Investors globally and locally are finding themselves in an ‘investment yield drought’, which started in 2008 with the financial crisis in developed markets and rippled through to the rest of the world.
Then came Covid-19, which wreaked havoc on the markets. Retirees and those planning for retirement have justifiably panicked. But the constant refrain from the financial planning industry remains: Do not take short-term decisions for longterm plans.
In South Africa there is a unique combination between the Covid-19 market crash and the SA sovereign risk downgrade by rating agencies that caused long-term interest rates on bonds to increase, says Deane Moore, CEO of retirement income specialist Just.
“Higher long-term interest rates are good news for pensioners because life annuity rates improved significantly. This means those in or close to retirement have an opportunity to purchase guaranteed income for life at some of the cheapest levels in decades.”
Alexander Babich, managing director at Alexander Babich & Associates and deputy chair of the SA Independent Financial Advisors Association (SAIFAA) says SA has an incredible tendency to bounce back from the brink of disaster.
Internationally, interest rates are at either 0% or close to it. In SA investors can get a fixed rate on a three-year SA retail savings bond of 6% and a fixed rate of 8% on five years.
“We do not believe SA is going bankrupt just yet. Although there are credit risks, we think it is still a calculated risk. We believe fixed income funds with short-duration government bonds are still a safe space.”
Denne historien er fra 22 October 2020-utgaven av Finweek English.
Start din 7-dagers gratis prøveperiode på Magzter GOLD for å få tilgang til tusenvis av utvalgte premiumhistorier og 9000+ magasiner og aviser.
Allerede abonnent ? Logg på
Denne historien er fra 22 October 2020-utgaven av Finweek English.
Start din 7-dagers gratis prøveperiode på Magzter GOLD for å få tilgang til tusenvis av utvalgte premiumhistorier og 9000+ magasiner og aviser.
Allerede abonnent? Logg på
THE HEALTH OF SA'S MEDICAL SCHEMES
As the Covid-19 pandemic abates, finweek takes a look at the financial performance of some of the largest players.
The effect of Gilbertson's departure
With Ntsimbintle Holdings now the major shareholder of Jupiter Mines, it could change SA’s manganese industry.
Making money from music
Why investors are increasingly drawn to the music industry.
Conviction is key
Sandy Rheeder plays a critical role in Mukuru’s mission to open up financial services to the emerging consumer market in Africa through tailor-made technology solutions and platforms.
The post-pandemic toolkit
How CFOs can use technology to support growth.
Big city living exodus
Mini cities like Waterfall City and Steyn City are redefining city-style apartment living.
Big compact, big value
Handsome, with a hefty level of standard specification, the roomy Haval Jolion compact crossover is a great value proposition.
On barriers to entry
There are various ways in which a company or sector can achieve competitive dominance. They usually make for good investments.
Fear and greed in one index
To buck the trend, when markets are hot or cold, is a tough thing to do. However, it can deliver solid returns.
Africa's largest data centre facility coming soon
Vantage Data Centers plans to invest over R15bn for its first African data centre facility in Attacq’s Waterfall City.
