{"id":16358,"date":"2025-03-18T09:52:15","date_gmt":"2025-03-18T10:52:15","guid":{"rendered":"https:\/\/www.premium-partners.net\/?p=16358"},"modified":"2025-03-21T13:10:20","modified_gmt":"2025-03-21T13:10:20","slug":"how-to-start-investing-with-limited-income","status":"publish","type":"post","link":"https:\/\/www.premium-partners.net\/fr\/builder\/how-to-start-investing-with-limited-income\/","title":{"rendered":"How to start investing with limited income"},"content":{"rendered":"

This post<\/a> was originally published on this site<\/a><\/p>

<\/p>\n

Many South Africans believe they need significant capital to begin investing. However, according to Haydn Johns, Head of PSG Life and PSG Invest at PSG Wealth, the key is to start with what you have and remain consistent.<\/span><\/p>\n

\u201cOne of the biggest mistakes new investors make is believing their contributions are too small to matter,\u201d says Johns. \u201cDon\u2019t underestimate how powerful the compounding effect of returns is. Even small amounts, when invested consistently, can have a significant impact over time.\u201d<\/span><\/p>\n

He adds that most people struggling to save have a spending problem, not an income problem. \u201cThe trick to overcoming this is to establish the habit of saving first and spending what is left over, rather than the other way around.\u201d<\/span><\/p>\n

According to BankservAfrica\u2019s Take-home Pay Index, South Africans\u2019 average nominal take-home pay rose 16.3% year-on-year in January 2025.<\/span><\/p>\n

Even when accounting for inflation, real take-home pay increased by 12.8%. <\/span><\/p>\n

\u201cA salary increase is the perfect opportunity to begin saving,\u201d says Johns. \u201cBefore adjusting your lifestyle or making any big purchases, consider setting aside a portion of your raise towards a monthly recurring investment.\u201d<\/span><\/p>\n

Practical steps to get started<\/strong><\/p>\n

Johns advises new investors to start with a budget: \u201cA budget highlights unnecessary expenses that can be cut to free up money for investments.\u201d While a good target is to invest 15-20% of gross monthly income, he stresses that the most important thing is to start \u2013 regardless of the amount.<\/span><\/p>\n

Building a reserve fund is also important. \u201cAim to have at least three months\u2019 worth of expenses in a cash-type investment vehicle that allows quick access, ideally within two to three days. This provides flexibility in case of unexpected financial needs.\u201d<\/span><\/p>\n

To maximise returns, Johns suggests taking advantage of tax-efficient investment products. \u201cMax out your retirement fund contributions, which are capped at 27.5% of income. The tax savings generated can then be used to fund a tax-free investment, which has an annual contribution limit of R36 000.\u201d<\/span><\/p>\n

Selecting the right investment structure is also critical. \u201cFor young investors with a long investment horizon \u2013 20 years or more \u2013 it\u2019s important to opt for funds with a higher equity allocation, as these offer higher potential returns which are needed in order to reach your retirement goals.\u201d<\/span><\/p>\n

Johns recommends starting with a diversified unit trust portfolio within a tax-efficient investment vehicle, such as a retirement annuity or tax-free investment account. \u201cThis ensures investors benefit from tax advantages, effectively increasing their net income when the tax benefits are factored in.\u201d<\/span><\/p>\n

Common mistakes to avoid<\/strong><\/p>\n

First-time investors often fall into the trap of chasing \u201cget rich quick\u201d schemes. \u201cThe risk associated with these schemes is extremely high, and many scams prey on young investors looking for quick returns,\u201d warns Johns.<\/span><\/p>\n

Instead, he advises a disciplined approach focussed on long term growth. \u201cInvesting is about consistency and patience. Don\u2019t underestimate the power of compounding \u2013 achieving 10-15% per year in compounded returns can make a significant difference over time,\u201d he concludes.<\/span><\/p>\n

PERSONAL FINANCE <\/strong><\/p>","protected":false},"excerpt":{"rendered":"

