Why it is in your interest to preserve your savings
Let’s assume a 35 year old person who earns R15 000 joins the Fund on 1 May 2021. The figure below shows the contributions less the risk options chosen. In total the member saves R3 269.16pm. Please note that this is only an example, the actual rates for the insured benefit will change from time to time and the rates used in this example cannot be relied on.
The red is the return on investment while the orange are the monthly contributions paid. The great Albert Einstein once said, “Compound interest is the eighth wonder of the world.” However note how long it takes for this wonder to kick into gear. After 10 years the interest earned would total R189 383.56 but after 20 years the interest would grow by 5.4 times to R1 025 635.94 and after 30 years by 17 times to R3 228 117.08.
If after 10 years you resigned and take your cash of R581 682.76 to pay debts and a new car, you would have to start the process all over from point 1. Let’s now assume you start new employment and work there to 20 years and retire. Your retirement benefit will be R1 810 234.34 whereas if you kept your savings your retirement would be R4 405 014.68. To take R581 682.76 in withdrawal benefits you sacrificed R2 594 780.34 in retirement savings! Preservation is the best option.