What to with that 13th cheque
The year end has finally come and for those that will be given the 13th cheque by their companies, here is how you could spend that money wisely.
As 2016 reaches an end many employees will be off to a well-deserved break and some are fortunate to receive a 13th cheque or bonus. Although it is tempting to spend this extra money on all the upcoming festive season activities, in these challenging economic times, we have to ask ourselves: Are we saving enough?
Head of Strategic Business Development for FNB Savings and Cash Investments, Stephan Buys, pointed out that consumers should consider saving or investing a portion of their extra money, with greater market uncertainty, as it remained particularly important to build up cash reserves so that there is some level of savings to dip into should the need arise. “This also provides the opportunity to gear towards a financially sound start to the new year ,” he said.
He explained that when weighing up savings or investment options for extra money, the challenge was often finding a solution which combined great returns with low or no risk of losing the original investment amount, coupled with simplicity and instant or quick access to the money invested.
Buys advised potential investors to take a look at Money market funds which he said generally provided good returns but noted that neither the capital nor the returns are 100 per cent guaranteed.
One of the disadvantages of a Money Market fund account was that effortlessly opening an account or instantly accessing money invested in this type of fund in case of emergency or unexpected expense, may prove challenging.
Buys however encouraged potential investors to put their 13th cheque in a Money Maximiser from FNB to stretch their bonus as it paid a rate (fluctuating, but currently 7.35 per cent p.a.) comparable to the top qualifying Money Market Funds in South Africa, fully guaranteeing capital and the quoted rate of return, while giving you immediate access to your money.
“This is like having the best of all worlds: high returns, no risk to capital or quoted returns, instant access to money invested, as well as effortless account opening and management,” added Buys.
Other ways of wisely using the 13th cheque:
- Pay off debt
- Build up emergency savings
- Put some into your bond.
