Risk and retirement
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