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Protect Your Nest Egg

Your retirement fund probably won’t be the only savings you’ll have when you retire, but it’s likely to be the core. How healthy is yours looking?

Paul Leonard



Retirement Savings Protection

Andrew Davison of Acsis stressed the importance of taking ownership of your retirement fund and compared it to owning a vehicle. For it to work for you, you need to get in and drive it.

Davison says too few people are actively thinking about their retirement funding decisions.

You should understand the way your employer’s fund works. Find out about the benefits and choices available to you and also consider the risks and costs involved.

Previously, most retirement funds were of the ‘Defined Benefit’ type. This means that if Maurice retired at 65 with an inflation-linked pension benefit of R8 000 per month, he was guaranteed that regular pension for as long as he lived.

But, due to poor investment returns and people living longer, this has resulted in a pension crisis for many of these retirement funds.

Owning your risk

Nowadays, most retirement funds are of the ‘Defined Contribution’ variety. This was driven partly by workers who felt they were more transparent and partly by companies who wished to mitigate the risks posed by their defined benefit obligations.

If Bob, for example, contributes 5% of his salary until he retires at 65, he’ll receive the total value of his contributions plus any investment growth over time as his accumulated retirement savings from which he needs to fund his income in retirement.

Whether Bob lives to 80 or 95 years, he’ll have to make that fixed amount last. Once that pot of money is gone, that’s it. The risk is entirely his.

Bob will have to manage his retirement fund carefully and ensure that the fund value at retirement will be sufficient to provide an income, increasing by around inflation, until his death, or possibly even until the death of his spouse, if she survives him.

Poor planning = poor funds

For many people, inadequate retirement funding is a serious problem. However, most only discover this when they are about to retire. And then it’s too late. A number of factors have combined to create a perfect storm for retirement funding.

Firstly, people are living longer and consequently enjoying a longer retirement. In 1965, the average French retiree lived ten or eleven years beyond retirement. Today, that same person could expect to live another 24 years.

What’s scary is that instead of preparing financially for more ‘golden years’, people are saving less than ever before.

When they do invest their hard-earned money, many people make poor decisions. When the market crashes, they sell out of fear and then buy back at a peak, losing significant portions of their savings in the process.

Aiming for comfort

You can’t afford to be conservative when it comes to investing for your retirement. Life-stage investment plans that put younger members’ money into high-risk investments and older people’s into low-risk ones, don’t necessarily work for everyone.

If you are a risk-averse investor, whatever your age, then you need to be contributing more to your retirement fund to compensate for the fact that your investment growth will be lower.

When it comes to your defined contribution retirement fund, the formula is relatively simple. Your contributions over time plus the investment growth will equal your retirement savings. But how early you start and how long you contribute are also key to a comfortable retirement.

Paul Leonard CFP® is an executive director of Consolidated Financial Planning. He runs the Eastern Cape region and is intimately involved in the Corporate Solutions division of the company. He has become well known throughout the Eastern Cape for his daily personal finance insert called MONEY TALK on Algoa FM, and was the national runner up of the Financial Planner of the Year awards in 2006. Visit for more information.

1 Comment

1 Comment

  1. Bus Hire Johannesburg

    Apr 11, 2013 at 13:31

    In a society where people constantly “borrow” from there future, it is worrisome to think that the person sitting next to you could fall in “that percentage” of folks who have not and will not adequately prepare for their retirement.

    Its very easy to blow most of your retirement savings in a single month. ANALOGY: You work at an establishment for 10 > 20 years, resign and cash in your retirement/provident fund ( not investing it into another Fund ), and purchase yourself a new car cash ( a sporty new KIA or SUV as an example ) because you deserved it anyway right )?

    With some of the other remaining funds you purchase a state of the art Samsung SMARTTV for your “outdated” entertainment room ( lets say it costs between R35,000 > R45000 ), and the small balance of R20,000 left from your Retirement/Provident Fund you dump into your existing mortgage loan, and bang – your majectic Retirement Funds are gone!

