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16 May 2012 17:22

Retirement savings should be enforced

20% of monthly income per employee must be saved.

Relying solely on individuals to discipline themselves to save for retirement is unrealistic. Employers and government will therefore have to play their part in enforcing savings.

Certain aspects of government’s retirement reform proposals are welcomed, such as compulsory preservation.  The impact of early withdrawals from retirement funds is profound. 

The majority of South Africans use pension and provident funds as their main, and often sole, form of saving for retirement.

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16 May 2012 15:25

When not to heed the investment headlines

Stick to a well-diversified investment strategy.

Concerns about the strength of the global recovery have dominated markets over the past year, with renewed worries about the sustainability of the US economic recovery and the sensitivity of China to a European recession leaving investors uncertain. However, for the 12 months ended March 31 2012, all asset classes – including equities – outperformed cash, which highlights the importance to sticking to a well-diversified investment strategy and not being swayed by headlines.

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15 May 2012 13:14

Latest price hikes to hit household savings rate

A frightening 94% of working South Africans don’t save enough for future.

Struggling consumers can expect to be hit hard in the next few months by a hike in the petrol price, which over the last two months has increased just short of one rand, the [potential] implementation of e-tolling, an electricity tariff increase of 16% and higher Metrorail fares. The increased cost of living, which has risen considerably in the past decade, has highlighted the need for consumers to spend frugally and ensure that they have effective financial planning strategies in place.

The increase in transport and electricity costs and the consequent knock-on effect this will have on the price of most goods and services is especially worrying in light of South Africa’s low savings rate. South Africa already has an extremely low savings rate, with savings that constitute only 20% of the country’s GDP. When compared with other emerging economies such as China and Malaysia, South Africa scores extremely low on domestic savings levels.

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15 May 2012 13:10

Europe’s financial crisis – effect on SA

European countries purchase a third of all South Africa’s manufactured exports.

The European financial crisis still poses a very real threat to the South African economy and even the most optimistic scenario for Europe translates into bad news for South African trade with Europe.

For this reason, the outlook for the South African economy benefiting from European trade is dampened unless new strategies for growth are initiated and alternate trading partners are found.

European countries purchase a third of all South Africa’s manufactured exports and despite positive developments, the Eurozone economy is still expected to experience a recession this year in the face of widespread fiscal austerity and tight bank lending conditions. Therefore the demand for South Africa’s exports will continue to decline.

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13 May 2012 03:54

Some advice on investing (sort of)

As heard from people in pubs, at braais and in boardrooms.

This was first published on http://www.brendanjack.com

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