While this is not traditionally classified among life’s big decisions, like getting married or moving abroad, it probably should be. The effects of what seem like small decisions can compound dramatically for good or bad effect.
The “normally cool, calm and collected” Petrus knows this too well now. An engineer by training, he says he is no financial expert, but he takes an active interest in his own financial wellbeing. He makes a big effort to think through and understand the choices he makes.
Petrus, who married Yolandi in April, moved to Munich to take up a job offer with one of the world’s largest semiconductor makers shortly thereafter. He says he loves South Africa and had a great life here, but he “would have been silly” to reject the offer he received.
It was during the move, a very stressful and expensive time, that Petrus cashed out some of his retirement savings. He made what he describes as an “emotional decision” because he was sick of the bad service he was getting from one of the big asset managers, where he had some savings in a company pension fund.
He had had a taste of what was to come at the beginning of that relationship, he admits, but it was a company fund and he could not choose the provider.
“I am an engineer, I am not stupid, but it took me three months to gain access to my investments via their online portal!”
He stuck with it, he says, because “I am completely OCD so I didn’t give up like most people would”.
The bigger problem came when he tried to move his funds to a preservation fund with the same asset manager after he had left that job.
“I was trying to move it internally, but even that was such a painful process,” says Petrus. After three months, he says, he had made no progress at all. He “got fed up” and cashed it out.
He said he was under a lot of pressure at the time, because “immigration is an expensive business”. That decision resulted in him losing a third of the value of the investment in penalties and other costs.
That is why, Petrus adds, the “first piece of advice” he would give to others is about having a fund of emergency savings that will make mistakes like cashing out pension savings less likely.
“You should never be cashing in these investments at all before retirement,” he adds.
Of the company that he lost patience with, he says: “It wasn’t a huge amount of money, but they basically lost a customer for life.”
Petrus self-deprecatingly describes himself as “glorified salesman”, yet it is clear he is no fool. I pressed him for more info about his job but quickly backed off when he started talking about field-programmable gate arrays and integrated circuit devices to accelerate data functions …
He is also careful and keeps track of things. “I am the kind of guy that when I give a car guard R5 I put it on a spreadsheet.”
Yet under pressure he made a decision that goes against all advice about saving and preserving. He would do it differently if he could do it over again.
“With the wisdom of hindsight,” he says, “my advice is to take it slow.”
Pause and preserve, he adds, you can always access the funds later.
“Move your money into a preservation fund. If you really need it you can take it out later.”
Fortunately, Petrus made a few good choices too. He also had some savings with one of South Africa’s big five life insurance companies, where he discovered he was earning sub-inflation returns. Basically, he says, at these returns, he was “getting poorer”.
This compelled him to look at alternatives and he did a calculation on the 10X site. He discovered that the difference in fees alone on this investment would save him a quarter of a million rand over 15 years.
“People are just used to putting the money away somewhere and forgetting about it, thinking they will look at it again when they get to retirement.”
Unfortunately for many, it is too late then, when “they realise they don’t have enough”.
A big motivation for Petrus is becoming financially independent. That is why, he says, he is determined to invest his money “intelligently”.
He just wishes he had started earlier. “If I knew what I know now when I was in my twenties, when I started working, I would have been a hellova lot closer than I am now.”