Investing as a South African: A practical empowering guide

Mindset first

Investing is for everyone.
You don’t need a lot of money to start; consistency matters more than timing.
Focus on goals (short, medium, long), your time horizon and risk tolerance.

Get the basics right

Build an emergency fund: Three to six hundred thousand to cover essential expenses in an account that you can easily access, such as a Tax Free Savings Account (TFSA) or Money Market account.
Pay off high-interest debt before investing heavily.
Set a monthly budget and automate contributions to your investment accounts.

Learn about investment vehicles

TFSA: Tax-free growth investment (up to R36 000 per year tax free with a lifetime limit of R500 000).
Retirement Annuity (RA): Tax-efficient, long-term retirement savings with withdrawal restrictions. Contributions to an RA are tax-deductible up to 27.5% of taxable income each year, capped at R350 000.
Unit trusts: Managed pooled investments, good for diversification and hands-off investors.
Exchange Traded Funds (ETF’s): Low-cost exposure to local or global markets.
Direct equities: Listed shares, suitable if you want control with risk tolerance.
Fixed deposits: Lower risk, lower returns but useful for short-term or capital preservation.
Bonds (government/corporate): Income-focused investments.
Property REITs: Listed property funds with taxable dividends.

Build a plan with a financial adviser, who will:

Probably first recommend using TFSA and RA tax benefits as powerful tools for long-term growth.
Diversify across asset classes and geographies.
Look at offshore investing to diversify currency and market risk.
Consider inflation and local interest-rate cycles, which influence bonds, cash returns and consumer prices.

Keep costs low

Compare fees, unit trust Total Expense Ratios (TER), platform/admin charges and brokerage/advice fees while also ensuring that you are investing with an adviser who has a proven track record, backed by a reputable company.
Look into the family pricing principle.
You can start with the minimum monthly debit order and increase contributions as your income grows.

Understand legal, tax and estate basics

Learn the basic tax implications (capital gains tax, estate duty, dividends tax and tax-free allowances).
Create or update your will and estate plan.
Name beneficiaries for retirement funds and policies.

Manage your emotions

The key to success is to stick to your plan through market volatility and to avoid panic selling. Track your progress quarterly and meet with your financial adviser at least once a year to review your plan and help you reach your financial goals with confidence.

The key to success is to stick to your plan through market volatility and to avoid panic selling. Photo: Supplied

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