Don’t blame the Guptas if your retirement fund has been captured

You shouldn’t blame the ANC, or the Guptas for that matter, if your pension fund has done badly over the last 10 years, no matter what you read in the media, says Steven Nathan, founder and chief executive of 10X Investments.

“We know that South Africa is not currently in a great place, economically or politically. We know there is a recession, a weak currency, emerging market contagion, corporate scandals and state capture. That is nothing new, but it is being amplified in the media,” he said.

Proceed to Source : BusinessTech

Nathan said the so-called investment experts – fund managers and advisers – are latching on to this bad news to advise that this is a good time to get your money offshore. “They are saying that SA might be a good place to retire, but not to invest in.”

“We have a different view and message,” Nathan said. “Don’t look at these scary headlines and say, ‘Oh this is why my pension fund has not done well in the past, and probably why I won’t do well in the future.’ It is just not true.”

We are hearing a lot of talk about recession, Nathan said. “‘They’ are saying if you are in a recession you are not going to get good returns from your retirement savings investments. We are saying rather look at the facts, not the emotions.”

Citing an example, he said there is no direct link between GDP growth and investment returns. “Over the last 10 years, GDP growth in South Africa has been terrible, a measly 1.8% per year, barely ahead of population growth. So there has been very little real economic growth in South Africa.

“Yet a well-balanced high equity portfolio, as represented by the 10X High Equity fund, has given double digit returns over this period.”

Nathan noted that a South African retirement fund portfolio is a very well globally diversified portfolio. More than 50% is invested in rand-hedge and international stocks that are not exposed to the South African economy.

“Your actual exposure to corporate South Africa is very small, less than 25% of your overall portfolio, Nathan said. Even if you are quite negative about South Africa going forward, your overall exposure is quite limited.

“It is important to know that when you retire in South Africa you are going to be spending rands. The important thing is to ensure that your portfolio beats rand inflation, and over the last 10 years a high equity fund has beaten inflation handsomely,” Nathan said.

The question is: Why have some portfolios not done as well as they should have?
The answer is: Because of the industry, not because of the ANC, or the Guptas.

Nathan pointed to research showing that more than 90% of fund managers have underperformed the index over the last five years. “That is another reason why many investors have fared poorly,” he said.

Research also showed that many investors lose out because they switch portfolios, usually at the worst time, because they are chasing past performance. “They tend to buy things that have done well and sell things that have done badly and by so doing they erode returns further. The combination of high fees, underperforming fund managers and switching can more than halve your retirement capital” said Nathan.

“We don’t know if the JSE will beat the S&P500 over the next 10 years. No one does. Here is what we do know: Over the last 10, 20 years or longer, if you had invested in a well-diversified portfolio, paid low fees, didn’t try to beat the market and stayed invested, you would have done very well invested in a high equity balanced portfolio in SA. You would have handsomely beaten inflation and, together with a good savings programme, should be well on track to a good retirement.

“Investors can still achieve very good retirement capital by investing in a well-diversified portfolio in South Africa. But they must take charge. If people don’t take charge, it doesn’t matter what the economy does, or what the Guptas do, or what happens with state capture. Those who continue to have their retirement funds captured by the industry are going to underperform significantly, in good and bad times.

“There is no need to take all your money offshore, unless you are leaving South Africa, in which case it would not make sense to have your liabilities in a foreign currency, say pounds or Aussie dollars, and your assets in a SA-domiciled portfolio,” said Nathan.

Recession? Caution! We have been here before.

Ignore anyone who tells you that Panic! is a good strategy.

Newspaper headlines might scream that South Africa has “plunged” into a recession, but it seems more realistic to say we “slipped” into a recession the country has been grappling with for a while.

Steven Nathan, 10X Investments chief executive, said this should not come as a surprise to anyone, much less a shock.

Continue to Source : Daily Maverick

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Let the taxman help you feather your nest

Hoping the Receiver of Revenue or your employer’s accounts department has or will make a mistake that results in you getting a refund this tax season is not the best strategy for getting money back from the taxman. But there is a legitimate way to get some of the tax you have paid back – and it’s guilt-free and 100% good for you.
It’s too late now to do anything for this year’s return, the tax season already being upon us. But there is a way to make return season next year that much sweeter, at the same time as looking after your future self. It is hard to believe  when you put it like this but the bottom line is: You can build a nest egg for your future self and get the taxman to partially fund it.

Proceed to Source : Daily Maverick

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One of the best ways you can pay less tax this year: expert

The tax season is upon us, with the usual angst of having to get our financial ducks in a row or risk posting an incorrect return and getting audited.

If you are a salaried employee your scope to lower your tax burden is quite limited, says Steven Nathan, founder and chief executive of 10X Investments.

“Most of the deductions require that you spend money first, for example, by making a donation, incurring legal or medical expenses, or paying income protection premiums. You can claim those deductions if you incurred these expenses, but it makes no sense to incur them just to save tax,” he said.

Proceed to Source : BusinessTech

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Millennials ‘not investing in pension funds’

Less than half of millennials are saving for retirement through pension or provident funds, with shifting perceptions by younger investors offering both opportunities and difficulties for financial services companies, according to research conducted by Old Mutual Unit Trusts.

Old Mutual’s survey suggests millennials are saving but not investing, reflecting a trend analysts say is putting increasing pressure on the fees that asset managers are able to charge.

It may also prompt consolidation within the financial services sector.

Proceed to Source : Business Day

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Compound interest – What’s the big deal?

Albert Einstein is rumoured to have described compound interest as the 8th wonder of the world, the story goes that he went on to say, “He who understands it, earns it. He who doesn’t, pays it.” Whether this can be attributed to the great mathematician and physicist or not, the value of compound interest has been spoken about by experts in their fields. To understand the wonder of compound interest and how to make it work for you, see what a few experts say about it.

Proceed to Source : News24

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Here’s how much you should be saving for retirement

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.

Proceed to Source : BusinessTech

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10X launches new portal that can track your current retirement savings and compare it with where you should be

Financial services firm 10X Investments has launched a new portal that enables clients to take charge of their own retirement plans.

Customer using My10X, which has been designed as mobile-first application, have access to all information about their retirement plan and investments. They can also make adjustments – such as change a beneficiary, increase a debit order, or make an additional once-off contribution – using their phone.

The service was made available to clients on the weekend by way of a soft launch, 10X told BusinessTech.

10X Investments founder and CEO, Steven Nathan, said My10X enables clients to plan, invest and monitor their retirement savings on their mobile phone or desktop.

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