Many South Africans believe they need significant capital to begin investing. However, according to Haydn Johns, Head of PSG Life and PSG Invest at PSG Wealth, the key is to start with what you have and remain consistent.\u201cOne of the biggest mistakes new investors make is believing their contributions are too small to matter,\u201d says Johns. \u201cDon\u2019t underestimate how powerful the compounding effect of returns is. Even small amounts, when invested consistently, can have a significant impact over time.\u201dHe adds that most people struggling to save have a spending problem, not an income problem. \u201cThe trick to overcoming this is to establish the habit of saving first and spending what is left over, rather than the other way around.\u201dAccording to BankservAfrica\u2019s Take-home Pay Index, South Africans\u2019 average nominal take-home pay rose 16.3% year-on-year in January 2025. Even when accounting for inflation, real take-home pay increased by 12.8%. \u201cA salary increase is the perfect opportunity to begin saving,\u201d says Johns. \u201cBefore adjusting your lifestyle or making any big purchases, consider setting aside a portion of your raise towards a monthly recurring investment.\u201dPractical steps to get startedJohns advises new investors to start with a budget: \u201cA budget highlights unnecessary expenses that can be cut to free up money for investments.\u201d While a good target is to invest 15-20% of gross monthly income, he stresses that the most important thing is to start \u2013 regardless of the amount.Building a reserve fund is also important. \u201cAim to have at least three months\u2019 worth of expenses in a cash-type investment vehicle that allows quick access, ideally within two to three days. This provides flexibility in case of unexpected financial needs.\u201dTo maximise returns, Johns suggests taking advantage of tax-efficient investment products. \u201cMax out your retirement fund contributions, which are capped at 27.5% of income. The tax savings generated can then be used to fund a tax-free investment, which has an annual contribution limit of R36 000.\u201dSelecting the right investment structure is also critical. \u201cFor young investors with a long investment horizon \u2013 20 years or more \u2013 it\u2019s important to opt for funds with a higher equity allocation, as these offer higher potential returns which are needed in order to reach your retirement goals.\u201dJohns recommends starting with a diversified unit trust portfolio within a tax-efficient investment vehicle, such as a retirement annuity or tax-free investment account. \u201cThis ensures investors benefit from tax advantages, effectively increasing their net income when the tax benefits are factored in.\u201dCommon mistakes to avoidFirst-time investors often fall into the trap of chasing \u201cget rich quick\u201d schemes. \u201cThe risk associated with these schemes is extremely high, and many scams prey on young investors looking for quick returns,\u201d warns Johns.Instead, he advises a disciplined approach focussed on long term growth. \u201cInvesting is about consistency and patience. Don\u2019t underestimate the power of compounding \u2013 achieving 10-15% per year in compounded returns can make a significant difference over time,\u201d he concludes.PERSONAL FINANCE\u00a0<\/p>","protected":false},"author":1,"featured_media":12912,"comment_status":"open","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[],"class_list":["post-16358","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-builder"],"_links":{"self":[{"href":"https:\/\/www.premium-partners.net\/fr\/wp-json\/wp\/v2\/posts\/16358","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.premium-partners.net\/fr\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.premium-partners.net\/fr\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.premium-partners.net\/fr\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.premium-partners.net\/fr\/wp-json\/wp\/v2\/comments?post=16358"}],"version-history":[{"count":1,"href":"https:\/\/www.premium-partners.net\/fr\/wp-json\/wp\/v2\/posts\/16358\/revisions"}],"predecessor-version":[{"id":16359,"href":"https:\/\/www.premium-partners.net\/fr\/wp-json\/wp\/v2\/posts\/16358\/revisions\/16359"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.premium-partners.net\/fr\/wp-json\/wp\/v2\/media\/12912"}],"wp:attachment":[{"href":"https:\/\/www.premium-partners.net\/fr\/wp-json\/wp\/v2\/media?parent=16358"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.premium-partners.net\/fr\/wp-json\/wp\/v2\/categories?post=16358"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.premium-partners.net\/fr\/wp-json\/wp\/v2\/tags?post=16358"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}