The only inflation-beating returns you would have earned was on your investment known as multi-asset (high, medium or low equity) which has had the ability of moving 25% offshore, with great results for their investors.

Have a look at your pension/RA/provident fund statement in the months to come: don’t expect much more than 5% to 8%.Your performance has been dragged down by the local stock and bond market in bear market territory.

Investors with their money in living annuities (monies coming out of pension funds and retirement annuities) can move 100% offshore if their risk-profiles allow for it, and generally have done much better.

So here is some advice: if you are over 55 with money locked up in an RA or provident fund, consider moving the money into a living annuity to obtain 100% offshore exposure if that is what you require. Otherwise you remain hamstrung by Regulation 28, which is currently holding you back considerably.

Dodged a downgrade bullet

SA can count itself lucky that it dodged a downgrade bullet by S&P Global Ratings last week. A yellow card instead of a red one; a stay of execution. I think it was a very close call. Perhaps these ice-hearted analysts have some feelings after all. I thought our growth metrics were too poor to avoid a downgrade, but maybe Finance Minister Pravin Gordhan managed to convince them of his determination to get government spending under control. I found S&P’s reference to the debt obligations of our parastatals (SAA, SABS, Petrosa, etc) a major warning to government.

But we have a municipal election coming up and who knows what a re-energised President Jacob Zuma will do or say in the next couple of months. Prepare to be surprised.

So here we go … another six months of anguish. Or, as the late US basketball player Yogi Berra once said: “Deja vu all over again.”

*Magnus Heystek is investment strategist at Brenthurst Wealth Management,
He can be reached at magnus@heystek for ideas and suggestions.

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