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Welcome to the latest edition of the Wealth Perspective

15 December 2020

Welcome to the latest edition of the Wealth Perspective

In this edition of The Wealth Perspective, Chief Investment Officer Adriaan Pask looks at the relationship between risk, return and time. Head of Sales, Nirdev Desai, highlights how compound interest can help you reach your goals if you use the gift of time wisely. Jan van der Merwe, Head of Actuarial and Product, provides a summary of the investment products that can help you create wealth in a tax efficient manner. Head of Technical Support, Gerhardt Meyer, explains when you should start with your estate planning and how often you should review it. He also offers some insights about bolstering your retirement nest egg, no matter the stage of life you are in.

Welcome to the latest edition of The Wealth Perspective

Health is wealth – this throwaway phrase has now taken on a new significance and resonance after the year we’ve had. The impact of the coronavirus pandemic has been significant; this period has challenged how we think and operate. Many of us now have a greater appreciation of factors such as health, relationships and time, and many of us are also looking at wealth creation in a starkly different way. These are lessons from the chaos that we can use to do better now that we know better.

The role of time

Before you start investing, you first need to set your financial goals, and these would be classified based on the time period. For example, you may want to save for a deposit to buy a house in the next few years; this will be a short-term goal. Similarly, your retirement savings would be a long-term goal. Once the goals are defined based on the time period, one has to then find investment vehicles with the appropriate time horizon to achieve them.

Make an early start

The wealth creation process is most effective if started early. By starting to invest during the early stages of your life, you will gain a valuable head start to achieve your financial goals. Due to the power of compounding, your investments can generate higher growth in the long term. Compound interest revolves around reinvesting your returns to earn higher growth to build a considerable corpus in the future. Fundamentally, the longer one stays invested, the higher will be the gain in wealth.

Getting your affairs in order

Before Covid-19, severe illness and mortality probably didn’t cross your mind that often. Unfortunately, the devastating health impact of the pandemic has not only left some families grieving the loss of a loved one, but sadly also impacted them financially when a household income earner passed away. The key learning has therefore been to think about the unthinkable and ask ourselves: what happens if I pass away? It’s important to be prepared by making sure your estate is up to date by drawing up a will, or reviewing it if you already have one.

Investing is for the long term

In times of indefinite uncertainty, your priorities may have to been reordered. Maybe you need to hold off on that family holiday, or you have decided to scale down your home. It might also be tempting to think about short-term survival rather than long-term goals. At this time, I encourage you to meet with your financial planner to discuss your priorities and opportunities. If you need to regroup, a financial planner can help you find ways to make the time you have work best for you. Don’t lose sight of the value a financial planner can add to your short-, medium- and long-term financial goals.

PSG Wealth’s cut-off times for contributions in the current tax year

The PSG Wealth platform’s cut-off date for all contributions to Retirement Annuities and Tax Free Investment Plans for inclusion in the current tax year is 24 February 2021.


This includes:

  • Direct debit instructions (collections)
  • Completed application and additional contribution forms received

Funds must also reflect in our bank account on 24 February 2021 at the latest. This means that electronic funds transfers must be made 48 hours in advance.


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Author
author

Etienne de Waal

CEO


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