A home for your nest egg

Finweek English Edition - - MONEY - BY KRISTIA VAN HEER­DEN

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

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