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With South Africa’s economy continuing to worsen by the day, while the standard of living increases exponentially, making smart investment decisions has gone from being a luxury to a necessity.
Similar to many other things, conversations regarding financial literacy and investments have always been somewhat of a foreign topic for a majority of South Africa’s black middle or working class. This can be attributed to South Africa’s brutal, yet very real history, where black and brown people were deliberately excluded from the country’s wealth and economy.
Today, these citizens are left to grapple with the harsh reality of needing to start building wealth from scratch, which is no easy feat, particularly in an economy that feels like it was designed to work against you.
Investing has become much harder to do, as disposable income becomes more and more of a foreign concept. More and more families are living from hand to mouth, paycheck to paycheck, leaving little to nothing to save or invest.
Here are some effective investment tips, particularly for the working class:
Start with a strong financial base
This might discourage a lot of people from starting, as debt is at an all-time high, with FinMark Trust reporting an estimated 10 million South Africans over-indebted. However, clearing off any high-interest debts and starting an emergency fund will work to your advantage.
Stick to low-cost/ diversified investments
For someone with limited disposable income, keeping the cost of your investments low makes sense, right? Finding investments that take less of your money, while guaranteeing you more return is not easy, but it’s not impossible, and is in your best interest. According to NerdWallet, resources such as Exchange-Traded Funds (ETF) are good options, as they spread the risk across many companies, including international ones.
Avoid get-rich-quick schemes
When looking to make smart, long-term investments, avoiding things such as pyramid schemes, forex and crypto traders, is in your best interest. Although they have proven to be helpful, stockvels are not a good idea either, as they can be risky, depending on the members involved.
“The “next big thing“ has probably already been bid far beyond fair value and could even be in bubble territory if everyone is talking about it. You may feel like you are missing out at first, but you will more often than not be very happy that you did not get swept up in the euphoria,” the First national Bank (FNB) website says.
Also see: Know your financial Human Rights