Retire: Portfolio check-ins 

Carina Jooste Latest, Retire

Here’s the scenario: You’ve got your retirement plan in motion and debit orders are going to the right savings vehicles every month. You’ve ticked all the boxes and now it’s time to sit back and let time works its magic. And rightfully so, because you’re in it for the long run.

But to ensure that you truly make the best of what you have, it’s important to check in with your retirement plan and portfolio every now and then. A regular pulse check followed by a tweak here and there can make a big difference over time. Consider the following questions the next time you view your statement, or meet with your financial advisor:

Is your retirement plan working as hard as it should for where you are in your life? 

Do the funds in your RA (or your discretionary savings earmarked for retirement) err on the side of caution? Moderate-risk when you’re only planning to retire in 20 or 30 years might be too conservative for your life stage. Take a critical look and see where you can make adjustments suitable to your savings horizon.

What are you investing in?

If you have an RA, ask about its constituents – are they actively or passively managed? An actively managed fund utilises the expertise of a fund manager or management team to make decisions on how to invest the fund’s money. This requires a fair amount of research, including the study of market trends, analysing economic data, checking the valuations of companies and staying abreast of company news. This, of course, comes with a price tag. 

A passively managed fund follows a market index. Examples of passively managed funds are ETFs or tracker funds. These investment products eliminate the costs associated with active management, as it simply replicates market performance. This means it holds the same shares in the same quantities as the index. The main argument for opting for a passively managed fund is, you guessed it, the associated fees. As most active funds fail to outperform the index, you can get the same performance for cheaper.

Is the growth of your RA in line with your personal inflation number? 

The inflation number Stats SA releases every month is not a one-size-fits-all number. Think about it: Are the items in the inflation basket that is used to determine the price level of goods and services bought by a typical South African consumer the same as the items in your monthly expenses basket? Not necessarily. More importantly, will that basket look the same when you are retired? 

Stealthy Wealth created a really handy spreadsheet to help you estimate your personal inflation number. Give it a go, and view your portfolio growth from a different, more informed perspective.

Retire blog

Saving for retirement is the biggest investment most of us will ever make. Sadly, it can also be very complicated. In this monthly blog, Carina Jooste responds to common retirement questions, ranging from which products are best suited to different circumstances to efficient tax treatments.

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