[ad_1]
DALL-E
Virtually 20 years into his retirement, Golden Years* continues to reap the rewards of following private finance finest practices all through his life.
“My spouse and I are conservative in our spending, having each been introduced up in financially restrained, however comfortable, households.” However this doesn’t imply they skimped on residing life. They traveled abroad when youthful, and proceed to take two to a few native holidays a yr.
At this time they dwell in a spacious cottage in a retirement village which they purchased below life rights possession for R1.6m.
So how did retiree Golden Years get to take pleasure in a retired life-style that ticks all of the packing containers?
Sticking to the fundamentals in the long term
Throughout his working years, he labored as {an electrical} engineer and technician for 4 totally different employers, whereas his spouse’s profession spanned 20 years. Each time he modified jobs, he invested his pension payout right into a retirement annuity (RA).
He did a inventory market course within the early nineties, however by no means traded day by day. “Our portfolio was mainly from Old Mutual and Sanlam de-mutualisation, then Telkom privatisation, and a few minor companies. We mainly bought unit trusts, and had a good financial advisor.”
On retirement, they invested R3.2 million in living annuities, had an endowment policy worth R1.5 million and unit trusts worth R3.5 million, with 23% in local equities and 37% in Rand-based foreign equity. Today, the value of their investments sits at just over R10 million.
“My calculations indicate that we will run out of funds when I’m 99.”
Considering the above, and without going into too much detail, the following personal finance brilliant basics shine through:
- Reinvesting your pension when starting at a new employer
- Being curious about money and learning more about it
- Relying on a trusted financial advisor to guide your decisions
- Spreading your eggs across multiple baskets
More tips from Golden Years for young and old
- With your first salary, start saving for an emergency fund equal to 6 months’ salary.
- Get a certified financial planner.
- Always argue for lower fees.
- Don’t over-invest in income funds.
- Read the financial pages even if you are not a stock trader.
- Plan to retire with no debt, including paying off your home bond before retirement.
- Invest your annual bonus – take a cheaper holiday, and pay the balance into your bond.
- Finance your car with your access bond, but pay it back at the rate you would’ve been paying if you took the finance scheme offered by the car dealer.
- Any loans you give to family or friends, only lend what you can afford to lose. Do not expect to get it back, but do not damage the family relationships.
*Not his real name
Retire blog
Saving for retirement is the biggest investment most of us will ever make. Sadly, it can also be very complicated. In this monthly blog, Carina Jooste responds to common retirement questions, ranging from which products are best suited to different circumstances to efficient tax treatments.
[ad_2]