“A regular saver who reduces the charges on [their] retirement account with 2% of assets annually would receive a benefit 60% greater at retirement after 40 years, all else being equal. For someone who is a member of a preservation fund for 30 years this increases to 80%.”
Modernizing or investing in next-generation architecture, moving more workloads to as-a-service and pay-per-usage platforms, and pushing automation to its full potential while embracing a “no ops” vision are all ways to contract the cost base to make room for growth.
For every 1% you can annually save in investment fees, it is possible to have up to 50% more money after 40 years. And that’s a fact.
Stretch your investment horizon beyond retirement, this will result in a smooth transition of your pre-retirement investment strategy as you move into retirement.
Fees impact investments by creating costs that reduce the returns an individual has achieved on their investment. Just as compounding delivers growing returns to long-term investors, high fees do exactly the opposite.
In a world of low returns, fees matter more than ever. Effectively, fees reduce your returns. And over time, if you are paying higher fees, this reduction compounds in the same way that the interest on your investment does. As National Treasury noted in a 2013 paper on charges in South African retirement funds, if a saver can reduce their fees by 2% every year, over 40 years their retirement pot would be 60% bigger. Even saving 1% a year would mean that over 40 years your savings would be worth 25% more. Of course, if higher-expense funds perform better, this might be worth it.
For saving and investing your pre-tax income so you can enjoy financial security after retirement – and contributions (up to a legislated limit) are tax deductible.
Changing jobs? You can roll the funds from your former employer’s retirement plan into a Pension or Provident Preservation Fund. All the tax benefits will still apply and you won’t pay any transfer or exit fees.
The higher your marginal bracket rate, the more important tax-efficient investing becomes. Bolster your savings and build long-term wealth with the tax benefits of an Investment Policy.
Looking for a flexible solution to managing your post-retirement income? Invest in a Living Annuity (with 40% offshore allocation limit) and draw a steady income designed to meet your needs.
The Tax-Free Savings Account is a savings account that allows you to save for both short- or long-term goals without paying taxes on any of the growth or income you earn.
Invest confidently with the Direct Investment Account option. Access the myretire on the Sygnia Alchemy investment platform with no fuss or stress.
Only 6% of South Africans retire comfortably – be one of them
Only 54% of South Africans who are currently 10 years from retirement age are saving for retirement
Just 1% higher growth per year over 40 years can improve your pension income with 25%
We save you as much as 40% on fees and could increase your retirement savings with up to 40%
The after-inflation value of a R1,000 monthly contribution for 40 years, earning 5% real return per annum, paying average traditional life product fees will return R4,180,792.
Paying only 2% less fees will result in R6,500,570
– saving you 40%
Seeking personalized advice for your financial goals? Connect with our experienced advisors today to chart a customized path towards your financial success!
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