The most common question we receive from clients, is:

How much money will I retire with if I start investing R 500.00pm today.

The real question you should be asking is: how much should I be investing to be able to maintain my current lifestyle when I get to retirement?

In answering this question, most clients start to panic, as the amount they should be investing is extremely high. We see a range of different emotions.

In 1980 when you were advised to start looking at a retirement annuity fund, you were told that you will get up to a R 1 000 000.00 for retirement in 2023, when you start investing R100.00pm today. You would have jumped at this opportunity. The reality of it is, you need to beat inflation. Because R 1 000 000.00 in 2023 is barely enough to buy a house.

Inflation has two components in terms of investing. The first being, your premium should be growing more than inflation every year, meaning that the premium amount is increasing to keep you on track with inflation. The second is that your investment should be giving you +3% more than inflation on the minimum. The goal is to not just beat inflation, but to own it!
Let us take an example.

If you want to retire with R60,000.00pm today, your investment value should be around R12,000,000.00. This is the present value. The future value of R60,000.00 pm is the equivalent of R390,000.00 pm in 35 years. THAT IS THE POWER OF INFLATION, meaning, your future value of retirement should be around R78,000,000.00. This amount sounds impossible but with the right guidance and proper financial advice, you WILL be able to achieve your goals!

For accurate guidance in reaching your goal, contact us today for an appointment.

Ryno Gerber
B.Com Accounting
Financial advisor