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How to invest How to Invest

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How to Invest

If you’re new to the investment world, the idea of choosing your own fund and investing your hard-earned money can be quite daunting.

Before you even start to research the different products and underlying funds, you need to ask yourself a few questions.

What is your goal and when would you need the money again? Are you a taxpayer and could benefit from choosing a tax-free product?
How much price volatility are you comfortable with? With these factors in mind, you can now start weighing up your options and plotting your investment journey.


How to choose an investment product that’s right for you

Every person has their own unique needs, dreams and circumstances. In order to choose a product that will best suit your needs, it’s very important to first identify your financial goal – perhaps you’re saving for an overseas holiday or a house, or maybe you’re thinking of your education or retirement.

There are 3 products most suited to the needs of the average investor:

Unit Trusts Retirement Hedge Funds

Generally a minimum monthly recurring contribution of R500 or a lump sum of R10 000 is required to start investing.

Most of the products you’ll come across might seem more or less the same, but the difference generally lies in the tax and financial laws that govern each individual product. So before you get in over your head, it’s important to consider the pros and cons of the various offerings – for instance:

  • When will you be allowed to withdraw your money?
  • Will you be taxed on your investment or the money you withdraw?
  • Do you qualify for personal tax relief on your contributions?


What to consider when choosing an investment fund

Choosing a product is only half the battle – every product has its own underlying funds, all designed with different goals and needs in mind. In order to choose a fund that ticks all the right boxes, you need to do some introspection and determine what type of investor you are:

  • How long do you want to invest for?
  • How much of a risk-taker are you?
  • Are you comfortable seeing spikes in your fund?
  • Are you saving for a short- or long-term goal?
  • Can you afford to lose any of your capital in the coming year?

Once you know the answers to these questions, you’ll have a better idea of what risk/return spectrum your ideal fund should fall into. More aggressive investors or investors with a longer time horizon can afford to choose funds with more equity/shares in the portfolio.

Another factor you need to consider is the adviser and administration fees associated with each fund. It’s also worth bearing in mind that all funds have a minimum investment amount – while it varies from fund to fund, you need to ensure that it fits your budget. If you're looking for a more specialised fund, Sanlam financial advisers will be able to assist you in choosing the appropriate product.


Get ready to invest

Now that you have a good idea of where you’re headed in terms of your investment fund and financial future, it’s time to get the ball rolling.

Start off by acquiring and completing the relevant forms for the product that piques your interest. Whether you’re applying for a fund online or with the help of a financial adviser, you will also need to submit the following FICA documents:

  • Proof of identity, in other words a copy of your identity document.
  • Proof of address (no more than 3 months old), for instance a utility bill or lease agreement.
  • Proof of banking details, in other words your bank statement (no more than 3 months old).

If you’re under 18 or thinking of investing on behalf of a minor, you will need to provide additional information and documentation. Certain funds might also require specialised documents, but rest assured that we will guide you through it when the time comes.

Over and above the physical document requirements, you will need to have a good understanding of what you want to achieve by investing. The prospect of seeing you money grow is an exciting one, especially if you keep sight of your goals and see them approaching steadily.

Quick Solutions

Your retirement years are something to look forward to – a time to do what you find meaningful at your own pace. But retiring without sufficient savings is highly stressful. How do you make sure that you’ve saved enough to enter this special time feeling confident and secure?

Start early

The sooner you start saving through your employer’s retirement fund or your private retirement annuity (RA) – or both – the better. It’s generally recommended that 20-somethings start saving 15% of their total income and continue to do so for at least 40 years to make sure they retire with enough money. But if you start in your thirties or later, you would need to save a much larger percentage of your income every year to catch up.

Consider the tax benefits

For more info on exactly how much you can save towards a retirement product and enjoy tax relief, watch this video on T-Day (the day on which the tax laws for retirement products changed).


Don’t be tempted to withdraw some of your retirement savings when you move from one employer to another. Read more on what to do with the money in your employer’s retirement fund when you resign or have to deal with retrenchment.

Work as long as possible

By working longer you’re able to save more towards retirement. It also means you’ll be living off your savings for a shorter period of time, enabling you to draw more retirement income every year. This is a great recipe for a more comfortable retirement.

Supplement your income

It’s a really good idea to start working on a hobby or a side business that could generate some additional income for you once you’re retired from your current career.

Speak to a professional

The closer you come to retirement the more important it becomes to consult a professional financial planner. He or she will be able to calculate the exact figure that you need at your desired retirement age, as well as how much you need to save every year to reach that magic number. Equally important is the sound advice that you’ll receive to help you navigate the tax laws covering retirement products – both before and after retirement. We recommend that you speak to a financial planner sooner rather than later.

You might be tempted to take all of your retirement savings as a cash pay-out, but remember the tax! Also, saving enough money for retirement is hard enough and dipping into your savings at any stage could set you back significantly. The two most common tips that retirees have for younger generations are: start saving earlier and preserve savings every time you leave a company.

What are your options if you want to preserve your savings in your employer’s fund?

  1. Transfer the money to a retirement annuity (RA)
  2. Transfer the money to a preservation fund
  3. Transfer the money to your new employer’s fund

To decide what to do, you would need to weigh the options against one another.

Retirement Annuity

No tax is payable on the transfer.

You only pay tax if you ask for part or all of your savings in cash.

Once in the RA, you’re not allowed to make any withdrawals before retirement.

Retirement Annuity

No tax is payable on the transfer.

You only pay tax if you ask for part or all of your savings in cash.

Once in the RA, you’re not allowed to make any withdrawals before retirement.

Preservation Fund

No tax is payable on the transfer.

You only pay tax if you ask for part or all of your savings in cash.

You’re allowed to make one taxable withdrawal from the preservation fund before retirement.

Preservation Fund

No tax is payable on the transfer.

You only pay tax if you ask for part or all of your savings in cash.

You’re allowed to make one taxable withdrawal from the preservation fund before retirement.

Employer’s Fund

You can make a provident-to-pension-fund transfer without paying tax.

A pension-to-provident-fund transfer, on the other, hand would be taxable.

You can withdraw the money when you resign from the new employer (it will be taxable).

Whether you’d like to save for your retirement, put money aside to buy a home or save for a rainy day, using Sanlam Investments is an ideal option.

Invest Online

You can use our new Sanlam Smart Invest Tool which makes it simple and easy to invest. Our online tool is designed to help you set your goals, and reach them easily! We’ll ask you about your goal, how much money you’d like to invest and your investing style. We’ll then let you know whether you’re saving enough to reach your goal and make recommendations about where you should invest your money.

Speak to a financial adviser

Alternatively, with Sanlam Investments, you’re able to work with a professional financial adviser who can help you along your savings journey. A financial adviser has the knowledge and experience to help you calculate how much money you’d need for your future goals, taking into account inflation and how much you're able to save.

Find an Adviser

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