Retirement is about a lot more than having more time and less money, say the experts at 10X Investments, who add that to be really happy after you have quit working you will most likely have to consider the needs of the mind, the body and the soul along with the practical aspects, such as money and time. “For many people work is not just a source of income, but also of identity, visibility, status, self-esteem, power, belonging, networks, structure and much more,” says Tracey Jensen, chief financial officer at 10X Investments. Finances – making your money last  A critical financial aspect you need to consider is how to ensure you don’t outlive your money. Steven Nathan, chief executive at 10X Investments, recommends starting with making a plan. He says this will force you to confront issues and set objectives with time horizons. “The plan should set out your goals and how you intend to fund them, as well as important financial ‘to-dos’,” says Nathan. “Things such as whe...

Emma Heap As new regulations in the UK tackle the gender pay gap, Emma Heap, head of retail at 10X Investments , says enduring pay inequality between men and women is one of the reasons so many women in South Africa are not able to retire comfortably. New regulations in the UK require that all companies with more than 250 employees report their gender pay gap to the Government Equalities Office by April this year. This shift towards greater transparency will likely put pressure on companies to pay their female and male staff more comparable wages. The problem is far from unique to the UK, however, and South African women face similar, if not worse, struggles. The 2017 Pulse of the People report run by market research firm Ipsos found that, on average, women in South Africa earned 27% less than their male counterparts. The same report, which surveyed more than 3 500 employed South Africans across various occupations and regions, found that this gap becomes even wider when lookin...

Steven Nathan There is always a frenzy to devour and dissect Buffett’s shareholder letter and extract the freshest pearls of wisdom. This year was no exception, even though the pickings seemed a bit slim. On more leisurely reading, says Steven Nathan, 10X Investment chief executive, some insights relate to the things he didn’t talk about.  Lesson 1: fees are paramount Some points bear repeating. In 2015, Buffett warned investors it’s their own behaviour that can make stock ownership risky. One such behaviour is “the payment of high and unnecessary fees to managers and advisors”. In 2017, he reminded his readers that, unlike returns, “fees never sleep”. Or, as he put it in 2018, “Performance comes, performance goes. Fees never falter.” That message never gets old. Nothing captures the long-term impact of compounding small percentages – as may be attributable to fees – as dramatically as Berkshire Hathaway’s own numbers. Since 1965, $100 dollars invested by the company w...

There is a longstanding misconception that investing, and the world of finance in general, is a man’s game. If you think about finance-related films - The Big Short, The Wolf of Wall Street, and the 1987 Michael Douglas classic Wall Street – could you name a female investor character? The unfortunate reality is that the investment world is generally perceived as a male dominated one. This is the view of Jenna Hartley, Investor Consultant at 10X Investments , who says that, interestingly enough, global research shows that there is a large uptake in female investors. “In a recent Blackrock survey[2], it indicated that there is almost no difference between male and female investor numbers.” Hartley believes, however, that the difference is the female approach to investing - a difference that might prove to be more effective over the long-term. Asking the right questions In her experience, Hartley says that the first thing that you notice about female investors is that they are m...

Steven Nathan While most active fund managers argue that their skills enable them to outperform the market return, the majority of research proves what passive managers have known all along – that even though it may be possible for a fund to outperform the market, it is generally not probable. In the finance industry, the term “investment universe” refers to a specific group of investments that share certain characteristics. This universe can be defined as large as ‘all listed shares in the world’, or as narrow as ‘the top 40 shares listed on the JSE’. It can also refer to a particular country, industry or sector, or to a particular ‘factor’ that underlines a group of investments, such as size or valuation. According to Steven Nathan, CEO of 10X Investments , such demarcations are important, as they enable us to evaluate the performance (skill) of a manager investing in securities from that universe. “By identifying all the securities within a universe, it is possible to calculate ...

A retirement annuity (or RA) is a pension fund for individuals, and one of the ways to save for retirement. In principle, it is a voluntary, tax-efficient savings tool to help you achieve a comfortable retirement. However, if you are not vigilant in your choice of RA and the related costs, it can easily become an inflexible money trap that delivers low returns, high fees and stiff penalties. This is according to Tracy Jensen, Chief Product Architect at 10X Investments , who says that the problem does not lie with the RA itself. “This is just the legal “wrapper” that affords you certain tax benefits. The overall return on your investment depends on how your money is invested, the associated costs, and any penalties associated with your choice of service provider. If you are concerned about the state of your current RA, it might be time to evaluate your choice.” According to Jensen, investors need to at least be asking the following questions about their current RA’s: 1.  ...

