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Here's the deal: You may read the information on the site for free and ask questions. As and when I have the time I'll answer the questions on the website and add new articles. Please do not consider it to be advice - the only free investment advice is to apply your own mind. If you are worried about your investments, I am willing to have a look and improve it. If you are destitute I will try to help free of charge (but you join at the back of the queue). If you are not destitute then email me and we can agree a lower fee (percentage terms, repeating monthly, is fine) than you are currently charged. I have limited time available, and will prioritise the work accordingly, so please be patient. Email me at invest@freeinvestmentadvice.org detailing the situation for which you'd like advice. Rob Baker

Strengthening retirement savings

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17 May 2012 I agree with a lot of what National Treasury has to say in their "Strengthening retirement savings" document. My main criticism is that too much weight is being placed on restricting behaviour and not enough weight is being placed on the Constitutional requirement to advance the financial freedom of South African citizens, and even worse, in some instances the legislation actually prevents people from making sensible financial decisions.

Government's legitimate concerns:

  1. Firstly, do no harm (i.e. don't make the situation worse for people than if there were no regulations).

  2. Freedom with transparency - let providers of financial products do what they want, so long as they are fully transparent about it.

  3. Protect those who don't know what they are doing.

  4. Government's main active priority is to ensure that people save a minimum amount so that they don't become a burden on the State (i.e. on other citizens). Secondly, they don't want people to become burdens on their families in old age, so they want to encourage people to save in excess of the bare minimum.

  5. Encouraging efficiency, especially in the form of low costs.

Government may achieve their aims by:

Comments on some of the specific proposals

Annuities market proposals

Using savings to pay off your property bond

This is the single worst thing about our current regulations, so deserves a few words of explanation. It's a dangerous strategy to go into debt at the same time as saving, yet our regulations ensure that many South Africans owe a lot of money on their property mortgage at the same time as having an equivalent amount of savings in their retirement fund. This enriches banks (who collect a fee on the mortgage, which would otherwise be paid off) and asset managers (who collect a fee on the retirement savings, which would otherwise be used to pay the mortgage off); but is risky for individuals (who effectively are borrowing money to invest).

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