Scaling Down – The Road To Retirement

– By Mareo Bekker

Sunél asked me to jot down a few thoughts on how I understand and experience “semi-retirement”. Before I address the subject, I have to provide some background and context to my story.

After starting my working career, my wife Lizel and I were blessed with four sons. It changed the dynamics of our household. As they grew up and each had his own activities, I realised that my work had to be afforded its appropriate place, and that the activities of and with the children, had to provide the balance. My sport was substituted by the attendance of coaching sessions, matches and tournaments. Friendships forged on the side-lines with other parents led, in our case, to hiking ventures with the families. As a result of the demands on our lives by our sons and their activities, Lizel and I inevitably had less time for ourselves on our own.

I met prof Johann Coetzee about 15 years ago. He introduced me to the concept of “work/life balance”. It resonated with me as we had intuitively seemed to have practised something very similar over the years. The concept of a “sabbatical” was not yet in vogue in all professions at the time. We however took a sabbatical after I left the corporate world in 2003. Lizel and I walked the Camino Francés (800 kilometres in 35 days) with backpacks from St Jean Pied de Port in France to Santiago de Compostela in North Western Spain. Camino means “the way”. “The Way is an excellent metaphor of life – not just as a goal, but also for the joy of the journey in all its fascination and fullness.” (The Road to Santiago, Edilesa Guides, p3) The hike made me review life and assess which things were really important to us.

In 2006 we changed our religious community to one in another geographical area. It was a challenging, but ultimately hugely satisfying experience resulting in growth on another level. We made a host of new friends. We had to work hard to maintain old friendships.

As knees started buckling, our old friends gradually started acquiring 4×4 vehicles. At the time I thought a 4×4 was an unnecessary luxury item. Coincidentally our new friends were already 4×4 people. After being invited to accompany them to places that we would not have been able to reach by foot, I was convinced that certain wonderful places were only accessible by a 4×4. We initially rented such a vehicle. In 2008 we acquired a second-hand 4×4 and had it kitted out so that we could be self-sufficient in the bush for a few days.

We toured through Botswana and Namibia a number of times. In 2013 we joined a group to Dar es Salaam and Serengeti. We went to Damaraland, Kaokoland, Etosha and Chobe last year. We re-visited Kgalagadi recently. These were all unforgettable experiences. We agree with the saying that experiences are more valuable than things.

Why do we go on trips like these? Since I turned 60, I saw the traditional retirement age of 65 drawing inexorably closer. I gave “retirement” a lot of thought, and started reading books and articles on the subject. I was afraid that the dreaded day would arrive and that I would not be mentally ready for it – especially as I had no hobbies outside my career. I do however have a wide field of interest.

I got the distinct impression that many people in my age group prefer not to think about retirement. Some are too busy and do not see the sense in retiring. Others are probably not financially able to cease working in the traditional way and to “retire”. My wife and I therefore discussed the issue regularly and drafted a timeframe for my scaling down into semi-retirement – which obviously depends on our health from time to time, and grace from above.

I realise that 65 is only a number. It could just as well have been 70 or some other number. In 2015, when I turned 65, I felt that it was the appropriate time for me to make a few visible moves to indicate that I am in fact scaling down. The process to full scale retirement will probably be completed by 70 or a few years thereafter.

Why scale down now? I felt that it was time not to be the leader any more, but more of a mentor and even, at times, the follower. I have lots of knowledge and experience to impart. (I am the cleverest that I have ever been!) I also wanted to reduce my responsibilities, obligations and risks. My energy levels are decreasing. I wanted to place my health higher on my list of priorities. I commenced with Pilates classes three times a week. I realised that I will not be able to clamber onto my roof rack after 75 to sleep in the roof tent – chalets are just too comfortable by comparison! I therefore had less than 10 years left for more strenuous physical activities. Thereafter we would probably scale down or terminate such activities.

What happened to my work? I have very accommodating partners. I agreed with them that I would commence selling my interest in the firm to them over a period of three years. I changed to a 10 month work year. I still work daily from 7 to 15:30. In effect nothing has changed, save that I have much more leave time. I informed my colleagues of the new arrangement on 1 July 2015 and motivated it as follows:

“Why do I want to do this?

  • I want more time to do 4×4 tours to wilderness areas while I am still physically able to do so.
  • I want more time to be available for my grandchild and his parents.
  • I want to spend more time at our seaside cottage to read and reflect. Maybe the TED talk below will give you some insight into my thinking.

The arrangement is reviewed annually. If both parties are satisfied, we re-commit.

How has it worked out to date? What do I do with my increased “leisure” time?

