Heard a radio ad this morning for RSA Retail Bonds…it went something like this…“There’s no fees or commissions therefore it’s a great way to save”. I disagree strongly with this statement – it is not a great way to save. It is a great way for people to generate income – at 7.25% for 2 years it is still the best rate out there, but as a long term savings product it is pretty poor. Even at 8.25% the 5 year rate is...

The recent changes to Regulation 28 rules around retirement funds has caused a bit of “excitement” in the asset management industry and I have seen at least 2 articles making a case that the stricter enforcement of the Reg 28 rules make Retirement Annuities  unattractive investments, especially for younger investors (see the article by Jan Mouton of PSG Asset Management –...

I came across the following in an excellent book about financial planning that I am reading, it’s called “Your clients for life”.  I have adapted it slightly for South African conditions. 20′s: I CANT SAVE NOW. I’m just getting established. I have student loans to pay back, as well as a car loan. I’m not ready to make committments yet and I want to have fun while I can. There will be time to think about...

The short term outlook for interest rates seems to be bad for those that are living off interest income…it looks like interest rates could stay low for quite a while and it is even possible that we could see another cut before the year end. (Once again) if you are a pensioner living off interest income your “salary” has effectively been halved over the past few years by all the interest cuts and while inflation might...

Was just in the bank this am when my eye caught the latest offering from Std Bank – “Contract save” – the byline is “pay no fees and commissions”. So what is it and is it any good? In a nutshell it appears to be a form of “contractual” saving with a minimum term of 12 months although there are no penalties if you cant afford to continue paying at any stage. The minimum premium is R100 and the...

There are many reasons that people get into debt, usually they can be categorised into one of the following three: Ignorance, Indulgence, or Poor Planning Debt is often the symptom of some “other” issues but that is the subject for another post. In this post I want to look at the first category: ignorance. This is where someone has no idea of the real cost of the debt. For example, few people stop to think that the total cost...