As someone who has been training for a marathon, I have come to deeply appreciate the way running clears my head and provides a meditative space to think about life’s complexities.
Running, in general, is not just a physical endeavour; it is a journey that requires discipline and consistency. I often reflect on how marathon training – zone two runs for building endurance, tempo runs for strength, and the importance of good nutrition – is so similar to the path of investing and retirement planning. Both require patience, consistency, and an integrated approach to success.
The marathon mindset: Patience over impulse
The difference between a sprint and a marathon is mindset. A sprint is about maximum effort over a short distance, while a marathon demands a sustainable pace over a long stretch. Similarly, when it comes to investing and retirement planning – adopting a long-term steady approach is crucial for success.
Setting the pace early
Just as a marathon runner must pace themselves from the start, investors in South Africa should set a consistent, manageable savings and investment strategy as early as possible. Starting early allows you to take full advantage of compound interest, where your investments generate returns on both the principal amount and accumulated interest over time. Delaying your savings plan is like waiting until the last few kilometres of a marathon to speed up – you may not have enough energy to reach the finish line effectively.
Consistency through automation
Seasoned marathon runners know that consistent training over time is the key to building strength and endurance. Likewise, the power of consistent, automated investing cannot be overstated. Automating your investments – by setting up recurring contributions to your retirement accounts and investment vehicles – ensures that you regularly put money to work. This disciplined approach helps you stay on track and prevents you from trying to time the market, which is often a losing game.
Over time, automated investments compound and grow, just like the physical benefits of consistent training. By automating contributions to your retirement annuity (RA) or tax-free savings account (TFSA), you can gradually build wealth without the temptation to skip months or get distracted by market noise. The steady, automatic nature of these contributions acts like the steady pace of a marathon runner, propelling you forward even when conditions are not perfect.
The importance of tax efficiency: Reducing the drag
Just as a runner minimises resistance to conserve energy, an investor should aim to minimise tax liabilities to maximise returns. In South Africa, taxes can significantly affect the growth of your retirement nest egg if not managed efficiently. Being tax-efficient requires knowledge of the different tax-sheltered investment vehicles and how best to use them.
Maximising RAs
One of the most tax-effective ways to save for retirement in South Africa is through a RA. Contributions to a RA are tax-deductible, up to a certain limit, reducing your taxable income and effectively lowering your tax bill. As with a marathon, consistency is key: regular, disciplined contributions to a RA over the years can accumulate substantial value, aided by tax savings.
TFSAs
A TFSA is another efficient tool, much like a steady energy gel that helps sustain a marathon runner. Contributions to a TFSA are not tax-deductible, but all growth within the account – interest, dividends, and capital gains – is tax-free. The annual contribution limit at present is R36 000. Using TFSAs strategically over time ensures that you have a tax-free component in your retirement portfolio.
Fueling your investments: The importance of regular contributions
Just as a marathon runner needs to fuel their body consistently with the right nutrition to keep their energy levels up, investors must regularly “fuel” their investment portfolios. This is where the importance of automated contributions comes into play. By setting up automatic deposits into your investment accounts, you are ensuring that your financial plan has a continuous supply of resources to grow and compound.
For a runner, failing to fuel appropriately during a race can result in hitting the dreaded “wall”, where energy levels drop dramatically. Similarly, neglecting to contribute consistently to your investments can lead to a shortfall in your retirement savings. The right financial “fuel” over time – regular contributions, diversified investments, and tax-efficient strategies – keeps your retirement plan on course and helps you weather market volatility.
Adaptability: Adjusting for changing conditions
In a marathon, runners may need to adapt to changing weather or terrain. Similarly, retirement planning and investment strategies must be adjusted over time. Economic conditions, changes in tax laws, or shifts in personal financial goals or circumstances require reviewing your portfolio and making necessary tweaks.
A marathon requires grit and focus, especially when the going gets tough. Market downturns, economic instability, or even personal financial setbacks can be discouraging, but maintaining discipline is key to achieving your long-term goals. Reacting emotionally to market fluctuations – like a runner sprinting when they should be pacing – can derail your entire plan.
Instead, focus on your long-term objectives and stick to your strategy, making only thoughtful and necessary adjustments. Staying disciplined ensures you keep progressing toward your retirement goals despite the inevitable ups and downs.
Finishing strong: The retirement payoff
The ultimate reward for a marathon runner is to cross the finish line, and for investors, it is achieving a comfortable, financially secure retirement. The key is to maintain your pace, minimise unnecessary tax burdens, and make strategic adjustments along the way.
Remember: successful retirement planning in South Africa, like running a marathon, is about endurance, consistency, and a well-executed strategy. By fueling your investments with regular contributions and keeping an eye on tax efficiency, you will be well-positioned to cross the financial finish line with strength and confidence.
Just as it can help to have a coach to push you along, a financial advisor can ensure you finish the race as well.
MARIA is a CERTIFIED FINANCIAL PLANNER®️ professional, a member of the Financial Planning Institute of SA and is fully qualified to give advice on all investment matters.
Anelle joined Brenthurst Wealth as a Receptionist and Administrative Assistant to Brian Butchart in the Cape Town office in December 2023. She has a wealth of knowledge from working as a liaison between Financial Advisers and clients at TMA and Absa Investment Management Services (Aims) since 1998. She obtained her B. com degree from the University of Port Elizabeth in 1997.
René Heystek joined Brenthurst Wealth in November 2023, as receptionist and administrative assistant in the newly established George/Garden Route office.
Sanet was appointed in April 2020, joining our Cape Town team as an Executive Administration Assistant to Renee Eagar. She has been in the financial services industry since 1990. Her previous experience includes positions at Sanlam, BJM and ABSA. She spent her last 12 years working at Alexander Forbes Private Client Wealth as a Senior Wealth Management Assistant. She has received numerous accolades over the years which include but not limited to, Alexander Forbes Client Service Excellence – Silver award in 2014,2015 and 2017. Sanet has also obtained her Certificate in Wealth Management (NQF 5) in 2012 and achieved “Best Student of the Year” from Moonstone.
ADMITTED ATTORNEY | FINANCIAL PLANNER & HEAD OF BRENTHURST FOURWAYS
