SOME people think investing and financial planning has to be complicated, but it’s not.
Unfortunately many people use their money with no plans for the future.
Felix Kagura, head of long-term insurance propositions at Standard Bank, says people need a new approach to protect themselves when times get tough.
“By basing your financial planning on goals, you have a clear reason to save. But part of the problem is that investment strategies don’t always focus on the risk of not saving for retirement.
“It is important that your planning goals are not swept aside in a financial emergency. There is a no more important time for South Africans to begin securing their wellbeing after they retire than the present.”
Every person needs to secure an income stream that will cope with their future needs. This is a critical component of a good financial plan – it needs to be able to resist sudden unpleasant surprises that life may throw your way.
With South Africa’s recent change in politics, it has already started edging its way out of a recession but the risk of an unsteady future remains high as there is always the chance of unpredictable events that may ruin the path of your life such as a retrenchment, a disabling disease or injury, or even death.
“While recessions come and go, they always come with rising prices and rising unemployment.”
But he encouraged people to have secure enough coverage to protect against the risk of an event like retrenchment.
He said savers and planners must have the discipline to make sure their priorities can be met, but also that the risks that will prevent them occurring do not derail those plans.
“Reducing the risk your finances face requires you go beyond the regular risk guesses.”
Risk solutions range from making sure your life cover is in place, and that it is monitored and reviewed regularly to make sure it continues to cover you.
Add to this critical illness and disability coverage.
“If a saver gets ill then there must be enough income at that exact point in time to look after his or her health while also making sure his savings are not hit.”
