Real Estate Investor Magazine South Africa February 2016 | Page 42

FINANCE

8

1

Common Financial Mistakes

and how to avoid them

Getting caught in the income trap

Many South Africans get caught up in the rat
race, believing they become rich by increasing
their working income. When they start work, they
manage to survive on a basic wage but continually
spend more with each pay rise. They spend all their
income and so they work harder, advancing into higher
paying positions with more money to spend. On it goes
– the more they earn, the more they spend and their
now substantial salary won’t cover their increasingly
expensive lifestyle. When you focus on income, you
fall into a trap of spending all you earn. More income,
without the right financial understanding, habits and
skills, is as dangerous to your financial success as too
little income.

2

Saving like Middle-Income Earners

The average South African has been taught to
invest or set aside 10% of their income to ensure a
comfortable retirement. However your goal should not
be to acquire a lump sum to slowly spend throughout
your retirement (in the hope you don’t outlive your
money) but rather to build an asset base that generates
ongoing, passive income, such as a portfolio of welllocated, income-producing residential properties.

3

Never Learning to Invest

Many of us have never been taught how to
invest, let alone save. Younger generations are
living differently to their parents; they’re marrying
later, spending more on ‘lifestyle’ and taking on
more credit card debt. As a result, many people have
significant earning capacity but few assets. To be
financially independent you need to build an asset base
that generates passive residual income, such as a sound
property portfolio

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BY JOHN SHEPARD

5

Getting Advice from the Wrong People

Many people don’t realise they’re repeating
the same financial patterns their parents
demonstrated. They continue in consulting the wrong
people who themselves are not achieving their desired
results. By using other peoples’ success as a template
you will find it easier to close the gap between where
you are and where you want to be.

6

Thinking Investing is too difficult

Many people feel they cant invest or are too
busy, so they take the path of least resistance and
don’t do anything. However, wealthy people plan, take
action, learn from their mistakes, consult experts and
take charge of their own financial affairs. Many people
are not prepared to pay for good financial advice and
many start climbing the investment ladder but give up
along the way because they’re stuck in the rat race and
can’t see themselves getting anywhere.

7

Making Emotionally Based Financial
Decisions

We all tend to make most of our decisions based
on emotions, but it’s important to recognise that we do
so. Your subconscious financial blueprint – your beliefs
and emotional associations regarding money – colours
your financial decisions. While you can’t change this
fact, you can change your thoughts and feelings about
money so they have a positive influence and make you
less fearful of climbing the investment ladder.

8

Letting Fear get in the Way

True wealth is on the other side of fear. The key
is to harness our fears in a positive way, because
fear can hold us back or drive us forward.

Falling Prey to Easy Credit Debt

Consumer debt is all too easy to get. Large
retailers offer the latest

FEBRUARY 016 SA Real Estate Investor

www.reimag.co.za