Building the Right Future

Confident investing at retirement.

Market volatility can pose a significant risk for investors just before or just after retirement.

Investing at retirement can be challenging. You want to allow your retirement savings pot to continue to grow in real terms in order to maximise the retirement income you can earn. But the typical investment portfolio that allows such growth also exposes you to market risk. With a large market correction even a conservative portfolio can lose as much as 20%, leaving you with a lot less to secure a sustainable retirement income, and a smaller cash amount if you intend to draw a lump sum from your savings. The same concerns apply when drawing a retirement income – following a market correction you ideally want to avoid locking in losses when drawing income and reducing the amount of capital left to grow.

Stanleur says Glacier by Sanlam has found that a popular way to manage such market volatility is to move to lower risk investment options as one approaches retirement. Stanleur cautions that this comes at the cost of investment returns and limits growth of your retirement savings when you may need it most.

Competitive yet smooth investment returns.

Stanleur says an investment option that addresses this conundrum is the Monthly Bonus Fund. This portfolio is intelligently managed to smooth out investment returns and can play a significant role in reducing volatility in your pre- or post-retirement portfolio – without having to sacrifice investment returns. The Monthly Bonus Fund has in fact delivered returns in excess of inflation + 4% over the last 10 years.

Backed by Sanlam Life and a strong governance structure.

The investment portfolio, expertly managed by Sanlam Investments, generates investment returns from a diversified portfolio of local and offshore assets. This portfolio looks similar to any other Regulation 28 compliant portfolio with a moderate risk profile.

Instead of distributing these returns in line with market movements in the environment where they are earned, a portion of the returns is held in reserve during periods of strong fund performance, and distributed during periods of poor performance. This ‘smoothing’ happens within a strong governance framework, overseen by an investment committee headed up by Sanlam’s Chief Actuary.

The result? Smooth investment returns distributed via monthly bonuses, which are guaranteed never to be negative. Stanleur concludes that, essentially, the portfolio value would always go up (or sideways at worst), making it an ideal solution to protect and grow your retirement savings.

Sanlam is a Licensed Financial Services Provider.