Saving for your children’s future is a financial gift every parent would like to provide, especially if it can shape their lives in a meaningful way. According to Jenna Hartley, Investor Consultant at 10X Investments , many South African parents place significant importance on ensuring that their children receive a good education. “The challenge however, is that all too often, parents have simply not saved up enough to be able to comfortably fund their children’s tertiary studies. To prevent this from happening, parents should prioritise long-term financial savings plans that will enable them to send their children to a reputable tertiary institution.” Hartley provides some saving tips that can help you prepare for your child’s future financially: Know your goal Before you consider saving for anything, set a goal. Knowing what you’re saving for not only makes the task tangible, but automatically gives greater meaning to your saving - for example saving for your child’s terti...

Tracy Jensen According to South African Finance Minister, Pravin Gordhan, only about 10% of South Africans enjoy a ‘decent retirement’. For the rest, retirement means financial hardship or, at least, a drop in lifestyle. Tracy Jensen, Chief Product Architect at 10X Investments , says that the problem is that the retirement industry habitually blames savers for these poor outcomes. “They start too late, they save too little, and they do not preserve when they change jobs. Invariably, the call is for more investor education. But, this achieves very little if employees refuse to engage, or take an active interest in the retirement fund. Unfortunately, these employees are in the great majority.” Even committed savers fall short. According to a study by Alexander Forbes, the average final income replacement ratio of long-term retirement members is only around 30% - half the recommended minimum. Jensen points out that retirement fund trustees are unable to regulate their members’ savings...

Chris Veegh, Head of Consulting at 10X Investments For most people, the idea of running the Comrades marathon is as absurd as it is scary. If you can barely manage to circle the block, then the idea of a 90km footrace is as far-fetched as flying to the moon. Clearly, this challenge is not for ordinary people. And yet, every year thousands of very ordinary people take it on and finish before the 12-hour cut-off. The trick is commitment and perseverance, rather than athletic ability. Saving for retirement may appear just as daunting to some: circumstance, financial or personal, might make this goal as improbable as finishing the Comrades. But the same principles that get you over the line at the Comrades will get you to a comfortable retirement. 1. Prime goal: beat the cut-off Other than elite and sub-elite runners, the primary goal for every Comrades runner is to at least finish within the 12-hour cut-off. Many might hope to do better, but getting a medal is the first obje...

Choice is usually a good thing. The problem comes in when there are simply too many options muddying the waters. With approximately 1200 unit trust options available in South Africa, trying to decide which one is best can be overwhelming. The question is: how do you go about making the right choice? “The unit trust market can be seriously complicated for the typical investor,” says Tracy Jenson, Chief Product Architect at 10X Investments . “To help simplify the process, it can be narrowed down to these three simple questions you need to ask yourself before investing.” How long do I plan to invest for? The investment term impacts dramatically on your choice of unit trust. If you’re looking to invest for a specific goal, over a specific time period (i.e. less than five years) you should consider a unit trust that invests predominately in cash and bonds. “These funds are generally low to medium equity portfolios,” Jensen explains. “Over the short-term they reduce market fluctuations and...

As a member of an employer-sponsored pension or provident fund your retirement savings are usually on auto-pilot: the monthly contributions flow unseen to the responsible administrator and to your fund managers of choice, or into the default portfolio. This detachment, however, ends when you leave your employer. Suddenly, you have to make all the decisions – and the decisions you make will have a major impact on the quality of your retirement. Chris Veegh, Head of Consulting at 10X Investments , says that more importantly you must choose between preserving your savings or not. “Regrettably, the majority of people cash out, pay unnecessary tax and cause irreparable damage to their retirement lifestyle.”  Veegh says that the sensible option is to transfer your savings, tax-free, to your new employer’s fund, or to a Preservation Fund or Retirement Annuity. “This preserves not just your savings and attached tax benefits, but also keeps your money growing until you do claim.” Given th...

Steven Nathan From 1 March 2016, a number of retirement and tax reforms introduced by National Treasury will take effect. Designed to create a simpler and uniform retirement savings regime, Steven Nathan, CEO of 10X Investments says that the value and purpose of these new laws has not been clearly communicated to the public. Nathan believes this lack of clarity that caused wide spread misperceptions around retirement reforms. Ultimately, it forced Government to postpone the compulsory annuitisation of provident funds at retirement for another two years. “If we don’t tackle these issues now, we’ll be sitting in the same predicament in 2018. It’s important to immediately clarify some of the burning issues related to vested rights, tax deductions on contributions, as well the ability of members to access their fund benefits on resignation or dismissal,” says Nathan. Uniform tax deductions across all types of retirement funds Presently, there are different tax deduction limits on co...