As the strain of making ends meet creates multiple hurdles on the journey to saving money, many South Africans are finding it harder to invest in long-term goals.
Whether its buying a house or managing debts, money struggles can become an insurmountable cycle where many are living from hand to mouth.
Fynbos Money co-founder Adrian Hope-Bailie says the real threat isn’t just external pressure: “The biggest dangers to your long-term wealth are often the small, silent decisions you don’t realise you’re making.”
Hope-Bailie highlights four major “wealth killers” that can quietly derail financial growth and security:
1. Procrastinating
Every day you wait to start investing is a day of compound growth lost forever.
“Compound interest is like planting a tree. The earlier you plant it, the more shade you’ll enjoy later. Too many South Africans put off investing for ‘when things settle down’, but life never does and those lost years can mean hundreds of thousands of rand less when retiring.”
2. No emergency fund
Without a financial buffer unexpected expenses, from car repairs to medical bills, force people to raid investments.
“The worst time to withdraw is usually during a market downturn when your assets are already under pressure. That not only interrupts your growth but also locks in your losses,” he warned.
A simple emergency fund, equal to three to six months of expenses, can provide peace of mind and protect long-term wealth.
3. Ignoring tax-free savings accounts
Tax is one of the most underestimated drags on wealth-building. South Africans can contribute up to R36,000 a year into a tax-free savings account (TFSA), yet millions don’t take advantage of the opportunity.
“It’s effectively a gift from the government that allows your money to grow without Sars taking a share. Ignoring it is like voluntarily handing money back to the taxman,” said Hope-Bailie, adding that platforms such as Fynbos Money have made it easier to open a TFSA in just a few minutes.
4. Paying percentage-based fees
On the surface, a 1% or 2% annual fee might not sound significant, but percentage-based pricing often creates hidden conflicts of interest.
“When an advisor’s income is linked to the products you buy from them, there’s a risk that their advice isn’t truly objective. Flat fees are simpler and fairer. You know what you’re paying and you can trust the guidance is focused on your goals, not on commissions.”
Collectively these wealth killers can add up to an enormous shortfall.
Hope-Bailie believes the solution lies in simplicity: “Start as early as you can, prioritise an emergency fund, max out your TFSA each year and be ruthless about the fees you’re willing to pay. These aren’t complicated steps, but they have a profound impact over time.”
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