Cape Town – Only about 50% of employed youth contribute to a pension or provident fund and only 13% have a retirement annuity, according to Old Mutual.
Lynette Nicholson, head of research at Old Mutual, described working youth between the ages of 18 and 30 as the ‘nowism generation’.
She said the leading reason why they are reluctant to save is because they want immediate results.
“Nowism is all about 'I want things now'. I want instant gratification; I don't want to wait for my investment for 50 years to mature.”
Nicholson said that youth have a different mindset about savings and long-term investments.
For youth the general consensus for long-term is anything between 8 to 15 years, she said.
“So when you speak to the youth about savings for retirement it is very difficult to get into that mindset of saving for 40 years' time.
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“What is interesting though is that there are products available that can speak to that nowism”, she said.
One of the savings vehicles available for the youth is unit trusts, she advised.
This is a way to buy into the shares listed on the Johannesburg Stock Exchange. You can invest from as little as R200 a month and it offers flexibility because you can buy and sell units whenever you want.
Nicholson also emphasised the golden rule when it comes to savings.
“The earlier you start the better it is but we have a lot of people saying when I reach 30 I'll think about it.
“You could have had 5 or 6 years before 30 when you were saving and that compound interest and that growth would only have been better at the end of the day,” she said.
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