Experts tip employees on retirement planning

Financial education experts have advised salaried employees to diversify their investment portfolios and expand their savings avenues to prepare for the lean period during their retirement.

In an interview on Friday, Sycamore Consult managing director Audrey Mwala said people should start learning the principles of financial management to achieve their financial goals later in life.

She said: “Knowing personal finance management puts people on the path to achieve their financial goals.

“There is a misconception that people need to have a lot of money to start investing and saving. But you can start small and place your funds in areas where you can get a return on your investment.”

In a separate interview, Old Mutual (Malawi) plc financial education manager Bernard Chiluzi said having a diversified portfolio helps individuals to have an alternative source of finance when they retire, especially if there are problems accessing their pension benefits.

He said: “Sometimes there are problems between administrators and employees and this delays a person to access their money.

“It is a problem when the person does not have another source of income to sustain them. This is where diversifying can provide a lifeline.”

On the investment channels people can use, Chiluzi said people should consider real estate and the stock market.

 He said: “People should learn to invest. A rule of thumb is to target investments that offer interests on savings that are higher than the inflation rate.

“The problem is that sometimes people save at a rate lower than the inflation rate and lose a portion of their savings in the long-term.”

The advice by the experts comes on the back of figures showing that ordinary savings attract on average 3.7 percent per annum, a figure that is significantly lower than the current inflation rate at 28.4 percent.