Petrol price up, food prices up, but my retirement fund is down. Why?

Thus far, 2022 has been a year of geopolitical uncertainty. The war in Ukraine has led to a spike in commodity prices, particularly energy prices, which has exacerbated the costs of ordinary goods globally.?

A quick trip to the supermarket will confirm this! Everything is expensive!?

South Africa has not been immune to the economic headwinds. We have seen inflation rates breach the upper limits of the South Africa Reserve Banks (SARB) inflation target. Subsequently, interest rates have increased.?

To contain inflation, central banks worldwide have been increasing interest rates.?

Yikes, which means your mortgage bond repayments instalments will go up!

Higher interest rates slow down the economy and adversely affect the stock market.?

The global markets have experienced a significant drawdown for the year to date as at 4 July 2022. Global equity (as measured by the MSCI World Equity Index in Rands) is down -17.8%. The Johannesburg Stock Exchange is down -9.1%.

?Here's what you need to know:

?Why is my fund credit value lower?

The majority of your fund credit is invested in the stock market. Over the long term, shares in the stock market are the best way to ensure that you retire comfortably. As described above, the stock market has performed poorly during 2022, resulting in lower fund credits for retirement fund members. It is important to note that the drop in stock markets is a global problem affecting members of retirement and investment schemes worldwide.

?What is RISE doing to protect my retirement savings??

The RISE multi-asset class portfolios are constructed to ensure diversification with multiple sources of income. Whilst the portfolio's equity (shares) portion has fallen, the fixed income portion will benefit from a high-interest environment. The RISE portfolio has good exposure to commodities shares (oil, coal, platinum, etc.), which perform well during periods of high inflation.?

Our portfolios also include alternative asset classes, which will aim to reduce the volatility within the portfolio. The portfolios are designed to minimise losses in all market environments, such as the high interest and inflation environment we are currently experiencing.

?What should I do with my retirement fund savings?

If you are not retiring soon, the best action is no action.

Retirement funds are long-term nvestments. Investment markets are affected by geopolitical and economic risks. These (systematic) risks are beyond the control of the investment manager (or anyone for that matter). We understand members will be concerned about the monies they have lost. Still, over the long term, markets recover from such environments.

Over the long term, remaining invested will help retirement fund savers overcome their biggest challenge - ensuring a decent income in retirement.?

Where can I get more info?

For more information on the performance of the RISE Portfolios, check out the fact sheets on our website.

You can also check out our monthly market commentaries to review local and global markets.

You can also contact us via WhatsApp to ask any retirement or investment-related questions.??

Click here to access our information channels:?https://linktr.ee/retirementrise