  • I have more time to spend with my wife: she has her own programme filled with music, orchestra, church affairs, bible study, gardening, charitable projects and looking after our grandsons from time to time;
  • I have more time available for my grandchildren. Unfortunately they are moving to Cape Town soon. The extra time will now be diverted into plotting and planning how and where to spend more time in the Cape, in order to see them regularly; we would not want to miss out on their development;
  • My other sons have different careers and sometimes ask me for advice. It is a privilege to be asked, and to have the time to assist.
  • Family and friends sometimes also require assistance, and it is very satisfying to assist.
  • Organisations in which I was involved previously, sometimes ask me to assist with advice or small projects. The writer Paul Tournier saw the benefit of giving inputs without expecting or receiving anything in return. It is hugely satisfying.
  • I have more time for spiritual matters. Marsha Burns said: “This is a time when you can take whatever steps are necessary to leave the past behind in ways that are deliberate and decisive. You must do this before you can step into the next phase of progression. Be done with things that are no longer useful and not relevant to who you are and where you are going.”
  • We go on a 4×4 tour with different groups of friends once or twice a year. I hope to be able to take my grandsons along on some trips in future.
  • We spend more time than previously at our sea cottage, either on our own or with friends or family. We do not have a TV there. There I rediscovered the pleasure of reading novels and biographies and listening to music.
  • Back at home, we make a point of going to music concerts, especially at the Linder Auditorium and those of the Rand Symphony Orchestra.
  • My old friends and I meet regularly to watch some rugby games, this is inevitably followed by a hearty feast. We also manage to fit in a lunch on certain Fridays – during the course of which we solve the world’s problems.
  • And: We never miss an opportunity to celebrate!
  • I still have to find time for the cinema!

I was involved in the financial services sector for most of my working life. I however never had time to properly study the markets and individual companies. I always thought that, after retirement, I would spend my time reading about these matters and buying and selling shares. It is quite ironic that I have lost my appetite for it. Thanks to FFW’s regular reviews and the trust which I have developed in them over the years, I now leave these matters to them. I really do not want to be bothered about whether I should buy or sell Naspers! I am however still interested in macro trends and asset allocation, and am concerned about increasing costs, capital gains tax, income tax and the amended regulations in respect of trusts.

I hope that my story may be of use even if only to one person. May your scaling down be enjoyable!

Mareo Bekker

PS: Here is a list of books, reports and articles that I found useful over the years:

Bob Buford: Half Time: Changing your game plan from success to significance

Bob Buford: Finishing well

Bruce Cameron: Retire right

Johann Coetzee: It’s about time

Alan Maguire: Retirement and getting old are not the same.

Merrill Lynch: Leisure in Retirement: Beyond the Bucket List (2016).

Lynda Smith: 12 Powerful Questions to navigate your future; Coaching Program of Refirement Network

Paul Tournier: Learning to grow old

Vaugh, Bataille, Sargent & Lee: Managing yourself: Next-Gen Retirement: Harvard Business Review: June 2016

Ernie J Zelinski: The joy of not working

Ernie J Zelinski: How to retire happy, wild, and free

Words Worth Reading

Retirees Are Too Pessimistic on Their Investments – And It’s Costing Them

… “Adults in retirement are less optimistic than younger groups about future economic growth, stock-market returns and long-term personal financial well-being, new research shows. This may lead them to shift out of stocks too soon and cut spending more than needed, shortchanging their lifestyle and dreams” …

This is such an important article. Dan Kadlec writes about the hope we can’t afford to lose – especially in light of our investments.


Seven Things You Should Save For Your Grandchildren

After Fifty Living’s Jo-Anne Lemu wrote:

“Money, toys and games come and go, but if you want to give your grandchildren a gift that will last, there are other items that can help kids learn more about your story, themselves, and their family. What children really value is your attention and they appreciate the grandparent who’s prepared to stand in, teach them and inspire them. These presents aren’ always the trendiest items on shelves, but they are more valuable and will help your grandkids for years to come.”

Let us know what you think about this one and send us a pic if you do manage to get this special box together for your grandkids.


The CFA Institute posted this article – “Politics Matters – Sometimes”.

“The narrative of global markets is shifting away from its focus on central banks and monetary policy toward geopolitics and fiscal policy…

Read the full article here.



Active, Passive or Both?

-By Elke Zeki

This debate is on-going and some are very passionate about it. In the South African market, quality active managers have been relatively successful in outperforming equity benchmarks over the long-term. However, recent low returns from the market (and active managers) has brought a renewed interest in passive solutions from investors. Why is this, and should we change our approach?


A passive investment strategy is a fund that merely tries to replicate a certain index as closely as possible over time. Because the constituents and construction methodology of most indices, like the ALSI Top 40 are made available, a simple strategy is for a portfolio to exactly replicate this.

What passive solutions are available to South African investors?

Exchange Traded Funds (ETF) – a marketable security listed on the stock exchange that tracks/replicates an index.

