20s – THE EXPLORATORY YEARS
THIS DECADE IS ALL ABOUT YOU. WE’LL SWEAT THE DIFFERENCE BETWEEN PENSION FUNDS AND HELP YOU SCRUB AWAY DEBT TO LAY THE GROUNDWORK FOR A LIFETIME OF COMPOUND INTEREST.

420 – The number of times you will invest into your retirement fund if you start at age 25 and stop at 60. As a rule, start with 15% of your salary from day one.

NUPTIAL BLING
There’s an old adage that cost of an engagement ring should be around double your monthly salary. Turns out that was just part of a (very successful) marketing campaign started by De Beers in attempt to sell more diamonds. Chances are, though, that one day you will buy a ring (or a house), and goal-based saving is a great way to save: start a ring/wedding/house fund with a monthly debit order payment into it.

R30 000 Starting price of the average ring
28.9 Average age of a groom. For brides it’s 27.1.
R800 Average cost per person at your wedding. For 100 guests, you’re looking at at least R80 000.

BE A BETTER LISTENER
Your career success will depend on how well you read your bosses. Confirm that you’re all on the same wavelength by asking, “You want me to do x, y, and z, right?” Pay attention to tone (anger, satisfaction); if something is left unsaid, ask why.
– Dr David A. Garvin, a professor of business administration at Harvard

The 29-year old WordPress Founder, Matt Mullenweg, on HOW TO WRITE YOUR OWN SUCCESS STORY

30s – THE BREAKTHROUGH YEARS
YOU’RE LIKELY TO BUY YOUR FIRST HOUSE THIS DECADE (NICE!). IT’S ALSO THE TIME TO PROVE YOURSELF. USE THESE TIPS TO GET AHEAD EVEN AS YOUR TIME, MONEY AND PATIENCE ARE STRETCHED IN EVERY DIRECTION.

HOUSE MONEY
The 30-year mortgage bond is a nasty development that has crept in over the past few years. Most of us just think it’s just the friendly bank manager making the house more affordable to us… but few have actually sat down and counted the real cost of the 30-year bond.

R1-million house @ 8.5% interest* (prime)
20-year bond       Repay R 8 678       Total R 2 082 776           Interest R 1 082 776

30-year bond       Repay R 7 689       Total R 2 678 089           Interest R 1 678 089

* If you’d paid 10% extra, your bond would be gone in 16 years, and you’d have saved R1.8-million in payments and R832 000 in interest!

BUILD YOUR BRAND
Want to boost your earning potential? Develop your personal brand. It describes the qualities that differentiate you and that you can deliver on. Find it at the intersection of your passions, values, and job strengths. Then write a creed that hits those three areas for your resume and LinkedIn profile.
– William Arruda, founder of Reach

SEED SERIOUS GROWTH
Your bond, retirement and education fund for any kid(s) are on track, and you still have some dosh. Time to invest, my friend. Speak to a qualified financial advisor about your options – and look for a high growth portfolio… like this one, which would produce returns of inflation – plus – 6% over time:

Funds                                                                % Allocation                 Asset Allocation
Coronation Global Managed Fund                     15%                             Equities 70%
SIM Dividend Plus Index Fund                            15%                             Bonds 10%
Northstar Metropolitan Managed Fund            35%                             Cash 18%
Prudential Balanced                                                35%                             Property 2%

 

RUN THE RISK
Beware of too little risk in your retirement fund. Don’t be fooled by the deceptive names typically given to retirement portfolios such as “aggressive”, “balanced” and conservative. We all tend to be too conservative with our savings, but by definition a retirement portfolio can never be “aggressive” – there are limits to the maximum amount that can be invested in shares (that’s the aggressive part). Over a retirement funding cycle (typically at least 35 years) being too conservative can cost you big time:

R1 000p/m into                            Final Value                             “Final Pension”
Aggressive portfolio                             R8.7m                                         R 36 250pm
Balanced portfolio                                R6.3m                                         R 26 250pm
Conservative portfolio                         R4.65m                                       R 19 375pm
* Assumes returns of inflation +5, 3.5 & 2% pa

32-year old Tough Mudder founder, Will Dean, on HOW TO MAKE A KILLING (WITHOUT KILLING YOURSELF)

40s – THE CRUCIAL DECADE
EVEN THOUGH THERE’S NO OFFICIAL RETIREMENT AGE IN SOUTH AFRICA (THE LABOUR RELATIONS ACT PROHIBITS DISCRIMINATION ON THE BASIS OF AGE), YOU’RE HALF-WAY THROUGH YOUR WORKING YEARS. (UNLESS OF COURSE YOU WANT TO BE STUCK BEHIND THAT DESK WHEN YOU’RE 75…)

WHO WANTS TO BE A MILLIONAIRE?
It’s easy: save R1 000 a month for 18 years and you’ll be there. But don’t get too excited: the actual value of R1-million in 18 years’ time will be just R340 000.
Assumes 6% annual escalation and 11% return

ARE YOU ON TRACK?
Building wealth in your 40s is all about inflation. You need to beat it, and cash in the bank won’t do this. You need to take equity risk, and with that comes volatility.

