DIY financial investing: Save

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DIY financial investing: Save to invest

A tale from a small sailboat.

DIY financial investing: Save

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I am currently in South America where I cruise on a small sailboat, which my brother and I built in Cape Town over the last few years. I wrote some articles for a British sailing magazine and the question of financing such a project came up. Allow me to quote from that:

“You can’t discuss the idea of building your own boat, and of extended cruising, without considering the question of money. The golden coin has two sides. One side has to do with investing wisely, and in ultimately earning a passive income. The other side, plain and simple but less often realised, lies in discovering that we can get by with a lot less than we think.”

Before you can invest, you need money, and this money has to come from somewhere.

Pay yourself first

A wealthy, normally subdued friend once started swearing profusely while we were driving somewhere. We were listening to the news on the radio, and the rand has fallen by 10%.

“I still have the money from the sale of my flat in my savings account, I’ve been meaning to invest it overseas for months. I will never do this with a client’s money!”

Take the time and the effort to view and review your money matters. Is your money well invested? Can you get a better deal on your cellphone contract, your medical aid or your car insurance? You probably can!

Live below your means

We probably all know people who earn 10% less than ourselves and still get by quite well. By spending less you don’t only have money at the end of the month to invest, you are also less vulnerable to the mishaps of life, and something like a burst geyser or broken TV become much less of a crisis.

Many small things can add up to make a big difference. Spoil yourself by cooking at home. Use public transport, and read while you are doing it! Walk or use a bicycle and enjoy the free exercise. Buy what you need and not what the advertising industry tells you to buy. Every ten rand you save can easily be worth five or ten times more later in your life.

And remember, cars keep many people poor. Buying a new car is one of the worst investments you can make.

Start early

Call it the eighth wonder of the world, like Einstein did, call it exponential growth, like mathematicians do, or simply call it the concept of interest on interest. The bottom line is, a small investment now can grow to become a lot later. But this wonderful process needs time. Start as early in your life as possible. Start today.