Cash is not king

Did you hear that heartrending advert on the radio? It was a recently retired couple who finally found a bank that cares for them. Now they can take that dream cruise that they've talked about for years and they can retire comfortably knowing that their capital is guaranteed safe.

Why? Because the bank guarantees them a whopping 7 1/4% return.

Now, if real inflation was 6% (wishthink) that would mean that they have 1 1/4% available to spend, so if they want to retire on, say, R60 000 before tax (and the way they are talking about cruises etc. they would want a lot more than that), then the R720 000 a year must be 1 1/4% of their invested cash.

That means that they invested R57,6m with the bank! Wow, no wonder they think they're OK. My take is that if they were clever enough to accumulate that kind of wealth during their working years, they would not be stupid enough to invest it with that bank.

No. When it comes to retirement, cash is not king!


Click here
 to buy a company from us, click here to buy a Trust from us or click here to get absolutely FREE, ONGOING business and Trust coaching, and tax advice from our CEO, Derek Springett Pr(Eng); CA(SA); Registered Auditor.

Memberships

South African Institute of Chartered Accountants. Designation CA(SA)  Internationally Accredited Financial MediatorsIndependent Regulatory Board for Auditors. Designation RA<Engineering Council of South Africa. Designation Pr(Eng) Member of MENSA, the High IQ Society

 

 

 

Find Us Here

Address: 1st floor, Gallagher School Building, 537 Lupton Drive, Midrand, Gauteng