The first two parts of this article outlined the additional risks investors face as they approach retirement. Importantly, these risks originate from volatility in the market. As we all know this is highly unpredictable. As a reminder, life cycle risk is the risk of significant market underperformance in the final years leading up to retirement, when investors’ contributions are at their highest levels. Sequence risk, on the other hand, is the risk that the timing of drawdowns from retirement savings can negatively affect the overall longevity of the investment. Before we conclude on how to mitigate these dangers, there is one other risk that can only be addressed by the investors themselves

The recent outbreak of the latest Coronavirus has people talking. With over 80 000 diagnosed cases worldwide and more than 2 700 deaths reported, it has raised concern on many fronts. Closer to home, but with far less coverage, has been the recent outbreak of the Ebola virus on the African continent which has also claimed many lives. These outbreaks, and others, will continue to occur and require responsible action by individuals, employers and governments alike. Individuals need to be well informed about symptoms They should take precautions to protect themselves and their families – a great deal of information is available from various sources on how to do this. Employers should protect th

“There is much to welcome in this budget, particularly action on youth unemployment, some fair steps in creating a fair tax system in support for beleaguered state-owned enterprises. This budget clearly acknowledges that the government has a central role to play in turning SA into a competitive economy and that it is willing to do so. This was also a budget for business and a budget for trade. Signalling the corporate tax cut in the future made our tax system more competitive. It means business will be better positioned to grow whilst the economy picks up. It also helps with the broader messaging that SA is open for business. We welcome this budget and believe that it enhances immediate pros

Finance Minister Tito Mboweni appears to have managed the almost impossible, presenting a budget in which there are not only no increases in taxes, but for the first time in years, also full inflation adjustments for bracket creep, which should inject R14 billion into the economy. Furthermore, despite a massive decline in growth and revenue forecasts, government has lowered the nominal main budget deficit slightly from the October Medium Term Budget Policy Statement. This is to be achieved by cutting expenditure to the tune of R260 billion over the medium-term expenditure framework, of which R160 billion is a reduction in the wage bill. However, therein lies the rub. The budget is dependent

Personal Income Tax Given the worsening economic realities still facing the Minister of Finance this year, it came as a pleasant surprise that he provided 5.2% adjustments to the individual tax brackets and rebates, resulting in real personal income tax relief for the already stretched individual taxpayers. The net result is that, with effect from 1 March 2020, the maximum rate of 45% applies to taxable income in excess of R1,577,301 (up from R1,500,000) while the lowest rate of 18% applies to taxable income up to R205,900 (up from R198,850) with similar adjustments to the brackets in between. There will also be 5.2% increases in the primary, secondary and tertiary rebates, resulting in the

With the budget speech looming today, deepening state of financial disarray at the state power utility Eskom is a thorn in the flesh of the national economy that minister of finance, Tito Mboweni will have to address. The much-publicised and forever increasing problems at the embattled parastatal are expected to take center stage at the upcoming national budget speech, due to their stunting effects on the economy – among other things like the discomfort they impose of South Africans. Money talk It seems as if it is indeed true that desperate times call for desperate measures as the Congress of South African Trade Unions (COSATU) recently proposed that a special purpose finance vehicle that i

Two out of ten (19,9%) of the total South African population were Generation X adults, while more than one-third of the population (35,3%), were Millennials, and the majority (45,5%) were the Born-free generation, this is according to the 2018 Education and Labour Market Outcomes in South Africa report released by Statistics South Africa today. The Born-free Millennials aged 19–24 years make 10,2% of the total population. Millennials made the largest share of the working-age population (54,1%) followed by Generation X adults (30,5%) and Born-free Millennials aged 19–24 years who made up 15,7% of the working-age population. According to the report, the gender gap in attendance of a tertiary

Workers from across South Africa who have been injured on duty are facing “a crisis of epic proportions” as a result of the technological collapse of the R60-billion Compensation Fund that is legally mandated to cover their medical bills and disability pensions. Grave concern over the situation has led to the official launch today of an emergency council of concerned industry leaders, the Injured Workers Action Group (IWAG). The group is calling on the government to address the crisis swiftly and is especially concerned about the Compensation Fund Commissioner Vuyo Mafata and Labour Department Director-General Thobile Lamati’s apparent failure to address industry’s calls for urgent remedial

South Africa’s top young thinkers are most concerned about high levels of corruption in government and the barriers this creates in attracting investment. The best and brightest young talent in the field of economics are cautiously optimistic about the potential for the South African economy to recover. The leaders of tomorrow are calling on Finance Minister Tito Mboweni to act decisively ahead of next week’s Budget Speech, imploring the government to take the necessary action to repair the country’s purse. This is according to Farhad Sader, Managing Director of Old Mutual Wealth, who revealed the major take-outs from the annual Nedbank and Old Mutual Budget Speech Competition. Sader says th

Part 1 of this article outlined how significant timing can be to the overall value of your nest egg. It also illustrated how important market performance is the closer you are to retirement. But do these risks still exist post-retirement? To re-cap - the assumed lifespan of a collective investment scheme is infinite and therefore with no end-point, it is managed very differently to individual portfolios. When a portfolio manager purchases a stock, he does so with the intention that there will be a positive return at some future date. This future date is undefined and is mostly in direct contrast to the thinking required when managing individual client portfolios. Individual portfolios can

