1. Absa Investments LIFE STAGE INVESTING Presented by: Johan Gouws

2. It’s All About Retirement
PRIOR TO RETIREMENT
DURING RETIREMENT
Saving for retirement
Wealth accumulation
Wealth consumption
Wealth protection
Retirement Capital
30 to 40 years
25 to 30 years
Objective:
Saving and creating sufficient wealth for financial independence during retirement
Objective:
Preserving your capital in order to maintain a desired standard of living during retirement

3. Percent Population Aged 65 and Over: 2040
The World is Ageing
Percent Population Aged 65 and Over: 2040
Retirement Age
Male
Female 60 81 84 65 82 85 70 86 75 87

4. Investment Planning Pitfalls
Not saving from an early enough age

5. Why Starting Early is A Good Idea
Age from which regular contributions are made
Retirement
Age 25 30 40 50 55
R 1,817,347.59
R 1,018,317.70
R 278,714.35
R 42,898.70 60
R 3,162,399.19
R 549,393.28
R 126,067.83 65
R 5,405,928.72 70
R 9,121,841.01
Note: Figures shown in the table assumes a starting contribution of R500 per month that escalates by 6% every year and a 10% investment growth per annum

6. Why Investing for Longer Is a Good Idea
Age from which regular contributions are made
Retirement
Age 25 30 40 50 55
R 1,817,347.59
R 1,018,317.70
R 278,714.35
R 42,898.70 60
R 3,162,399.19
R 549,393.28
R 126,067.83 65
R 5,405,928.72 70
R 9,121,841.01
Note: Figures shown in the table assumes a starting contribution of R500 per month that escalates by 6% every year and a 10% investment growth per annum

7. The Power of Compound Growth

8. The Power of Compound Growth
Years
R 1 5 10 15 20 25 30
Growth 5%
R 1.28
R 1.63
R 2.08
R 2.65
R 3.39
R 4.32
10%
R 1.61
R 2.59
R 4.18
R 6.73
R 10.83
R 17.45
15%
R 2.01
R 4.05
R 8.14
R 16.37
R 32.92
R 66.21

9. Investment Planning Pitfalls
Not saving on a consistent and regular basis

10. Investment Planning Pitfalls
Not taking sufficient investment risk in order to achieve the required real returns

11. The Value of Your Money Years R 1 5 10 15 20 25 30 Inflation 3% R 0.866%
R 0.75
R 0.56
R 0.42
R 0.31
R 0.23
R 0.17 9%
R 0.65
R 0.27
R 0.18
R 0.12
R 0.08
12%
R 0.57
R 0.32
R0.18
R0.10
R0.06
R0.03

12. The Cornerstones of Investing

13. R100 - Invested Over 30 years (Compound Annualised Growth Rates)

14. Investment Planning Pitfalls
Allowing emotions to corrode the base of sound long-term financial planning

15. Investor Sentiment and Behaviour
Investor Sentiment Cycle
Market
Peak
Market
Bottom
Point of maximum financial opportunity
Anxiety
Thrill
Euphoria
Denial
Excitement
Fear
Optimism
Desperation
Optimism
Panic
Relief
Capitulation
Depression
Hope
Despondency
Point of maximum financial risk
Source: Westcore Funds/Denver Investment Advisors LLC, 1998

16. Investment Planning Pitfalls
Dipping into retirement savings when moving between jobs

17. Dipping into Retirement Savings
Of the 91 respondents who had changed employers & exited their funds in the past 10 years:
51%
Had withdrawn benefits in cash
40%
Had transferred their benefits to the fund of their new employer 6%
Had left their benefits in their previous fund 4%
Had invested in a preservation fund 4%
Had dealt with the funds in another way
Source: Old Mutual Retirement Monitor, 2011

18. Investment Planning Pitfalls
Viewing retirement as a once-off event rather than a period of transition

19. How Much is Enough? 25 years in retirement Retirement Age – 65
Annual Income – R
25 years in retirement
Replacement ratio: 75% of final monthly salary = R7,5 million required at retirement*
* Note: Assumptions applied regarding investment returns, inflation and income required

20. Retirement is a Process Not an Event
Prior to Retirement
In Retirement
100% Equity
Transitional Retirement Planning
Opportunity loss due to insufficient market exposure
Equity Market Exposure
100% Cash
Retirement

21. A Life Stage Approach to Financial Planning
Early
Career
Mid
Career
Late
Career
Early Retirement
Late
Retirement
Formative
Wealth
Wealth Preservation
Wealth Protection
Wealth Creation 10 20 30 40 50 60 70 80
Years

