The “Two Bucket” Retirement Savings System: What is it and Why is it Important?
The government has said that it is going ahead with plans to introduce a ‘two bucket’ retirement savings system. The intention is to increase the amounts that South Africans are preserving.
But what does retirement preservation mean? And why it is something that the government is so concerned about that it feels it is necessary to change legislation?
In this article we explore the importance of preserving retirement savings, and why it has become such a necessary issue to address in South Africa. We also look at what the two-bucket system means in practical terms for investors.
Much Ado About Regulation 28 and the Private Investor
There’s been much discussion around the recently gazetted changes to Regulation 28, the law governing the management of retirement funds in South Africa. But how do they affect you?
Folks who work for companies usually contribute towards a pension or provident fund and don’t have to think much about Regulation 28. But those working for themselves or small businesses usually use Retirement Annuities (RAs) to save for retirement and should be aware of the implications.
In this year’s budget, the offshore allocation in RAs was raised from 30% to 45%.
This gives private investors a lot more options.
The Risk That Many Investors Don’t Think About
Many people have things dotted around their houses that they claim are extremely valuable. It may be collectible coins, or antique furniture, artwork, or even wine.
However, the value of something is not determined by how it looks or feels or even tastes. The only thing that really matters is how much someone else is willing to pay for it.
Liquidity is not something that investors think about too much, but it is a vital consideration in any investment. It is about how easily you can sell an ‘asset’, and whether there is really a market for it.
Read on to find out more about liquidity risk and why investors should give it more attention.
Capital Gains Tax: 10 Common Questions Answered
As the annual tax return deadline (24 October 2022) looms, we thought it’d be good to answer some commonly asked questions about Capital Gains Tax (CGT).
CGT can seem very unfair, but why not look on the bright side? At least paying CGT means you’re actually improving your financial situation year-on-year, which is not something many South Africans can say…Especially as we deal with the fallout from Covid and the Russian invasion of Ukraine.
Read on to find out why CGT exists in the first place and what you can do to minimise its impact on your finances.