Financial planning is a skill every modern woman should possess. Women are generally more independent and financially savvy than they were 20 years ago, with millennial women, in particular, more confident in understanding and participating in the investment world. But many women still either don’t invest or delegate the task to someone else, be it a spouse or financial adviser. 

The bottom line is that the more involved women are in their own financial well-being, the greater their ability to become financially independent and recognise good investment opportunities.

One of the biggest misconceptions when it comes to the world of finance is that it’s “a man’s game”. There’s been strong growth in the number of female investors over the past couple of decades, and if the numbers show anything, it’s that a woman’s approach to investing is definitely different to that of her male counterpart – and this is not a bad thing. Women may take longer to make decisions, but they tend to avoid unnecessary risks and are often better long-term investors, because they stick to their goals instead of trying to beat the market.

Don’t know where to start? Your first step should be to contribute to a retirement annuity (RA) fund. You can contribute up to 27.5% of your salary to an RA annually. 

Next, you can look at contributing to a tax-free savings account. You can contribute R33 000 annually (R500 000 over you lifetime) to this type of account, which doesn’t trigger any dividend, interest, income or capital gains tax. 

Thereafter, you can look at diversifying by contributing to an offshore investment. This can be in your name, an offshore trust or an offshore retirement plan in a zero-tax jurisdiction such as Guernsey. The Sovereign Group offers various offshore investment vehicles in jurisdictions such as Malta, Gibraltar, Isle of Man or Guernsey. 

The broad principles for investing are the same for everyone, men and women alike:

  • The earlier you start to save, the better – the effect of compound interest is astonishing.
  • Take a long-term approach. Your goal should be to beat inflation, which is probably one of our biggest threats in South Africa. 
  • Make informed decisions before you invest. You must understand the various levels of fees and the risks associated with every option. If this means that you are going to take a bit longer to decide how you invest, that is your prerogative. 
  • Try not to touch the funds that you are saving and investing in your retirement plans, unless it is absolutely necessary.

So, go ahead. Take the first steps to financial independence today. It will not only give you higher returns, but the financial resources to deal with the unexpected.

More than ever, South Africans are starting to look into investing offshore – with protection from the ever-fluctuating rand and the need for a buffer against an increasingly unstable economic climate being among the major drawcards. Investing overseas also offers access to investment options and structures that are not available in the domestic market.

However, investing offshore is not without risks, and local investors should familiarise themselves with all the facts before making a decision. For example, South African investors with offshore assets could be liable for estate duties if their portfolios are not correctly structured.

When considering an offshore portfolio, it’s crucial to work with a trusted, reputable financial adviser. A good adviser will draw up – and discuss – a long-term investment strategy, explain the pros and cons of the suggested investment structures and how the investment will be made, and thoroughly investigate the institution that will receive the investment, before making recommendations.

Coreen van der Merwe is the managing director of Sovereign Trust (SA).