    The above analogy might seem far fetched, foolish and unheard of – but its happening to some folks coming out of all industries. 21st Century living says, “I want it now! My Retirement will take care of itself!”

    Very scary.

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Personal Finance

(Infographic) The Financial Advice Millennials And Gen Zers Want To Know

Having a grasp on your financials is tricky, but it’s crucial if you want to be successful. And that starts with getting the right advice.




Whether it’s saving for retirement or paying off credit card debt, money management can be a challenge. Of course, different people have different concerns – and that often comes with age. While a 60-something baby boomer might be organising their savings for retirement, your 20-something millennial might be focused on paying off student loans.

In a recent study, financial intelligence company Comet surveyed more than 1 000 people to uncover the top financial concerns of various age groups, as well as the financial advice millennials and Gen Zers want to know and what they hear instead.

Overall, saving for retirement was the top concern across all age groups, with saving for an emergency and affording monthly bills following in second and third. However, it’s no wonder these are some of the most pressing worries – according to the research, 23 percent of people admit they don’t have a savings account, and 43 percent reported not being on track towards their retirement goals. Perhaps that’s because they didn’t hear the right advice growing up. At least that might be the case for Gen Zers and millennials.

According to the research, these young people want to learn things such as how the stock market works, how to manage an investment portfolio, how to invest in real estate and how to build credit. Instead, they’re simply told how to create a budget, save for retirement and pay credit card bills in full every month.

Related: 7 Critical Things Your Financial Advisor Must Meet

Having a grasp on your financials is tricky, but it’s crucial if you want to be successful and comfortable. To learn more, check out Comet’s infographic below.


Related: Financial Wellness Coach Nelisiwe Masango Shares Retirement Wealth Advice

This article was originally posted here on

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Personal Finance

14 Ways To Make Quick Cash On The Side

If you need money quickly, here are some solid ideas.



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Need to make some fast money on the side, whether it’s to pay off a credit card or to make your rent?

Keep in mind, making quick side cash isn’t about making a lot of money or getting rich. It’s about getting a shot of capital to help tide you over and put something extra in your pocket. However, some of these side-income ideas can build up your wealth over time. There’s many ways to accomplish this: By participating in the gig economy, the sharing economy, online sales networks, passive income techniques and more.

If you’re looking to make extra money in a relatively short period of time, check out these 14 slides.

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Personal Finance

Take Advantage Of Financial Democracy Made Possible By The New Stock Exchanges

Why should financial democracy matter to entrepreneurs?

Etienne Nel




Because it creates a society able to afford products and services. Without it, even the innovative products and services that are entrepreneurs’ bread and butter will fail.

What is financial democracy, exactly?

It’s both the right and the ability of the (wo)man in the street and business people to make the decisions that affect their financial circumstances.

Financial democracy does not automatically follow political democracy. For almost 25 years after South Africa’s political transformation, the exclusiveness of our financial markets continued to deprive the vast majority of South Africans of the means to invest, save, and build wealth. South Africa has, therefore, never developed a retail stock exchange environment. So, it has deprived the majority of small and medium sized business of access to capital.

For entrepreneurs to truly flourish, they need a mechanism that easily and seamlessly connects the investor pool with every size of business. And, they need affordable ways to enter both the retail and institutional market.

In short, they need stock exchanges. Ones on which listing takes weeks rather than years, doesn’t break the bank for listing fees, and provides the shortest route to the largest possible potential investor base.

That’s not been possible in the stock exchange monopoly that existed for six decades. Now, it is.

What’s changed?

We now have four new stock exchanges. The resulting competitive environment will significantly reduce the cost of listing – and the cost for investors of buying and selling shares.

Instead of restricting share trading to people or organisations who already have tens of thousands of rands to invest or millions to spend on listing, by licensing four new stock exchanges, the Financial Services Conduct Authority (FSCA, formerly the FSB) has recognised that most financial decisions do not call for high levels of education.

