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Your questions answered

By Supplied Time of article published Sep 1, 2020

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This feature is Sponsored by PSG Wealth. Email your queries to [email protected] or fax them to 021 488 4119


I am 26 and I want to start building up an emergency fund. Where do I begin?

Name withheld

Denise Fourie, a financial adviser at PSG Wealth Silver Lakes, George Central and Mossel Bay Diaz Wealth Management and Stockbroking, responds: Your aim should be to accumulate three to six months’ income. So, if you earn R15 000 a month, you need at least R45 000 (three months’ income) for that rainy day or emergency that may come up. This means you should save about 25% (R15 000 x 25% = R3 750) of your income in the first year to reach that mark.

Remember to review your emergency fund if you dip into your savings, or as your income increases. Ideally, this fund should be readily available in times of need and not tied up in a fixed investment.


I will be turning 40 in three years. I have some retirement savings, but I’m worried I’m behind. I can afford to pay R5 000 a month towards my retirement.

Name withheld

Dulcie Weyks, a financial adviser from PSG Wealth Pretoria Irene Sovereign Drive, responds: Ideally, three times your annual income should be saved by the time you turn 40 to ensure you are on track. If you’re behind, your investment portfolio should be structured dynamically to boost growth in the next few years.

Let’s consider saving R5 000 a month assuming 10% annual investment growth and an annual contribution increase of 5%. An investment started at age 40 (with 25 years to invest) will mean that at age 65 your investment’s maturity value will be R9 415 115.

Starting at age 50 (investing for 15 years) will see you to only R2 652 389 by the time you reach 65 based on the same assumptions, so it can really pay off to invest as soon as possible.


It feels insignificant to save just a few thousand rand a month, particularly when you read about how much is needed for retirement. Please help!

Name withheld

Vanessa Alberts, a financial adviser from PSG Wealth Pretoria East, responds: If you start saving about R2 500 a month, increasing this amount by 5% every year and assuming an average return of 9% on your capital, you may accumulate R500 000 over 10 years. It will depend on the product in which you invest, the assets to which you are exposed, and maintaining your contributions to your savings.

You don’t have to wait until you have accumulated a lump sum to access investment growth. Saving monthly gives you the benefit of a steady allocation to the stock exchange if you invest in funds with exposure to local and offshore equities (shares). There are different asset classes (equities, bonds, property and cash), and it is important to ensure that your portfolio is well diversified, including a combination of these.

When it comes to saving, the power of compound interest is key. The sooner you start putting away money, the more time it has to grow. You will also earn interest on the growth achieved.

Although small amounts every month may seem low on their own, over time they have the collective power (if invested correctly) to add up significantly. This will give you a head start to achieve your longer-term plans and goals. Don’t be discouraged, and chat to an adviser to ensure you invest in the right place.


I have two daughters. How do I ensure I help to raise them to be financially independent?

Name withheld

Riëth Schnetler from PSG Wealth Rietondale Soutpansberg Road in Pretoria (and Top Relationship Manager in the Intellidex Top Private Banks and Wealth Manager Awards), responds: I believe women should be taught from a young age that it is perfectly in order – and, in fact, a necessity – to have their own financial plans and goals.

To lay a healthy foundation, I suggest you discuss basic concepts, such as budgeting, with your children from an early age.

The value of starting early and saving consistently can never be underestimated, so consider making saving part of their everyday lives – tucking away part of their allowance every month is a good start.

In today’s world, as women are building careers and embracing their earning potential, they must also accept the responsibility of effectively managing their finances. This includes growing their financial intelligence and taking control of their financial future.


I would like to retire earlier than planned given Covid-19. What should I consider before doing so? I’m 62 years old.

Name withheld

Lynette Wilkinson, a financial adviser from PSG Wealth Sandton Grayston, responds: The earlier you retire, the longer your capital must support you, and the less time your capital has to grow. Working for two years longer can mean your capital lasts up to five years longer in retirement.

It is always advisable to work for as long as possible, and if you are forced to retire, to do part-time work or consulting to supplement your income if you can. Given the Covid-19 pandemic, many employers have become more open to remote working arrangements, and you may wish to explore this as an alternative to full retirement.

Risks that can derail your retirement plan include retiring too early, inadequate medical scheme cover, spending more than you should, based on your available capital, and supporting adult children or parents who were not part of your original planning.

Everyone’s circumstances are different, so working closely with an adviser will help you to assess what the impact of retirement now or later will mean for your finances.


Can your short-term insurance needs change as you get older?

Name withheld

Luzanne Wait, an Insure adviser from PSG Jeffrey’s Bay, responds: As we grow older, we tend to accumulate more. Moving into your own space (rented or owned) may mean accumulating things, such as furniture, which need to be insured. Owning a property changes your insurable needs significantly as does owning a car.

Inflation tends to affect the replacement cost of most things, so your policy has to provide sufficient cover to insure everything you own at realistic valuations. You should also specify expensive items that you take with you when you leave home, such as jewellery and gadgets.

Insurance is usually required while paying off an asset, such as a home or car. Thereafter, insurance is optional, but without it your asset could be worthless in the event of a fire or accident. This is why you’ll always need to budget for insurance on anything you own, for the entire time you own it.

For some, getting older may mean downsizing or owning less, so it’s important to check with your financial adviser that you have cover in place suited to your unique needs.


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