset-based loan required to further grow a portfolio. Reducing all debt but leaving the facilities active, like an access bond or low-interest credit facility, increases a credit score, but also allows flexibility to invest in other assets or business opportunities that have the potential to create additional sources of income.
Funding and loan options have the ability to be a useful tool in financial growth. They can also become a financial disability. For entrepreneurs, seek loans that have a competitive interest rate and be aware of any management or account fees that may bump up the monthly repayment amounts. There are new products, such as BizFlex – a pay-as-you-earn product that holds no account costs and has a fixed interest amount for the duration of the contract – as an example of innovation in the SME financing sector.
Compare the costs and benefits for all loans taken out. For individuals, this can include personal and revolving loans, overdraft facilities, instalments, and lease-vehicle-lending options, as well as credit card and home-loan products. The variety of offers are all designed to suit a particular need and can often be compared on your financial service provider’s website. Useful affordability and repayment calculation tools can also be found here.
Building a strong financial portfolio, even in the current economic climate with rising costs and stagnant incomes, is possible. Qualified financial advisors are always a good first port of call when crafting a solid financial future.