The Dilbert cartoonist, Scott Adams, earned a MBA from Berkeley, worked at a bank (got held up twice at gunpoint), and is worth millions. So we presume he knows a thing or two about money. In an interview with the Akron Beacon Journal, Adams says he read about a dozen personal finance books and began working on one himself. However, he found it all boiled down to these nine points and he “couldn’t figure out how to fluff it up.”
1. Make a will.
2. Pay off your credit cards.
3. Get term life insurance if you have a family to support.
4. Fund your 401(k) to the maximum.
5. Fund your IRA to the maximum.
6. Buy a house if you want to live in a house and can afford it.
7. Put six months expenses in a money market account.
8. Take whatever money is left over and invest 70% in a stock index fund and 30% in a bond fund through any discount broker and never touch it until retirement.
9. If any of this confuses you, or you have something special going on (retirement, college planning, a tax issue), hire a fee-based financial planner, not one who charges a percentage of your portfolio.”
If we adapt these to South Africa they might read something like this:
1. Make a will (you are going to die one day and the consequences of not having one if you have beneficiaries is too great to contemplate).
2. Pay off your debt including your credit cards and home loan.
3. Get life insurance if there is financial risk at your death (i.e. you have a family to support or debts that need to be paid including estate duty).
4. Fund your pension fund to the maximum (that the company allows).
5. Fund your Retirement Annuity to the maximum (if you dont have a pension fund).
6. Buy a house if you want to live in a house and can afford it. I guess the same logic would apply to buying a car – if you can afford it.
7. Put six months expenses in a money market account (once you have paid off your debt).
8. Take whatever money is left over and invest 70% in an equity based unit trust or exchange traded fund (etf) and 30% in a bond fund or 100% into a balanced unit trust fund and never touch it until retirement. As South Africans, probably at least 20-30% of this should be offshore (i.e. out of SA).
9. If any of this confuses you, or you have something special going on (retirement, college planning, a tax issue), hire a fee-based financial planner, not one who charges a percentage of your portfolio.”
