Don’t tell me what you value. Show me your budget and I’ll tell you what you value.Joe Biden, American politician
Even for those of us who don’t have a formal budget, I’m sure people could tell a lot about us simply by analysing our spending behaviour. In previous articles I’ve spoken about the importance of investing, starting to invest as soon as possible and the role of planning and advice. But another crucial element of investing – and one that will keep you going when times are tough – is to know and understand yourself.
This goes beyond knowing what you’re saving for. It entails knowing what’s important to you and why. What is it that you ultimately want out of life?
Setting up a debit order and automating your monthly savings will get you going on your savings journey, but knowing why you’re investing in the first place will prevent you from prematurely dipping into those accumulated funds.
Some questions to ask yourself before investing:
“Is five or ten years really such a long time?”
Ten years may seem like a lifetime away now, but the time will pass soon enough. And when 2029 arrives, you’ll wish you’d invested in that longer-term growth asset all those years back.
“How do I feel about short-term market movements?”
No-one likes to see their investment amounts fall – but remember this is only a loss on paper (unless of course you sell your investment and realise the loss). Over the longer term, returns from equity markets do smooth out. If you’re unsure of the level of risk to take on, speak to a qualified financial adviser. There are solutions available to meet a wide variety of needs.
“How committed am I really to my end goal?”
Instead of saving because you “think you should”, have a detailed plan for at least the next 20 years – possibly even a vision for your life (although you can still fine-tune this in time if you’re still young). Where do you want to be living? What are your hobbies and where do you travel to on holiday? Do you see yourself setting up a business – and what will you be doing?
Having a clear vision of where you see yourself will help with the next phase of goal-setting. Your end goals will determine your investment time-lines and also your choice of investments.
Ultimately your best investment is in yourself – being the best you can be, and living your best life.
For more information on how to invest in yourself and your goals, visit www.glacier.co.za or speak to your financial adviser.