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Financial freedom: Marginal changes can lead to exceptional gains






Achieving your long-term financial goals may seem overwhelming at the moment. However, by focusing on the factors you can control, and implementing small changes to your spending and saving habits, financial freedom is still within- reach.


Don’t sweat the small stuff

Looking at the FTSE/JSE All Share Index (ALSI) so far this year, we see major rises and falls caused by events such as downgrades, a national lockdown and a pandemic. However, when looking back over the long term, these major short-term drops don’t seem so severe. The S&P 500 drawn over 100 years shows that the only time investors would have received a negative 20-year return was during the Great Depression.


If you allow yourself to get caught up in the news headlines and the everyday exposure of market volatility (especially as is the case at present with COVID-19), it can become all too easy to lose your nerve and change your strategy. This, more often than not, leads to investors selling high and buying low. Although it is important to keep track of your strategy and remain cognisant of market shifts, it is also imperative to remember that growing your money is a long-term commitment – a marathon and not a sprint. 


Adjust your pace

In the table below, scenario 1 shows that it will take about 45 years to reach an investment target of R10 million, at a growth rate of 10%, if you invest R1 000 per month. However, if you double the amount to R2 000 per month, it will take you just 38 years to reach your goal. In other words, you’ll save seven years less. This illustrates that even a small increase in your monthly contributions could help you to retire earlier or maximise on your investment returns.


Periods to reach R10 million capital at retirement



Scenario 1

Scenario 2

Present value



Future value

R10 000 000

 R10 000 000




Monthly payment

 R1 000

 R2 000

Period (months)



Period (years)




Source: PSG Wealth research team


Can small changes really make a difference?

In 2008, at the Beijing Olympics, the UK cycling team won seven of 10 gold medals by improving only 1% of their overall performance. Prior to this, the UK cycling team had only won one gold medal in 76 years. Reflecting on this achievement later, Sir Dave Brailsford, Head of British Cycling said: “It struck me that we should think small, not big, and adopt a philosophy of continuous improvement through the aggregation of marginal gains. Forget about perfection; focus on progression and compound the improvements.” We believe this focus on marginal changes, aggregated over time, can have a significant impact on your long-term financial outcomes, and it’s an approach that’s easy for anyone to adhere to. 


Check in with your coach

There are times when we all need motivation, guidance and support. When it comes to your marathon to financial freedom, your best coach is a financial adviser. Not only do they understand the available products inside out, they can also advise and guide you where needed. It is important to have regular check ins to discuss how your plans are evolving and what you can do to improve on your journey to financial freedom in the long run.


Source: Adriaan Pask, Chief Investment Officer, PSG Wealth
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