Alexander Forbes Retirement Fund newsletter Issue 3 for 2022 Retirement alexforbes.com
These changes will result in a reduced total investment cost, which is better for you. They will also encourage you to consider your investment strategy before and after retirement. financial women need to work harder to
Enhancing our lifestage strategy
More changes coming very soon
To recap …
The enhancements we’ve made to our lifestage strategy are simple: investment types align before and after retirement, and we’ve renamed the portfolios.
AFRF PassiveportfolioProtector
tips for young adults Why
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AFRF Houseview Income Target portfolio
AFRF Protector portfolio
We’ll introduce two more income targeting portfolios in September 2022: • AFRF Inflation-linked Annuity Target portfolio if you want a guaranteed pension for life that is linked to inflation
Alexander Forbes Retirement Fund newsletter2 Fund updates – hot off the press Live smart, save hard
comfortablyretire Investmentreturns to 30 June 2022
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• AFRF Living Annuity Target portfolio if you want a flexible pension that is linked to the value of your investments and must be managed We will send you more information closer to the time on these additional portfolios. You will then be able to choose which income targeting portfolio you want to invest in when you are five years from retirement.
Quick links –keepvouchers!Takealotwinning Fund updates –hot off the press The turnsAFRF25–
New income targeting portfolios will replace the current portfolios to better align your investment strategy close to retirement. It makes sense that your investment strategy before retirement matches the income you are targeting after you retire. For example, the AFRF Houseview portfolios introduced in June will align with a with-profit guaranteed pension, which should suit most members’ needs. We renamed the portfolios in June 2022:
AFRF Passive Houseview Income Target portfolio Ourboardnotice
Alexander Forbes Retirement Fund newsletter3 In-fund preservation is changing administrators With the sale of the AFICA group to Glacier we’ve had to move in-fund preservation members back onto our Khanya administration platform. The change in admin systems will improve your online access and offer you greater efficiencies. The change of administrator does not affect: • the fees • your portfolios • any aspects of the in-fund preservation fund If you have any queries, please note that the email address has changed from transactionalquery@alexforbes.com to paidupmembers@alexforbes.comQuicklinks: win win win!! Survey feedback Thank you for your feedback on our last newsletter. Please keep sending us feedback so that we can keep giving you articles that are interesting reads for you! What does the 50/30/20 rule mean? Submit your answer here and you can win a R200 Takealot voucher –we have 20 vouchers to give away! Find the answer and win Anything we can improve? contactus@alexforbes.com Any questions on these articles? 0860 100 afrfqueries@alexforbes.com333
This is a tough one. Who doesn’t want to help a friend out in a time of need? The problem is that many times your friend won’t be able to pay the money back. It will ruin your friendship. If you are going to lend money, rather see it as a gift. That way, if your friend does pay the loan back, it’s a bonus. If not, you weren’t expecting it back anyway. Don’t lend money if you don’t have it yourself – the last thing you should do is take it from your overdraft.
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Paying for something using cash helps you to get a better grasp of the value of the money you are spending. It is easy to just pull out your plastic card until you get your monthly statement. That’s when you see how quickly it adds up.
Tip 2: Be careful of taking the wrong financial advice
A 32-day notice account is a savings account that keeps your money safe. You have to give the bank 32 days’ notice before you can withdraw some or all of your money.
As a young adult you are probably experiencing some of the best years of your life. Here are some financial tips to help you build a better tomorrow for your future self:
The AFRF turns 25 years old in August –financial tips for young adults
Tip 1: Learn to live on cash If you can’t afford it, don’t buy it on account.
Friends and family can give you what they think is good advice, like inviting you to join a pyramid scheme. You may even have a cousin or friend who encourages you to spend money you should be saving.
Tip 4: Commit to saving a small amount every month
Open a 32-day notice account and commit to adding small amounts whenever you can so it can grow for that special something. In this way, you can pay for it in cash instead of using credit. What is a pyramid scheme? It’s an illegal investment scam that pays members higher up in the structure with money taken in from newly recruited members. What is a 32-day notice account?
