Why female doctors save more

By Hayley Brown, Executive of Business Development at PPS Investments.

 Money matters for women

People approach things differently, especially when it comes to money matters. Various factors influence this, from your income to your upbringing. However, could this difference in approach be due to other factors such as age and gender? Theories suggest that the gender pay gap is a key factor driving not only the disparity in salaries, but could be one of the underlying reasons that women spend, save, invest and borrow differently.

Mind the (income) gap

Research by Giraffe online recruitment shows that South African women earn on average 25% less than their male counterparts.  And the gap is even larger for women with children, who earn up to 35% less than men in similar positions in some countries, according to the American Association of University Women. So, what does this mean for the saving and investment culture of women? And specifically, for the professional market, where women are juggling careers and other responsibilities?

Female doctors are top savers

Around 40% of the PPS Investments client base is female, with the majority (47%) in the medical profession, including medical doctors. Professionals in private practice are often sandwiched between their personal and business financial needs, which requires far more discipline and planning than receiving a monthly salary from an employer each month.

Further analysis shows that women are 10% more likely to have a financial adviser than men, of which 25% make use of female advisers. In addition, an encouraging observation is that women are generally saving towards retirement.

Women live longer

Even retirement planning requires unique considerations for women. Overall, life expectancy is increasing for South Africans, and the probability of living to the age of 90 and beyond is higher for females (38%) than for males (27%).  PPS research suggests that the professional market has a longer life expectancy than the average South African. Ultimately, this means that the longevity risk of outliving your retirement savings increases. As such, women will need to ensure that their retirement savings will fund even many years, and so they will need to save more per month.

Freedom to do more with your money

Whether you are at the start of your financial journey, or looking at ways to supplement your retirement savings, tax free investments allow you the freedom to do that, without having to pay tax.

Investing tax free means that you can contribute up to R33 000 per tax year and up to R500 000 during your lifetime, across one or more tax-free account(s) with unrestricted access to your investment at any time. Keep in mind that any withdrawals cannot be replenished, and unused limits fall away. There are no initial fees, exit penalties or administration fees with tax free investment accounts.

Family limits

South Africans of all ages are eligible to invest tax free. For many, one of the disadvantages of tax-free investing is the annual limit of R33 000 per individual per tax year. One way to maximise the allowance is to look at the approach from a consolidated view, in that a family of four could invest up to R2 million (4 x R500 000) during their lifetime, or R132 000 for the year. However, it is important to weigh up the cost benefit of utilising your child’s tax-free allowance during the years when they are not liable to pay tax. Once breached, your child will not be able to replenish his/her lifetime contribution limit.

Like discretionary investments, tax free investments are not required to adhere to Regulation 28. This allows you to invest in unit trusts that invest offshore, as well as having a high exposure to growth assets. This can be used as a tax-efficient way of mitigating the restrictions of Regulation 28 within your retirement annuity.

A further tax benefit can be derived by using your tax-free investment to supplement your income once retired. Withdrawals from your tax-free investment are not taxed and thus can lower your overall tax burden when combined with your living annuity income.

A financial adviser is best placed to provide you with appropriate advice that is tailored to your unique needs and approach to money.  A tax-free investment provides you with the options that will help augment your overall financial portfolio.

 

Visit www.pps.co.za for more information.



Latest


18 Jan 2021
SA failed to get its act together on vaccines: here’s how

By Shabir A. Madhi, University of the Witwatersrand South Africa has an estimated population approaching 60 million. To achieve herd immunity against COVID-19,…

SA failed to get its act together on vaccines: here’s how

By Shabir A. Madhi, University of the Witwatersrand South Africa has an estimated population approaching 60 million. To achieve herd immunity against COVID-19, the government recently set the ambitious goal of vaccinating 67% of the population – roughly 40 million people. According to the outline of this plan, this would be achieved within 2021. But…

18 Jan 2021
Foreign holdings of nominal SAGBs increase to 35.7% in December

By RMB Research According to the National Treasury (NT), combined holdings (fixed-rate and inflation-linked) of government bonds increased to 29.9%…

Foreign holdings of nominal SAGBs increase to 35.7% in December

By RMB Research According to the National Treasury (NT), combined holdings (fixed-rate and inflation-linked) of government bonds increased to 29.9% in December from 29.7% in November. Nominal (fixed-rate) SAGBs: Investor holdings as at the end of December 2020 are as follows:Non-resident investors hold 35.7% (R791.78bn).Monetary authorities hold 22.6% (R501.79bn).Official pension funds…

18 Jan 2021
Getting to grips with private market investments

Investors put their money in expert hands to grow it through investments in shares, bonds, cash and property. These are traditional investment…

Getting to grips with private market investments

Investors put their money in expert hands to grow it through investments in shares, bonds, cash and property. These are traditional investment types available on the stock exchanges of most public markets. However investors can also choose to invest in alternative investments – available in private markets. This gives them access to investment types that are not available…

12 Jan 2021
Steven Nathan steps down as CEO of 10X Investments

After 15 years at the helm, 10X Investments’ founder and CEO Steven Nathan has resigned, effective 31 December 2020, in…

Steven Nathan steps down as CEO of 10X Investments

After 15 years at the helm, 10X Investments’ founder and CEO Steven Nathan has resigned, effective 31 December 2020, in order to pursue other interests.  This is according to a statement issued today. The statement says: In line with 10X’s succession plans, the company’s Executive Chairman, Henk Beets, will assume responsibility…


Top stories


10 Sep 2020
How too much choice is draining your brain

By: Paul Nixon, head of technical marketing and behavioural finance at Momentum Investments From the words of Francis Scott Key…

How too much choice is draining your brain

By: Paul Nixon, head of technical marketing and behavioural finance at Momentum Investments From the words of Francis Scott Key that dubbed America “The land of the free”, which stuck, to the unforgettable Mel Gibson monologue where an army of painted Scots were willing to trade their lives for the…

13 Apr 2020
Investors should keep a reasonable investment allocation outside of SA

MoneyMarketing asked Roland Gräbe, the head of Tailored Fund Portfolios at Old Mutual Wealth, about offshore investments in the COVID-19…

Investors should keep a reasonable investment allocation outside of SA

MoneyMarketing asked Roland Gräbe, the head of Tailored Fund Portfolios at Old Mutual Wealth, about offshore investments in the COVID-19 environment and what form a global market recovery will take.

13 Apr 2020
SA’s Proposed Covid-19 Disaster Management Tax Relief

The National Treasury recently issued the draft Disaster Management Tax Relief Bill (Bill) for public comment by 15 April. The…

SA’s Proposed Covid-19 Disaster Management Tax Relief

The National Treasury recently issued the draft Disaster Management Tax Relief Bill (Bill) for public comment by 15 April. The draft Bill, together with its explanatory memorandum, provides clarity with regards the tax relief measures President Cyril Ramaphosa announced on 23 March.

10 Apr 2020
When the going gets tough, farmers are on familiar territory

South African farmers are old hands at adapting to uncertain and daunting circumstances, and our local agricultural industry has proved…

When the going gets tough, farmers are on familiar territory

South African farmers are old hands at adapting to uncertain and daunting circumstances, and our local agricultural industry has proved to be most enterprising in acclimatising to challenges as they arise.


Visit the official COVID-19 government website to stay informed: sacoronavirus.co.za