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Survive Inflation Part 2: Investing

Liezl Hesketh in Life skills 


In our last blog about How to Survive Inflation, we said that people who stop expecting the government to supply all their needs and make a plan for themselves, survive inflation. Ten years ago, people said the cost of petrol would never reach double digits. Think of what you pay for petrol today – between R11.94 and R12.37 per litre – all thanks to inflation.  A reasonably priced car will probably take 40 -50 litres to fill the tank. That’s nearly R480 – R620 a tank. The price of petrol is a very good economic indicator.

Survive Inflation through Investing

This week, we’re going to look at how investing can be a great way to reduce your expenses, and thereby increasing net income. Bear in mind, that investing properly is a long term project to beat inflation. As we mentioned last time – forget get rich, quick schemes. They are usually some form of con.  As Warren Buffet, the most successful investor of all time says, “No matter great the talents or efforts, somethings just take time. You can’t produce a baby in one month by getting nine women pregnant.”

Investment requires a lot of research and careful thinking. There are a number of ways to invest. Here are just a few.

  1. Pay off your credit card.

I bet you weren’t expecting that. Having an unpaid credit card means you are already starting from a negative situation. On average, credit card interest in South Africa can be as high as 24.85%. If you pay off the card, that money is now available to earn you interest instead of costing you interest. Apart from the interest, there’s also the annual card fees which, depending on the card can be as high as R53.

Also see: Budgeting Tips for Students

  1. Learn the difference between good debt and bad debt.

Just like with fat, there are both good and bad versions of debt. Bad debt is money you’ve borrowed at a high interest rate. It’s money that waves good-bye. It’s the loans you take out for things like white goods (refrigerators, ovens etc.), clothing, cars and overseas holidays. It’s also your credit card.

Good debt is money that you borrow at a low interest rate but which makes you money down the road. For example, if you borrow money to buy an apartment building, that initial investment will earn you money in a few years’ time and then indefinitely on an on-going basis – if you charge the correct rent. If you charge rent that doesn’t cover the loan repayments and interest you will actually be falling behind into bad debt.

  1. Follow Warren Buffet – Online and ‘Inlife’.

A lot of modern investors scoff at Warren Buffet for his unexciting investment philosophy. He may be 85, but he’s also consistently ranked among the richest men in the world with a net worth of US$61 billion, so it’s up to you really. A sample of his advice: “Don’t save what’s left after spending. Spend what’s left after saving.”

  1. Play the Stock Market

This takes on-going research and can be a big time investment on a daily basis. If you don’t have the time or the know-how, SATRIX40 is the best way to start. Thanks to a wide range of transparent, passively managed investment products, SATRIX gives you an simple, easy-to-understand, cost effective way to access the stock market at a relatively low cost; a minimum of R300 monthly debit order or a R1000 lump sum.
Don’t expect the government to solve the inflation crisis.  Our last piece of advice – amongst the woes of a crippled economy, the stress of planning for the future and dodging the inflation bullet – don’t forget to have a life.

  1. Invest in property

There there always the option of investing in property, then renting it out. Student Accommodation is growing worldwide. Risks can be higher, but returns are good. And remember, is where you should advertise your rental property today.

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