In a recent article by Old Mutual Investment Group, they stated that inflation is still investors’ biggest enemy, as it erodes their spending power.
Ronald Reagan once said: “Inflation is as violent as a mugger, as frightening as an armed robber and as deadly as a hit man”.
The reality is that many investors suffer from “inflation illusion” – they do not notice how destructive inflation can be to their investments over time. Therefore, we look at our long-term investment returns in real terms (return above inflation).
INFLATION AND YOUR RETIREMENT
If your retirement income does not at least grow in line with inflation, you will either experience a decline in your standard of living or you will run out of money.
At a 6% inflation rate, a fixed monthly retirement income of R10 000 a month today will decline in real terms to about R1 700 a month after 30 years.
See an example below of the impact of inflation on a retirement income of R10 000 over several years:
Source: Old Mutual Long-Term Perspectives 2020
It is a difficult topic to discuss, as many people would prefer to avoid thinking about an unpleasant future for themselves and their families.
Your concerns are valid. The PW Harvey & Co team has expert knowledge in order to assist our clients and to provide the complete financial package.
For assistance or any queries, please contact our team at info@pwharvey.co.za
Download the PW Harvey & Co Client App from the Google Play Store or the Apple App Store today!
A will is one of the most important documents you can have. At PW Harvey & Co, free wills come standard. Let us assist with your will and provide you with peace of mind. Complete the below form and we will contact you to sign the required documents.