{"id":820209,"date":"2025-04-11T14:37:18","date_gmt":"2025-04-11T12:37:18","guid":{"rendered":"https:\/\/businesstech.co.za\/news\/?p=820209"},"modified":"2025-04-11T14:37:24","modified_gmt":"2025-04-11T12:37:24","slug":"best-investment-south-africans-can-make-for-retirement","status":"publish","type":"post","link":"https:\/\/businesstech.co.za\/news\/finance\/820209\/best-investment-south-africans-can-make-for-retirement\/","title":{"rendered":"Best investment South Africans can make for retirement"},"content":{"rendered":"\n

Corne Bouwer, CEO of Heptagon Capital<\/a>, illustrated that a retirement annuity (RA) can be one of the best investments for retirement. <\/p>\n\n\n\n

Bouwer told BusinessTech that RA’s will remain one of the best investments any individual can make for the foreseeable future.\u00a0<\/p>\n\n\n\n

With the proper discipline, Bouwer added that an RA can deliver an annual return of up to 40%\u2014a figure that few other investments can match.<\/p>\n\n\n\n

Bouwer described RA\u2019s as one of the “best investments” individuals can make, whether formally employed or running their own businesses. <\/p>\n\n\n\n

“It doesn\u2019t matter if you already have a pension or provident fund through your employer or if you’re self-employed\u2014an RA is the perfect way to top up your retirement savings,” he said.<\/p>\n\n\n\n

Despite some negative perceptions around retirement annuities, Bouwer believes the benefits outweigh any downsides. <\/p>\n\n\n\n

He highlighted four significant advantages that make RAs a “no-brainer” for anyone serious about securing their future.<\/p>\n\n\n\n

Bouwer noted that the first and most obvious is the tax benefit. Contributions to a retirement annuity are tax-deductible, which means SARS effectively helps you save for your future. <\/p>\n\n\n\n

He explained the notable upside this type of investment vehicle can bring with a simple example. <\/p>\n\n\n\n

He explained that if you contribute R12,000 a year to an RA and fall into the 31% tax bracket, SARS will refund R3,720 through tax rebates. <\/p>\n\n\n\n

\u201cIf you\u2019re disciplined enough to reinvest that rebate back into your RA, it significantly boosts your savings,\u201d he said. <\/p>\n\n\n\n

Bouwer points out that many South Africans struggle to save consistently, often dipping into accessible funds for emergencies or impulsive purchases. <\/p>\n\n\n\n

However, retirement annuities have strict withdrawal rules: you generally can\u2019t access the money until you\u2019re at least 55 if you avoid tapping into your savings pot as part of the new two-pot system. <\/p>\n\n\n\n

Another significant advantage is protection against creditors. “Retirement annuities are protected by law from creditors,” Bouwer said. <\/p>\n\n\n\n

“Even if you are sequestrated, your RA savings and the income you later draw from it are safe from being seized.”<\/p>\n\n\n\n

The potential <\/h2>\n\n\n\n
\"\"<\/a><\/figure>\n\n\n\n

All growth within a retirement annuity is completely tax-free. Unlike other investments where you might pay tax on interest, dividends, or capital gains, the growth in an RA is sheltered, allowing your money to compound faster over time.<\/p>\n\n\n\n

Bouwer shared a simple example to illustrate the potential. Suppose you invest R1,000 a month (R12,000 a year) in an RA. <\/p>\n\n\n\n

With a 31% tax rebate reinvested, you effectively get an extra R3,720 each year, which, combined with the investment growth, can deliver a return of up to 40% annually. <\/p>\n\n\n\n

“No other investment can even come near to guaranteeing this kind of return,” he said. Bouwer stresses, however, that this requires discipline\u2014the tax rebate must be reinvested rather than spent.<\/p>\n\n\n\n

One criticism often levelled against retirement annuities is that income drawn from them during retirement is fully taxable. <\/p>\n\n\n\n

However, while Bouwer acknowledged this, he pointed out that retirees generally fall into lower tax brackets because their income drops after they stop working. <\/p>\n\n\n\n

“You\u2019ll still pay tax, but at a much lower rate, which leaves you better off overall,” he explained.<\/p>\n\n\n\n

Importantly, Bouwer recommends not putting all your eggs in one basket. A balanced retirement strategy should also include other investments like endowments. <\/p>\n\n\n\n

For instance, he suggests a scenario where a retiree has both a R3 million RA and a R3 million endowment. <\/p>\n\n\n\n

By drawing 6% annually from each, the individual would receive R180,000 from the RA and R180,000 from the endowment, for a total income of R360,000 per year. <\/p>\n\n\n\n

Only the income from the RA would be taxable, and even then, it would be taxed at 18% under current rates, while the endowment income would be tax-free.<\/p>\n\n\n\n

“By combining retirement annuities with products like endowments, you can ensure a very comfortable retirement with minimal tax implications,” Bouwer said.<\/p>\n","protected":false},"excerpt":{"rendered":"

The CEO of a private financial firm outlines one of the best investments a South African can make. <\/p>\n","protected":false},"author":92,"featured_media":820259,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[11121],"tags":[22268,21574,16634,853],"class_list":["post-820209","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-finance","tag-corne-bouwer","tag-heptagon-capital","tag-retirement-annuity","tag-south-africa"],"_links":{"self":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/820209","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/users\/92"}],"replies":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/comments?post=820209"}],"version-history":[{"count":12,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/820209\/revisions"}],"predecessor-version":[{"id":820650,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/820209\/revisions\/820650"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media\/820259"}],"wp:attachment":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media?parent=820209"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/categories?post=820209"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/tags?post=820209"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}