Meet Wanda Retirewell. She’s 26 and has just started her first job. Her parents are still working because they never planned for retirement, and she’s determined not to end up in the same position. So she gets advice. From her very first payslip, she invests 10% of her income every month until she retires at 65. The money goes into a balanced fund targeting inflation plus 5%, and she stays in that fund once retired. If she sticks with this plan, Wanda can keep her standard of living until the age of 100.Now let’s change just one thing. Instead of the balanced fund, Wanda puts the same money into a savings account. Her picture changes completely. She runs out of money at 73 and has to go back to work or lean on her family.
Investing feels scary to many people, and our industry doesn’t help by making it sound complicated and sophisticated. It isn’t.
The graphic below shows what various asset classes returned over 20 years. In orange is what the average investor actually earned. The gap is sobering. It comes from people not having a long-term plan that is personal to them and the life they want to lead, or not sticking to it.
Cash is not an investment. Keep a sensible emergency fund, but put the rest of what you can into a strategy that you and your Lifestyle Financial Planner have built around your dream life.
Choose a planner who focuses on you, not just your money. That’s someone who will hold your hand through the temporary dips on the way to the long-term highs. Have a plan, and stick to it.
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Dirk Groeneveld, Certified Financial Planner
t. 083 261 9287
Disclaimer:
This article is for information purposes only and does not constitute financial advice in any way or form. It is important to consult a financial planner to receive financial advice before acting on any information contained herein. Client Care and PWM and its directors, officers, and employees shall not be responsible and disclaim all liability for any loss, damage (whether direct, indirect, special or consequential) and/or expense of any nature whatsoever, which may be suffered as a result of, or which may be attributable, directly or indirectly, to the use of, or reliance upon any information contained in this article.
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