Reflecting on investments

In Latest, Money cents by Donna Willan

Reflecting on investment

So we’ve launched the year, done our annual financial goals and budgets. Now I’m going to dig deeper and look at all my investments with a critical eye to reflect on whether I need to change anything. I have a few investments that take up about 20% of my income; it’s a lot of money so I think it’s time to check if they are the right investments.

This is what I have, and my plan for each investment:

  • Retirement Annuity: (which is arguably not the best investment, but when I was 26 years old it seemed like I was doing the right thing). I’m sort of stuck with this one – it may not be a wise investment, but stopping it is even less wise (I think).
  • Short-term savings at Nedbank (32-day notice account): this is my fund for a new car in four years’ time, and a 50th birthday island holiday in five years’ time. I like this, it makes me feel secure that we have a plan and are saving towards it.

I’ll keep this;

  • Tertiary education fund for my kids: R650 a month into ETFs. It’s not huge but it will give us a bit of a fund to cushion the harsh reality of tertiary fees. Fortunately, I have at least another 10 years to contribute to this, so it is growing slowly but steadily.
  • Extra money into the bond each month: I like to put a minimum of 20% extra every month, with the aim of having the bond paid up in seven or so years – in time to start paying high school fees. At the moment I am putting more than 20% extra every month. So I think this is the area where I need to be making some changes – who knew one could over-invest in one’s home!

I’m suspecting that instead of over-investing in the house (what do they say about not putting all your eggs in one basket?) I should rather explore investing in more ETFs. Yip I think I need to do this.

And something I don’t have (well there are many things I don’t have, but let’s just focus on one for now):

  • A pension fund through work which I am now exploring: perhaps that is where some of my money, currently going into the bond, should go?

Right, I have some clear actions: firstly, work with our HR department to see if the pension scheme is a good investment. Secondly, I will only invest an extra 20% in the bond, and the difference can be invested elsewhere – either the pension scheme or monthly ETFs.

In my next column I am going to reflect back on ‘the lessons I learnt from my mother’ and check in on how well, or not, I am practicing them.

Donna

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