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What are the alternatives to the unified accumulated pension fund (UAPF)

Deposits, stocks, real estate, life insurance, what do you need to invest in, so that the standard of living in old age does not fall? The question from was answered by Bota Zhumanova, the founder of the thematic pension platform
What are the alternatives to the unified accumulated pension fund (UAPF)

The expert believes that the traditional system with a monthly 10 percent deduction from the income to the pension fund cannot provide today's young people a comfortable old age.

"It's very simple, before the devaluation as of 2014. I had about eight million tenge on my pension account, and the old rate that was equivalent to a whole villa in Spain. For one day it turned into half the villa. My purchasing power in tenge remained the same, eight million, but what can I buy on them in dollars?", the expert told.

Zhumanova thinks the profitability of UAPF is too low. Independently she can invest her money in a much more profitable way; the deviation reaches tens of times.

"I would recommend everyone who is over 35 years old now to seriously think about alternative accumulation opportunities, because if it is not done, then the generation of Kazakhstanis who are older than this age will simply, unfortunately, lose in their quality of life", said the expert.

The specialist recommends forming the retirement capital.

"Retirement capital consists of four main parts: deposits, the stock market (bonds, stocks, and foreign currency), investment insurance and investment in medical services, every person should have this portfolio, and one should individually work on it", said Bota Zhumanova.


According to Zhumanova, the deposit money basket should make up around 20-25 percent. However, she advises to keep them in different currencies.

If it is more or less clear with deposits, it might seem a bit unusual for some to save pension in shares.

Stock market

"You can approach any brokerage firm and open an account. Then you have to decide whether you want to do an active or passive investing. If you do not want to be actively involved in your portfolio, you can become a passive investor, however, for that you should have from one to 100 thousand dollars", the expert explained.

The point of passive management is that a person does not speculate with constant stock buying/selling, but keeps them for a long time, hoping that they will go up in price.

"You can just buy, for instance, the S&P 500 index, it includes the shares of 500 companies with the largest capitalization: that means you buy a little bit of each of all those firms.  Yield comes to 10-20 per cent per year", she said.

To affluent people, whose savings exceed 250 thousand dollars, Zhumanova advises to use trust management, when professionals manage the client's portfolio.

"Active investment is when you start trading, monitor the companies’ dynamics, sell or buy something. But it is, frankly speaking, a very slippery slope for amateurs because people often lose money. Passive investment is the best option if people are not competent in this topic", Zhumanova clarified.

Insurance Investments

There are already several companies providing such services in Kazakhstan. You buy a life insurance policy. It can cost 10 thousand dollars; the income will be about three percent annually. This is three times more than a dollar deposit.

However, the peculiarity of this type of investment is that deposits are long-term.

Medical services

This method does not include income. According to Zhumanova, this is just some kind of free amount of money that concerned citizen should have available; so that when they reach retirement age, they can afford a medical treatment abroad.

"These are international companies, usually some kind of medical club that provides such services. You become a member of this club, buy insurance and get qualified treatment at any time", the expert added.

Real Estate

The expert did not call this instrument as effective at the moment.

"Such investments are not attractive now in Kazakhstan because of low profitability. You spend 40-50 thousand dollars to buy an apartment, and rent it out for 70 thousand tenge. Where is profitability? Plus, in five-six years you have to renovate it, and it will cost two million tenge. No benefit whatsoever", the expert said.

According to Zhumanova, to ensure carefree old age you need to accumulate a certain capital, constantly increasing it. In order to be successful in that people in Kazakhstan are advised to improve financial literacy.

"Let the people in addition to the pension fund be involved, learn to invest, and not take vague eyelash extensions courses or something like that. I would rather extend some fundamental knowledge that would help in managing my own money. If getting the money is so hard, we need to learn how to keep them longer", she said.

Zhumanova is now actively working on development of that retirement capital.

"I have real estate investments as a passive income, deposits in different currencies, investment in domestic and foreign stock markets. I also invest in the Warren Buffett fund, it means, my money is managed by the best investor in the world. These are all long-term investments. My position is not speculative", the specialist said.

But even on the local companies’ stocks she earns a very good interest.

"I hope to get about 70 percent per annum in tenge, for example, I invested a million and should get 1.7 million tenge. I take shares of one company, track it and do not trade; I wait for it to grow in price", explains the creator of a pension platform.


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