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Retiring with Grace

Life companies have a vested interest in encouraging us to save more, but is this one of those cases where more may be less?

Eamonn Ryan




Listening to life companies, you’d think most pensioners are destined to frugal retirements and better get used to the idea now. They berate South Africans for not saving enough money towards retirement, and whenever they get the opportunity, cashing in what little they have saved instead of preserving it. Of course, they have a point. But go onto any social discussion forum and you will see endless complaints from individuals who have done exactly what life companies say they must, yet are disappointed when they see their actual savings after their life company deducted its costs.

What do they offer you in return for the approximately 2% of your capital they siphon off? It is not the capital – you earned that. It is not the return – the JSE or money market delivered that. In fact, these are not the right questions to be asking, says financial adviser Bryan Hirsch. It is all about savings. A country such as Australia has a national savings scheme, and South Africa has been pondering a similar solution, which removes ‘financial products’ from the equation and emphasises compulsory savings.

Sanlam does an annual survey which invariably reveals the need for more saving. Danie van Zyl, head of guaranteed investments at Sanlam Employee Benefits, says that 60% of pensioners say they do not have enough money, and Sanlam’s advice (echoed by the life industry) is that people should start saving earlier. Other revealing statistics are that on leaving a job, two-thirds of people opt to cash in their retirement savings, and worst of all 47% of members say they have “no idea” of what their retirement savings are invested in.

Disconnect between people and retirement

This reveals a disconnect between members (never mind the broader public who are not on a retirement scheme at all) and retirement, says Van Zyl. He says most people only wake up to the issue of retirement when they are about five years from it. The disconnect began 20 years ago when companies shifted from defined benefit to defined contribution. It is therefore not so much that people have lost interest, but when they needed to take an interest they failed to do so, and that is at the heart of the problem, says Hirsch.

Have a plan – and a budget

South Africans rank poorly in financial planning, but Hirsch claims their debt ratio is not as bad as many think – they have disposable income to save, they just don’t know it. “If you do not operate according to a budget, how can you identify costs that could be trimmed to make space for saving? A budget is critically important to calculating how much you can save – and often without even limiting your lifestyle,” he explains. Hirsch also says that retirement is something that has to be confronted: people need to work out exactly what they will need in retirement to live (taking into calculation savings they might have outside the retirement net) and work backwards to what they need to save now. “In particular, you have to pay off all debt including your bond, and make provision for future medical costs.”

The fundamental problem in South Africa is that retirement saving is not compulsory and its preservation not enforced. Current regulations almost encourage people to cash in, as the tax rate charged for it is a low 18%. “I believe even fewer people will consider preserving in the future,” says Hirsch.Van Zyl says there is another area that may soon worsen the savings rate. With the increase in compliance around pension schemes, many smaller funds are opting to join umbrella funds to minimise costs. That’s a good move, he says, but inexplicably Sanlam’s survey also demonstrates that many companies are using the excuse of the shift to reduce their employer contribution. So employees are now saving even less than before. He expects the shift to umbrella schemes to gain momentum.

Save 15% over 35 years

Sanlam claims that each individual needs to save a total of 15% of his income over a period of 35 years, whereas the average among members at the moment is 11,7%. With longer lifespans, even this may not be enough. European governments are currently looking at extending the retirement age to 68 or 70. In South Africa, with our youthful – and unemployed – population the trend is to lower it to 55.

Retirement planning is all about compounding – every month lost becomes harder and harder to make up. Another frightening statistic, says Van Zyl, is that pensioners can no longer bank on living off their own children. Not only are those children struggling to make ends meet, but half of grandparents today have dependents still living with them due to the impact of HIV/Aids. Members may cash in one-third of their benefit on retirement, which is supposed to be a ‘rainy-day reserve’ but a quarter of pensioners spend it intwo years.
Hirsch’s solution is for people to take control of their own finances – budget, quiz your financial adviser on every investment, especially the costs,  and minutely inspect every household bill for potential savings.

Investment opportunities

Supplement with an RA

For the individual in formal employment it is customary for membership of the pension scheme to be compulsory. Danie van Zyl, head of guaranteed investments at Sanlam Employee Benefits, says that if the combination of your employer’s and own contributions is not 15%, then supplement it with a retirement annuity (RA). If you are self-employed, then buy an RA up to 15% of your income. To the cynics who say life companies are making money out of them, and they could do a better job themselves, the life industry argues that people clearly aren’t, because whenever they can, two-thirds cash in their benefit. The benefit of contractual savings over unit trusts or property is that it forces people to save.

Before becoming a financial writer and freelance journalist in 1997, Eamonn Ryan was a legal adviser, company secretary and alternate director at listed company Cashbuild Limited from 1988 to 1997. Since becoming a financial writer, he has focused on the business and financial sectors, as well as personal finance, writing for Finweek, The Star Business Report, Sunday Times Business Times, Business Day, Mail & Guardian, Entrepreneur, Corporate Research Foundation (which brings out a series of books each year ranking SA’s best employers and best managers), as well as a host of once-off and annual publications such as ‘Enterprising Women’ and ‘Portfolio of Black Business’. He also writes media releases, inhouse magazines and sustainability or annual financial reports for various South African corporates and financial services groups, including the Ernst & Young annual M&A book.

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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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