Harbour Wealth Client Newsletter
August 2015

This month’s newsletter is based on a presentation I gave at the recent MONEY EXPO run by SAFM, RSG radio and MONEYWEB. After the positive feedback I thought I would cover the issue in our newsletter.
– Eugene Maree Director

94% OF SA AFFECTED DAILY BY Biggest unreported FRAUD!

Imagine retiring to the idyllic setting of your choice. Whether that is long walks along our beautiful coastline or the magnificence of our bushveld sunsets. Maybe it’s living near friends and family you love with absolute financial peace of mind. What if while you were savoring the freedom that a lifetime of labour had brought you, peace and contentment was interrupted by a phone call. No ordinary call. A call bringing news that was about to drop a dark vale over the inner joy you had just been experiencing. It is news that your savings have been subject to a fraud that has cost you 25% of the financial security you created through a lifetime of effort.

We all think this will never happen to me. 94% of you will unfortunately be wrong! That 94% will be affected by this fraud daily. The long-term detrimental effects on your life savings may vary, however the net result will prevent you from retiring successfully.For the sake of clarity I have included a definition of fraud below as per the dictionary.

According to the definition synonyms for fraud are embezzlement,deceit and deception. As I write this note I read about another Ponzi scheme in SA. So how do people get caught in schemes and frauds that embezzle them of their hard earned money? Most think they are too smart to be a victim.The perpetrators of fraud succeed because they understand the emotion and desires of their targets. Their schemes work because they promise to provide a quick solution to satisfy the wants of their victims.

Fraud: frôd/noun  noun: fraud; plural noun: frauds wrongful or criminal deception intended to result in financial or personal gain. “he was convicted of fraud” Synonyms: fraudulence, cheating, swindling, embezzlement, deceit, deception.

The PERPETRATOR IS KNOWN to the victim!

Male Non- Smoker Male Smoker
Female  Non-Smoker
Female Smoker
Current age 30 = 68% Current age 30 = 35% Current age 30 = 86% Current age 30 = 64%
Current age 30 = 68% Current age 50 = 38% Current age 50 = 87% Current age 50 = 66%


The fraud I’m covering in this note works for all the above reasons. The perpetrator knows the victim and understands exactly how to deceive them. This is because the perpetrator and the victim share the same ID number but are not exactly the same person.Confused? The fraud I’m talking about involves the “current you” defrauding the “future you” of valuable retirement income. The “current you” has become an expert in justifying bad financial decisions that will rob the “future you” of a successful retirement. The “current you” knows exactly what lies to sell you to get you to spend money on immediate gratification. The marketing machine of consumerism assists gladly.Car marketing convinces you that your status and self worth are linked to a piece of metal.Everyone is entitle to luxury but if you’re buying a vehicle based on the marketing hype then you’ve had to convince your current self what a good idea it is. This is despite the fact that this new acquisition will put the “current you” and “future you” under financial pressure.Think I’m being a bit dramatic? Let me give you an example. Say you’re 35 years old and could resist spending R2000 per month, which is either 2 cups of coffee a week along with a meal every second week and a night out. Maybe it’s a few items of clothing or the difference in paying installments between a Golf base model and a GTI.

“If you keep buying the things you don’t need you’ll end up being forced to sell the things you do” –
Warren Buffet

If you were to invest that R2000 and increase that investment by 10% each year at a return of 12% per annum, it would result in R15 012 623 in 30 years’ time! The converse is that you spend it and defraud the “future of fifteen million rand!

The smell of the new car will wear off after a few months but the rest of your retirement without adequate income will feel like forever. As a non-smoker who is part of the insured population, you have a 40% chance of living to 90 if you’re a male and a 71% chance if you’re a female. Going back to the beginning of this newsletter and the call you received about losing 25% of your retirement income. How would the “future you” feel about the “current you” losing R15 012 623 of your retirement capital.

How much capital will you need to retire with in order to draw R50 000 income per month in today’s value, in the future?
This assumes drawing 6% of your retired capital and growing that by inflation annually. Some may argue that they could never save/invest R2000 and hardly come out on what they earn. This may be true for some. However for many if the government where to raise taxes by 10% they would be forced to adjust their lifestyles to accommodate that change.

My intention is not to be killjoy. You need to reward yourself for your current efforts otherwise you will lose motivation. Just be smart about it. Like your health, the bad decisions you make in your youth will come home to roost.

I hope this note prompts you to start thinking about the “future you” in the way you think about the health of the “future you”. If you’re retired and have become the “future you” don’t underestimate how much future is still ahead.

The same principles apply. Including watching the costs related to your investments as a 1% saving in costs could increase your income by 20%. Contact us and we’ll explain how.

Year: 0 – 10

Years Rand/Amount
1 R10 600 000,00
2 R11 236 000,00
3 R11 910 160,00
4 R12 624 769,60
5 R13 382 255,78
6 R14 185 191,12
7 R15 036 302,59
8 R15 938 480,75
9 R16 894 789,59
10 R17 908 476,97

Year: 11 – 20

Years Rand/Amount
11 R18 982 985,58
12 R20 121 964,72
13 R21 329 282,60
14 R22 609 039,56
15 R23 965 581,93
16 R25 403 516,85
17 R26 927 727,86
18 R28 543 391,53
19 R30 255 995,02
20 R32 071 354,72

Year: 21 – 30

Years Rand/Amount
21 R33 995 636,01
22 R36 035 374,17
23 R38 197 496,62
24 40 489 346,41
25 R42 918 707,20
26 R45 493 829,63
27 R48 223 459,41
28 R51 116 866,97
29 R54 183 878,99
30 R57 434 911,73