Notes From my Inbox I never won a fight in the ring; I always won in preparation - Muhammed Ali

Our main message this quarter is the necessary health warning that needs to accompany the new two-pot retirement system commencing in September this year. Under this reform, members of retirement annuity funds will, for the first time, be able to access up to one third of their fund value before retirement. However, as we show in detail here, this new early liquidity option comes with high immediate, and even higher long-term, costs. One of the first principles in finance theory is that optionality, which can be defined as having the flexibility to choose different paths in the future, is desirable, but only if the cost of the option is low enough. Unless you face a dire and immediate emergency, the cost of early access will likely prove too high in most cases.

Thinking about health warnings and finance theory leads me to some investment analogies from the worlds of exercise and diet. Outlive: The Science & Art of Longevity, Peter Attia’s magisterial yet deeply personal book on preventative strategies that can be deployed to improve the quality of life in your later years, was a profound recent read and inspired this quarter’s edition of Notes from my inbox.

Read full article on https://www.coronation.com/en-za/personal/latest-insights/business-and-industry-views/notes-from-my-inbox-april-2024/

May 24 2024 By Pieter Koekemoer