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Retirement Planning

Retirement seems to most of us to be a specter in the far distant future and procrastination is typically our preferred response to the threat. Provision for retirement however must not be left too late; you literally cannot start early enough.





Shakespeare said, “I wasted time, and now time doth waste me.”  I doubt he was referring to retirement planning, but the comment is still appropriate. 

In the past people started at a corporation at the age of 20-25 and worked there until the age of 65.  In their 10 to 15 years of retirement they were completely cared for by their pension fund until their death.  Recently, choice, freedom and flexibility have dominated the scene; this combined with a change in working habits has drastically altered the landscape. 

People still start work at around 25, but often they change employer two or three times before the age of 35.  When changing, they often pay out their current pension fund and use it to buy a car, settle debts or go on holiday.  By doing so they damage their retirement propositions more than they could possibly imagine.  It seems people just don’t understand the effects of compound interest.   Albert Einstein, Ben Franklin and John Maynard Keynes have all been credited with describing compound interest as the eighth wonder of the world.

Retirement Savings Scenarios

It is almost cruel that some of the most important years for retirement planning are when you are generally only starting up, want to live your life and your retirement is a distant danger.  An example would be the following:

  • Imagine a person (A) that saves R40 000, in real terms, per year for the first 12 years of their career and then stops.
  • Another person (B) then starts to invest R40 000 per year in real terms for the next 28 years.  Together this is the length of the average working life (40 years). 
  • If the real return on the investment is 5% per annum throughout, then, at the end of the 40 years person A, who only saved for 12 years, still has more invested for retirement than person B.

Another problem concerns people who do not have a company pension fund and use a RA.  Often in times of hardship they stop their contributions to the RA.  While this may not seem serious at the time the psychological effects could be extreme.  Once the contribution is stopped, you often get used to the extra cash flow and it becomes very difficult to start paying again.  A planned break for only a couple of months could turn into a several year struggle to resume payments.

Don’t Try to Time the Market

You cannot do it and will destroy value while trying.  Set up an investment plan with asset allocations and stick to it.  Contact a financial advisor to help you and make sure you don’t invest too conservatively.  Most SA investors fall into the trap of investing too conservatively rather than the converse.  Most people are by their very nature risk averse and need encouragement to invest more aggressively. 

Part of your investment plan should include rules for rebalancing.  Whether this is simple, i.e. rebalancing annually, or more complicated such as rebalancing when the asset allocations go more than 5% off their initial positions, make sure you stick to it.  Doing this should decrease your risk in the long term.

One of the great benefits of using an RA or something similar for retirement planning is the effect of rand-cost averaging.  It is the easiest way the average investor can practice some form of market timing.  It happens when buying into a volatile asset class at frequent intervals and it has a very interesting consequence. 

Because a person is investing, say R2 000, per month into equities they buy more equities when the market is low than when the market is high.  When the market is high a person buys share X priced at R100 and gets 20 shares.  If the market is low the person buys share X priced at R50 and gets 40 shares.  This means that they have 60 shares which cost R4 000, or R66.67 per share.  This is lower than the average price of R75.  By doing this monthly over a long period of time an investor generally buys shares at prices lower than their average over the period.

Remember the Long-term Goal

Lastly, it is important to remember the long-term goal.  At 30 or 40, thinking of being 80 might be difficult, but that long-term focus is what is needed.  Planning for your retirement can only benefit by adopting this long term ideology.  Try to ignore short term volatility and take Warren Buffet to heart when he says, “Look at market fluctuations as your friend rather than your enemy; profit from folly rather than participating in it.”          

Entrepreneur Magazine is South Africa's top read business publication with the highest readership per month according to AMPS. The title has won seven major publishing excellence awards since it's launch in 2006. Entrepreneur Magazine is the "how-to" handbook for growing companies. Find us on Google+ here.

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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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