[with acknowledgement to Sizwe Dlamini in Personal Finance, 17 June 2017]
Although their financial behaviour differs from that of other generations in some respects, Millennials may still be in danger of making the same mistakes as their parents when investing and planning for retirement.
The stark reality is that 94% of South Africans are unable to retire comfortably, and a recent survey by 10x Investments reveals worrying insights into the saving habits of young South Africans.
Steven Nathan, the chief executive of 10X Investments, says that, in addition to highlighting that South Africans do not start to save early enough for retirement, another alarming finding was the lack of knowledge about how fees affect investment values.
“While the majority are aware that they are paying fees to financial services providers, most people are unaware of the exact level of fees or the impact that these fees are having on their investment value.
“These findings suggest that Millennials, despite witnessing their parents’ poor financial decisions and retirement misfortunes, have still not realised that fees are the most important predictor of success.”
He says it is important to recognise the financial behavioural traits and trends of Millennials, and how these differ from those of previous generations, because the immediate future of saving and investment in South Africa depends on this demographic.
“Even as financial behavioural traits and trends change, the formula for a successful retirement remains simple: put away 15% of your salary over a 40-year period in a high-equity fund with total fees of less than 1%, and let time do the work.”