Tips for 2023

It can make a big difference to your long-term wealth

By Samuel Rossouw


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The year 2022 has come and gone and most people have probably given up on their New Year’s resolutions by Valentine’s Day.

There is a saying that if you fail to plan, you plan to fail. I am sharing some important tips that you should take note of and prioritize in 2023, which, if followed diligently, can make a noticeable difference to your long-term wealth and success.

Retirement fund contributions

The tax year ends on 28 February. So, make sure that you contribute the maximum allowable amount to your retirement fund (limited to 27.5% of your income or R350 000), in time to receive the tax benefit in the current financial year.

If you are a disciplined investor, you can of course reinvest this credit, in a tax-free savings account for example, where all interest/dividends/capital gains are tax-free.

Keep in mind that you do not have to make the additional contribution to your employer’s pension fund. A private non-contractual annuity often offers more options in terms of underlying funds and strategies.

Salary increases

Salary increases are usually linked to the official inflation rate. Although increases have been slight in the past few years, we can expect that if your employer does use inflation as a benchmark, increases in 2023 will be considerably more, as the official inflation rate is currently north of 7%. In October last year it was at 7.6%.

If so, make sure you adjust your private retirement fund contributions in line with your salary increase.

Also review your income protection benefits (disability cover) and confirm that they are still in line with your salary after the adjustment.

For persons who provide for retirement via a private pension (annuities) (contractual or non-contractual) the adjustment of contributions is very important.

Often annuities have a fixed annual increase (for example 5%) while actual inflation (and the salary and contribution increases based on it) is much more.

See the chart below. For someone who starts saving for retirement at age 25 and underestimates the actual increase and therefore saves less than he/she should for 30, 35 and 40 years, the risk is substantial. For the purpose of the chart, assume that inflation is 5.5%, investment growth of 10.5% and a 15% contribution to retirement.

If you have group cover benefits, find out what the scheme’s proof-free limit is and contact the administrator of your fund if your approved cover is less than what you qualify for after your salary adjustment.

Review investment strategy

The new year is of course also a good time to review your investment strategy.

2022 was not great for investment returns, but take note of the following:

  • For investors close to retirement, a so-called life phase model, where your pension fund automatically rebalances by investing in conservative assets by disinvesting from the market over the last five years before retirement, can have a considerable influence on long-term planning.

We don’t know what will happen in the next year, but we do know that (1) cash is currently returning negative real returns and (2) the best investment years usually follow the worst years (although not always in direct succession).

  • Rebalancing is the process where you adjust your investment’s current asset allocation in line with the long-term strategic asset allocation. In periods such as 2022 when the value of growth assets has mainly decreased, your exposure to this asset class is likely to be lower than the strategic allocation.

This situation is not ideal if markets bounce back. If you do not know whether your investments rebalance automatically, consult your adviser about this.

At the time of writing this article, we find ourselves in turbulent times. You might wonder when the last time was that this was not the case.

The impact of a failing government and state institutions on the morale of citizens is all too familiar but determining the long-term impact on companies’ ability to generate profit is more of a challenge.

However, the following points may help you to enter 2023 with a little more optimism:

  • Inflation (and consequently interest rates) is cyclical in nature, not only in South Africa but world-wide, although the shape of the cycle varies. We are probably closer to the peak of the cycle than 12 months ago.
  • Historically, there is a very low correlation between the performance of stock prices and political stability. Don’t make the mistake of making your investments based on your personal level of optimism or pessimism. Instead, use a fundamental assessment criteria as basis for decision making when allocating your investments.
  • Political turmoil often provides an opportunity for the patient investor to purchase assets at a discount (cheaper than market value). The return on government and corporate bonds looks very attractive at this stage and it might just be an asset class that should be included in your investment portfolio.


All the best for 2023!

Samuel Rossouw is a certified financial planner and director of Woodland Wealth. Contact him at

Although all possible care has been taken in the preparation of this document, the factual correctness of the information contained herein cannot be guaranteed. This document does not constitute advice and anyone who intends to take any financial action based on this document is strongly advised to first consult with his/her personal financial advisor. Woodland Wealth is an authorized financial service provider with FSP no. 5966.

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