As a young professional, the decisions you make now will significantly impact your financial future. Early, smart planning is crucial for building a strong financial foundation. To support this, the Starting Your Financial Journey in the Right Way event aims to equip young professionals with valuable insights and guidance.
Initially launched about nine years ago as part of the Financial Planning Institute’s (FPI) MyMoney123 Week initiative, this event has evolved into a key platform for young professionals in Cape Town. Spearheaded by Veritas Wealth, it serves as an opportunity for various professional practices to give back to the community by dedicating their time and expertise to educate and support young professionals as they begin their careers and financial planning journeys.
The two-hour event, set for the evening of Wednesday, 9 October, at the Allan Gray Auditorium, V&A Waterfront, is designed for professionals aged 25 to 35. However, anyone eager to secure their financial future is welcome.
The event will showcase a panel of financial planners from Veritas Wealth, WealthUp, Crue Invest, Chartered Wealth Solutions, Netto Invest, and Core Wealth, with Jonathan Theunissen of Galileo Capital as host.
Each expert will cover key aspects of financial planning, including investment and retirement planning, healthcare, life insurance, estate planning, wills, and effective financial management. Together, they’ll offer a comprehensive overview, ensuring attendees leave with practical strategies and actionable steps for securing their financial futures.
According to one of the panellists, Cole Zweistra from Veritas Wealth, the primary goal of the event is to provide basic guidance on the initial dos and don’ts of financial planning, as well as what to look out for.
Budget and an emergency fund
Zweistra, who will be weighing in on investment and retirement planning at the upcoming event, emphasises that building wealth is a gradual process accomplished over time. While it involves many elements, a good place to start is by creating a budget and building an emergency fund.
“Understand how much you earn and how much you spend, along with your financial commitments. This will help you see how much you can set aside for savings and investments.”
He advises saving three to six months’ worth of living expenses in an accessible account, like a money market fund, before investing.
He recommends paying off high-interest debt, such as credit cards or personal loans, as these often have higher interest rates than most investment returns. Once debt is managed, he suggests starting to save for retirement. Contribute early to an employer retirement plan. If you don’t have access to one, consider a retirement annuity and take advantage of the compounding effect.
“Both an employer retirement plan and an individual retirement plan will provide you with a tax deduction benefit and tax-free growth within the fund.”
Zweistra also underscores the importance of starting to invest early.
“Time in the market is one of the biggest factors for growth. Even small amounts invested early can compound significantly over time. Speak to a professional who can help guide you along your journey.”
He suggests placing your investments with an investment firm. “Consolidation often results in administrative fee discounts and take advantage of compound interest,” he says.
Providing for medical expenses
Rudolph Geldenhuys, this year’s FPI Financial Planner of the Year from WealthUp, will provide valuable insights on healthcare planning. Geldenhuys stresses the importance of a medical scheme in financial planning, particularly for young professionals.
“When we talk to clients, we generally find that there aren’t many young people who feel they don’t want to have medical aid. I think there’s a general awareness in South Africa that having medical aid is pretty much a non-negotiable component,” he explains.
Although some may try to cut costs when it comes to affordability, those earning decent incomes, particularly outside large corporates, often prioritise getting the right medical scheme cover.
Geldenhuys highlights the essential role medical scheme cover plays in safeguarding financial stability. “A week or two in ICU can cost R1 million. If you don’t have medical aid, where are you going to get a million rand to pay for a private hospital stay?”
According to him, medical scheme and gap cover are the foundational building blocks of a solid financial plan, offering much-needed security against unexpected medical expenses.
When advising young professionals, Geldenhuys emphasises the importance of clarity around personal needs and financial concerns.
“You must know exactly what you want and then look for the plan that fits. More important than anything else, get advice from an independent medical aid specialist or a financial planner.”
Good investment habits
On investment and retirement planning, Hannah Myburgh from Crue Invest will provide expert guidance at the event.
Addressing the challenge of starting to invest with a limited budget, Myburgh advises: “Starting small is still starting.” She notes that the biggest hurdle in saving is developing good financial habits and resisting the temptation of immediate gratification.
“Begin by determining how much you can comfortably save each month, then set up an automatic transfer to your savings account. Many investment platforms have high minimum requirements, so once you have accumulated enough savings, you can use those funds to open an investment account and continue contributing. Investing does not have to be complicated – once you get started, it will become a habit,” she explains.
Myburgh also highlights the importance of directing additional income, such as bonuses or salary increases, into investments. “When you receive a bonus or an increase in salary, remember to allocate a portion of that extra money toward your investments.”
On the balance between debt repayment and investing, Myburgh advises young professionals to first consider the cost of their debt.
“Before you begin investing, it is important to understand the cost of your debt. Specifically, consider the interest rate being charged. If the interest rate on your debt exceeds the expected return on your potential investment, it is more beneficial to pay off that debt.”
Once debts are settled, those funds can be channelled into investment opportunities.
Importance of estate planning
Megan Smit from Netto Invest will focus on the importance of estate planning and having a valid will. Smit encourages young professionals to start thinking about estate planning early, even if they don’t yet have dependants.
“In South Africa, you are able to draft a will once you turn 16, so as long as you meet this requirement, it is never too early to draft one,” she explains.
Smit dispels the notion that a will is only necessary if you have significant assets. “It is a common misconception that you need to have a lot of assets to justify having a will or doing estate planning, but the truth is, if you have a bank account, personal belongings, or a car in your own name, it is worth having a valid will in place.”
She also points out the importance of appointing an executor to manage digital assets and close social media accounts, as well as to cancel subscriptions such as Netflix or Apple Music. Smit cautions that dying without a valid will can lead to unintended consequences.
“If you pass away without a valid will, the laws of intestate succession apply. This essentially means that your estate will be left to your spouse and children. If you do not have a spouse or any children, your estate will be left to your parents, and failing them, your siblings. Is this your intention?”
Seek guidance from a financial adviser
Jodrey Rossouw from Core Wealth will contribute by outlining effective financial management strategies.
According to Rossouw, research shows that those who seek professional financial advice are better positioned to navigate economic difficulties than those who do not. “Seeking the guidance of a financial adviser can be a crucial step in protecting, organising, and growing your wealth over the long term. It is highly encouraged to seek a financial adviser as soon as you enter the workforce.”
Rossouw advises young professionals to choose independent advisers who can recommend financial products tailored to their goals.
She stresses the importance of working with firms licensed by the FSCA. “Engaging with a registered financial services provider (FSP) offers peace of mind, as clients have legal recourse in cases of misconduct.”
Transparency in fees is another key factor when selecting a financial planner. “It is important to find a financial advisor who is transparent when it comes to their fees. Financial advisers are legally required to disclose what and how they charge their fees,” she adds.
Rossouw also recommends looking for advisers with the CERTIFIED FINANCIAL PLANNER® (CFP®) designation, emphasizing that these professionals adhere to stringent educational and ethical standards. “A CFP® professional demonstrates a commitment to acting in their clients’ best interests throughout their lives.”
Tom Brukman from Chartered Wealth Solutions will delve into the critical role of life insurance as part of comprehensive financial planning.
The event is scheduled for Wednesday, 9 October, at Allan Gray Auditorium, 1 Silo Square, V&A Waterfront, starting at 5.30pm for 6pm to 8pm. For more information, email tauhirah@veritaswealth.co.za.
