Nine investment elements your parents wish they had
Let no one ever tell you that simply putting money aside monthly will solve all your retirement problems without a proper strategy.
It is estimated that up to 80% of your retirement “pot” is likely to come from growth in your monthly savings rather than the actual savings themselves. We need to give appropriate attention to how this money is invested.
Fortunately, the world of investments is constantly evolving. In many ways, we now have more opportunities and tools at our disposal than previous generations had. So how does the current landscape of investing stack up relative to the world of your parents?
Nine investment elements your parents wish that they had:
1) Choice
There have never been more funds, more managers and more investment platforms than we have now.
2) Technology
Choice leads to complexity. Overcoming complexity requires insight, data processing and visualisation tools.
Our methods of portfolio construction have never been more thorough, more personalised or more comprehensive.
3) Insights
A massive upside to technology is the ability to understand where performance comes from and how to manage your investment plan accordingly.
4) Costs
Costs have been declining for years locally and internationally, particularly within the active manager space. In fact, the average consumer is paying less than two-thirds of typical unit trust fees in the 1990s.
5) Opportunity
South Africans have seen their ability to invest internationally increase from 1% of their retirement portfolio in the early 90s to 30% today, with an additional 10% allowance for Africa. South Africans are also individually entitled to take R10m foreign investment allowance offshore every calendar year.
6) Accessibility
Platforms abound. Today there are multiple platforms, with very low switching fees, with low cost and negotiated access to the bulk of products.
7) Implementation
The second wave of choice is vehicles. One is no longer limited to single investments products but can invest in a range of vehicles.
8) Expanded asset set
The world of private investments including direct property, private equity (and debt) and, not least, hedge funds, used to be the preserve of only institutions and high-net-worth individuals. Recent legislation has opened these up to the average investor.
9) Legislation
The regulatory framework that underpins the investment environment has never been stronger.
We have at our disposal the most comprehensive set of tools for improving our understanding, and creating a plan that services our individual needs and our individual risks.
There truly has never been a better time to be an investor.