Thank you for sticking by, always a pleasure to hear from you. In this spring series, we have covered the following topics so far , ( click on each topic if you have not yet read the article or just want to re-visit it). My hope is always that you will become better at managing your money and be a step closer to achieving financial freedom. These topics are:
- How do excess payments really work and what are some of the clauses that could be included in your contracts that you are not aware of.
- We looked at how to evaluate your net worth and how that can help you when choosing what to focus on in your financial management.
- We also looked at how you can evaluate investment choices by looking at the opportunity cost .
- And ended off with how the matching principle work especially when you are looking to obtain funding
Today, I was shocked and disturbed by my provident fund statement that I received for the year. To date, for the 2018 calendar year, I was charged N$4 100 in admin fee and only received N$882 in interest. At face value, my pension is actually loosing money both in theory and real terms. Because the returns is less than the fees I am charged by the pension company, I am actually loosing money as well the fact that inflation is decreasing the purchasing power of money. All else remaining the same, I can expect to receive less than I have contributed upon retirement.
If I had this knowledge at the time I had to opt for this provident fund, I would have probably not opted for it. This is because knowing that would have changed my decision. At the current growth rate, my money is actually better off in a bank account as the interest net of bank charges would have been better. In addition, at least I am guarantee that my capital is also safe when I invest at the bank.
This is why when I discovered the fund fact sheet, it opened up my eyes to a lot of thing. We have covered the fund fact sheet earlier (read it here) , which is one of the key tools that you should be asking for before you have sign up for products you hardly understand.
In this week articles, I will explore some of the principles around common terms in fund fact sheets and those which you should be looking out for in particular. I would also want to cover how life cover and study policies work. If time allows, I will also explore whether it’s worth it to take out funeral covers.
Wishing you a great week ahead and looking forward to interacting with you.