Your savings, retirement, and insurance questions answered

Looking at the current landscape, how will I know which asset classes or sectors are promising for long-term growth and which ones I should avoid? Richus Nel, Financial Adviser, PSG Wealth, Old Oak.

In a society where everything is fast, easily accessible and microwaved, investing for the long-term is a contrasting discipline and the reason why it remains elusive to most.

Future investment success rests firmly on the repeated ability to pay less for something than what it is worth (in an active market) and selling it at a profit. Instruments in the same asset class/sector are all priced differently (some cheap, some expensive) although by market consensus. This results in future winners and losers in the same sector, under the same macro or microeconomic conditions.

Creating wealth over the long-term rests much more on the discipline of investing in a well-diversified investment portfolio. Yes, it sounds unexciting at first but remains the most certain way of changing your wealth trajectory.

The exciting part comes in for each of us focusing on:

• Increasing your income earning potential 
• Diversifying (so that unforeseen risks do not let you start over)
• Avoiding mistakes (forcing faster growth at significantly high levels of risk)
• Ensuring optimal contribution rates
• Spending maximum time in the market

Wealth accumulation starts at a pedestrian rate and seems to be flawed, until investors start to see the multiplying effect changing their wealth trajectory during the later part of their life.

We currently find ourselves in a:

• Global low inflation, low interest rate and strong US growth phase 
• Local low inflation, low interest, low growth phase and strengthening of the Rand.

These can be good macro factors for equities (local and internationally). Diversify well and avoid over-concentration and overpaying by getting advice from a qualified financial adviser who will help you design a portfolio suitable to meet your financial goals.

What steps can I take this year to make my financial portfolio more tax-efficient? I currently don’t have a tax-free savings account, but I do put extra money into my home loan every month to pay that off as soon as possible. Should paying off my home loan be my priority? Carina van Rooyen, Wealth Manager, PSG Wealth, Pretoria East.

That’s a great question – and one many people wrestle with. You’re already doing something very positive by paying extra into your home loan; reducing debt is never a bad financial move. But when it comes to making your overall portfolio more tax-efficient, there are a few angles worth considering.

A tax-free savings account (TFSA) is one of the easiest ways to boost tax efficiency. Even though there is no tax deduction upfront, every bit of growth in the TFSA – interest, dividends and capital gains – is completely tax-free. Over time, that compounds, especially if you invest in instruments with long-term growth potential. Starting a TFSA doesn’t mean you need to commit a large amount at once; even small, consistent contributions can build meaningful value over time.

Paying additional funds into your home loan is also a sound financial decision – paying it off faster saves you interest and provides peace of mind. However, it is not necessarily the only place your extra money should go. The return you get from reducing debt is limited to your interest rate, while investments could potentially grow faster over time. If you focus only on the bond, you might miss out on the compounding benefits of investing early.

So paying off your home loan should not necessarily be your first priority. A more balanced approach often delivers the best results: continue making manageable additional bond payments while also allocating funds to a TFSA. This way, you reduce debt responsibly while still building a growing pool of tax-free capital that supports your long-term wealth.

Your ideal mix will depend on your goals, investment horizon and whether you have an adequate emergency fund and retirement strategy. But in most cases, combining tax-efficient investing with steady debt reduction creates a more resilient and rewarding financial plan than prioritising only one path. A qualified financial adviser will guide you in finding a suitable strategy to meet your financial goals.

I have a pension fund but am thinking of also having a retirement annuity (RA). I have R15 000 that I’d like to invest. Should I use all of this to start the RA or should I contribute a smaller amount every month until I retire? Bianca van Niekerk, Wealth Adviser, PSG Wealth, Vanderbijlpark Financial Planning.

It’s always a smart decision to save for retirement independently, and one of the most effective vehicles for this is a Retirement Annuity (RA). An RA allows you to build long-term wealth while enjoying significant tax advantages. A practical approach is to start with a manageable monthly contribution, increase it annually and add lump sums, when possible, to accelerate growth.

