Financial Independence After Retirement Continued

In our Communiqués we continually highlight the importance of disciplined financial planning and wealth preservation at retirement and thereafter.

Having been in the financial services industry for over 26 years I have witnessed many people becoming poorer as they age because they resist exposure to equities and stay in Money Market and continue to pay SARS a fortune in tax. Naturally it is wise to keep some funds in Money Market for emergencies and other compartmentalised needs but money which is not needed for day to day living expenses must have exposure to well-managed asset allocation funds to counter the effects of inflation, which always reduces the purchasing power of your money.

As a simple experiment, divide the current inflation rate into the figure of 72 and this will quickly give you an idea of how quickly the purchasing value of your money will halve. So, if inflation averages 8% into the forseable future, this means that every 9 years things will cost double what you are paying now. Put another way, if a new car costs R300 000 today, in 9 years time it will cost you R600 000. The same principle applies to property or other assets. Therefore exposure to actively managed Asset Allocation Funds equities is essential in order to counter the ravages of inflation.

The graph below clearly illustrates this point:

Past-Performance Data
Graph showing total return (%) from 29 Mar 2003 to 29 Mar 2010

For those who observe Easter and Passover, we hope the time is joyfully shared with family and friends.

* April Fool! Correct amount is 16.91%

Silke Financial Services has the skill and expertise to advise on all investments according to one's needs and time horizons.