South African Human Rights Day is celebrated in memory of the events on 21 March 1960 at Sharpeville in southern Gauteng. On that awful day, apartheid police shot and killed 69 unarmed people and injured dozens more when they opened fire on a crowd protesting against the hated pass laws, which were designed to control the movement of non-white people.
There has been some disagreement over the years about whether this national holiday should be called Human Rights Day or if it should go by the name that many older people still call it, Sharpeville Day. Many people think the name Sharpeville Day recognises that it commemorates a day when individuals lost their lives fighting for the rights of the majority. I am not going to get into that today.
What I am interested in is the idea that while we didn’t have to win some of the rights we take for granted today (such as freedom of movement without carrying a pass), we should at least uphold and reinforce them in honour of the generation who won them for us.
Some of that generation live among us still and, unfortunately, many of them suffer the indignity and deprivation of poverty, their lives and times not having been conducive to saving, investing and preparing financially for old age.
We live in different times (thanks in large part to sacrifices made by many of them) and the least we can do is make the most of opportunities we have. One of those is to prepare for retirement.
I, for one, am doing what I can to try to make my generation the generation that breaks the cycle of workers carrying the double burden of raising the next generation while supporting the previous one. If you want to be part of this change, too, but aren’t sure how or where to start, here are some basic guidelines:
Start early/start now
The perfect time to start saving for retirement is the day you start working; the second best time is now.
Starting to save early means you give yourself the benefit of compound interest, where growth builds on growth. In other words, letting your investments do the heavy lifting for you.
Do your research
Don’t be fooled into believing that saving for retirement is too complicated for you to understand, and don’t sign up for something you don’t understand.
Do a little research and you will discover that an uncomplicated index fund that tracks the market and charges low fees will give the best chance of success.
Make a plan
Set the destination (the lifestyle you want in retirement at the age you want it) when you set out on the journey. Plug some basic information about yourself (age, salary and so on) into the retirement saving calculator on the 10X Investments website to custom-build a plan for yourself.
Don’t pay away your earnings in high fees
Most South African investors have no idea about what fees they pay on their retirement savings. Paying an extra 2% in fees per annum over 40 years can almost halve the real value (purchasing power) of your pension (and could well ruin your retirement).
Max out on tax incentives
To encourage people to save for retirement the government refunds taxes paid on money saved into retirement savings funds up to certain (reasonably generous) limits. If you earn R500,000 a year and contribute R50,000 to your retirement fund, you are taxed on only R450,000. (This illustrates the principle only – in reality your tax calculation will likely have other deductions as well.)
Invest for growth
Investing in a well-diversified, high-equity portfolio has been shown time and again to be the most effective way to grow money over the long term. Index funds are the best way to do that at a low cost.
So, this Human Rights Day let’s recognise the heroes of our past by starting a new fight. Let’s be the ones who win freedom in retirement. The right I am fighting for in my retirement is to be self-sufficient and free to live life as I please.
The content herein is provided as general information. It is not intended as nor does it constitute financial, tax, legal, investment, or other advice. 10X Investments is an authorised FSP (number 28250). 10X Index Fund Managers (RF) (Pty) Ltd is a Manager registered under the Collective Investment Schemes Control Act, 2002.
