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It’s not often that a journalist can say he’s come into a bit of excess cash. But having recently been the recipient of a monetary award I was finally able to move the family out of beans on toast type meals in April… or so I thought. Having come into some money has its own pitfalls and, in my case, it came in the form of my wife – who had promptly started spending it before we’d even had a chance to enjoy the feeling of not having an overdraft for a while.
House alterations, double-door fridge and freezer, a tumble dryer and Woolworths shopping were suddenly on the cards… and all I wanted was to buy some General Electric shares and grow fat on the dividends. With that in mind I thought I’d hit up Anthony Katakuzinos, the head of retail investing at Stanlib, about some smart ways of putting the money out of my wife’s reach before she blew it all.
While there may have been some humour in my request for an interview, Katakuzinos says thinking smart about lump sums is a very real challenge for South Africa’s few savers. “It’s one of the themes I’ve been focusing on a lot over the past few months and that is most people will earn roughly 420 pay cheques in their professional career and maybe 40 genuine bonuses – if they’re lucky.” In other words, think hard about how you’re going to deploy each lump sum you hopefully come into.
Being in the investment industry, it’s obvious Katakuzinos is going to beat the drum of saving rather than going out for that fancy holiday or new appliances, but our interview revealed a startling statistic: the average age of the Stanlib retail client base investing in savings products varies between 45 and 55 years. That’s pretty much in line with other South African asset management houses.
South Africans are basically starting to save very late in their life cycle, preferring to spend first and save later. Sorry, honey, but recent industry statistics point to an average zero savings rate in SA and if we blow it all on “stuff” we’re also going to fall into that trap.
“The first step is to understand the psyche of you as an investor and the second is to divorce the money from your bank account to force you to save,” Katakuzinos says. He adds the first two steps count for nothing if you’re simply going to dip into your savings each time. He says while a retirement annuity (RA) may not be a “sexy” parking place for younger investors there are plenty of long-term benefits, including not being sucked in by temptation to splurge it. With its added tax benefits, the right RA product means R100 invested may give the same or even better returns than investing R150 in a traditional general equity unit trust.
One word that kept cropping up was “discipline”. And one observation Katakuzinos made is the cost of living in SA is rising, there are an increasing number of freelance type employees and Government is pushing hard to tackle the savings crisis by instituting some formal savings plan. If you aren’t saving now then you’re going to find it even harder to do so down the line.
It may not be the most flattering analogy – considering this report is about money and marriage – but the old stereotype of the prisoner scratching off the days of his sentence on a wall may apply here. Draw up your 420 pay cheques and 40 bonuses on a spreadsheet and start crossing them off one by one and you might get a savings wake-up call.
House alterations, double-door fridge and freezer, a tumble dryer and Woolworths shopping were suddenly on the cards… and all I wanted was to buy some General Electric shares and grow fat on the dividends. With that in mind I thought I’d hit up Anthony Katakuzinos, the head of retail investing at Stanlib, about some smart ways of putting the money out of my wife’s reach before she blew it all.
While there may have been some humour in my request for an interview, Katakuzinos says thinking smart about lump sums is a very real challenge for South Africa’s few savers. “It’s one of the themes I’ve been focusing on a lot over the past few months and that is most people will earn roughly 420 pay cheques in their professional career and maybe 40 genuine bonuses – if they’re lucky.” In other words, think hard about how you’re going to deploy each lump sum you hopefully come into.
Being in the investment industry, it’s obvious Katakuzinos is going to beat the drum of saving rather than going out for that fancy holiday or new appliances, but our interview revealed a startling statistic: the average age of the Stanlib retail client base investing in savings products varies between 45 and 55 years. That’s pretty much in line with other South African asset management houses.
South Africans are basically starting to save very late in their life cycle, preferring to spend first and save later. Sorry, honey, but recent industry statistics point to an average zero savings rate in SA and if we blow it all on “stuff” we’re also going to fall into that trap.
“The first step is to understand the psyche of you as an investor and the second is to divorce the money from your bank account to force you to save,” Katakuzinos says. He adds the first two steps count for nothing if you’re simply going to dip into your savings each time. He says while a retirement annuity (RA) may not be a “sexy” parking place for younger investors there are plenty of long-term benefits, including not being sucked in by temptation to splurge it. With its added tax benefits, the right RA product means R100 invested may give the same or even better returns than investing R150 in a traditional general equity unit trust.
One word that kept cropping up was “discipline”. And one observation Katakuzinos made is the cost of living in SA is rising, there are an increasing number of freelance type employees and Government is pushing hard to tackle the savings crisis by instituting some formal savings plan. If you aren’t saving now then you’re going to find it even harder to do so down the line.
It may not be the most flattering analogy – considering this report is about money and marriage – but the old stereotype of the prisoner scratching off the days of his sentence on a wall may apply here. Draw up your 420 pay cheques and 40 bonuses on a spreadsheet and start crossing them off one by one and you might get a savings wake-up call.
