My take on investing

I was 17 when I first took an interest in the financial and investment markets. I was invited to buy shares in a company called Beget Holdings that was pioneering sms technology back then. I wasn't able to get funds released from a 32 day notice account in time and ended up losing out on the offer. If I had been able to get in on the action those shares would've been worth quite a bit now as Beget Holdings has grown substantially since then.

My first investment was in StratCorp Ltd in December 2002 followed by Supertow International Ltd in March 2007, GlobalJewel Ltd in September 2007 and then a series of investments in an Empowerment initiative in 2008, managed by StratEquity. I carried on investing via StratEquity until early 2013.

What I've learnt about owning listed shares is that you need to work with an organised financial institution. I found out the hard way that StratEquity was not as organised as it should have been and this made for some very frustrating financial year ends as I needed to follow up and search for information in order to provide my accountants with what they needed to compile my financial statements. The sheer frustrations with this was one of the deciding factors that lead me to liquidate all of my listed shares.

I'm all for aggressive investing as well as slightly more passive saving but ultimately you need to have a solid understanding of what is happening with your money and work with people who know what they're doing and can communicate clearly.

The sooner you can start saving and putting your money to work the better. I wish I had started when I got my first job. Compound interest is a wonderful thing and it's one of the reasons that you need to start saving as soon as you can. There is no doubt that long term investments are appealing because they offer higher returns but I believe you need a combination of short, medium and long term investments to be able to build wealth as well as remain liquid in difficult times.

As a first step set yourself up with a short term savings account, this would typically offer a low interest rate but be better than your current account. I recommend you aim to have a minimum of one month's living expenses in this account in case something goes wrong then you can still pay all of your bills.

Once you've got enough in a savings account, to cover a months living expenses, start putting your savings into a medium term investment or a notice account. These accounts usually offer a higher return but come with a notice period which means you don't have instant access to your money. This is why it is important to have enough in your short term savings to cover you in case you get paid late or something goes wrong and you need money immediately. Usually the notice period is short enough so that you can get access to your money within a month or so. The notice period makes it less of a temptation to spend your savings as you'll need to make a conscious effort to put notice on the funds before you can make a withdrawal. Set a target balance on this account of say six months to a year's worth of living expenses, this becomes your emergency fund.

Once you've reached your targets in your savings account and notice account it is time to start thinking long term. Do research and find a financial institution that offers a blend of risk and reward that you are comfortable with. You can usually negotiate higher interest rates if you invest your money for longer periods so make sure that whatever money you invest in a long term plan is money you can do without as you will often be faced with penalties should you wish to withdraw your money before the investment reaches maturity.

In addition to savings and investments, one of the ways to not only save for your future but also save on taxes in the present is to sign up for a retirement annuity. The more you can put away into a retirement annuity the better as you'll be able to substantially decrease your taxable income. When you eventually do retire and begin to withdraw funds and benefit from your retirement annuity, you'll pay tax on the amounts that you take out so you're not avoiding taxes, you're just deferring them until a later stage and your money earns you interest at the same time.

I often hear of parents saving for their children in separate accounts. It's tempting to have multiple savings accounts for different reasons, one for education, one for when they get married or simply something to leave to them as inheritance. The problem with this approach is that the capital is split and therefore the potential to earn high interest rates is reduced significantly. Financial institutions often reward you with a higher interest rate if you have more in your account, never has it been truer that it takes money to make money. The way I see it, if you're planning on saving for your children, keep your money consolidated in one account but make use of a spreadsheet to keep track of what money you're allocating to each child or to yourself. This way you'll be able to increase the overall balance quicker and reach different interest rate thresholds a lot faster.

Everybody's financial situation is different though and I'm not qualified to give formal advice so make sure you chat to someone qualified on the subject before you take any action.