Investing for retirement is essential, but South Africans can often make mistakes when altering their long-term plans.<\/p>\n\n\n\n
As we head into the festive season, 10X Investments said that many South Africans are changing their investment plans without considering the consequences. <\/p>\n\n\n\n
“Many of us invest to receive our money back in years to come and enjoy a secure retirement. But not all of us get the opportunity to realise the full value of our investments,” 10X Investments said.<\/p>\n\n\n\n
With this in mind, here are ten mistakes people make regarding their retirement savings: <\/p>\n\n\n\n
Not educating yourself<\/strong><\/p>\n\n\n\n A common mistake is not getting educated about retirement savings from a young age. <\/p>\n\n\n\n Those who start later miss out on the compound interest rate. Delays of just five to ten years can have a serious impact on future investments. <\/p>\n\n\n\n Retiring too early<\/strong><\/p>\n\n\n\n People are living for longer, meaning that retirement investments need to be carefully planned so that users do not outlive their savings. <\/p>\n\n\n\n “Factoring aspects such as inflationary costs and realistic expenses at retirement age all has an impact on when you can afford to retire,” 10X Investments said. <\/p>\n\n\n\n High investment fees<\/strong><\/p>\n\n\n\n High fees can quickly erode the growth of one’s retirement investments. <\/p>\n\n\n\n Incorrect asset allocation<\/strong><\/p>\n\n\n\n “Many people make the mistake of making too conservative investments and too early.”<\/p>\n\n\n\n “Investors might be nervous about markets and volatility, yet it\u2019s crucial to ensure what you get out is much higher than what you put in.” <\/p>\n\n\n\n Avoiding family planning<\/strong><\/p>\n\n\n\n Partners should be involved in retirement investment planning early on.<\/p>\n\n\n\n Savings expectations and future implications on the estate should also be considered. <\/p>\n\n\n\n Active vs passive fund management<\/strong><\/p>\n\n\n\n Passive funds outperform active funds over a longer period.<\/p>\n\n\n\n Active funds are good short-term investments as they try to outperform the market, but they struggle to beat the market over a 20-to-30-year period. <\/p>\n\n\n\n “Passive funds also help with diversification and for ensuring you get market-related returns.”<\/p>\n\n\n\n Not speaking to an independent financial advisor<\/strong><\/p>\n\n\n\n Independent financial advisors can also help South Africans make good financial decisions. <\/p>\n\n\n\n “It\u2019s important to always look for financial expertise and do your own research when planning your retirement. Financial planning doesn\u2019t require breaking the bank to do so.” <\/p>\n\n\n\n Not saving enough for the future<\/strong><\/p>\n\n\n\n Consumers often live beyond their means, and an increasing number of South Africans are becoming dependent on credit for basic living costs amidst the challenging economic climate. <\/p>\n\n\n\n However, increasing debt will negatively impact retirement savings in the future. <\/p>\n\n\n\n Taking out your retirement savings too early<\/strong><\/p>\n\n\n\n “Try to avoid taking out of your preservation fund, as there are tax implications if you resign or leave. This money could be saved to grow in a retirement fund to avoid high tax penalties.”<\/p>\n\n\n\n Not taking advantage of employer retirement funds<\/strong><\/p>\n\n\n\n Several companies will offer a provident or pension fund, and employees should take advantage of it. <\/p>\n\n\n\n Employees should contribute as much as they can on top of what the company already contributes. <\/p>\n\n\n\n “It\u2019s important for employers to communicate and educate employees about their saving and investing a portion of their salaries for retirement.” <\/p>\n\n\n\n
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