Umbrella Funds Info - Prepare for the unexpected - Issue 1 | 2022

Alexander Forbes Retirement Fund

UMBRELLA FUNDS

INFO Prepare for the unexpected

1 Your life file – prepare for the unexpected

2 Members and their debt – meet Lerato

3

4

How much are your retirement savings worth?

Trending topics – giving back

ISSUE 1 | 2022

5 Quick links win win win!

6 Investment returns to 31 December 2021

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Your life file prepare for the unexpected Natural or unexpected, your death can place a massive administrative burden on your loved ones long after you have passed away, especially if your financial affairs are not in order. It is a new year, and a fresh start. Why not kick 2022 off by putting together your own life file?

What is a life file?

It is a file (printed or electronic) with all your important documents and information. The aim of the file is to help your family quickly find your will, living will, passwords and title deeds for a house if you pass away. Having all of these important documents in a single file or folder makes it easier for your family during an emotional and stressful time.

Where do you keep your life file?

These documents can be kept in a safe or filed with your lawyer for safekeeping while you are alive. If you don’t have a lawyer, banks offer a safety deposit box facility, but there is a monthly charge. You must let someone close to you know where you keep the file.

Who should have a life file?

Everyone should have a life file. It not only helps your family if you pass away but also makes managing your life easier in an emergency.

How often should my life file be updated?

It is wise to update it whenever you experience life changes such as marriage, divorce or the birth of a child.

Otherwise, it would be good to review your file once a year to make sure the information is still up to date.

What should go in my life file?

Print our life file checklist as an index for your file. If you keep all of your files electronically, your family will need access to the files. Tell them where your life file is kept and how they can find the information.

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FINANCIAL TIP: While the life file checklist is extensive, it is not entirely comprehensive, as no two individuals are alike or have the same policies. Start a conversation with a financial adviser or legal professional to make sure your personal life file is complete and up to date.

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Members and their debt meet Lerato Our Member InsightsTM statistics show that our retirement fund members are struggling with debt. The XDS Presage credit rating score shows the credit risk associated with a member based on how they have used and repaid credit in the past. XDS is the largest locally owned credit information bureau in South Africa.

The higher the score, the lower the risk of credit default.

A score of: ■ 1 – 659 is a high risk ■ 660 – 839 is medium risk ■ 840 – 1 000 is low risk What we do see is that at least 6 in every 100 members are at high risk of not repaying their loan and therefore not getting access to credit in future.

The table below illustrates the level of risk by generation:

XDS Presage credit rating score by generation

40%

6%

35%

30%

25%

15%

10%

5%

0%

Early Millenials Age 18-35 High risk

Late millenials Age 36 - 45 Medium risk

Generation X Age 46 - 55

Baby boomers Age 56 - 99

High rish

Medium risk

Low risk

Low risk

There are several different ways to manage your debt to avoid getting a low XDS Presage credit rating score. In this article, we introduce you to Lerato who managed to get rid of her debt one small step at a time. She will tell you that all you need is patience and dedication to the process.

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Getting out of debt with Lerato Meet Lerato! She’s a junior engineer at a large construction company. Lerato’s goal is to buy an apartment. Her new year’s resolution is to get rid of her debt so that she can buy an apartment closer to work. These are the steps Lerato followed:

Step 1:

Lerato started by listing her debts Amount owed Student loan

R140 000

Credit card

R15 000

Clothing account #1

R4 500

Clothing account #2

R1 000

Step 3:

Lerato’s next step was to list her debts in order of highest interest rates Priority

Step 2:

Lerato then contacted each loan provider to find out the interest rate for each loan Amount owed

Interest rate

R140 000

7%

R15 000

17.5%

Clothing account #1

R4 500

17.5%

Clothing account #2

R1 000

17.5%

Student loan Credit card

Interest rate

1

Credit card

R15 000

17.5%

2

Clothing account #1

R4 500

17.5%

3

Clothing account #2

R1 000

17.5%

4

Student loan

R140 000

7%

Step 4:

Lerato asked each debtor if they could reduce the interest rate in any way possible Some companies may be open to negotiating if you are a good payer or if you have a good reason to negotiate. Lerato managed to negotiate a lower interest rate on her two clothing accounts. It might not be a lot but every little bit counts:

Step 5:

Lerato put together her budget and allocated R900 every month to her first priority (credit card) to pay it off as soon as possible

Priority

As little as R100 extra on an account will help Lerato to pay her credit card off quicker and, at the same time, increase her credit score. A high credit score will help her when she is applying for a home loan for her apartment.

Step 6:

Once your highest interest rate debt has been paid, move on to the next item with the highest interest rate

Amount owed

Interest rate

Minimum monthly payment

1

Credit card

R15 000

17.5%

R800

2

Clothing account #1

R4 500

17%

R400 + R800 = R1 200

3

Clothing account #2

R1 000

17%

R200

4

Student loan

R140 000

7%

R2 500

1

Credit card

2

Clothing account #1

3

Clothing account #2

4

Student loan

Amount owed

Interest rate

Minimum monthly payment

R15 000

17.5%

R800

R4 500

17%

R400

R1 000

17%

R200

R140 000

7%

R2 500

Some people feel that it is better to list your debts from smallest to biggest and pay off the smallest debt first. This method can also work because the small debts will get paid off quickly, giving you faster results. Choose the method you prefer and be patient. It will take time and dedication. But over time you will start to feel the load lifting off your shoulders.