A look across the globe shows that the last embers of the coal industry are about to burn out. There will be the odd hold-out (President Donald Trump rode to power promising to ‘revive’ the dying American coal-mining industry), but in the main, coal is dead. While many believe it’s due to a greater global push against climate change, in a number of countries it’s simple economics – renewable energy has become cheaper than coal. An in-depth report says a just energy transition that will have a positive impact on South Africa’s structural unemployment and entrenched inequality is doable. We need to look at various financial options Politicians and business will argue that no matter the reason,

The Financial Sector Conduct Authority (FSCA) warns the public against doing financial services business with Zoom Executive Investments. Zoom Executive Investments is not authorised in terms of the Financial Advisory and Intermediary Services Act, 2002 (FAIS Act) to render any financial advice and intermediary services. The FSCA received information that Zoom Executive Investments Fund is using Numus Capital (Pty)(Ltd)’s financial services provider (FSP) licence number 43348 and is portraying itself as a registered financial services provider. It is alleged that Zoom Executive Investments is offering investments and related services to the public. Numus Capital has confirmed that it does no

A new study by the International Labour Organisation (ILO) reveals that self-employment, and micro and small enterprises play a far more significant role in job creation than previously believed. Data gathered in 99 countries, including South Africa, shows that these businesses – described as small economic units – account for 70% of total employment, which makes them the most important drivers of employment. GROUND-BREAKING DATA SHOWS THAT THE FUTURE OF JOBS LIE WITH SMMES WHICH URGENTLY NEED COMPREHENSIVE SUPPORT The Small Matters: Global Evidence on the Contribution to Employment by the Self-Employed, Micro-Enterprises and SMEs report says this new data means that it is even more essentia

Health officials in China have released their first major report about the coronavirus which has now been officially named COVID-19. The Chinese Center for Disease Control and Prevention compiled the paper which was based on 72,314 patient records and 44,672 confirmed cases of the coronavirus in Mainland China as of February 11, 2020. Out of the total number of confirmed cases, 1,023 deaths were recorded, equating to a case fatality rate of 2.3 percent. The paper found that the fatality rate gradually increases with age. For example, there were no deaths among children aged nine or younger while it stood at 0.2 percent for people aged between 10 and 39. It increased to 3.6 percent in the 60-

“Timing is everything”. There are many different variations of this quote, however, ultimately whether it is planned or by chance, the impact of timing can be the solitary difference between celebrating success and languishing in failure. In the investment industry it is instilled in us that it is impossible to consistently and successfully time the market. History is proof of this as there have been many failed attempts to do so, and while there are a relatively small number of successful investors, they have also been wrong a large percentage of the time. Timing risk ‘Timing risk’ is defined as “the speculation that an investor enters into when trying to buy or sell a stock based on future

If you work for a company, chances are that you are saving a portion of your salary in a group retirement savings scheme every month, such as an umbrella fund. What you may not know is that you qualify for special tax breaks, meaning that you could have more money go to your retirement savings pot, and less to the tax man. But you need to take advantage of these tax incentives before the end of February, which is the end of the current tax year. Less impact on your take-home pay than you would think Saleem Sonday, Head of Group Savings at Allan Gray, explains that the government has put tax incentives in place as a way to stimulate retirement savings by ensuring your take-home pay does not d

Deloitte’s ‘A demanding future’ report predicts that four trends will define insurance in 2020: the customer, ‘a new roadmap’, partnerships and digital disruption. This research found that 45% of 200 high-ranking executive respondents believed rapidly evolving customer needs and expectations would be the top challenge this period. To continue to grow profitability, insurers need to acknowledge that traditional principles no longer apply as they used to. A new approach is necessary to drive the disruption required to stay relevant to a consumer who expects seamlessness at every touch point. Insurance alone is no longer the solution. It’s imperative to broaden business ecosystems to deliver mo

Inundated with reports of failing state-owned enterprises and spiralling government debt, investors are understandably concerned ahead of South Africa’s 2020 Budget Speech. Sehrish Khan explores how local investors might be affected if Moody’s rescinds South Africa’s remaining investment grade credit rating. Sentiment around the likelihood of a credit ratings downgrade by Moody’s is overwhelmingly pessimistic. Although National Treasury, credit rating agencies and investors have long been concerned about South Africa’s widening fiscal gap, the threat of a downgrade has placed increased urgency on the need for significant structural reform. The Budget Speech, which is to be delivered by Finan

With South Africans increasingly opting to live abroad, a hot topic is the issue of what to do with your life savings, retirement, and insurance policies when emigrating. New legislation, coming into effect in March 2020, means that South African tax residents living and working abroad will be required to consider whether they should emigrate from South Africa in order to avoid having to potentially account for tax in two countries. A new term known as “financial emigration” has crept into people’s vocabulary. This is no different from the term “emigration” and the rules which attach when a person takes the steps to emigrate. One needs to understand the consequences of emigrating to another

Online, digital and 4IR have come to define our reality, and now 5G and WiFI 6 are set to speed up the way we work, do business and play even more. Load-shedding and broken undersea cables notwithstanding, South Africa is catching up with global tech trends. At least three of those emerging, disruptive technologies look set to impact our daily lives and businesses in 2020, as the country leaps into a hyper-connected future. Robots are here to stay As the Fourth Industrial Revolution (or 4IR, or Industry 4.0) continues to kick in, technologies like artificial intelligence (AI), machine automation, 5G and blockchain blur the lines between the physical and digital worlds. In South Africa, RPA