Tip 3: Never lend money to friends
Tip 8: Track your spending –budget You are more likely to spend wisely if you are tracking your spending habits. Always know how much you have available and how much you have spent. Use the AF Online budgeting tool Alexander Forbes Retirement Fund newsletter5 Tip 5: Get independentfinanciallyassoon as possible You may still be getting support from mom and dad at this point. While there is nothing wrong with getting money from mom and dad, it is better to work yourself to a point of financial independence. That way, if anything happened to your parents, or they lose their money somehow, you are capable of standing on your own two feet. 50% essentials • Food • Rent • Water and lights • Transport Tip 6: Don’t get into debt when you get married Your wedding day should be magical, but is should not break you financially. Don’t get yourself into debt because of it. Be realistic about the type of wedding you can afford and the unnecessary stress of being in debt will have on your new marriage. Tip 7: Get into the 50/30/20 way of life This means that you spend 50% of your income on essentials like housing, food and transport. You’ll use 20% on savings for your future self and spend 30% on wants like social activities and hobbies for the month. 20% savings • General savings • Debt reduction • Investments • Emergency fund 30% wants • Travel • Hobbies • Dining out • Shopping Money, like emotions, is something you must control to keep your life on the right track. – Natasha Munson “ ”
Why women need to work harder to retire comfortably August is Women’s Month and 9 August is Women’s Day. It seems fitting to consider that women may need to take saving for retirement more seriously than men because they face more obstacles than men do. It’s a fact that women live longer, often need to take career breaks to look after children and sometimes get paid less than men. In this article, we take a look at the challenges women face and provide solutions to those challenges. Women live longer How long women and men are expected to live in South Africa on average Women: 67 years 2 months Women: 71 years 3 months Men: 59 years 9 months Men: 64 years 6 months 2002 2022 Statistics South Africa Women usually live almost 8 years longer than men (of course, some live longer or shorter) On menaverage,nowlive over 4 years longer than 20 years ago
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Meet Virginia … Virginia gave birth to a special needs child and decided to stay at home until her daughter was two years old. After those two years, she returned to work. Thankfully her employer provides access to financial advice. Virginia met with an adviser who calculated how much she would need to save to make up for the shortfall in contributions. Her employer’s retirement fund doesn’t have flexible contribution levels, so she couldn’t opt for a higher contribution level, but does have the option of additional voluntary contributions. Virginia signed up to make them and even saved some tax at the same time. Today she is well on her way to reaching her retirement goals.
Women often have career breaks In some households mothers may take off a few years of work to look after their young children. The reality is that when they return to work, they often have to pick up where they left off, which sets them back in their career and in their earning potential. They also don’t contribute towards retirement during this time. To prepare for the years lost, you could ask your HR or payroll department if you can contribute more from time to time. You’ll need to complete the additional voluntary contribution form here or get it from you HR department.
Meet Sophie … Sophie’s family has a history of living well into their 90s. Though this is great for Sophie, it may also mean that she needs to prepare for a retirement that extends longer than most and will need more savings to cover this extended period. After speaking to a financial adviser Sophie increased her monthly retirement contributions from 15% to 17%. She understands that she will need to track her savings along with her adviser to make sure this adjustment will be sufficient to cover her potential longer life.
Increase your contributions if your employer offers flexible contribution rates. Ask your HR or payroll department if you can contribute more from time to time. You’ll need to complete the additional voluntary contribution form here or get it from your HR department.
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How you prepare for those additional years?
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Meet Jenny … Jenny’s husband died in an accident many years ago, leaving her with two children to take care of by herself. Though Jenny is doing well at work, she is barely making ends meet. Jenny realised that she needs to provide for her future because she has no one else to get support from. She made a promise to herself to keep her retirement savings invested every time she changes employers. Today she has three preservation funds that are growing well. She may not retire in luxury but Jenny will have an income when she is no longer working. She is a keen baker and plans to do some baking in retirement to make some extra money.
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Women, in general, earn less than men On average, women earn 23% to 35% less than men in South Africa. This percentage is quite high compared to the global average pay gap. While the gender pay gap is still so evident, as a woman it is critical to plan your own retirement accordingly.
Financial tip: Educate your children from a young age. Teach them about a budget and to save as much as they can for something they want in future. Tell them how the issues facing women that we have discussed above can make it more difficult to save enough for retirement, so they understand the importance of starting early.
Women are heads of households In South Africa women head around 38% of households. This means women often have to spend all their money on caring for their children, leaving little to save for retirement. To look after your home and still prepare for your future, your best option is to keep your retirement savings invested every time you change employers instead of taking them in cash.
Meet Miriam … Miriam is a medical professional where women are paid less than men for the same work. She decides that she wants a certain level of comfort when she retires. The problem is that her fund salary and her monthly contributions are not enough to reach her retirement dreams. Miriam speaks to a financial adviser and the adviser calculates that if she retires at 68 instead of 63, she will reach her goals. Miriam is happy with this plan because her employer will allow her to retire later.
