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What You Need To Start Saving Each Month In Your 20s To Retire With R5 million

It’s going to take a lot more than you thought to retire as a millionaire. So it’s best to start now, in your twenties.

Diana Albertyn

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“Most of us have conflicting priorities when it comes to affording our current lifestyle and saving for the future,” says Allan Gray’s Wanita Isaacs. “But, what if you realised that the well-researched rule of thumb that a retirement income equal to 75% of your final salary will allow you to comfortably retire is relative? Rules of thumb do not account for personal circumstances,” she adds.

How much is ‘enough’?

Surely, about R1 million is plenty for you to be comfortable after 65? 

Not if you look at it this way: If you retired today at the age of 65 and you had R1 million in retirement savings, you could buy an inflation-linked annuity (pension) of between R4 300 and R5 100 a month. If you currently earn more than that, you’re going to have trouble adjusting.

Niel Fourie, public policy actuary at the Actuarial Society, estimates that an average of R5 million would buy a monthly pension of over almost R26 000. In order to save for that amount you’d have to make a monthly contribution of more than the widely held belief of 15% of your salary.

“For years many people have used the previous maximum tax-break of 15% as a savings benchmark, which is too low to reach the recommended 75% income replacement,” says Isaacs. “Even for a 25-year old, investing 15% of taxable income is not enough to ensure a sustainable and comfortable retirement. A safer rule of thumb is to invest at least 17%.”

Related: How To Start Saving Money Today

What you can do today

starting-top-save-money

Here are three steps, or levers to pull, to increase your chances of retiring a millionaire:

1Prioritise your retirement savings

When you get additional income, consider either splitting each individual income boost, or alternate between improving your current lifestyle and increasing your retirement savings.

2Delay your retirement

To give your investment more time to grow, both through your contributions and return on your investment, attempt postponing your retirement by an additional few years. The later you retire the more income you receive from an annuity, as statistically you will be relying on that pension income for less time.

3Decrease your income needs

Rethink your lifestyle priorities now, so you need less to live on when you retire, and it won’t be such a huge adjustment for you.

Want to be a millionaire?

millionaire-lifestyle

It’s going to take a lot more than a thorough financial plan. It begins with every decision you make from today onwards:

What are you waiting for? 

The earlier you start saving the more money you’ll have in your retirement savings. The later you start, the more you’ll have to contribute monthly to reach your desired R5 million goal.

If you’re saving for the first time in your twenties, your contribution towards your retirement should be between roughly R1 000 and R1 200. And that’s just for R1 million.

It seems like a lot, but remember, there are other savings products you can use to supplement your retirement savings.

A tax-free investment account, basic unit trust or any paid-off assets you own contribute towards your retirement by either decreasing your financial needs, or increasing your income in retirement.

Related: 6 Top Money-Saving Tips

Outsmart the debt trap

debt trap

If you’ve managed to get through university or college without student debt, well done. Not everyone is able to, but if you avoid big debt early on you’ll thank yourself later.

“The big problem is that the lifestyles of young people are being upgraded too fast especially if they are earning money for the first time,” observes Duane Gilbert, head of manager research at Sygnia Asset Management.

“That means spending too much money on a car, clothes and technology, which inevitably gets funded by debt.”

Debt can be unavoidable, but loans and credit card could cripple your savings efforts as you’ll be stuck paying these off over long periods of time instead of saving – plus interest.

If you aren’t currently in a position to save, at least commit to cut down your debt faster. Once your debt is cleared, you can start saving.”

Have a side hustle

You’ve heard it countless times before – that’s because it’s true. You can’t expect to cover your current and future expenses on your salary alone. Retiring a millionaire means not just surviving, but thriving. And you have to start now to live in comfort later.

Running an online business or taking a weekend job means you can pay off your debt faster or contribute more to your retirement savings.

Related: 8 Rules To Build Wealth When You Weren’t Born Into Money

Tighten your belt

tighten-belt

The wealthy are known for living far below their means. Take a good look at millionaires the world over, from tech billionaires to software moguls. They dress simply, drive simple cars and live simple lives. This is because they know that when you’re frugal you’re able to invest more money for your future.

How much do you think you need to save every day to build up a R10 million portfolio by the time you’re 65? The daily savings amount is just R31. That’s less than the cost of a pack-a-day smoking habit.

Create a budget. in that way allocations towards savings can be determined.

Estimate your future spending

You can come up with a ballpark figure based on what you’re currently spending in expenses each month. Remember that some expenses will disappear and new ones will replace them.

You may need to downsize, but if you pay off all your debt before retirement, that cost will fall away to make way for medical expenses, for example.

