Tuesday, 23 April 2013 - 20:00
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Retirement and the Perfect Storm At the best of times Retirement planning tends to be a stressful exercise, over the last couple of years successful Retirement has become nearly impossible for most individuals in South Africa.
There are a number of reasons for this and these various factors have combined to create “The Perfect Storm” for South African Pensioners and Financial Advisors.
Let us have a look at the factors:
Retiring Earlier
There has been a tendency for a lot of South Africans to take early retirement, we won’t go into the various reasons for that now, but 20 years ago most people retired at the age of 65. It is now not uncommon for people to take early retirement packages at the age of 55, this extra ten years in retirement and ten years less of saving puts a huge strain on retirement capital.
Retirees living longer
It is a well-known fact that, with the advances in nutrition and medical sciences, people are living longer. This means that people are often in retirement for a period longer than their working careers.
Low Interest Rates
Because real interest rates are negative i.e. below inflation, retirees need to invest in “Higher Risk Assets”. Whilst these assets offer the prospect of real returns, they are a lot more volatile than cash and this volatility adds to the many concerns already experienced by pensioners.
The second concern on low interest rates is that it is more difficult to achieve higher returns in a low interest rate environment. This factor has been exacerbated by the fact that very few people are on defined benefit retirement funds so most retirees now carry the investment risk. On a defined benefit pension fund the investment risk sits with the employer.
Even people purchasing guarantees at these low rates are at risk. They are exposed to huge uncertainty going forward should we see later large inflation increases because they have been locked into these low rates.
Different Inflation Rates
Whilst the official South African inflation rate has remained under control, most individuals have seen huge inflationary pressure on their cost of living. Eskom, petrol prices and medical expenses are just a few of the normal day to day expenses which have seen increases way in excess of the official inflation rates. This erodes the purchasing power of the retirees’ future income.
Starting families later
In the 60’s it was common place for couples to start their families in their early twenties, lately it is not uncommon to see forty year olds bleary eyed from the effects of late night “pajama drills”. This means that your average 60 year old often still has children who are financially dependent.
As you can see, this lethal cocktail of factors has made a secure retirement a reality for only a select few. “What can be done about this?” I hear you ask. Firstly, remember no matter how frustrating your job is, no matter how irritating useless or incompetent your boss is, a bad day at the office is a lot better than having insufficient retirement capital and spending your “golden years” under the breadline. So, always try and work for as long as possible. Working longer has a double benefit on your retirement savings, firstly you are saving for longer and your capital has more time to grow and secondly you are drawing down on your capital for a shorter period of time. The chart below illustrates the effects of retiring at 55 versus 65 in real terms (i.e. after the impact of inflation).
The second way to get around it is obviously to start saving early enough; unfortunately this cannot be rectified like it was in the “good old days” where people were able to “buy back” years of service.
Most importantly, one needs to have a plan, the plan should include when you are planning to retire, how much income you need to retire with, what capital do you have at the moment and what returns are required to achieve all of these goals. If you timeously start with this plan and constantly assess your progress, you could be one of the select few spending your golden years above the bread line.