Alexander Forbes Retirement Fund newsletter9 Find out how much you’ve saved for retirement 24/7/365 This is how you register: Step 1: Log in here Step 2: Click on Register now Step 3: Complete the registration page to get registered on AF Online Important note: It is now quicker to register. Once registered you’ll be able to check your savings balance day and night. This is how you download your benefit statement: Step 1: Log into AF Online Step 2: Click on the Individual tab and select Investment Stepvalues3: The investment value screen will open. Click on StepStatements4: The Statements screen will open. Select the statement you’d like to view from the list Our noticeboard The My Money Matters Toolkit is live! Get free access to a professional financial consultant and the My Money Matters toolkit to help you manage your finances and guide you through starting a new job, resigning and retiring. Visit the website to find out more: websiteAlexforbes Rewards is launched in July We partnered with Randgo to give you a digital mall for excellent discounts on day-to-day necessities like food, household goods, toiletries, airtime and even travel. Don’t miss out on this opportunity to save some money! Click here to start shopping. If you can’t activate your profile on Alexforbes Rewards, please complete this form
Alexander Forbes Retirement Fund newsletter10 Investment returns Performance of investment portfolio to 30 June 2022 Performer R100 R113 R134 R151 R273 R100 R114 R140 R160 R309 Benchmark Source: Alexander Forbes Investements 3 months 1 year 3 years 5 years 10 years We measure how well a portfolio is performing by comparing it to a benchmark1. We can see that the portfolio is better than its benchmark over all Keepperiods.inmind that the value of your investments go up and down over short periods like three months. Over a period of 10 years you would have R290 more for every R100 you saved in this portfolioinvestmentinsteadof its Overbenchmark.longperiods, we expect the value of investments to grow. For this reason, it’s better to focus on long periods like five or ten years when you look at retirement savings. Invest over long periods for your money to grow – the longer the better. 1 325 4Let’s take AF Balanced High Growth as an example The value of R100 invested over various periods to end June 2022 AF High Growth AF High Growth R93 R103 R123 R144 R217 R95 R105 R130 R144 R260 Benchmark Source: Alexander Forbes Investements 3 months 1 year 3 years 5 years 10 years 1 What is a benchmark? A ruler shows us objectively how long a piece of string is. In the same way, we use a benchmark as a value to measure how an investment portfolio is performing and if it is delivering on its performance objectives. AF Passive Bold AF Passive Bold R92 R103 R122 R138 R92 R103 R121 R137 Benchmark Source: Alexander Forbes Investements 3 months 1 year 3 years 5 years
AFRF Real Return Focus AFRF Real Return Focus R103 R111 R128 R151 R247 R98 R106 R124 R146 R236 Benchmark Source: Alexander Forbes Investements 3 months 1 year 3 years 5 years 10 years Alexander Forbes Retirement Fund newsletter11 If you are considering changing portfolios or investment strategies, we encourage you to get professional financial advice before doing so. Can’t find your investment portfolio above? View the investment returns here. AFRFAFRFProtectorProtector R98 R106 R119 R134 R97 R104 R116 R129 Benchmark Source: Alexander Forbes Investements 1 year 3 years3 months 5 years AFRF Passive Protector AFRF Passive Protector R97 R104 R117 R130 R97 R104 R116 R129 Benchmark Source: Alexander Forbes Investements 3 months 1 year 3 years 5 years AFRF Stable Focus Combined AFRF Stable Focus Combined R99 R104 R123 R144 R103 R110 R125 R144 Benchmark Source: Alexander Forbes Investements 3 months 1 year 3 years 5 years 2 The Real Return LifeStage is closed and members can’t choose to switch into this strategy. LifeStageReturnReal2
alexforbes.com ImagesGetty•23247-NL-2022-4 The businesses are licensed as follows: • Alexander Forbes Financial Services (Pty) Ltd is a licensed financial services provider (FSP 1177 and registration number 1969/018487/07). • Alexander Forbes Investments Limited is a licensed financial services provider and registered insurer (FAIS licence number 711, company registration number 1997/000595/06 and insurer number I155). Contact details Phone the Alexforbes Client Contact Centre on 0860 100 333 Monday to Friday between 08:30 and 17:30 Send an email to: afrfqueries@alexforbes.com alexforbes.com While care has been taken to present correct information, Alexforbes and its directors, officers and employees take no responsibility for any actions taken based on this information, all of which require financial advice. Please speak to your financial adviser for tailored advice based on your individual financial needs. You can also contact: My Money Matters Centre Call 0860 000 381 or email mymoneymatters@alexforbes.com Visit https://mymoneymatters.alexforbes.com/
