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Welcome to Taking Stock Winter 2018

July 2018
By: Sangeeth Sewnath, Deputy Managing Director

Never mind arresting the ageing process. Why not reverse it altogether? Dr Aubrey de Grey, famed researcher and probably the world’s leading proponent of the view that technology will one day allow human beings to control the ageing process, believes it is within our reach to live healthily into our hundreds, or even thousands.

Speaking at a recent Investec Asset Management conference hosted for our South African advisor clients in London, De Grey set out that virtually everything that causes us to age and die stems from the life-long accumulation of ‘damage’ to the body, which steadily accrues throughout our lives. The body can tolerate some damage, but too much of it causes disease and disability.

He then went on to list seven discrete categories of damage and alongside that, seven seemingly simple repair therapies. What’s more, he’s looking at an approximate time frame of 2021 to start human trials.

Consider the consequences. How many more people can the planet handle? Would we get bored if we were to live to 1000? And how would you get rid of an immortal dictator? And for us in the investment and savings industry, how much more complex would planning for your clients’ retirement become?


Would we get bored if we were to live to 1000?

We already know that thanks to advances in medical science and improving living standards, we’re likely to live longer than previous generations. We also know that most people are not saving nearly enough for their retirement. Now consider the implications of a really (really!) long-term investment horizon followed by an interminable drawdown period.

This leads me to the second instalment in our series covering the in-house research we conducted on living annuities. In this edition of Taking Stock, Jaco van Tonder explores how to manage the income withdrawal strategy for a living annuity investor to ensure an inflation-proof income. In summary, the research demonstrates that a successful living annuity income strategy contains two key components:

  • Picking a safe income level at the outset; and
  • Adjusting the income every year to reflect investment returns achieved on the annuity, whilst preserving the real purchasing power of the income.

More food for thought at our conference came from Dr David Wood, acclaimed futurist, on artificial intelligence. How worried should we be? Can we equip ourselves to anticipate industry disruption and harness the benefits of artificial intelligence so that our businesses will thrive? Dr Wood summed up by stressing the importance of contemplating future opportunities and threats, practically:

  • Strategy = choice: what you will do and what you will not do
  • Futurist = preparation: readiness for key changes

Before I sign off, it is encouraging in this environment of disappointing returns and increased volatility to note how many of our advisors are holding the line and not bowing under pressure to make irrational decisions. While those who have been invested for a long time have experienced the benefits of double-digit returns and the power of compounding, it is those newer clients who have really only experienced the paltry returns of the last three years that want to throw in the towel.

We would welcome the opportunity to help you reinforce the message to your clients. Do not hesitate to let us know whether we can convene or participate in group discussions – with clients old and new – to add our voices to yours in encouraging them to stay invested.

There are still opportunities out there and as always, we are committed to finding them.

In closing, I wish to thank you for your continued support and trust you will enjoy our winter edition of Taking Stock.



Sangeeth

 

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All information and opinions provided are of a general nature and are not intended to address the circumstances of any particular individual or entity. We are not acting and do not purport to act in any way as an adviser or in a fiduciary capacity. No one should act upon such information or opinion without appropriate professional advice after a thorough examination of a particular situation. We endeavour to provide accurate and timely information but we make no representation or warranty, express or implied, with respect to the correctness, accuracy or completeness of the information and opinions. We do not undertake to update, modify or amend the information on a frequent basis or to advise any person if such information subsequently becomes inaccurate. Fluctuations or movements in exchange rates may cause the value of underlying international investments to go up or down. Any representation or opinion is provided for information purposes only. This is the copyright of Investec and its contents may not be re-used without Investec’s prior permission. Investec Asset Management is an authorised financial services provider. Issued by Investec Asset Management, July 2018.