Kind regards,
Barry Hugo
www.seedinvestments.co.za
info@seedinvestments.co.za
021 914 4966
Tue, 23 Apr 2013
Top News
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near Kirkuk on Tuesday, triggering a gun battle between troops
and protesters and provoking insurgent attacks in other areas. Full story |
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Markets | Markets for stocks, bonds,
oil and commodities were briefly roiled on Tuesday after a bogus
report of explosions at the White House.. . . Full story | | U.S. stocks turned volatile
on Tuesday, sharply cutting gains for a few minutes and then
bouncing back, after a "bogus" Associated Press report. . . Full story | | Europe's main share index
posted its biggest one-day gain in more than seven months on
Tuesday, buoyed by strong earnings and after a. . . Full story | | Britain's blue chip share index
jumped 2 percent on Tuesday on strong earnings reports and after
weak German data fuelled expectations for a. . . Full story |
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| U.S. stocks climbed on
Tuesday as strong earnings from Travelers Cos Inc and
others put shares on track for a third straight day. . . Full story | | Europe's top share index
recorded its biggest one-day gain in more than seven months on
Tuesday, buoyed by strong earnings and as a. . . Full story | | U.S. stocks extended gains on
Tuesday, with the S&P 500 up 1 percent as strong earnings from a
variety of sectors improved sentiment.. . . Full story | | Gold fell around one percent on
Tuesday after the outflow from the biggest gold exchange-traded
fund (ETF) accelerated, investors shifted towards other assets
like. . . Full story |
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SA Business | Cameroon cocoa exports reached 183,300 tonnes by the end of March since the start of the season in August, up more than 12 percent from amount shipped over the same period last season, National Cocoa and Coffee Board statistics showed.. . . Full story | | South Africa's rand remained on a weaker footing against the dollar on Monday, weighed down by fears over disruptions to the national electricity supply and by weaker-than-expected Chinese manufacturing data.. . . Full story |
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| Operations at Northam Platinum's Zondereinde mine resumed on Tuesday after the South African mining company said it reached a deal with. . . Full story | | British oil company BP intends to invest nearly 5 billion rand in South Africa over the next five years, half of. . . Full story | | South Africa sold a total 2.35 billion rand of its 2023, 2036 and 2041 government bonds on Tuesday. Yields were lower. . . Full story | | The South African Reserve Bank's monthly leading business cycle indicator increased 0.1 percent in February from January, as the number of. . . Full story |
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| Shares of South African retailer Massmart tumbled more than 3 percent on Monday, after the Wal-Mart unit warned it may fall short of its profit target this year, squeezed by weak consumer spending.. . . Full story |
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Company News | Afrimat is pleased to announce that its headline earnings are expected to increase by between 25% and 30% for the year. . . Full story | | Shareholders are referred to the renewal cautionary announcement released by Aspen on 7 March 2013 in which shareholders were advised of. . . Full story | | Anglo draws attention to an announcement issued by Kumba Iron Ore, the text of which is set out below: Application for. . . Full story | | Shareholders were advised on 28 March 2013 that the Supreme Court of Appeal had dismissed the appeals of the Department of. . . Full story |