It’s scary to think R1 million may have you living on around R5 000 a month in retirement, but the good news is that you can aim for a larger nest egg by taking the expert advice above. From as little as R31 a day you can retire with R10 million in the bank and for a lot less if you’re aiming for R5 million.

With South Africans now living longer it has become harder to determine how much is ‘enough’ to retire – make sure you put careful planning into your retirement plan, starting with the decisions you make right now.

Diana completed a BA in Journalism in 2010 and has honed her skills as a newspaper reporter, senior communications specialist and most recently worked at a weekly magazine as a writer. She joined the EMTS Group in 2016 as a writer for Entrepreneur magazine and SmartCompany Networks. Passionate about honing her writing skills and delivering exceptional client results, Diana continues to keep a finger on the pulse of industry news and insights.

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Investing

(Infographic) The 10 Things You Should Cover In Every Investment Pitch

If you want to wow potential investors, you need to cover your bases.

Matthew McCreary

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If you’ve ever watched Entrepreneur’s original series, Elevator Pitch, then you’ve probably seen smart founders make dumb mistakes while pitching their ideas to potential investors. They might flub an answer or get tongue-tied, or they might just be a little boring. Other times, you might notice that something seemed off about a pitch, but you can’t quite put your finger on why.

Investors are gambling every time they put money into a new project or idea. Your job when pitching is to prove to them that you’re worth the risk. That means you’ll need to not only show them the possible upside of what they have to gain, but also be clear about what they could possibly expect to lose and their odds. In other words, you need to give them a holistic view of what you do, not just the one good idea.

You might have pitched an investor yourself and thought you crushed it, only to hear that the investor isn’t interested. If that’s the case, there’s a chance the pitch was missing one of 10 essential elements.

This infographic by Buffalo 7 breaks down 10 slides you should have in your next investment pitch deck. If you’re not presenting formally, though, you can still keep track of these aspects in your head and make sure you cover each one. They include:

  1. The vision, where you concisely explain your idea.
  2. The problem. Why is your vision necessary or helpful?
  3. The opportunity. What is the market size, and how can you position yourself to earn a share of it?

Related: How To Pitch Your Business, Product Or Idea To Industry Experts

This is just the start, though. Check out the infographic below to see the rest of the slides you need when pitching investors.

1541174287_investment-pitch-infographic

This article was originally posted here on Entrepreneur.com.

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‘Shark Tank’ Investors Reveal Top 5 Tips To Make Your Business Famous

Is your business worthy of fame? If so, pay attention to what the Sharks have to say …

Eric 'ERock' Christopher

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Shark Tank

Shark Tank enters its tenth season as popular as ever. Over the past decade, millions of people have watched fascinated as entrepreneurs pitched their business ideas and startups in the hopes of winning an investment and support from self-made millionaires and billionaires.

The multi-Emmy® Award-winning reality-based show has had a tremendous impact on the business world and has been a major influence on the increased popularity of becoming an entrepreneur. Over the years, the show has evolved into one of the world’s top platforms to launch a business and recently reached an astonishing $100 million in deals offered in the Tank.

I was recently invited to attend a private event hosted on the set of Shark Tank to celebrate their 10th season and met with all the Sharks and most of the guest Sharks for the current season. This year’s guest list includes luminaries:

  • Charles Barkley, Hall of Fame NBA star and TV analyst
  • Alex Rodriguez, legendary baseball player and businessman
  • Rohan Oza, an iconic brand builder and marketing expert
  • Sara Blakely, founder and owner of SPANX brand
  • Matt Higgins, the co-founder and CEO of RSE Ventures and vice chairman of the Miami Dolphins
  • Bethenny Frankel, TV celebrity, author, and founder of Skinnygirl brand
  • Jamie Siminoff, the CEO of RING, who rejected an investment offer in season 5, but went on to sell his company to Amazon for a whopping $1 billion.

My better half was also invited, and we arrived promptly on time at Studio 24 inside of Sony Pictures Studios in Culver City, CA. We were greeted by the cordial staff who informed us that the Sharks were still filming the last takes of the day. After several minutes, we were invited to chat with the Sharks on the main floor where nervous entrepreneurs excitedly pitch their companies to the investors under the bright lights of the studio set.

I was curious to know what excited the Sharks the most about their tenth season and what they believed to be the best advice for an entrepreneur to help make their business famous.

1. Create an ingenious product

When asked, Lori Greiner said, “It’s a mix, right? Of smart marketing and ingenious product. For example, Scrub Daddy was a technology. So, taking that one sponge, which was revolutionary, changed the whole sponge arena. We now have, to date, 20 different SKUs, and we have 30,000 new retail locations and 170 million in sales. That’s what takes it from one idea to a global brand.”

