File Image: IOL
File Image: IOL

When it comes to your retirement, Covid-19 doesn’t have to be a total gamechanger

By Supplied Time of article published Jun 17, 2020

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After the lockdown was implemented, Liberty Executive Wealth Adviser Carlo Gil was telling his clients to delay their retirements if possible. Weeks later, the markets are recovering and it’s safe to reinvest – with expert help

For those of us who have retired or are on the verge of retirement, the Covid-19 pandemic has been a terrifying experience. Not only are the health implications of the virus at their most severe for people in this age bracket, but the negative financial impact on savings and retirement funds has been seen worldwide. Retirement savings are intrinsically linked to financial markets, and as global lockdowns brought economies to a grinding halt, so too did we see a broad-based fall across most asset classes. What this means is a noticeable decrease in retirement savings value.

However, the market volatility that was so prevalent just a few weeks ago is already starting to stabilise, and the recovery period means that not only are there opportunities to recoup any losses, but there may be opportunities to grow your investment.

This is the time to speak with a financial adviser, because just a slight re-managing of your retirement plan could mean the difference between a loss or potential growth of your life’s savings.

Retirement going into the lockdown

Liberty Executive Wealth Adviser, Carlo Gil, specialises in investment and risk cover, and prior to the lockdown was receiving numerous calls for advice from his clients – particularly those on the verge of retirement. “I had a client who was set to retire the week that the lockdown was about to start, and in that week, we saw a 30 percent drop in the (FTSE) All-Share Index. This client was invested both locally and internationally, and in that scenario, we told him to hold, to postpone his retirement because he stood to lose a significant amount,” said Gil. But just five weeks later, Gil explained that there was already a 20% market recovery, locally and abroad, which allowed the same client to retire that week without significant loss.

“Typically, at this point, when I looked at my older clients’ portfolios, the initial reaction was that we had to hold off on selling because the losses were too big. But now, there are a lot of opportunities arising during the pandemic, and after the recent Moody’s downgrade,” he said.

 Where are the opportunities for reinvestment?

While every retiree's circumstances are different, there have been some markets that are becoming more lucrative across the board, even in the face of continued volatility. The bonds market, Gil explained, has become a top investment priority, as well as safe investments in currency or cash markets. “We are now third in the world on the highest bonds rates. This is due to the fact that the reserve bank and treasury are trying to attract foreign investment; however, this won't last very long,” he said.

Gil said that certain clients have also been able to invest in life annuities, because the rates have gone up so much. “I had a client who, pre-lockdown, was on an income of R55 000 – but for the same capital amount, with the new bond rates, we increased his income to R73 000,” he said.

However, it may not be possible for all investors to alter their portfolios so easily, especially if they’ve already experienced major losses. “We are advising clients who have seen very negative effects to hold off on selling for now, because many of these markets can still bounce back, as we’ve seen in the past,” said Gil.

“But even with depleted portfolios, we have some opportunities. We’ve seen the rand strengthening, as well as the S&P 500 Index and European markets improving. You do need to look at the various options,” he said.

Innovative packages that provide investment security

Many financial services providers offer stable and secure investments to ensure that your retirement savings are protected, some products on the market even have features that allow you to invest in a high-growth portfolio while locking in a minimum investment value, giving you the safety-net you need during market downturns; thus enabling you to take more risks and make bolder investment choices while securing your retirement income. 

Try not to panic

It’s understandable that many people of retirement age are making knee-jerk decisions to try and “save” their retirement funds. After all, these are their life savings that we’re talking about. However, everyone’s situation is different, meaning there could be opportunities for growth that you might be missing. In the unprecedented age of Covid-19, now is the time to take advantage of having an expert financial adviser at your fingertips.


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