Investment Insights | 2 min read

Confident investing around retirement

By Roenica Tyson – Investment Product Specialist

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

Investing around retirement can be challenging. You want to allow your retirement savings pot to continue to grow in real terms 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.  A common way to manage such market volatility is to move to lower risk investment options as one approaches retirement, but 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

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 by Sanlam has in fact delivered returns in excess of inflation + 4% over the last 10 years.

Backed by Sanlam Life and strong governance structure

An 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. The way these returns are distributed to investors, are what sets the Monthly Bonus Fund apart.

Who should invest?
The Monthly Bonus Fund is suitable for investors that want:to lower investment risk without giving up return potentialto earn competitive real returns in the form of monthly bonusesmore certainty of the benefits they will receive at retirementto avoid the impact of volatile and negative investment returns while drawing a retirement incometo remain invested for three to five years and don’t regularly switch between underlying investments

Instead of distributing these returns in the volatile nature they are earned, a portion of the returns are 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 to never be negative. This essentially means the portfolio value would always go up (or sideways at worst), making it an ideal solution to protect and grow your retirement savings.

For more information about Glacier product availability, the guarantee and associated charges, click here.

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