Of course, skillfully promoting your product on a platform like QVC is another excellent way to make your business famous. The day after the Scrub Daddy episode aired, Greiner helped CEO Aaron Krause sell their entire inventory of 42,000 sponges in less than seven minutes on QVC.

Related: 6 Great Tips For A Successful Shark Tank Pitch

2. Leverage social media marketing

barbara-corcoran

During my chat with Bethenny Frankel, she stressed, “Social networking is so important. Also being a little bit disruptive now … and you have to be creative. You have to be creative. The President was the most disruptive candidate that there’s probably ever been in history. He got people’s attention, and young entrepreneurs need to get people’s attention in some way. So be a little disruptive.”

Matt Higgins responded, “I’d say that you have to understand social and digital marketing. You can’t survive unless you understand Instagram, Snapchat or all the tools out there. You have to be contemporary.”

Barbara Corcoran claimed, “Every one of us successful entrepreneurs, for the last two years, were phenomenal at social media. It’s true. No exceptions.”

No smart entrepreneur will deny the power of social media when it comes to making your company famous. With more than 2 billion people worldwide using some form of social media, any business can put their business in front of a large audience, especially if they can create content that goes viral.

3. Build a community

Daymond John stressed the value of building a community. “You’ve got to build a community,” stated John. “Nobody needs to buy anything new in this world. They only buy it because there’s some form of community and/or need that you are supplying for them.”

John speaks from experience. He built a successful clothing empire by creating a vast community of his own via his clothing brand FUBU. John wisely invested in celebrity endorsements, making him an early pioneer of modern influencer marketing.

If you lack the resources to build your own community from scratch, you can leverage the power of others. Partnering with influencers who have cultivated their own communities allows you to introduce your product or service to larger audiences. In fact, some consider Shark Tank to be the world’s largest business influencer platform.

4. Devise a publicity hook to win earned media coverage

Barbara Corcoran also said, “I’d say you need a publicity hook. Some hook, angle or gimmick that grabs the attention unfairly from your competitors.”

Remember, Shark Tank is a unique combination of reality television, business acumen, and entertainment. Doing something unique, different, or disruptive can get you significant media attention and abundant free publicity… especially if you’re able to leverage that publicity and captivate the show’s producers, who decide your fate as to whether you’ll appear on the show.

Regardless if you want to appear on Shark Tank or not, being featured in the media is a way to differentiate your business from the competition and reach a broader audience. Be creative and willing to take educated risks when it comes to getting noticed by the media. You should always be actively building relationships with media representatives and ask for their insights when formulating your plan.

Related: Shark Tank Funded Start-up Native Decor’s Founder on Investment, Mentorship And Dreaming Big

5. Know your strengths and stay focused

When I asked for billionaire Mark Cuban’s insights, he thoughtfully replied, “Knowing your unique advantages, play to that, and your strengths. And focus. You know, what happens is very often people start with an idea, get a little bit of traction, then it gets hard. And when it gets hard, they start looking for other things to do as opposed to playing to their strengths. Because businesses aren’t supposed to be easy. You know, if they were easy everybody would already be rich, and we’d all be sitting on a beach somewhere. And so, when it gets tough, you gotta dig in and work hard. I’d say the final thing I’d add is that sales cures all. There’s never been a business that succeeded without sales. So, if you focus on selling … if you’re able to sell … and that’s something that is one of your core competencies, then you’ll be okay.”

These are wise words from one of the world’s few billionaires.

This article was originally posted here on Entrepreneur.com.

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The Best Way To Get Your Teenager To Start Investing Right Now

Jeff Rose advises a young fan on where to start his investment journey.

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In this video, Entrepreneur Network partner Jeff Rose talks about receiving a letter from a young investor, who is looking for advice on how to begin investing.

Rose talks about the act of actually doing the investing versus worrying about reading books or asking others about the process. Taking action gets the most results, since you are able to make mistakes and start the learning process. Taking action also leads to more experience, which is to say if you begin investing as a teen, you will be much more savvy about investing as a twenty-something.

In answering this young investor’s concern about investment direction – the fan hopes to balance short-term gain and long-term gain, as well as to establish some padding for a future business – Rose turns him in one specific direction: A Roth IRA. When he was younger, Rose didn’t even know what a stock was until far into his college years; during this time, he discovered the Roth IRA and learned of its compounding power, as well as the accessibility of an initial investment.

As another route, Rose also mentions starting a business. This path, Rose explains, will help you achieve the most return on investment.

Related: Making International Investing Simple And Transparent – CybiWealth Digital Platform

Click on the video to hear more tips for a younger investor.

This article was originally posted here on Entrepreneur.com.

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