Related: The Role Of Foreign Exchange In The Economy

Most people know how to spend their own grocery money. Most know that it’s better to keep their R1 000 monthly income in a coffee jar than spend R50 of it on bank account fees. People who can barely read and write are immensely skillful at manipulating air time deals to their advantage.

There is significant financial savvy in all social strata.

In the same way, although the mechanics of bookkeeping and accounting may be unfamiliar territory to many entrepreneurs, most have a clear understanding of the difference between profit and loss.

The FSCA has therefore enabled democratisation of the financial markets by enabling the broadest possible spectrum of entrepreneurs and investors to use stock exchanges to participate in and contribute to the economy – on their own rather than prescriptive terms.

How do you take strategic advantage of this democratisation?

  1. Base your business strategy on people’s instinct for making decisions in their own best interests. Trust financial decentralisation, such as one sees in crowd funding and in digital environments such as block chain, where people would far rather trust one another than institutions and governments. This is democracy innately at work in the financial environment and it’s accelerating organically as digital technologies give people more means and the confidence to help themselves – to information and opportunities. Ride the wave.
  2. Tap into people’s desire to innovate. Consumer organisations have proved that letting people interactively help them develop products is a powerful growth engine. Apply the principle by letting people grow your business by buying shares in it, giving you capital and themselves a platform on which to build wealth.
  3. Remember, the ultimate loyalty reward is equity.

Your financial democracy business plan

Look to list on an entrepreneurial stock exchange; one that was founded by entrepreneurs on entrepreneurial principles.

That means: A stock exchange that is already built on financial democracy and decentralisation. One that has, at its core, a single operational concept that keeps things simple for you, automatically gives you an immediate competitive advantage, and, ensures that no matter what your business needs in terms of attracting capital, the exchange can provide all the options in the same, consistent way.

What does such an exchange look like?

It has fintech capabilities. So:

It slashes your listing costs. It achieves this, among other things, by enabling you to populate an electronic prospectus, demonstrating your financial viability, and self publish.

It gives you control by having the granularity and agility to impose relevant governance right down to the individual investor. You get to decide the types and quantities of investors you want to attract. This also enables you to achieve black economic empowerment in perpetuity.

It leads the world by clearing and settling trades in T+0. No-one in the value chain has to hold large sums of money for days following a transaction. Small transactions become profitable. Investors don’t have to risk their life savings on a single large trade. A retail market is opened. An investment and savings culture is entrenched. The economy expands. Your business grows steadily.

It enables anywhere, any time trading via a mobile app that allows investors to see share value in real time. See economy expansion point above.

It integrates processes and procedures, simplifying them and ensuring rapid onboarding of issuers and, therefore, speed to market with new concepts and alignment with the digital economy.

It operates a principles-based regime. So:

It treats you, as an executive, with respect. It’s not prescriptive. It does not insist on excessive oversight, allowing the Companies Act to guide you to sustainability.

It does not attempt to squeeze your company into a pre-defined business or listings format. It recognises and works with your uniqueness.

It obviates the need for expensive specialist listings advisors.

It focuses on financial inclusion and access. So:

Shares can be bought and sold for no more than R1 000. See economy building point above.

Related: 27 Of The Richest People In South Africa

The new world of stock exchanges is integrated, synergistic, holistic, organic, self-fulfilling

Decentralisation of financial control, democratisation of opportunity leads to a whole new economy. One in which, for instance, a taxi operator can finance a minibus through a company in which his purchase gives him shares. A single purchase gives him two benefits: a vehicle on which to found his business and a longer-term investment in shares that he can trade. The funding company gains liquidity through access to a wider base of investors while being able to control who buys and sells and the conditions on which trading takes place. Increasing black equity in business becomes an organic, natural, self-perpetuating process.

Everyone wins in a decentralised, democratised financial market. And it’s the stock exchanges that drive the process.

As an entrepreneur, can you afford to ignore the acceleration that listing could give your business growth?

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