South Africa has a poor record when it comes to saving for retirement.
“South Africa’s retirement landscape looks terrible,” says 10X Investments chief executive officer, Steven Nathan. Citing the National Treasury, he said that as many as 94% of South Africans can’t afford to retire.
He said that the country’s failures are exactly the same 25 years ago (also 94%), which means, that in 25 years the industry has not been able to improve the outcome for clients, for ordinary South Africans, by even a single percentage point.
Nathan said the team at 10X sees one of the main problems as being an excess of choices when it comes to savings related products, “most of them are too complex and expensive, and require the services of advisors to make sense of.
“The result is that the average South African has got very little chance of being able to invest their savings in a way that will ensure that they get competitive long-term returns, that they pay low fees, and that they have transparency,” he said.
So how do we get South Africans to take retirement more seriously?
“We need to scare the living daylights out of them,” Nathan said, suggesting something similar to the way the authorities scared Capetonians with the prospect of Day Zero.
“Another approach is to help them to take charge of their retirement journey, as well as to give them access to products that will give them the best chance of success,” Nathan said.
Nathan pointed out that the 10X formula for a healthy retirement is to save 15% of your salary for the duration of your working life (40 years) and invest in a balanced high-growth index fund, with low fees.
“Keep it simple,” Nathan said of the savings journey. “With the internet there is so much information at your fingertips. Do your research. You can read up on the likes of Buffet, Bogle, Fama and other experienced, smart and ethical people.
“Take a bit of time especially when you are young. It is not only about planning your retirement but about how to manage your money. Empower yourself by doing a little work. You have to make sure you understand what you are investing in, and the fees you are paying,” he said.