Retirement funds – Weathering the storm

Mathias Sithole, Head of Public Sector and Corporate Consulting at Liberty Corporate.

The recent decision by Standard & Poor’s (S&P Global) to downgrade South Africa’s sovereign credit rating to “junk status” has caused panic among retirement fund members. Importantly though, one should consider how this impacts on one’s plan to retire comfortably.

Mathias Sithole, Head of Public Sector and Corporate Consulting at Liberty Corporate says “Saving for retirement requires a long-term focus, often 20 to 30 years into the future. Recent market volatility highlights the importance of developing an investment strategy that should target long-term goals while being robust enough to withstand short term market fluctuations. It is imperative to remain objective and avoid “short-termism” and knee jerk reactions when making investment decisions.”

For retirement fund members, an appropriate investment strategy, such as a life stage - model, would have allowed the individual to de-risk into a more conservative investment strategy to reduce exposure to market fluctuations.

Sithole concludes by saying that “In times of market volatility like we are currently experiencing, it is therefore important to go back to basics. Consider your long term objectives, develop an investment strategy to help achieve these objectives and avoid making rash investment decisions based on emotions and market sentiment.”