One of the greatest benefits of an RA, beyond the peace of mind it provides, is the tax relief you receive. In South Africa, you can deduct up to 27.5% of the greater of your taxable income or remuneration for contributions to retirement funds, including RAs, subject to an annual cap of R350 000. This deduction reduces your taxable income, meaning you pay less tax and keep more of your hard-earned money. Additionally, all interest, dividends and growth within your RA are completely tax-free, allowing your investment to compound efficiently over time.

Another advantage is estate planning benefits: Your RA does not form part of your estate ensuring that your RA proceeds bypass executor fees and estate duty in the event of your passing. However, it’s important to remember that an RA is a long-term, fixed investment. Funds are generally only accessible at retirement age (except the savings component in case of an emergency), so it’s wise to maintain a reserve in a more liquid option, such as a Tax-Free Savings Account, for unexpected expenses.

By combining disciplined contributions with the tax benefits and growth potential of an RA, you set yourself up for a secure and comfortable retirement.

What’s a good way to ensure I have the right balance between my savings and investments? For example, I have paid off my home, contribute R36 000 per year towards my tax-free savings account and have some shares on the JSE. What would be my next investment option? Chrisley Botha, Wealth Adviser, PSG Wealth, Paarl Cecilia Square Stockbroking.

Understanding the difference between savings and investments is a crucial starting point when trying to strike the right balance in your financial plan. Savings are typically low risk and easily accessible, designed for short-term needs and emergencies. Investments, on the other hand, are aimed at long-term growth and usually involve more risk and market volatility in exchange for higher potential returns.

A good starting point is to separate your money by purpose. Short-term savings should be easily accessible and low risk — for example, an emergency fund covering three to six months’ expenses in a money market or high-interest savings account. This ensures you won’t need to dip into long-term investments when unexpected costs arise.

Once this foundation is in place, the focus can shift to growing wealth through investments. Asset classes generally include cash, bonds, property, equities (shares) and offshore assets. Each behaves differently over time, and diversification across these asset classes helps reduce risk and smooth returns. Equities offer long-term growth, bonds provide income and stability, property can offer inflation protection, and offshore investments add valuable global and currency diversification.

Your tax-free savings account (TFSA) should be viewed as a long-term investment rather than a traditional savings account. Using growth assets such as diversified equity funds inside your TFSA allows you to fully benefit from tax-free compounding over time.

Given that your home is paid off, your TFSA contributions are maximised, and you already hold JSE shares, the next logical step is a discretionary investment portfolio. This could include a mix of local and offshore unit trusts structured according to your risk profile and investment horizon.

Ultimately, the right balance between savings and investments depends on your personal goals, timeframes and tolerance for risk. Regularly reviewing your asset allocation with a financial adviser ensures your strategy remains aligned as your circumstances evolve. 

What are some of the most prominent commercial insurance risks that emerged in 2025, and how can businesses prepare for them in the year ahead? Ryno de Kock, Head: Distribution at PSG Insure.

Several persistent and emerging risks continued to affect local businesses. These include:  

• Fires

Fires remained one of the most financially damaging risks for businesses in 2025. Many incidents were linked to electrical faults, aged wiring or overloaded systems. Fires can lead to full operational shutdowns, long-term business interruption, and costly asset replacement. This reinforces the importance of adhering strictly to compliance requirements, maintaining fire-detection systems and ensuring regular inspections. 

• Cyber risks

Cybercrime continued to pose a risk to businesses with email compromise, ransomware and phishing attacks among the most reported incidents across various industries. SMEs are particularly vulnerable, as many lack formal cybersecurity frameworks. This highlights the need for robust cyber risk management, including strong authentication controls, regular software patching, and employee training. Cyber insurance is also a crucial safety net, helping businesses recover from operational downtime, data-breach costs and financial loss. 

• Climate and extreme-weather events

Unpredictable and severe weather events, including localised flooding, strong winds and storm damage were particularly disruptive for the retail, agriculture and manufacturing industries in 2025. Insurers have increasingly turned to data-driven tools such as geocoding to assess exposure more accurately. This involves mapping properties against weather-risk patterns and emerging climate models to determine whether certain areas are likely to experience higher losses in future. 

Insurance advisers help business owners to determine the most appropriate cover to address the risks they face. 

PERSONAL FINANCE