Real Estate Investor Magazine South Africa November 2014 | Page 36

FINANCE BY YVETTE FOURIE Got Cash? How to make it grow... M any years ago, I worked as a broker in the insurance industry. I obviously had to learn everything about the different products and their structures. But, because of my inquisitive mind, I do a lot of research and try to think outside the box as far as I can. This has helped me many times in life, not only to solve difficult situations but also to discover things that have been “occulted” from the public, which means it has been “hidden or cut off from view by interposing something else”. I’ve discovered something really interesting that I believe will be of great value to many people. The truth about savings The best way to share what I have learnt is by using an example. Let’s say I want to save R55,282.85 through a normal endowment savings plan that offers compound interest with an expected growth of 10% per annum. If I stick to a static investment amount over the five years, and don’t take inflation into account, I would have to save R716.36 per month to reach my goal. However, if I instead put just R200 a month into my R1 million bond account, on which I am charged 10% interest, I would have saved R55,282.85 in interest over five years! Apples with apples Let’s say I put the whole R716.36 into my mortgage bond each month for five years. The savings then would be R181,893.52! Let’s flip it again. To save R181,893.52 in a normal savings plan, I would need to put away R2,356.99 for 5 years! Remember, you won’t be able to access the savings unless you have a flexibond or access bond from which you can withdraw the extra funds you have put into the bond. So make sure you get an access bond. Magic of compound interest What if I told you that if you apply the principle of compound interest to your bond, as it is applied to any form of savings, that you would bring down your bond term to as little as seven years and retain your capital? What if you could save your entire bond repayment per month for the remainder of the bond term, being 13 years? Let me tell you! If you saved the monthly instalment of R9,650.22 in a normal savings plan for 13 years, you will have saved a whopping R2,991,377.52! With this you can buy another two properties cash, giving you three properties – instead of one - in the same amount of time! Makes you think doesn’t it? The sooner you start applying these principles the better. Don’t wait to say: “If I knew then what I know now...”. You can apply certain principles when repaying your mortgage that will save you millions, give you more leverage on your cash and make it grow. To find out how save money on your mortgage, visit www.mortgagerecovery.co.za and navigate to the Mortgage Deflator. RESOURCES CAPINT CALLING CAPE TOWN ESTATE AGENTS & PRINCIPALS! Do you want to be part of one the most powerful names in the property game in Cape Town? We are looking for the very best estate agents and/or principals to take ownership and launch our exciting new franchises in the Atlantic Seaboard & Southern Suburbs areas of Cape Town. If you think you are the right person then please email communicate2015@gmail.