  • Market capitalisation-weighted Exchange Trade Funds – an ETF that replicates an index whose individual components are weighted according to their market capitalisation (value of company’s outstanding shares). The larger companies carry a larger percentage of the fund.
  • Smart Beta Exchange Trade Funds – a type of ETF that uses alternative index construction rules instead of the typical cap-weighted index strategy, in a transparent way. It considers factors such as dividend yield, value and volatility.

Passive Unit Trust Funds – Like an ETF, but a unit trust fund that is not a listed instrument and therefore only available through LISP platforms or directly through the service provider.


Active investment management, on the other hand, is a style of investing where the portfolio/fund manager aims to design a portfolio that will outperform the fund’s benchmark or index. The selection of shares and the weight of the shares will therefore differ from the index in an attempt to produce a superior result.

A brief recap of some of the arguments:

Although we are lagging in comparison to the rest of the world, we are expecting South Africa to experience a similar trend for the following reasons:

  • The strategy provides a low-cost option to gain investment exposure to a broad and diversified market.
  • Increasing competition in the passive space should lead to lower costs.
  • Because of costs and general efficiencies in financial markets, it’s difficult for active managers to consistently outperform benchmarks. We have seen evidence on this over the past five years. See link to recent global study.

In its review of retirement funding costs over the last few years, National Treasury has come out in support of passive funds, saying they are underutilised in South Africa.

Another very important factor to consider is investor behaviour.

When it comes to investment returns and performance – most investors are their own worst enemies. Investor behaviour is the biggest detractor of returns as shown by Dalbar studies (Quantitative Analysis of Investor Behaviour-

Investor behaviour is not simply buying and selling at the wrong time: it is the psychological traps, triggers and misconceptions that cause investors to act irrationally. That irrationality leads to the buying and selling at the wrong time which leads to underperformance of the available market returns.”

Illustrated below:

Low returns play a part

Even though many of these arguments are not new to investors, we believe that the interest in passives has accelerated due to lower recent equity market returns investments and sensitivities around fees.

Over the past three years, the South African equity market has moved sideways. Higher management fees are therefore questioned in an environment where equity markets returned only 5.9% annualised compared to the long-term average of 13%.

Graph from Investec Asset Management

What we’ve learned?

Investor behaviour impact long-term investment returns more significantly than choosing between active and passive.

Good South African fund managers produce similar returns to passives or indexes over the long term, but they take significantly lower risk.

Source: PortfolioMetrix

Outperformance by good fund managers is not always consistent and can be “lumpy”. It’s therefore important to stick with a selected fund manager through good and bad times.

Both styles have merit. The most suitable one will depend on personal preferences and goals. There is a case for blending these approaches as we can address the following specific issues more efficiently:

  • Reduce overall costs – especially if there is a targeted fee.
  • Reduce concentration risk.
  • The continuing growth of the South African ETF market and the introduction of new ETF’s will ultimately lead to even lower costs and provide more choice.
  • Uncorrelated returns to some degree if you blend passive market cap index with an active manager that is benchmark agnostic and construct a portfolio based on valuations.
  • As the market develops, we believe there will be space for true active managers.

At Foundation, we strive to find solutions for every client based on their personal needs and objectives. We continue to innovate, based on rigorous research and careful consideration. We will continue to choose or develop new products for our clients so that they can benefit from these developments.

Also, through a disciplined approach, we want to help investors to avoid irrational, destructive, decisions based on short-term performance.

Memories of the Kgalagadi

-By Mareo & Lizel Bekker

“The goal isn’t more money. The goal is living life on your terms” – Will Rogers

We recently had the privilege of touring Mabuasehube in Botswana and the Kgalagadi Transfrontier Park. We were aware that it had rained up to 300mm in the area since January. But nothing could’ve prepare us for the spectacle that awaited us: millions of butterflies, metre tall grasslands, pans filled with water and beautiful clouds everywhere. We’ve visited the area regularly for the past 40 years – but never before seen it like this.

Lions daily for the first 14 days – and nights; hundreds of aristocratic oryx and red hartebeest; regal secretary birds and kori bustards; eagles, goshawks, vultures; Namaqua doves and other birds – too many to mention.

We had time to observe, listen, experience, appreciate and be thankful. A lot of nonsense was spoken around the fires, but we also had time to strengthen old friendships. We took lots of photos to reflect upon later.

There were close encounters with lions and vehicles overheated as a result of grass in the radiators. But the main characters were nature, the clouds, grasslands, plants and animals. And their Creator. We were privileged to have experienced it all.

Words Worth Reading

The Best Way To Follow Your Dreams Is By Keeping Your Day Job! Now there’s a thought…

“Because the best route to one’s calling is often not to choose must over should, but rather to choose must and should.”

Read the full article here.

