Risk and re­tire­ment

Finweek English Edition - - LETTERS -

I MUST SUP­PORT Vic de Klerk’s cover story (23 June), even though with only three years in the in­dus­try I may be con­sid­ered a mem­ber of the “new gen­er­a­tion of smart alec fi­nan­cial ad­vis­ers”. The only real guar­an­tee you give to in­vestors with “guar­an­teed prod­ucts” is they’ll be poorer in real terms by the time the in­vest­ment ma­tures.

If we ac­cept the av­er­age rate of CPI will be in the re­gion of 6,3% over the next five years, a cap­i­tal amount of R1m to­day will only be worth ap­prox­i­mately R722 230 in 2016.

All in­vestors – es­pe­cially those hop­ing to live off the pro­ceeds of their re­tire­ment sav­ings – need to in­vest in as­sets that of­fer longterm growth that meets or ex­ceeds the av­er­age rate of CPI, even though they may also have to en­dure some short-term volatil­ity.

How­ever, as De Klerk has noted, in­vestors should fo­cus on “what their cap­i­tal can do for them” and buy­ing shares in a qual­ity busi­ness that’s gen­er­at­ing strong cash flows will en­sure the div­i­dend in­come will be main­tained de­spite

Newspapers in English

Newspapers from South Africa

© PressReader. All rights reserved.