Article: Nicole Rego from Fin24
Image: Getty

"Women generally live longer – seven to 20 years longer – than their husbands and financial advisers," says Barnard Jacobs Mellet Private Clients services director, Sunél Veldtman. "Of widows living in poverty, 80% were not poor before their husbands died."

"It's the Cinderella complex, where many women feel that they need a partner to provide for them," says Veldtman. "Women need to overcome this and provide for themselves."

She said that even though women are known for being good at saving, there aren't many that invest.

"In an inflationary environment where people are generally living longer, money has to last longer."

Most South Africans don't save sufficiently for retirement, relying only on their pensions to sustain the same standard of living as that enjoyed before retirement; at least 15% to 20% of income has to be saved.

Currently, about 10% of a person's salary goes towards retirement. Ideally, any return you get on an investment should beat inflation," she says. Inflation (excluding mortgages) was 13.6% in August 2008.

Aligning values with goals
Savings and investments shouldn't be viewed as a chore, says Veldtman. People should save and invest to align their cash flow with their values and goals – like saving monthly for their next holiday, or investing for an overseas trip or their child's education, and eventually retirement.

"Try and debit order your dreams," she said.

According to Veldtman, when people invest they have to understand where the money that they are making, also known as the return, are coming from.

One way to make money from investments is by earning interest from bonds or money-market instruments like treasury bills (where government borrows money from citizens and pays them interest).

Another way is through capital appreciation, which is a benefit you get when the price of your investment (like property) rises or by earning money from dividends on stocks as a shareholder in a company.

But how do you start?
In times where stock exchanges are getting hit by the financial crisis caused by the credit crunch in the US and Europe, how can one get the best return?

"The best thing to do is get a balanced portfolio of investments," says Veldtman.

You would go to see a financial advisor – not a broker – who would help analyse your needs and get you a fund manager that will help you have all the right eggs in your basket, like cash and bonds, as well as shares and property, in one investment.

This means that when investors move out of equities or stocks and into the cash market, their balanced portfolio fund won't lose as much value as an equity investment, as the gains in the cash part of their portfolio would make up for the losses by the portion in shares.

"If you can't stand the roller-coaster ride, you have to balance it out by spreading your assets; you lower your risk," she says.

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