This reading piece has some helpful information to help you achieve your financial goals.
This post was published on 15 Feb, 2019

Want to put together a solid financial plan for 2019? To help you, this article focuses on topics such as:

  • •  long-term investments,
  • •  short-term investments,
  • •  life insurance,
  • •  short-term Insurance,
  • •  credit shortfall cover,
  • •  medical aid, and
  • •  Gap cover.

Financial planning helps you determine your short-term and long-term financial goals and empowers you to reach these goals from a balanced and realistic perspective. With the New Year upon us, it’s important for you to make the best decisions early, so that you can make 2019 your most prosperous year yet. Here are a few important financial planning pointers to help ensure a sound financial standing.


To get things started, you need a good budget! The first way to take control of your finances is to budget. To start, calculate how much you spend on fixed expenditures such as household bills, financial products, school fees and travel costs. Also, calculate how much you spend on nice-to-have expenditures like your recreational activities, clothing items and fancy gadgets – if you’re spending more than you have coming in, you need to readjust your pending habits. Cut out what’s not needed, re-evaluate your spending habits, put a reasonable budget in place and stick to it!

Long-term investments

Long-term investments include buying assets such as shares, unit trusts, or properties with the expectation that your investment will make money for you and increase your long-term earning capacity. Investments can make your money work for you and help you to create and preserve wealth. Your investment plan should include a realistic understanding that expectation and actual return may vary – this is the risk you take. A good financial adviser can help you make objective decisions by clarifying any confusion and guiding you through your financial planning journey.

Short-term investments

Short-term goals include setting up a savings account to put away ‘emergency funds’ or to save for a dream holiday, or put aside money for down payment for a new car. Saving accounts, money market accounts, certificates of deposit accounts (notice accounts), short-term bond funds and trustworthy stokvels are all examples of good short-term investment plans.

Life insurance

Life insurance is a contract between a person who takes out a policy (known as the ‘policyholder’), and the life insurance company or ‘insurer”, in exchange for a premium. In such a contract, the insurer will pay a specified beneficiary a certain lump sum when the insured person, who is usually the policyholder, dies. In some contracts, when the policyholder is suffering from terminal illness or disability, payment can also be initiated.

Short-term insurance

Short-term insurance is a short-term agreement between an insurance company and a policyholder. It is called “short-term” because the things that are insured through this type of insurance are flexible, don’t need to be covered for decades at a time and can be canceled by any involved party within 30 days. Valuable belongings such as vehicles, houses, furniture, cell phones and laptops would fall into this category. With short-term insurance, you can practice sound financial management and protect your valued possessions against natural disasters, burglaries and accidental damage. Life is full of uncertainties and short-term insurance enables you to protect your valuables against an unexpected loss that you may not be able to afford.

Credit shortfall

Most vehicles are insured for their market value, which may be less than the amount you owe your vehicle finance provider. If your car is written off or stolen, your insurer will pay out the market value only – this will not settle the amount you owe your finance provider. Credit shortfall cover covers the outstanding balance owed to the service provider after your insurer settles the market-related costs. This ensures that all your vehicle debt is settled and nothing comes out of your pocket.

Medical aid

Medical schemes pay for many other healthcare needs such as nursing, surgery, dental work, medicine, physiotherapy and eye-care. Medical scheme membership protects members financially if they suddenly have to pay large, unexpected medical costs.

GAP Cover

Medical Top-up Insurance, more commonly known as GAP Cover, is a low-cost-high-value insurance product that you take out in the event that your medical aid doesn't cover all costs for a hospital procedure or emergency surgery. The Council for Medical Schemes recommends an annual medical aid rate – this is the base rate that can be charged by all medical practitioners for medical procedures. Most medical aids agree to pay up to a certain percentage of this rate – in most cases up to 300% of this rate. However, medical practitioners are free to charge whatever they want for their services, and should your provider charge more, it will be your responsibility to cover the shortfall.

Whether you want to fund your children's education, buy a new home, save for retirement or manage your financial risks, make wise choices for you and your family and make sure that you build a strong foundation for your financial wellbeing.

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