Yesterday ABSA announced the closing of their ABSA Money
Market Fund. ABSA have announced investors have 90 days in which to withdraw
their funds, switch out of the ABSA Money Market Fund or after 90 days the
funds will be transferred into an ABSA investment bank account.
Earlier this month we sent investors information on the Marriott High Income Fund as an alternative to fixed deposits and money market investments. The Marriott High Income Fund is a Multi-asset Income Fund that is currently yielding 6%. With interest rates currently at very depressed levels, this is an attractive investment return for investors seeking an income from their savings whilst not wanting to be exposed to higher levels of risk. To find out more about the Marriott High Income Fund please click the link.
For investors who wish to remain invested in Money Market
funds we are also able to provide a variety of alternative Money Market funds
where the yield varies between 4 – 4.5% per annum. To find out more information
on how to invest please click
here.
An alternative
to cash and money market investments
Over the past year, the South African Reserve Bank (SARB) has cut interest rates by 3%. Investments in call accounts, fixed deposits and money market accounts are currently yielding between 3 – 4.5% per annum.
The Marriott High Income Fund is a low-risk unit trust fund that has a primary objective of providing investors with a high-income yield as well as protecting investor’s capital over the term of the investment.
Marriott High Income Fund has a proven track record of providing investors with a predictable high level of income. Marriott High Income Fund has consistently provided inflation-beating returns whilst protecting investor’s capital.
Entry yield of 6.08%
Suitable for investors looking for an alternative to cash
No fixed term on the investment, funds readily realisable
The Fund is actively managed and due to its flexible mandate, we believe the portfolio will continue to deliver inflation-beating returns whilst protecting capital over a 24 month period. For more information or to discuss how to invest in the Marriott High Income Fund please contact Kevin or Greg on 041 373 0601.
we believe the portfolio will continue to deliver inflation-beating returns whilst protecting capital over a 24 month period. For more information or to discuss how to invest in the Marriott High Income Fund please contact Kevin or Greg on 041 373 0601.
Financial
Services Conduct Authority (FSCA) issues second crypto health warning for
consumers
Last week the FSCA noted once again, the large number of
investors who have reported financial losses from investing in Crypto assets.
The FSCA again reminded consumers who wish to invest in any investment asset or
product – specifically unregulated, risky ones such as cryptos – that if it
sounds too good to be true, it usually is! Consumer caution is strongly advised
to avoid painful or catastrophic financial losses. To read more of the
FSCA’s warning please click on the link.
The COVID 19 pandemic has highlighted several retirement problems! Historically, on retirement, most retirees have invested their retirement savings into living annuities.
For living annuities to sustain an income over the duration
of the investor’s lifetime two things are important:
If the income withdrawal is more than the return
on the investment the capital value will decrease. This will ultimately mean
that the client’s income will decrease in the future.
The living annuity is dependent on the returns
produce within the underlying investments. These returns could be positive or
negative
International research indicates that an investor should
withdraw a monthly income of 4-5% per annum if they wish their income to be
sustainable for the duration of their lives. It is a sad fact that in
South Africa most people have not saved enough for retirement and they are
withdrawing 7-10% per annum.
Investors who have invested their retirement savings into
living annuities are facing an income crisis as the income provided by living
annuities has decreased dramatically. Looking back over the past two or three
years, income funds were achieving returns +/-8% per annum. However, earlier
this year the South African treasury reduced the Repo rate by 3%. As a result,
the average return for income funds has declined to +/- 5% per annum.
The problem gains intensity for those investors who placed their annuities into balanced funds [multi asset high equity funds] Over the past year the average balanced fund in this sector has achieved -2.79% and over five years the average Balance fund return has been 2.47% per annum. [Performance figures supplied by Morningstar as at 31st October 2020.] What is more chilling is that in the last five major world stock market crashes balanced funds have declined by +/- 20%. This could be calamitous for living annuities.
Herein lies the problem! Investors who withdraw between
7-10% or more will see their capital values diminish and the investments are
doomed to fail!
Let us be quite clear about this! One cannot spend more than
what one is earning! If one withdraws 8% and the return is 2%, the capital will
reduce by 6%.
Investors need to decrease their income urgently if they
wish their annuities to succeed. We cannot emphasize this enough! Please
contact us to review your living annuity income withdrawals and to explore alternative
options.
Christmas Office
Closure
Our offices will close on Tuesday 15th December 2020 and re-open on Monday 11th January 2021. We, at Kevin Mills Financial Services, Greg, Leonie and Kevin wish all our clients, family and friends a blessed Christmas and Happy New Year!
Stay safe and well and COVID free!
“Once in the world, a
stable had something in it that was bigger than our whole world.” C.S. Lewis.