22. Life Stage Investment Solutions
Early Career
Mid Career
Late Career
Early Retirement
Late
Retirement
Age
75 +

23. Life Stage Investment Solutions
Early Career
Mid Career
Late Career
Early Retirement
Late
Retirement
Age
75 +
Investment Objective
Wealth Creation
Wealth Creation & Preservation
Wealth Preservation & Consumption
Wealth Consumption

24. Life Stage Investment Solutions
Early Career
Mid Career
Late Career
Early Retirement
Late
Retirement
Age
75 +
Investment Objective
Wealth Creation
Wealth Creation & Preservation
Wealth Preservation & Consumption
Wealth Consumption
Required Returns
Inflation +5/6/7%
Inflation +3/4/5%

25. Life Stage Investment Solutions
Early Career
Mid Career
Late Career
Early Retirement
Late
Retirement
Age
75 +
Investment Objective
Wealth Creation
Wealth Creation & Preservation
Wealth Preservation & Consumption
Wealth Consumption
Required Returns
Inflation +5/6/7%
Inflation +3/4/5%
Time Horizon
Long
Long - Medium
Short - Medium

26. Life Stage Investment Solutions
Early Career
Mid Career
Late Career
Early Retirement
Late
Retirement
Age
75 +
Investment Objective
Wealth Creation
Wealth Creation & Preservation
Wealth Preservation & Consumption
Wealth Consumption
Required Returns
Inflation +5/6/7%
Inflation +3/4/5%
Time Horizon
Long
Long - Medium
Short - Medium
Risk Tolerance
High
Moderate to High
Moderate
Moderate to
Low

27. Benefits of a Life Stage Approach
Recognises the financial realities during each life stage, i.e. ability to earn and save
Provides a visual framework that creates the necessary urgency to plan for the long term
Allows for the alignment of investment objectives with the appropriate investment strategy
during each life stage, i.e. the ability to take on sufficient investment risk
Facilitates a higher probability of keeping intact the investment strategy and timeframes
agreed at the outset throughout the economic and investment market cycles
Highlights the negative impact of dipping into retirement savings
when moving between jobs
Reduces the impact of emotions and maintains focus on sound long-term planning
Provides perspective on the retirement age as a transition period rather than a goal

28. Meeting Your Life Stage Requirements
PRIOR TO RETIREMENT
DURING RETIREMENT
Saving for Retirement
Wealth Accumulation
Wealth Consumption
Wealth Preservation
Investment
Account
Guaranteed
Solutions
Retirement
Annuity
Fund
Investment
Account
Unit
Trusts
Share
Portfolios
Unit
Trusts
Preservation
Funds
Share
Portfolios
Living
Annuity
Equity, Property &
Currency Funds
Asset Allocation Funds
Money Market &
Fixed Interest Funds

29. Absa Single Manager Funds
INCOME
NEED
CAPITAL GROWTH
RAND PROTECTOR FUND
SELECT EQUITY FUND
PROPERTY EQUITY FUND
MANAGED FUND
BALANCED FUND
ABSOLUTE FUND
INFLATION BEATER
INCOME ENHANCER FUND
MONEY MARKET FUND
LOW
RISK
MODERATE - AGGRESSIVE

30. Absa Multi Managed Fund Solutions
INCOME
NEED
CAPITAL GROWTH
ABSA MANAGED CPI + 6% FoF
ABSA MANAGED CPI + 5% FoF
ABSA MANAGED CPI + 4% FoF
ABSA MANAGED CPI + 3% FoF
ABSA OPPORTUNITY INCOME FoF
ABSA OPTIMAL INCOME PORTFOLIO
LOW
RISK
AGGRESSIVE

31. Absa Asset Management Private Clients
INCOME
NEED
CAPITAL GROWTH
EQUITY PORTFOLIO
OPTIMAL EQUITY PORTFOLIO
LISTED PROPERTY PORTFOLIO
BALANCED PORTFOLIO
FLEXIBLE PORTFOLIO
QUATTRO PORTFOLIO
PREFERENCE SHARE PORTFOLIO
BOND/ INCOME PORTFOLIO
MONEY MARKET PORTFOLIO
LOW
RISK
AGGRESSIVE
Segregated portfolios for clients with more than R1m to invest.

32. You’d be surprised what you can accomplish when you start with what you’ve got.

33. THANK YOU