Some of Dr Mamphela Ramphele’s investments lack diversification a financial assessment by Marius Fenwick, chief operating officer of Mazars has revealed. To target corruption and increase transparency among political leaders Dr Ramphele disclosed her finances today and challenged President Zuma to do the same.
A release on Agang’s website shows that Ramphele’s net worth as of 27th June 2013 was R55,436 063 but Fenwick showed concern over her share portfolio, which is primarily exposed to mining stocks. “She has way too many mining shares and diversification is needed here without a doubt,” he said.
He also showed concern over her portfolio’s lack of offshore exposure. “There is no offshore exposure and I would take a chunk of her R30million trust fund and expose some of the money offshore. There are several reasons for this. If you look at the geopolitical landscape on South Africa at the moment it’s not ideal. There’s a general feeling that developed countries will do better over the next five years or more. Exposure to offshore equities will also open your investments up to more specialist sectors,” said Fenwick.
Fit for retirement?
However, he praised her for making provision for her retirement by paying into a company pension scheme (UCT pension) and a retirement annuity. “It’s a good thing that she has taken out these products. There are many advantages to them and retirement annuities in particular benefit from tax breaks.”
However, he warned that a retirement annuity and a pension scheme may not be enough for retirement purposes. “It’s not enough to save in just these vehicles for retirement. In Dr. Ramphele’s case these two funds would provide an income of R12-13k, which may not be enough for her. I generally like to advise people to invest 50% of their retirement contributions in compulsory funds and 50% in voluntary funds,” added Fenwick.
He supports this investment strategy as a buffer against tax. “I would advise people to invest in voluntary funds to supplement what they would lose after paying tax from drawing down from their annuities.”
Property exposure
Property wise, Dr Ramphele has a primary residence valued at R10 million in Camps Bay in Cape Town. Despite only having one residence, Fenwick agrees that this is the right approach at the moment. “To own a multi-property portfolio has more cons than pros at the moment as property values are not increasing too much - at least not to the extent at which they did prior to 2008."
He points out an alternative to buying brick and morter. "If you want property exposure you could invest in listed property. But if interest rates go up you could lose money on listed property because of the way in which they are structured.”
He also warns against relying on the sale of your primary residence as a backup for retirement. “We generally exclude primary residences from wealth accumulation. Unless you have a R10 million house, like Dr. Ramphele, downscaling for the ordinary man on the street won’t generate that much more extra cash to live on. When it comes to retirement everything must be balanced,” explained Fenwick.