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Retirement planning akin to riding a bicycle – once you’ve mastered the skill, you never lose it

Retirement planning akin to riding a bicycle – once you’ve mastered the skill, you never lose it

By Richus Nel, Financial Advisor, PSG Wealth Old Oak

As a recreational cyclist, I regard cycling as one of the most enjoyable and effective ways to get around. But while some cycling is for recreation, other times it can be about incremental goal setting. Every hill, every valley or every time challenge is within reach, if you are willing to do the necessary conditioning or preparation, which is a precondition for success.

This makes for a ready comparison to the investment and retirement industry. Start with small achievable targets and learn to ride the ‘investment bike’ over many years, long before retirement. The more you ride, or the earlier you begin, the better you’ll become and the less frequently you will fall, crash or get hurt.

Technology and research make for a better ride

Cycling has changed dramatically over the years, with accelerating technology making bicycles lighter and faster. The post-retirement industry has followed the same trend through research that today can provide investors with knowledge to assist them to achieve additional income if a shortfall is identified.

We have compared these learnings with the various elements of cycling below, to help you consider the journey and to connect how good cycling principles can be applied to reach a sustainable retirement as well.

* Lighter and faster cycles

In cycling, lighter means faster and it seems to be the ultimate competitive advantage. Wealth creation is always in a ‘tug of war’ between risk and reward against an investment horizon. One can only retire once financially independent. A common mistake many investors close to – or in retirement – make is shifting focus to wealth preservation and choosing to reduce risk instead.

Recent research by Investec shows that:

* A minimum of 60% exposure to growth assets goes a long way to having sustainable income at a drawdown of 4% of retirement capital per annum.

* Expenses are under a magnifying glass and passive investments are a common appearance in diversified portfolios. Added volatility from passive investments can reach a point where the likelihood of running out of capital in a post-retirement strategy, is unacceptably high.

* Keep in mind that income drawdowns can only be increased annually, depending on the portfolio returns in prior years, and you can only increase the Rand income amount, not the percentage.

* Route planner

Cyclists do not use a road bike to do specialised off-road cycling; the right bike is needed for each different terrain. Dealing with volatility can be compared to off-road cycling. Skillful, well-trained riders (investors) use volatility to their advantage. They keep just enough momentum through the obstacles, to avoid a crash. Anyone withdrawing from the race during ’bumpy times’ (much like selling your investments in times of fear) also risks losing money. The right balance between risk and return can now be scientifically proven.

Volatility can be better managed by not overpaying for assets, sticking to quality instruments, and applying active asset-allocation strategies that have effective cross industry/geographic diversification.

* Track record

When looking for a good bike, I suggest that you do good research and choose a manufacturer with a solid track record. The same goes for investment management and the financial advice you take on board.

* Brakes and helmets

Bicycle racing has always been a dangerous pursuit. The possibility and seriousness of a crash depends on the speed travelled at the time of impact and the protection of the rider (e.g. helmet, hand or knee guards, etc.). In the investment world, speed can be compared to the level of equity exposure and concentration risk of a portfolio. The levels of injury sustained during a crash is different for a pre-retirement and post-retirement investment strategy.

The amount of time available for recovery for a post-retirement investor is much shorter. Therefore, a strong focus on scientific asset-allocation and portfolio diversification is essential for the ‘post-retirement cyclist’ as well, to continue to stay protected, even when you have reached your destination of retirement.

Hybrids – EBIKES

Hybrid bicycles, with battery assisted motors are now available. Similarly, post-retirement products are enhanced to a point where retirees can choose retirement hybrid products. This is a transparent combination of market-linked living-annuities and guaranteed annuities. This option is now easy to understand, cost competitive and to my mind, one all retirees should take note of when planning their post-retirement strategy, given each client’s unique circumstances.

Finally, retiring is not a ride in the park. Getting on the wrong bike or riding too fast in post-retirement (or too slow in pre-retirement), proves costly. Following the rules of riding a bike, using the right equipment and planning the journey can keep you on the road safely.

Should you be willing to apply this approach to your retirement journey, investing in the necessary time and advice needed to stay on track, you will likely arrive at your planned retirement destination too.


About The Author

Guest Contributor

A Guest Contributor is any of a number of experts who contribute articles and columns under their own respective names. They are regarded as authorities in their disciplines, and their work is usually published with limited editing only. They may also contribute to other publications. - Ed.

Following reverse listing, public can now acquire shareholding in Paratus Namibia


20 February 2020, Windhoek, Namibia: Paratus Namibia Holdings (PNH) was founded as Nimbus Infrastructure Limited (“Nimbus”), Namibia’s first Capital Pool Company listed on the Namibian Stock Exchange (“NSX”).

Although targeting an initial capital raising of N$300 million, Nimbus nonetheless managed to secure funding to the value of N$98 million through its CPC listing. With a mandate to invest in ICT infrastructure in sub-Sahara Africa, it concluded management agreements with financial partner Cirrus and technology partner, Paratus Telecommunications (Pty) Ltd (“Paratus Namibia”).

Paratus Namibia Managing Director, Andrew Hall

Its first investment was placed in Paratus Namibia, a fully licensed communications operator in Namibia under regulation of the Communications Regulatory Authority of Namibia (CRAN). Nimbus has since been able to increase its capital asset base to close to N$500 million over the past two years.

In order to streamline further investment and to avoid duplicating potential ICT projects in the market between Nimbus and Paratus Namibia, it was decided to consolidate the operations.

Publishing various circulars to shareholders, Nimbus took up a 100% shareholding stake in Paratus Namibia in 2019 and proceeded to apply to have its name changed to Paratus Namibia Holdings with a consolidated board structure to ensure streamlined operations between the capital holdings and the operational arm of the business.

This transaction was approved by the Competitions Commission as well as CRAN, following all the relevant regulatory approvals as well as the necessary requirements in terms of corporate governance structures.

Paratus Namibia has evolved as a fully comprehensive communications operator in Namibia and operates as the head office of the Paratus Group in Africa. Paratus has established a pan-African footprint with operations in six African countries, being: Angola, Botswana, Mozambique, Namibia, South Africa and Zambia.

The group has achieved many successes over the years of which more recently includes the building of the Trans-Kalahari Fibre (TKF) project, which connects from the West Africa Cable System (WACS) eastward through Namibia to Botswana and onward to Johannesburg. The TKF also extends northward through Zambia to connect to Dar es Salaam in Tanzania, which made Paratus the first operator to connect the west and east coast of Africa under one Autonomous System Number (ASN).

This means that Paratus is now “exporting” internet capacity to landlocked countries such as Zambia, Botswana, the DRC with more countries to be targeted, and through its extensive African network, Paratus is well-positioned to expand the network even further into emerging ICT territories.

PNH as a fully-listed entity on the NSX, is therefore now the 100% shareholder of Paratus Namibia thereby becoming a public company. PNH is ready to invest in the future of the ICT environment in Namibia. The public is therefore invited and welcome to acquire shares in Paratus Namibia Holdings by speaking to a local stockbroker registered with the NSX. The future is bright, and the opportunities are endless.