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Company Results | Net revenue for the interim period fell to R210.7 million (2012: R217.6 million). Operating profit increased to R27 million (2012: R21.7. . . Full story | | Revenue for the year ended 29 February 2013 increased to R9 billion (2012: R8.3 billion). Gross profit rose to R1.6 billion. . . Full story | | Net insurance premium revenue for the interim period increased to R17.9 million (2012: R16.6 million). Profit attributable to equity holders of. . . Full story | | Headline earnings for the annual financial period amount to R284.6 million (2012: R365.5 million). In addition, headline earnings per share from. . . Full story |
World Markets (Spot Prices)
Name | Time | RP | Move | % Move | JSE Overall | 17:00 | 38742.43 | 573.00 | 1.50% | JSE Top 40 | 17:00 | 34166.27 | 582.00 | 1.73% | JSE Gold | 17:00 | 1493.14 | -26.00 | -1.77% | JSE Financial | 17:00 | 30502.12 | 342.00 | 1.13% | JSE Industrial | 17:00 | 49434.20 | 1135.00 | 2.35% | JSE Indust 25 | 17:00 | 42792.68 | 1102.00 | 2.64% | JSE Resource | 17:00 | 43935.26 | 121.00 | 0.28% | DJ Futures | 19:40 | 14630.00 | 131.00 | 0.90% | DJ Ind | 20:00 | 14696.80 | 129.63 | 0.89% | SP 500 | 20:00 | 1577.09 | 14.59 | 0.93% | Nasdaq | 20:00 | 3267.75 | 34.20 | 1.06% | FTSE 100 | 17:35 | 6406.12 | 125.50 | 2.00% | DAX | 18:08 | 7658.21 | 180.10 | 2.41% | CAC40 | 18:08 | 3783.05 | 130.92 | 3.58% | Nikkei | 08:32 | 13529.65 | -38.72 | -0.29% | Shanghai | 09:28 | 2184.54 | -57.63 | -2.57% | Hang-Seng | 10:28 | 21806.61 | -237.76 | -1.08% | All Ords | 08:45 | 5002.60 | 47.20 | 0.95% | NZSE 50 | 07:48 | 4516.50 | 32.84 | 0.73% |
| | Name | Time | RP | Move | % Move | Gold $ | 19:59 | 1411.10 | -14.29 | -1.00% | Gold R | 20:00 | 12985.51 | 0.40 | 0.00% | Gold R/kg | 20:00 | 417484 | -4780 | -1.13% | Silver $ | 19:59 | 22.9180 | -.4670 | -2.00% | Platinum $ | 19:59 | 1412.50 | -16.50 | -1.15% | Palladium $ | 19:59 | 669.30 | -11.60 | -1.70% | R157 | 17:38 | 5.22 | -.08 | -1.51% | R186 | 17:29 | 6.78 | -.11 | -1.60% | R204 | 17:14 | 5.79 | -.12 | -2.03% | R207 | 16:59 | 5.97 | -.10 | -1.65% | Brent Crude | 20:00 | 99.98 | .33 | 0.33% | Rand / Dollar | 19:59 | 9.2024 | -0.0205 | -0.22% | Rand / Pound | 19:55 | 14.0048 | -0.0640 | -0.45% | Rand / Euro | 19:55 | 11.9626 | -0.0822 | -0.68% | Rand / NZD | 19:58 | 7.7375 | -0.0344 | -0.44% | Rand / AUD | 19:55 | 9.4400 | -0.0373 | -0.39% | Yen / Dollar | 19:59 | 99.4000 | 0.0800 | 0.08% | Euro / Dollar | 19:55 | 0.7689 | 0.0036 | 0.47% | Dollar / Euro | 19:59 | 1.3002 | -0.0060 | -0.46% | Pound / Dollar | 19:55 | 0.6553 | 0.0015 | 0.23% |
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The JSE Today
Trading Statistics
Date | Adv. | Decl. | Unch. | Actives | Volume | Value | Trades | Orders |
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23/04/2013 | 204 | 118 | 85 | 407 | 244,682,098 | R14,806,710,293 | 159822 | 1327809 | 22/04/2013 | 193 | 165 | 63 | 421 | 197,235,457 | R13,034,615,976 | 152210 | 1231639 | 19/04/2013 | 261 | 87 | 72 | 420 | 218,368,406 | R15,258,779,841 | 139303 | 1282232 | 18/04/2013 | 158 | 180 | 83 | 421 | 223,703,966 | R13,746,041,338 | 154170 | 1434404 | 17/04/2013 | 118 | 200 | 77 | 395 | 233,706,420 | R16,079,679,516 | 197306 | 1415110 |
* Includes all listed instruments on the JSE
