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As you build your career, goals set at having a seat at the executive table, your debt under control - mostly, you’re finally feeling secure! You’ve got a retirement fund in place, an emergency budget, and you’re past the point of living paycheck to paycheck.
"Good investments can last for generations if they’re well looked after, and every parent wants to give their children all the advantages possible to ensure their success. And it’s been said time and time again: generational wealth will be the key to breaking the cycle of poverty and inequality," says Maxine Muller, Executive Adviser for Liberty.
Invest in Unit Trusts (leveraging the power of investment)
For many South African's unit trusts are highly flexible and can be started with a lump sum or through a monthly accumulator. Investment returns will be taxed at your marginal income tax rate which could be anywhere from 0% and 45%, especially taking the interest exemption of R23,800 for under 65s.
"So, it pays to do your research or check in with your Financial Adviser," says Muller.
Diversify your investment portfolio even further through Endowments
These are an option for those individuals on the higher income tax bracket, as endowment plans are a more efficient investment vehicle from a tax perspective. The insurer will pay tax on your behalf at much lower tax rates than those applicable to high-net-worth individuals.
"As with unit trusts, you can also entirely avoid paying tax on interest, local dividends, and capital gains, if you invest through an endowment structured as a tax-free investment like Stash by Liberty," says Muller.
Education helps maintain generational wealth – make sure your kids can have the best
Putting something away each month for our children’s education is as important as your other savings plans.
"But many people don’t realise that you have to consider education inflation as well. It’s best to build out an entire education fund plan starting when your child is born,” says Muller.
If you are unable to work due to a disability, pass away or suffer a critical illness, Liberty's EduCator can cover these expenses as well.
Income Protection can protect you and your savings from being wiped out in an emergency
You and your family are accustomed to a certain lifestyle, so if something tragic happens, you don’t want to lose it. "Income protection really shined during the COVID-19 pandemic, as it helped many people maintain their incomes even when they were unable to work,” says Muller.
Avoid the what if's and the I should have's - acknowledge your unique circumstances and get risk cover that meets your needs
Finances are highly personal; we must avoid trying to keep up with the Joneses. “Big purchases need proper consideration, and we can’t just make them to compete with our neighbours,” she says.
“Lastly, don’t forget that debt is always manageable. You just have to go through your finances and learn everything you can about your spending habits. And here’s a freebie: always remember that a Financial Adviser is trained to help you understand your finances down to the finest detail. We’re here to help you,” she concludes.
This post and content is sponsored, written and produced by Liberty.
