The Fat Wallet Show with Kristia van Heerden

Podcast: Choosing an RA

In Latest, The Fat Wallet by Kristia van Heerden

In a previous episode of The Fat Wallet Show we discussed how to compile your own ETF portfolio. In theory, once you know which factors to consider and understand all the information, you can make informed choices about your investments. However, putting together an ETF investment is child’s play compared to choosing a retirement annuity.

Unless you’re an outlier, your retirement annuity is the most important financial decision you’ll make. It’s not only the largest sum of money you’ll ever invest, but it’s also the investment decision with the least room for error. I don’t mean to overstate this, but it’s the decision that’s going to determine how the second half of your life pans out. If you’re lucky enough to die somewhere between 80 and 90. Live to 130 and you’re on your own.

This week, we try to unpack some of the factors you should consider when choosing an RA. We talk about moving existing pensions and annuities and completely fail to distinguish between them. You’ll be unsurprised to learn that fees play a major role in our decision-making process.

We asked 10X to help us think through some of the factors to consider when it comes to RAs. They identified five parameters by way of very helpful questions. They are:

  • Is it a traditional, policy-based RA offered by a life insurance company or is it an investment-based RA offered by an asset management company?
  • Are you forced to use an advisor or another intermediary?
  • How much are you paying in fees?
  • Are you taking on the appropriate amount of risk?
  • Is your service provider honest about the impact of these factors?

I also decided on a whim to make listener Jaco Marais rich. If you are planning on signing up for Stash next year, use Jaco’s promo code. He gets R10 every time someone new signs up. Code: JAC8747

We also share the story of a man who found R400 000 he didn’t know he had.

Kris


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