Best Way To Invest 1 Million Rand In South Africa

How long will it take to save a million?

Attaching a timeline to save R1 million is difficult because financial situations differ from person to person.

Too many variables are involved to predict a reasonable timeline, ranging from the inflation rate and rapidly-changing tax regime to the investor’s appetite for risk, which influences their investment choice regarding the preferred asset class. However, there are examples that offer some insight.

In 2010, Warren Ingram, a director at Galileo Capital, relayed that you can make your first million by saving R5,000 a month for a period of nine years. This is not an easy strategy to follow, as not everyone has R5,000 to put aside. However, once the first million is made, it becomes easier.

“If you keep investing R5,000 and adding it to the first million, you should have another million rands within four years. By sticking to the plan, you should have three million rands in total within 16 years,” Ingram told Moneyweb.

Ingram relayed a similar strategy to Destiny Man in February 2016. “If you’re prepared to be disciplined and avoid spending your money on things like expensive cars, clothes, and entertainment, you can make your first million rands quite quickly.”

“The fastest I’ve ever seen was a young lady who saved her first million in five years and her second million three years later. After 10 years, she has more than R3.5 million and is creating another million every 14 months.”

ShareMagic says that it’s possible to achieve R1 million with less money – but then you’d need more time.

“If you put away R4,000 a month and achieve 10% annual compound growth, it takes over 11 years of disciplined saving to end up with a million rand,” notes the ShareMagic website.

“At net 5% per annum, it takes over 14 years. If you save R2,000 a month it’s going to take you 23 years – and at R1,000 a month, more than three decades.”

Of course, the vehicle in which you save your money can influence the timeline required to save R1 million. The key is finding the right rate of return.

John Manyike, head of financial education at Old Mutual, notes further, “The choice of investment partner is also critical because asset managers might have their respective investment strategy and principles. It is not a bad idea to scrutinize the previous investment performance of your investment partner.”

On attaining a suitable partner and formulating an investment plan, it’s important to conduct reviews and updates from time to time, as personal circumstances and economic conditions change, notes the Old Mutual website.

As noted on the PSG website, “Gone are the days when you could formulate a financial strategy and forget about it, as markets change almost daily. Successful money management and saving require continuous updating. Financial planning is going to require an almost fanatical obsession with financial, economic, and political news.”

Tips to save

The PSG website provides the following additional tips for wealth creation.

Set goals. Specific and measurable goals are much easier to break down into smaller, achievable components in order to monitor your success. Goals should be challenging, but not unrealistic – just out of reach, but not out of sight.
Decide to be financially successful. This is different from wishing, hoping, wanting, or even desiring to be rich. Making a commitment that this is going to happen, is necessary. Financial freedom is not an accident or a matter of luck. It usually requires some inconvenience and a lot of hard work.
Start early. The important thing is getting started now. Whether you start with R50, R100, or R500 per month, for every month you delay, you are losing thousands of rand, notes the PSG website.

According to the Old Mutual website, “The earlier you save the better, especially given the fact that life expectancy in South Africa has improved. Women generally live longer than men and generally earn less than their male counterparts. It is better to start as early as possible to avoid the risk of outliving your retirement provision.”

Understand how money works. The process starts with you mastering your relationship with money, says the PSG website. “Some of us spend for excitement, to show off, to prove we can. Some of us are addicted to spending, and some of us are just careless about it. Whatever your relationship with money, understand it and develop a relationship of respect, appreciation, and gratitude. Use your money, rather than allowing it to run your life.”

What to do with a million rand in South Africa?

Among all the registered voters, the SRF found the top five choices for what they would spend the money on, in order, were:

give to charity, pay for children’s education, start a business in South Africa, donate to the church, and pay off debt. Those voters who preferred to be philanthropists numbered 20.7%.