Do you aspire to retire successfully? Discovery Invest client Louis Janse van Rensburg has managed to do it, and has tips for the rest of us on how to avoid debt, save money and reach our retirement goals.
Louis Janse van Rensburg retired four years ago, and he's now enjoying the fruits of his financially savvy lifestyle. But how did the former IT integration manager and father-of-two, get to this point? Here's his story:
An early commitment to avoiding debt
"I decided at a very young age to avoid debt," Louis says. "When I started working, I bought a car and planned to pay it off monthly. Paying it over the 48-month term would mean paying double what the car actually cost because of the interest on the payments, so I paid it off as quickly as possible." This tactic saved him thousands in the long run, and also fostered financial discipline by getting him into the habit of putting money aside each month.
Self-discipline when it came to saving
"Once the car was paid off, instead of spending the instalment amount, I invested it each month Every year, I increased my monthly budget at the rate of inflation and continued to pay off any new debts while saving." So not only did Louis pay his debt off as quickly as possible, once he paid it off, he kept living as though he still had debt.
"Plus," he adds, "To avoid debt, I only bought items with cash when I could afford it."
Getting expert investment advice
How did he know what to do with his savings? By teaming up with a financial adviser, he found the expertise he needed to make smart long-term investments. "A good financial adviser can make all the difference to your investments and prepare you for a successful retirement," says Louis. This relationship works best when your financial adviser understands your lifestyle and communicates clearly to you about potential losses and gains.
Maximising product benefits
For example, Louis makes a point of maintaining his top-tier Diamond Vitality status because he knows he gets maximum benefits at this level - both financially and holistically, given the importance of a healthy lifestyle on one's wellbeing. Every Saturday, he visits his local parkrun or takes part in a road run, coupled with an occasional race on Sundays, with the confidence that, thanks to Vitality's unique model, physical activity can translate into financial rewards!
As a Diamond Vitality member who withdraws 3.25% each year from his retirement savings, Louis can boost his retirement income by up to 50%1. This income boost effectively tops up his retirement income, which enables him to keep withdrawing 3.25% each year. "Discovery Invest's retirement income boost1 makes a huge difference to my monthly pension amount and comes at no additional cost." He's quick to acknowledge, "You just cannot compare the benefits you get through Discovery Invest."
It also boils down to using those benefits for what you want to accomplish. Louis pays for his youngest son Izak's student fees and accommodation. "Without the 50% income boost, I would not be able to afford to keep him at university," he adds. Discovery Invest will pay Louis a 50% boost on his monthly retirement income for ten years. "So, I get 50% more than I withdraw from my retirement savings, a great reward for the simple acts of linking my Discovery products to Vitality and keeping healthy."
Discounts on groceries add up
"Discovery clients have an advantage over others, because by engaging with Discovery Vitality as far as possible, you can save money on multiple levels," says Louis. "As a vegetarian, fruits and vegetables make up the bulk of my grocery list, and the Vitality HealthyFood benefit means I get up to 25% cash back paid into my bank account every month."
R33 000 in annual savings by ‘living healthier'
I also get up to 100% off two kulula.com flights per year with Vitality Active Rewards. Plus, I save up to 35% on local and international flights through the Vitality travel savings. That's a lot of savings." Louis' calculations show that in 2015 alone Discovery's benefits totalled R33 000 in savings for him: "I ‘earned' this simply by living healthier - doing what I would have done anyway."
Effective integration helped Louis reach his retirement goals
By integrating various Discovery products, Louis has received more rewards and has reached his investment goals easier.
1The 50% income boost with the Retirement Income Investment Integrator is based on Diamond Vitality status and an income drawdown rate of 3.25% or less each year. A lower Vitality status will result in a lower boost. Vitality rewards are dependent on a member's Vitality status. The more Vitality points earned through healthy activities, the higher the Vitality status and the greater the rewards.
This article is meant only as information and should not be taken as financial advice. For tailored financial advice, please contact your financial adviser. Specific consent was given by the client to share his story with regards to his Investment choices and retirement.
Discovery Life Investment Services Pty (Ltd): Registration number 2007/005969/07, branded as Discovery Invest, is an authorised financial services provider. All life assurance products are underwritten by Discovery Life Ltd. Registration number: 1966/003901/06. An authorised financial service provider and registered credit provider, NCA Reg No. NCRCP3555.
Discovery Vitality (Pty) Ltd is an authorised financial services provider. Registration number: 1999/007736/07. Limits, T&Cs apply
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Earn Vitality points at your local parkrun or myrun
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A retirement savings strategy isn't static - it needs to adapt as you move through different life stages. In other words, a 25-year old will approach retirement investment differently to someone who is 55.