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A “Retirement Plan B” you can't ignore!

by , 04 March 2019
A “Retirement Plan B” you can't ignore!
Let me ask you a serious question…

How many of you believe you have enough money to last your retirement?

Well when you consider that over 50% of South Africans aren't confident they will be able to draw an income in retirement, I'm going to assume not many of you.

You see, a standard retirement annuity is simply not enough to generate the income you need, for the retirement you want and deserve.

That's why you need a Plan B.

Today I'm going to show you a Plan B retirement fund that…

Won't see you pay tax

Has minimal fees

And could net you an extra R200k - R500k for your retirement

Do you want to earn an extra R5,100 per month from simply opening an SMS
What I'm about to show you only takes about five minutes to put into action...
You won't have to crunch any numbers...
You won't have to calculate anything...
Click here to find out more... 
 The “Retirement Plan B” fund I’m talking about …
A Tax-Free Savings Account (TFSA).
I’m sure you’ve heard it all before. But I’m not just talking about any TSFA.
You see, you could invest in a Deposit TFSA from your local bank, but there are limitations with this:
Firstly, the highest return you’re likely to receive is around 8%-9% - and that’s only if you invest high amounts.
In addition, the longest investment period is 12 months. That means, you would have to go through the hassle of re-investing in a deposit TFSA, every year for the next 15 years.
Or you could invest in a TSFA via Unit Trusts. But there are also disadvantages to doing this…
Firstly, managed investments like a unit trust cost a fortune in fees. You don’t only have to pay a fee for investing in the fund, but also an advisor fee.
Before you know it, you’re paying 2% in fees. Add this to the fact that 80% of fund managers underperform their benchmarks and your overall tax-free returns after 15 years may look dismal.
A switch to this TFSA could add an extra R200k –R500k to your nest-egg
I’m talking about investing in exchange-traded funds (ETFs).
With ETFs, you won’t pay exorbitant fees associated with unit trusts and a good selection of ETFs will provide you with a better return than unit trusts and deposit accounts.
In addition, ETFs allow you to invest small amounts every month, which may be more affordable than one massive lump-sum.
The yearly investment allowance you can invest tax-free is R33,000. This means, you can invest R2,750 a month. In total, that would equal to R495,000 over 15 years. 
So let me explain using a rough example of ETFs exposed to local, offshore shares and local property…

Obviously past performance doesn’t equal future performance. So to counter that, let’s take 3% off the average returns of ETFs.
Now let’s say a Deposit Account gives you 9% interest a year and a Unit Trust returns 10% a year. This is how your Retirement Plan B could look after 15 years:

You can see investing in ETFs (even with a lower average return) would still make you over R262,000 more than a Unit Trust and over R500,000 more than a Deposit Account.
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How should you build your Retirement Plan B Fund?
Well, it all depends on two main factors - your age and risk tolerance.
1) Age: If you’re 60 plus then you’re already retired or approaching retirement soon. So to wait 15 years for the returns, when you’re more than likely need the money now, isn’t the best option. A deposit account might be more suitable.  But if you’re in your 20s, 30s, 40s and 50s, then building a tax-free Retirement Plan B fund with ETFs is a great option.
2) Risk tolerance: The ETFs I used above are just an example. Obviously the ETFs you choose will depend on how much risk you can stomach. But as a general rule, a good mix should include local and offshore shares and property for growth. Dividends and gold for safety. 
The fact is, whether an ETF tax-free investment account route makes an extra R50k, R100k or R500k… it’s extra income and a Retirement Plan B you simply can’t ignore!
See you next week,
Josh Benton, Real Wealth
P.S. Want to discover additional lucrative investment opportunities to boost your retirement income? Then I urge you to read the Little Book of Big Income to uncover income strategies, tricks and secrets to help you build the ultimate retirement portfolio.

A “Retirement Plan B” you can't ignore!
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