Global Investing posted this read: “Be nice to your boss! Getting fired can deal more deadly blow to your wealth than divorce”. Here’s the intro – enjoy the full article…

Financial intermediaries often caution their clients about the hazards of divorce. Splitting homes, possessions and bank balances can deal a major blow to personal finances. But, unemployment can be just as deadly for wealth-building efforts, with redundancy or being fired causing irreparable harm to savings and investment strategies, notes Chris Stokel-Walker. Extroverts bounce back quicker, while the astute may consider entrepreneurial paths. Take the example of PSG Group founder Jannie Mouton, who recovered from being ousted from his own business only to rise to become one of South Africa’s richest – at a time when most people are contemplating retirement. – Jackie Cameron

Full article can be found here.

Seth Godin writes a brilliant, short piece on the 24 things that artificially intelligent computers can do better than us. But here’s the crux – its in finding what they can’t do better – where human beings in their uniqueness overtake these marvelous machines.

Read more here.

A quarter marred by political instability: First Quarter 2017 Review

At home:

A quarter with positive data and signs of economic stability was yet again marred by political turmoil. Local inflation slowed down to almost 6%. The current account deficit narrowed substantially and there was a general uptick in appetite for emerging markets. For a moment it seemed that South Africa was on the recovery path. All of this was undone with the cabinet reshuffle and firing of Finance Minister Pravin Gordhan at the end of March.


Abroad Trump has signed 34 executive orders to date. Therese May signed Article 50 to trigger Britain’s exit from the European Union. And in the East, tension is rising as America is at loggerheads with North Korea about nuclear missile testing – while China sits on the fence. The French are heading to the polls, which may spark the newly coined Frexit (French Exit from EU) although first round voting results have calmed these fears somewhat.

Locally, both S&P and Fitch downgraded South African debt following the cabinet reshuffle. Moody’s will also make a decision in the coming weeks.

The downgrade has three major consequences:

  • Less foreign investment into South African bonds.
  • Higher borrowing costs for the government, which eventually leads to lower growth.
  • Lower confidence in our country, which ultimately reduces investment and growth.

The JSE rallied just under 4% in the first quarter with Industrials as the star performer. Barring financials which were hit in the last week of March, all major sectors showed positive returns. Emerging markets were the overall winners as investors sought growth opportunities. The Global Emerging Market index was up 11.4% (in dollar terms) for the quarter.

The Rand initially remained calm after the ratings downgrade but eventually depreciated to around R13.95/USD. However, it seems that strong demand for the Rand after quarter end continued and pushed the currency back below R13/USD.  There seems to be continued demand for emerging market investments from global investors and compared to other emerging markets like Turkey and Brazil, South Africa’s current problems do not seem to concern these investors.

Positive earnings posted pulled the P/E Ratio closer to the longer-term averages. As mentioned in previous reviews, the P/E is affected by the big industrials such as Naspers and Richemont that have been in expensive territory for some time. It also excludes some major resource companies due to negative earnings results. On face value – this graph would indicate a “cheaper” market than in 2016.

Source: Bloomberg

Heightened tension out of the East pushed the gold price higher in the first quarter.  Russia backed Syria after it was alleged that the Assad regime used chemical weapons on their own people. The US followed with a missile strike on a Syrian airfield where the chemical attack was launched.

Furthermore, North Korea tested nuclear missiles as President Trump arrived in China and the US dropped the “Mother of All Bombs” (MOAB) on an ISI target in Afghanistan. All of this contributing to the anxiety and the rush to the safe haven metal.

South Africans are in for an interesting ride. There was widespread outcry and protest against Zuma and his unprecedented cabinet reshuffle. With another motion of no confidence set and a request for a secret ballot to be heard by the constitutional court, it will certainly be a quarter to remember. It appears that Zuma will remain President until at least the ANC’s electoral conference in December. It is clear that there is a growing divide within the ruling party with more members becoming vocal on the damage caused by the President.

As the National Conference moves ever closer, there are already candidates on the campaign trail. Dlamini-Zuma, President Zuma’s ex-wife is seen to lead the Zuma loyalist camp. We have seen how vocal the Youth League and Women’s League are in support of this faction. On the other side, you have the reformists, who could be led by either Cyril Ramaphosa or Dr. Zweli Mkhize. It is certain that there will be a lot of noise and that the divide within the ANC is almost certain to grow – especially as the stakes are getting higher.

We live in uncertain times with a number of outcomes that can weigh in on investment performance. We remain of the opinion not to position our clients’ portfolios in anticipation of certain events. A diversified portfolio will give us the necessary exposure to be hedged against any one specific event no matter the outcome.

There is a danger that due to uncertainty, investors, like dears in headlights, do nothing, or worse pull out of their investments. The last quarter is a good example of how, in uncertain times, investments can still return positive results.

In closing, we leave you with the following quote:

“I can guarantee one thing: Those who put an investment program in place will have a lot more money when they come to retire than those who never got around to it” – Noel Whitaker.