Your investment, retirement, and insurance questions answered

With industries and trends changing rapidly, I often feel tempted to change my investment strategy (specifically the portion of shares that I’ve invested in). Can you advise me on how to navigate these "hypes" and remain committed to my financial plan? Alexi Coutsoudis, Wealth Adviser, PSG Wealth, Umhlanga Ridge

In today’s fast-paced, always-connected world, the sheer volume of investment news and social media commentary can be overwhelming. This constant stream of information and success stories often fuels the urge to adjust investment strategies in response to the latest winners. However, staying focused is essential to preserving your long-term financial plan, as yesterday’s winners can become tomorrow’s losers.

Warren Buffett put it best: “To invest successfully over a lifetime does not require a stratospheric IQ, unusual business insights, or inside information. What’s needed is a sound intellectual framework for making decisions and the ability to keep emotions from corroding that framework.”

One of the most effective ways to manage the pressure of “investment FOMO” is to recognise a key truth: individual stock selection has far less impact on long-term portfolio performance than your overall asset allocation does. In other words, how much you invest in equities matters far more to long-term performance than which specific shares you pick.

Even with a few standout stocks, consistently outperforming the market is rare. What’s more damaging to long-term returns is being underexposed to equities altogether. That’s why your focus should be on aligning your portfolio with your risk tolerance and long-term goals, rather than being tempted to chase the next big thing.

Finally, one of the most powerful defences against emotional decision-making is getting caught up in the hype is working with a Certified Financial Planner®. A trusted adviser offers objective guidance, helping you filter out noise and stay committed to your strategy — even when headlines suggest otherwise.

Market trends come and go, but a disciplined, well-structured plan is what builds lasting wealth.

I am currently working full-time and would like to use a portion of my salary to invest in starting my own business, but I also need to keep paying rent and other living expenses. Do you have advice for how I can achieve this and remain financially stable? Dulcie Weyks, Financial Adviser, PSG Wealth, Waterkloof

Starting your own business while working full-time is a smart way to lower financial risk, but it takes planning to stay on track. Begin by understanding your monthly budget. Make sure your essential expenses — rent, groceries, transport, and debt repayments are covered. Then calculate how much of your remaining income you can safely set aside for your business without affecting your day-to-day living.

Open a separate account for your business savings and contribute to it regularly. Even a small monthly amount can grow over time and give you a solid starting base. A study by the Kauffman Foundation found that nearly 65% of successful entrepreneurs launched their businesses while still employed, proving that steady progress can pay off.

Start small. Choose a business idea with low upfront costs — like a service or online offering — that you can manage in your spare time. This approach keeps your risk low and allows you to test your idea before investing more.

It’s also wise to build an emergency fund with at least three months’ worth of living expenses. This safety net gives you breathing room if the unexpected happens or income is tight for a while.

Use your evenings and weekends to build your business gradually. As it grows, you can reinvest profits rather than taking on debt.

With a steady income, a clear plan, and the discipline to build step by step, it’s entirely possible to start a business without putting your financial stability at risk.

I’ve just started a new job and I’m finally able to start putting additional money away towards my retirement. What do I need to be aware of to maximise my strategy? Kim Wheeler, Wealth Manager, PSG Wealth, Northcliff

Only around 6% of South Africans can afford to retire when they hit retirement age. Think of it this way: for every R4,500 to R5,000 per month of income (after tax) you will need for your retirement, you are going to have to have invested R1 million, and then still hope you do not outlive your funds. This is why it is always good to start working on making your retirement secure early in your career. The earlier you start, the better. After all, the 8th wonder of the world is the power of compound interest!

But it is never too late. In South Africa, there are several advantages to contributing to a retirement fund:

• A deduction of up to 27.5% of your taxable income (capped to a maximum of R350,000 per annum) in respect of your contributions is allowed, which reduces your taxable income – so this earns you tax relief.  
• The growth in the investment is not taxed.
• On retirement, the first R550,000 of all cash lump sums you take is tax-free.
• Retirement funds fall outside of your estate, so when you die, your heirs can benefit without the burdens of estate duty and executors’ fees.

Remember that if your retirement fund is your only source of retirement income, you will need to take into consideration that you will pay tax on your income at your marginal tax rate. So, it is always advisable to have some “discretionary” money set aside to top up your income or to meet unforeseen expenses. 

A qualified financial adviser can help you draw up a retirement plan tailored to your needs.

I haven’t started saving for my long-term goals. What’s the best strategy for a 10-year investment? Kobie Kritzinger, Wealth Adviser, PSG Wealth, Menlyn

Congratulations on taking the first step to start saving towards your long-term goals. Given that you have not started saving yet, you might have to play catch-up and allocate a bigger portion of your budget towards your investment. This means you may have to make some lifestyle sacrifices. The other commitment you have to make is an emotional commitment.

Investors underestimate the risk posed by inflation on investments over the long term. There is a perceived sense of safety in having your money in a bank account earning interest. Interest is a wolf in sheep’s clothing, because it is taxed and cannot beat inflation over the long term. 

Growth assets such as local and international equities are the only assets that can beat inflation over the long term. I like to refer to equities as the ‘hard-working’ money. Your behaviour during the different market cycles will determine the success of your investment, meaning that if you make emotional decisions, it could affect your investment. A qualified and experienced financial adviser can craft an investment plan tailor-made to your unique circumstances and help you stay the course and achieve success. 

I recently heard about the concept of ‘duty of care’ regarding car insurance. In the context of car keys, which we often hand over to multiple people in our normal daily interactions, how does this work? Ryno de Kock, Head: Distribution, PSG Insure

Duty of care is a legal obligation that all insured parties must take reasonable care to protect their insured assets. There are many situations where you may unknowingly neglect your ‘duty of care’ requirement when it comes to safeguarding car keys as many of us may find ourselves in situations where we hand over our keys to third parties. While in most cases, it might be handed over to trusted parties, we need to exercise caution in certain situations. Some examples include:

The car wash

A quick trip to the car wash includes handing keys over without knowing where they are being stored, leaving your vehicle vulnerable to theft. Keep in mind that criminals may attempt to claim your keys without your knowledge by pretending to work for the carwash you are leaving your vehicle at. It is your responsibility to prioritise the safety of your vehicle. It’s always best to choose a reputable car wash with clear security measures and protocols in place. 

Airport parking

Leaving your car at the airport for a long period is convenient, but if your arrangement involves handing over the keys for valet or repositioning services, there’s a risk of damage or even theft. Before you travel, speak to your adviser to make sure you’re covered for any unexpected incidents.

Ultimately, ensure you have comprehensive cover in place. Reach out to one of our qualified advisers for more information. 

PERSONAL FINANCE