Financial Planning Jargon, Investments

How to Prevent Playing Catch Up

You read the article “Playing Catch Up”. (If not, read it here before you carry on: https://www.linkedin.com/pulse/article/6013723481605181440/edit?trk=pulse-edit-nav_artn  )

And your head is spinning. Every time you get in your car you look left, right, left, right and left again, just to make sure you are safe, and there is not some crazy person trying to get you into financial trouble by crashing into you. You relook flight prices, compare them to driving to your dream destination. You read about Savings Accounts, 32 day accounts, Unit Trusts, Money Markets…and the list goes on and on. What to do with your hard earned money to ensure you can take care of the little pleasures (or pains) in life?

Let’s have a look at exactly what some of these options are:

1. Savings Account at your preferred institution:

  • Has a nominal monthly fee
  • Virtually no Interest
  • Minimum Balance required (normally over R50)

2. Term Deposit at your preferred institution:

  • The money is not accessible for a fixed period of time
  • You cannot add to the fixed amount
  • No Monthly Fee
  • Slightly better interest than a Savings Account
  • Higher minimum balance is required (generally over R1000)

3. Notice Deposit at your preferred institution:

  • The money is only accessible after a notice period
  • You can add to the initial amount
  • No Monthly Fee
  • Variable interest, the longer notice period the higher the interest rate
  • Higher minimum balance is required (varies between R1000 and R10 000)

4.Money Market or Similar Account at your preferred Bank:

  • Funds are available immediately, you have access to the account
  • You can add to the initial amount
  • Monthly Fees
  • Transaction Fees
  • Variable Interest Rates but considerably better than the above mentioned options
  • Higher Minimum Opening Balance is required (varies between R10 000 and R25 000) and has to be maintained

5. Money Market Unit Trust Investment at your preferred Financial Institution, other than your Bank:

  • Funds are available from 3 working days via your service provider ie Financial Adviser
  • You can add to the initial amount
  • Monthly Fees
  • Transaction Fees could be applicable
  • Advice Fees
  • Money gets invested for you by your chosen institution, and interest will depend on the underlying investment choice
  • Minimum amount payable monthly, starting roughly at R500 per month
  • No Fixed Term

Makes more sense now? It sure does.

Of course, depending on where you are in life, there will be a specific product that will work better for you, and fit into your lifestyle. All of the above are options, but you need to pick the one that is right for your needs.

Feel free to email me on michael.pfister@momentum.co.za for assistance in selecting the right short term savings method for you.

“Do not save what is left after spending, but spend what is left after saving” – Warren Buffet

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(Originally published on 16 June 2015)

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