Index Summary Index Name | RP | Move | % Move | Top 40 | 34,166.00 | 582.00 | 1.73% | Industrial | 49,434.00 | 1135.00 | 2.35% | Mid Cap | 54,996.00 | 240.00 | 0.44% | Small Cap | 43,813.00 | 233.00 | 0.54% | Resource 20 | 43,935.00 | 121.00 | 0.28% | Industrial 25 | 42,792.00 | 1102.00 | 2.64% | Financial 15 | 11,334.00 | 153.00 | 1.37% | Financial & Ind. 30 | 46,276.00 | 1102.00 | 2.44% | All Share | 38,742.00 | 573.00 | 1.50% | Oil & Gas | 29,157.00 | 236.00 | 0.82% | Mining | 27,188.00 | 23.00 | 0.09% | Gold Mining | 1,493.00 | -26.00 | -1.77% | Platinum Mining | 43.00 | 1.00 | 2.48% | GENERAL MINING | 7,523.00 | 13.00 | 0.17% | Oil & Gas Producers | 15,677.00 | 127.00 | 0.82% | Basic Materials | 23,876.00 | 24.00 | 0.10% | Chemicals | 19,163.00 | 85.00 | 0.45% | Forestry & Paper | 20,771.00 | 63.00 | 0.30% | Industrial Metals | 22,988.00 | -4.00 | -0.02% | Industrials | 40,481.00 | 660.00 | 1.66% | General Industrials | 119.00 | 3.00 | 3.22% | Consumer Goods | 46,756.00 | 1718.00 | 3.82% | Automobiles & Parts | 7,812.00 | 57.00 | 0.74% | Household Goods | 162.00 | 5 | 3.25% | Health Care | 61,066.00 | 685.00 | 1.14% | Beverages | 167.00 | 5.00 | 3.32% |
| | Index Name | RP | Move | % Move | Food Producers | 67,345.00 | 762.00 | 1.15% | Personal Goods | 722.00 | 48.00 | 7.12% | Consumer Services | 81,643.00 | 1206.00 | 1.50% | General Retailers | 61,596.00 | -50.00 | -0.08% | Travel & Leisure | 5,580.00 | 48.00 | 0.89% | Media | 133.00 | 4.00 | 3.60% | Support Services | 2,369.00 | -6.00 | -0.29% | Telecommunications | 76,974.00 | 1239.00 | 1.64% | Financials | 30,502.00 | 342.00 | 1.13% | Banks | 51,632.00 | 324.00 | 0.63% | Non-life Insurance | 46,935.00 | 434.00 | 0.93% | Life Insurance | 28,085.00 | 509.00 | 1.85% | General Financial | 2,773.00 | 51.00 | 1.87% | Technology | 35,655.00 | 146.00 | 0.41% | SHARIAH TOP40 | 3,111.00 | 44 | 1.44% | FTSE/JSE SHARIAH ALL | 3,256.00 | 41 | 1.30% | COAL MINING | 19,209.00 | 459 | 2.45% | FTSE JSE Fledgling | 5,914.00 | -18 | -0.31% | FTSE/JSE Alt X | 949.00 | 17 | 1.83% | SA LISTED PROPERTY | 545.00 | | 0.76% | CAPPED PROPERTY | 436.00 | | 0.69% | RESOURCE | 24,059.00 | 48 | 0.20% | DIVIDEND PLUS | 206.00 | 1 | 0.86% | FTSE/JSE RAFI 40 | 7,763.00 | 100 | 1.31% | Capped Top 40 | 18,070.00 | 314 | 1.77% | Capped All Share | 19,640.00 | 295 | 1.53% | JSE TABACO | 6,414.00 | 76 | 1.21% |
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Click here for the Sharenet Index Summary page
Latest Consensus Changes** Code | Company Name | Status | Updated | BTI | BRITISH AM. TOBACCO PLC | BUY | 22/04/2013 | APN | ASPEN PHARMACARE HLDGS | SELL | 19/04/2013 | AMS | ANGLO AMERICAN PLATINUM C... | HOLD | 19/04/2013 | MTN | MTN GROUP LIMITED | BUY | 19/04/2013 | PAN | PAN AFRICAN RESOURCE PLC | BUY | 18/04/2013 |
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Results Expected** Expected | Company Name | Fin. Date | 24/04/2013 | EFFICIENT | February 2013 (Interim) | 24/04/2013 | OCTODEC | February 2013 (Interim) | 24/04/2013 | PREMIUM | February 2013 (Final) | 25/04/2013 | ALTECH | February 2013 (Final) | 25/04/2013 | CLICKS | February 2013 (Interim) |
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Recent Dividends** Share Name | Dec-Date | LDT | Pay-Date | Amount | CMH | 22/04/2013 | 07/06/2013 | 18/06/2013 | R 0.5000 | BLACKSTAR | 19/04/2013 | 07/06/2013 | 18/06/2013 | R 0.0121 | DCENTRIX | 16/04/2013 | 10/05/2013 | 20/05/2013 | R 0.1202 | PSG | 15/04/2013 | 03/05/2013 | 13/05/2013 | R 0.7800 | AMAPS | 12/04/2013 | 03/05/2013 | 13/05/2013 | R 0.3000 |
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Ex Div** Share Name | Dec-Date | LDT | Pay-Date | Amount | TRENCOR | 25/03/2013 | 19/04/2013 | 29/04/2013 | R 3.6000 | SANLAM | 07/03/2013 | 19/04/2013 | 29/04/2013 | R 1.6500 | JDGROUP | 21/02/2013 | 19/04/2013 | 29/04/2013 | R 1.1500 | MPACT | 07/03/2013 | 19/04/2013 | 29/04/2013 | R 0.5000 | SANLAM | 07/03/2013 | 19/04/2013 | 29/04/2013 | R 0.5000 |
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Upcoming AGMs** Code | Company Name | Date | Status | SVN | Sabvest Ltd. | 24/04/2013 | Confirmed | MRF | Merafe Resources Ltd. | 24/04/2013 | Confirmed | SBV | Sabvest Ltd. | 24/04/2013 | Confirmed | CNL | Control Instruments Group Ltd. | 24/04/2013 | Confirmed | JSE | JSE Ltd. | 25/04/2013 | Confirmed |
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