Wealth of Wisdom: Step 3 – growing your portfolio – DestinyConnect

[FEATURED] This third step in our Wealth of Wisdom series looks at how to actually grow your wealth and increase your financial portfolio. It also looks at key things to consider for your long-term plans

We asked Marwan Abrahams, Executive General Manager: Broker Distribution at Old Mutual Personal Finance, for practical advice to help us grow our wealth portfolio and advise us on things we need to think about for the future.

What are the different types of investments available?

Investing or saving money is key to achieving the goals you have set in life. Old Mutual offers a number of investment and savings solutions and each one is structured to meet a selection of investment needs. Start by identifying your goal – are you investing for growth or for income? Investing for growth means you are willing to invest a lump sum or on a monthly basis for a select period of time. Investing for income means you need a product that will ensure some capital growth and pay out an income on a regular basis.

What do I need to consider when looking at my investment options?

Deciding where to invest is a big decision and will depend on a number of factors, such as:

  • How long you’re able to invest for.
  • Your investment objectives.
  • How much risk is acceptable.
  • What kind of return you hope to achieve.
  • How much can you contribute.

You can also use the Old Mutual InvestRight online tool to help establish how much you will need to save and invest to meet your financial goals, be they short, medium or long term. InvestRight is a simple, interactive and free guide. Once you’ve considered the above factors and looked at the InvestRight tool, speak to your financial adviser or broker to ensure you make the right investment decision for you.

What is a “diverse portfolio” and why should I consider this?

After time, diversification is the second most valuable tool you can use to manage risk − as it reduces the impact that a single poorly performing asset has on your overall portfolio. For most investors, a sound financial plan includes a balanced portfolio of investments. Diversification works for you by combining a range of different asset classes, ensuring that you don’t have too many eggs in one basket.

When should I start an investment for my children and what’s the best option to make sure they are covered?

When you’re a parent, nothing is more important than investing in your children’s wellbeing. You want to make sure they are not only taken care of, but that they also have the opportunities to explore the different activities they enjoy. The best way to invest for your children is to start as early as possible! The miracle of compound interest will go quietly to work and, one day, you’ll be in a position to help your kids achieve their dreams.

How can I help my elderly parents reinvest their money today to help them pay for growing costs like medical bills?

Choosing the right retirement income solution can seem tricky. Many people outlive their retirement savings because they choose a living annuity with excessive draw-down rates and use too much of their savings in the early years of their retirement. Before you make a decision, it makes good sense for your parents to discuss their options with a financial adviser. An adviser will ensure that their decisions are best suited to them, taking their retirement needs into account. An adviser can also help ensure that their life and disability cover is preserved and will discuss medical cover options with them.

Passive vs active investing: which is better to help me achieve my financial goals?

The age-old debate of whether to invest in active or passive investments is no longer relevant and the focus needs to shift to what is the right kind of investment approach for you, the investor. At Old Mutual, we believe that there is a place for both active and index (passive) investing and that combining the two strategies provides you with better diversification, lower risk and lower overall cost.

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