This week I heard the case of a Zimbabwean pensioner who has basically lost his entire pension due to hyperinflation caused by the political situation in Zimbabwe. Today his pension cannot even buy a half loaf of bread. This is the tragic case for thousands of Zimbabwean Pensioners whose pensions were eroded by inflation.
The recent case of hate speech from ANC Youth leader Julius Malema is a reminder that we live in a third world country with political uncertainty ahead. Up to now the ANC has done an excellent job in managing the country’s economic policies but as South Africans we cannot take this for granted going forward. We need to accept that political risk is a reality.
To manage political risk with investments you need to:
1. Not depend solely on retirement products such as RA’s and Pension Funds for your savings.
2. Invest outside of Retirement Products to ensure flexibility should things change.
3. Invest Offshore:- build investments outside of SA
Hopefully SA will never end up in the same position as Zimbabwe! However, if you diversify your investments now, you could save yourself from being in a similar position as so many of the Zimbabwean pensioners have found themselves in later on in life.