                           Nominal Return          Real Return         Standard Deviation (“risk”)
Equity                                   17.7%                    7.9%                               20.6%
Property                               16.8%                    7.1%                               19.2%
Bonds                                    13.9%                   4.5%                               8.4%
Cash                                       12.4%                   3.1%                                1.3%
Gold (ZAR)                          11.9%                    2.6%                               18.1%
CPI                                         9.0%

RAINY DAY
Best place for that emergency fund? Don’t sit with the cash in anything but a money market unit trust fund (no fees in or out, and no capital risk) or an “enhanced” income fund unit trust:

Average interest on R50k with the bank (current account): 0%
Average interest on R50k in money market unit trust fund: 5% (R2 500 pa)
Average interest on R50k in “enhanced income UT: 7% (R3 500 pa) but with small capital risk

SCHOOL’S OUT
Few big companies will even look at your (or your kid’s) CV if you don’t have a bachelor’s degree to your name. So how much is teriary education going to set you back? Here’s what a three-year degree at the University of Cape Town costs in 2013:

Year 1  R 51 000
Year 2  R 56 000
Year 3  R 62 000
Total    R 169 000

Equivalent cost in 2023 (10% inflation) R 460 000
Amount needed to save to achieve this R1 700pm

*Assumes 6% annual increase and 11% return

SHARPEN YOUR SUPERVISING
Too many bosses leave their charges rudderless because they think it’s “empowering” for employees to find their own path. Instead, set up one-on-one meetings at least once a month to provide guidance and talk about formalised goals. Spell out clear expectations and track the employee’s follow-through each time you meet. With good documentation of performance, you can convince higher-ups to reward your best workers – and eliminate the worst.
–Bruce Tulgan, author of It’s Okay to Be the Boss (eBook R200, kalahari.com)

Ralph Gilles, 43-year old senior VP of product design at Chrysler and CEO of the SRT brand, on HOW TO BUILD A DREAM TEAM

50s – THE HARVEST YEARS
CONGRATS: YOUR EARLY 50S WILL PROBABLY BE YOUR PEAK EARNING YEARS. YOU’RE ALSO MORE LIKELY TO SELL A HOUSE. YOU’RE ON TOP OF YOUR GAME, AND IT’S TIME TO RIDE YOUR SECOND WIND.

BUSINESS IN A BOX
Relaunch your career by taking the reins of someone else’s idea.
90/49 – Percentage of new franchises/new independent businesses that make it five years

Return on independence
Franchises are great for guys who have some money saved and want to work for themselves but aren’t willing to risk their livelihood on some basement invention, says Phil Dyer of Dyer Financial Advisory. To search franchises by category, name, and amount of start-up cash needed, go to franchise.org.

TRY REVERSE MENTORING
You’re surrounded by people with darker hair, lower cholesterol, and more energy. To adapt, ID a protege and propose “reverse or reciprocal mentoring.” This is hot at companies like Dell and Procter & Gamble. It’s an informal way to encourage learning and facilitate cross-generational relationships in the office.
– Lisa Quast, a Seattle-based career consultant

GOT ENOUGH?
Before you hit your swingin’ sixties, make sure you have enough capital stashed away to fund your 30 years as a pensioner.

Monthly pension:         Approximate Capital required
R 25 000                              R 6 000 000
R 30 000                              R 7 200 000
R 35 000                              R 8 400 000
R 40 000                              R 9 600 000
R 50 000                             R 12 000 000
*Assumes living annuity with income @ 5%, escalating at 6%pa

MUNCH MUNCH
Watch out for the fees. An additional 1% pa on your investment will mean about 11% less over 20 years and as much as 16% less over 30 years. Make sure you know what fees you are paying on your investments and why you are paying them.

IT’S TIME TO MOVE
That gold/platinum card is costing you must more than you think. At the end of the day, who really cares about the colour of your credit? As a guide, if you’re paying more than R80 to R100 per month in bank fees, you’re over-paying. Remember, the bank is not your friend. It’s a business with shareholders who are looking for returns. You need to get maximum for minimum.

BEWARE THE DEBT MONSTER
The most expensive thing you will ever buy? It’s not the Ferrari, it’s the debt on the Ferrari.

20 million Credit active consumers in South Africa (December 2012)
10 million Credit impaired consumers (>3 months in arrears)
R1.44 trillion Total amount owed by South African consumers. The national annual budget is about R900-billion.

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