You continue to pay off your other debts as usual. As you finish paying off one debt, you take a portion of the repayment and allocate even more to your priority debt.

Priority

Amount owed

FINANCIAL TIP: Remember that interest rates can increase or drop during the period that you are paying your debt off. Always build in a little bit of ‘fat’ in your budget to afford an increase in interest rates.

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How much are my retirement savings worth?

Your benefit statement will tell you how much you’ve already saved up in the fund which you can find on AF Online.

The benefits of AF Online

With AF Online, you can view your updated:

Investment values

retirement fund values

Monitor and improve your retirement planning You can find investment values and performances, and use valuable financial planning tools, to track and improve your financial plan.

values of any other products you may have through Alexander Forbes

If you’ve used AF Online in the past or have not used it at all – it’s time to get online – before you get left behind!

Watch a short video on how to log on to AF Online

This is how you register STEP 1: Log in here STEP 2: Click on Register now STEP 3: Complete the registration page

This is how you download your benefit statement:

STEP 1: Log into AF Online STEP 2: Click on the Individual tab and select Investment values

STEP 3: The investment value screen will open. Click on Statements

STEP 4: The Statements screen will open. Select

the statement you’d like to view from the list

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Trending topics Giving back – the AFRF way The year 2021 will be remembered for the devastation caused by Covid-19. It brought a lot of uncertainty to so many households, especially in previously disadvantaged areas. The fund’s administrator, Alexander Forbes, was able to use its ‘gift budget’ for year-end Christmas cards and calendars, to give back to those who need it most. This budget was used to donate money to the:

Bizweni Centre for Children with Disabilities in the Western Cape

Mpilonhle Sanctuary Organisation in Ladysmith, KwaZulu-Natal

You can read more about these charities and what they do.

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Quick links: win win win!

My Retirement Picture competition – win Takealot vouchers

Explore your Retirement Picture, send us a picture of your character and you could win 1 of 20 R200 Takealot vouchers

Watch a short video as a quick recap.

Simply create your own character in Step 1 and submit it here by 15 March 2022.

A journey of a thousand miles begins with a single step – take a step today towards building the retirement you want.

Win: give our newsletter a new name Survey feedback Thank you for your feedback on our last newsletter. We love hearing from you!

We have decided that it is time to rename our newsletter but would like one of our readers to come up with a new name. Please share your ideas for a new newsletter name and you could win a R1 000 Takealot voucher) if your name is used for the newsletter.

Any questions on these articles?

Anything we can improve?

0860 100 333 afrfqueries@aforbes.com

contactus@aforbes.com

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Investment returns at 31 December 2021 AF GOAL-BASED LIFESTAGE MODEL PORTFOLIOS

3 months

1 year

3 years

5 years

AF High Growth

8.80%

25.93%

14.06%

9.77%

Benchmark

9.31%

23.86%

13.12%

9.51%

AF Balanced High Growth

6.66%

22.98%

14.27%

10.64%

Benchmark

6.93%

22.15%

12.60%

9.27%

AF Passive Bold

9.99%

25.03%

13.07%

9.28%

Benchmark

9.77%

24.40%

12.89%

9.14%

AFRF Protector

5.79%

17.53%

9.11%

Benchmark

6.06%

16.31%

8.50%

AFRF Passive Protector

6.13%

16.63%

8.60%

Benchmark

6.15%

16.52%

8.55%

*REAL RETURN LIFESTAGE

3 months

1 year

3 years

5 years

AFRF Real Return Focus

5.60%

17.88%

10.59%

8.99%

Benchmark

1.97%

9.55%

8.13%

8.45%

AFRF Stable Focus

2.80%

9.44%

8.91%

7.98%

Benchmark

1.72%

8.53%

7.12%

7.44%

*Closed Core offering LifeStage model - members cannot choose to switch into this strategy.

If you don’t see the returns for the portfolio you are invested in, in the ones above click here

Disclaimer: Please note that while care has been taken to ensure that the information provided in this article is correct, it represents an overview of the topic under discussion and as such does not constitute advice. While Alexander Forbes has taken reasonable effort to ensure that the information contained herein is true and correct it will not be held liable in respect of any loss arising from any advice provided arising out of the contents of this circular. We suggest that you contact your Legal department before taking any decisions based on the information herein.

The following businesses are licensed financial services providers: Alexander Forbes Financial Services Limited is a licensed financial services provider (FSP 1177 and registration number 1969/018487/07).

Alexander Forbes Investments Limited (FSP711 and registration number 1997/000595/06) Credits: Alexander Forbes Communications (production) | Getty Images (imagery) I8I 22492-NL-2022-02