In the personal finance feature, certified financial planner Paul Roelofse chats about the importance of a pension fund in your financial plan.
He provides 3 reasons why you should never cash in your pension fund:
1) It costs more than you realise
Roelofse says that every time you cash in your pension fund, you blow a huge hole in your provisions towards your financial freedom in the future.
He adds that the bigger the amount, the bigger the compound over time.
The compounding effect of a pension fund cannot be understated.— Paul Roelofse, certified financial planner
2) Cost of living
Having too much debt in the first place is a result of you living beyond your means.
Roelofse says that if you cannot afford your lifestyle now whilst you are earning a salary, you certainly won’t be able to afford that lifestyle when you retire.
He says that you have to bite the bullet and pay off your debts with the income you earn after savings because it’s the only way to obtain financial freedom into the future.
If you’ve got debt on your doorstep, leave the pension fund behind and rather tackle the debt and make it a project in your cost of living.— Paul Roelofse, certified financial planner
3) Protected investment
Roelofse says that retirement funds are inalienable and creditors cannot touch the money in the fund.
He adds that you get the best of both worlds because your retirement funding stays on track, and if the business doesn’t do well, you still have your funds for the future.
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