I had the privilege of sitting down with two young professionals in Lesotho who are doing amazing work within the financial planning space in Lesotho. We discuss the importance of financial planning, particularly in Lesotho.
Meet Lerato Sekantsi (LS), the founder and managing director of Strategic Wealth Managers – an investment advisory firm and financial planning firm. Secondly, meet Lesaoana Monyane (LM) an aspirant corporate and personal financial advisor, who is currently engaged as a Principal Officer at Pulamaliboho Financial Services.
Why is financial planning important?
Tokiso TKay: Globally 4 October to 8 October is regarded as the financial planning week, with 6 October being World International Financial Planning Day. In your line of work, why is financial planning important, especially in the Lesotho context?
LS: I think financial planning in general is very important, especially in the Lesotho context, because traditionally not many Basotho (people from Lesotho) are very cognizant of their finances and also not taught at home. You realise from studying about finance that the relationship you have with money starts from a young age. Given that many of us never had any experience with finances growing up, we need to start engaging with professionals who can assist us with our finances, so we can manage our own finances.
TKay: When People think of financial planning, they think it’s just about savings and just budgeting, but there’s so much more to financial planning. In your view, what are the elements of a financial plan?
LM: Well, when you talk about the prosperity of the economy at a national level, building the economy requires financing. For this to happen people need to save and invest. To be able to save and investment, you need to start with financial planning.
TKay: From a national level going down to the individual level, what would you say are the building blocks of a personal financial plan?
LS: It starts with a budget – you’d want to plan for savings, investments and retirement. Then, you’d want to touch on matters like estate planning. Do you have a Will in place? What happens to your estate if you were to pass tomorrow? What’s going to go into your Will? You’d want to consider all these things.
TKay: Lesaoana, I know you’re very big on investment planning. From a financial planning perspective, what should people think about when thinking of investment planning?
LM: So, in order to create wealth, you need to have a financial plan as part of investment planning. This will help you make money work for you. You money works for you by earning you interest, dividends and profits from your money. Having a financial plan also enables you to reach your investment goals.
TKay: I like that we spoke about financial goals, touched on investments and estate planning. Perhaps we can zone into retirement planning, reason being that a lot of young people think that they are too young to start saving for retirement or need to have a lot of money to start saving for retirement. When should people start saving and planning for retirement?
LM: The importance of retirement planning is to have sufficient capital when you retire. Currently, many people don’t have enough capital to sustain themselves after they retire. A retirement plan helps you build up sufficient income so you can live comfortably and maintain your lifestyle when you retire. The reality is that some people are not able to maintain their standard of living or lifestyle when they do retire, hence the importance of having a retirement plan.
LS: To add on, it is equally important to talk about the concept of longevity – where people living longer. I was reading an article about someone who died at the age of 127 years and went into the Guinness Book of Records because he was the oldest person that has lived so far. So, when it comes to retirement planning, I think one of the other important factors to think about is time. You asked when the right to start planning is, well, the right time to start is yesterday!
When it comes to investments, compounding interest is important – what is referred to as the eighth wonder of the world. With compounding, you start to earn ran interest on interest and the more money you’ll have. It is called the snowball effect. This is what you’d also want to do with your retirement savings – start early and benefit from compounding. The sooner you start, with however little the better. The more time you have before you go into retirement the better, because then it gives you time to grow your wealth and grow your savings.
