A home for your nest egg
Now that you know how much y ou s hou l d be s a v i ng towards retirement, it’s time to figure out where exactly you should be investing your money. Magnus Heystek Jnr, a certif ied financial planner (CFP) at Brenthurst Wealth Management, says since every case is different, it’s worth consulting a financial planner to determine your risk profile, investment horizon and lifestyle variables like dependents.
“Advisers are well-versed in the di f f erent f ee s t r uct ures a nd t a x implications and can guide investors away from products with confusing commission structures,” says Heystek. “They also provide guidance on the use of preservation funds for retirement savings accumulated during income earning years.”
If you would like to consult with a professional about your retirement, remember to consult a financial adviser who doesn’t sell specific products to ensure that you’re not getting a product simply because the adviser is earning commission.
“The introductory meeting should generally not be charged for, and this is where the client and adviser can discuss needs, (the client’s) financial situation, requirements and their expectations,” says Allan Shine, CFP. “R1 000 per hour would be about right if someone was looking to pay financial adviser fees only.”
In some cases, financial advisers are willing to enter into a monthly retainer fee agreement or do pro bono work, so don’t assume you can’t afford an independent adviser. Also don’t hesitate to question your financial adviser about their fees. If their answer is vague or they imply that you can’t or don’t need to understand the fee structure, f ind another adviser. The Financial Planning Institute of Southern Africa ( FPI) website has a comprehensive list of CFPs in your area. doesn’t offer a pension package or who want to invest more towards their retirement than their company would allow, can opt for discretionary products.
Retirement annuities (RAs) offer tax rebates, but discretionary funds can also be unit trusts or individual share portfolios. When considering a discretionary fund, ensure you are maximising t he t a x benef it s and coordinating your tax strategy effectively between pension or provident funds and retirement annuities, says Ongley. She adds investors also need to be vigilant about costs and ensure they understand all fees, including asset management fees, performance fees, product fees and financial adviser or advice fees.
“Each investor’s portfolio comprises different ingredients – known as asset classes – such as cash, shares and property, both locally and offshore. Each ingredient has, over time, a different likely return and a different amount by which that return is likely to f luctuate,” says John Campbell, CFP and CEO of Chartered Wealth Solutions.
“By caref ul l y blending t he i ngredients together in certain proportions, a financial planner is able to target the return a client needs at the lowest possible l e v e l of r i s k , t hereby minimising f luctuation or volatility.” He says you have to understand a nd accept t he r i sk you have to take to achieve t he return you need