Consistent portfolio management a necessity
Staff Writer
HARARE, First Mutual Wealth general manager Thomas Muswiti has said consistent portfolio management and re-balancing is a necessity as pension members progress through their Income Life Cycle and ordinarily migrate on the risk matrix.
He recently said this while making presentation at the Zimbabwe Association of Pension Funds (ZAPF) Principal Officers and Chairpersons Convention in Nyanga.
Muswiti who was talking about financial blunders said portfolios ought to be created for purposes of meeting consumptive, risk Management and retirement purposes.
Wealth accumulation activities should be maximized at reasonably early stages of members’ career paths while value preservation is maintained throughout.
“Portfolios ought to be created for purposes of meeting Consumptive, Risk Management and Retirement purposes….Expert managed and personally managed investments aligned towards retirement funds form total funds; along the way ignorance, risk aversion and opportunity misses culminate regrettable mistakes,” he said.
He added that Investment advice and planning are equally relevant across all stages while the general trend has been a sudden drop of professional advice and services the day someone walks into retirement.
“The move while being a default for most, it has negative effects as Fund existence persists into post retirement and management of it is still relevant,” he said.
He noted some of the blunder made in financial planning to include timing, ignoring inflation, bad investments making decisions among others.
“Inflation has a detrimental effect; ranges of 2,5% can double cost of living in 26 years. Buying power of pre-retirees is halved during full employment.
The remaining half is eroded in the first 20 years of retirement. Contributions therefore may go merely unconsumed in real terms,” he said
Muswiti recommended pensions funds to dominate portfolios with Equities, Real Estate and Alternatives Investments.
At best he advised holding some equities even post-retirement and seek professional advice on an ongoing basis.
