Don't put all your eggs in one basket!

I teach financial wellness and property investing. I know it all, right?

Wrong.

What I do know is that there is always something more to learn, a new perspective to gain. Being curious and open to new ideas and concepts has led me down some fascinating paths, even, believe it or not, when it comes to my personal finances.

I recently enlisted the help of a very experienced Financial Planner to assess my financial status. It will come as no surprise to those of you who have been following my blog that my portfolio is heavily weighted in property. Too heavily weighted in fact.

Here’s why. What if something were to happen and I needed lots of cash fast?

This has just happened to a very successful fellow property investor, Thembani. She had purchased properties using other people’s money. A number of those loans matured at the same time and most of the investors wanted to call in their loans. Covid had swept away their normal income stream and this loan payback was their only hope. At the same time, property prices were plummeting and the same time she lost her steady stream of income from her day job.

The perfect storm.

Sure, Thembani could sell off a few properties to repay the loans, but what kind of a financial hit would she have to take if she HAS to sell to the first buyer that comes along versus being able to wait it out for her selling price? Not to mention having to deal with irate investors who grow weary of endless excuses.

But what is the alternative?

Having a mixed portfolio. Include property in that mix but make sure you have investments and some savings that can be tapped into within 3 to 5 days.

• Use a TFSA (tax free savings account) that offers you a tax break on savings of up to R36,000 per year, or R3 000 per month, with the maximum lifetime contribution being R500 000.

• Save 3 to 6 months’ worth of expenses in a Money Market account. Before you think this is impossible, it's important to know that this is referring to your "basic living expenses." Essentially, how much do you need at a minimum to pay for your food, housing, core utilities such as water, electricity, internet and transportation? Is that number sounding more attainable?

• Use a platform like Easyequities to build up a shares and trust portfolio. They offer fantastic educational videos and reward you with zero fees if you stay up to date with the latest teachings. Start slowly, opting for a mixed basket to reduce risk while you learn the ropes.

The idiom “Don’t Put All Your Eggs In One Basket” is truer in today’s world than ever before. Spread your risk and increase your potential returns.

Side effect? Being able to sleep easy at night, no matter what the market is doing.