When you finally get to retire from your pension fund or retirement annuity you are faced with a significant (and very important) choice about what kind of annuity you will purchase (with the compulsory portion of your fund). Simply put, there are 2 choices: a conventional life annuity (through an insurance company) or a “newer” Living Annuity (usually through a unit trust company). The differences are explained...

Consider the following – what would you advise the client? Client A took out an insurance based RA in 2003 (23 year term). She started a debit order of R450 pm (escalating at 10% pa). The current fund value is R63500 The company claims a return of 11.8% pa on the funds but the maths shows that she has had about 6% per annum. She now wants to move the RA to a unit trust RA (where there is no contractual obligation and no initial...

2010, it’s finally here… In just over 1 months time it is the end of the 2010 tax year and there are 2 important deadlines that go with this. They are: Retirement annuities: RA contributions need to be made before the end of Feb. This year the 28th is on a Sunday so all contributions will have to be done by the close of business on the 26th Feb in order to qualify for the 2010 tax year. But dont leave it to the last minute...

I recently attended a Financial Services Board workshop on the FAIS Act (Financial Advisory and Intermediary Services). FAIS is big on putting consumer interests first and on making sure that consumers get appropriate advice. Despite the legislation there are still many instances of investors getting bad advice and being ripped off – this is partly due to the way that advisors are remunerated and partly due to the fact that the...

Results from the American Demographics poll showed that retirement is more difficult than becoming a parent or than getting married*. Those that felt retirement was the most difficult adjustment said that they struggle with the monotony, boredom, lack of purpose and lack of intellectual stimulation that traditional retirement offers. So if this is the case, why is there still such a one-dimensional approach to retirement from the financial...

Just read an article online about how in these tough times one of the positive outcomes is that people seem to be investing more into their retirement funds. The bad news, though, is that it is still usually too little to enable most people to retire financially secure. Of bigger concern for me, however, is that not only are most people contributing too little, but on top of this, most people are probably not taking enough risk on their...