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FINANcIAL FREEDoM

Marginal changes can lead to exceptional gains

By Adriaan Pask, Chief Investment Officer, PSG Wealth
A chieving your long-term 1% of their overall performance.

Prior to this, the uk cycling team
financial goals may seem
overwhelming at the
moment. However, by had only won one gold medal in 76
years. reflecting on this achievement
focusing on the factors you can control, later, sir Dave Brailsford, Head of
and implementing small changes British Cycling said: “It struck me
to your spending and saving habits, that we should think small, not
financial freedom is still within reach. big, and adopt a philosophy of
continuous improvement through
DoN’T sWEAT ThE sMALL the aggregation of marginal
sTuFF gains. Forget about perfection;
Looking at the FTSE/JSE All Share focus on progression and
Index (ALsI) so far this year, we see compound the improvements.”
major rises and falls caused by events
such as downgrades, the national We believe this focus on marginal
lockdown and the current pandemic. changes, aggregated over time,
However, when looking back over the can have a significant impact on
long-term, these major short-term your long-term financial outcomes,
drops don’t seem so severe. The s&P and it’s an approach that’s easy
500 drawn over 100 years shows that for anyone to adhere to.
the only time investors would have
received a negative 20-year return chEcK IN WITh YouR
was during the great Depression. coAch
There are times when we all need
If you allow yourself to get caught motivation, guidance and support.
up in the news headlines and the illustrates that even a small increase When it comes to your marathon to
everyday exposure of market volatility in your monthly contributions could financial freedom, your best coach
(especially as is the case at present help you to retire earlier or maximise is a financial adviser. Not only do
with COvID-19), it can become all on your investment returns. financial advisers understand the
too easy to lose your nerve and available products inside out, they
change your strategy. Although it cAN sMALL chANgEs can also advise and guide you where
is important to keep track of your REALLY MAKE A needed. It is important to have
strategy and remain cognisant of DIFFERENcE? regular check-ins to discuss how your
market shifts, it is also imperative In 2008, at the Beijing Olympics, plans are evolving and what you can
to remember that growing your the uk cycling team won seven of do to improve on your journey to
money is a long-term commitment 10 gold medals by improving only financial freedom in the long run.
– a marathon and not a sprint.
Periods to reach R10 million capital at retirement:
ADJusT YouR PAcE
In the adjacent table, scenario 1 Variables Scenario 1 Scenario 2
shows that it will take about 45 years Present value r0 r0
to reach an investment target of r10 Future value r10 000 000 r10 000 000
million, at a growth rate of 10%, if you Interest 10% 10%
invest r1 000 per month. However, if
you double the amount to r2 000 per Monthly payment r1 000 r2 000
month, it will take you just 38 years Period (months) 534 452
to reach your goal. In other words, Period (years) 45 38
you will save for seven less years. This source: Psg Wealth research team

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