Global investment in clean energy overtook investment in fossil fuels in 2016. By 2025, clean energy investment had reached about $2.2 trillion – roughly twice the amount invested in fossil fuels.
“For every dollar going into fossil fuels, there’s $2 going into clean energy,” Teichgreeber said.
He pointed to falling technology costs as another sign of the transition. The figures in his presentation showed solar photovoltaic prices down 93% between 2010 and 2024, alongside substantial declines in battery and wind-power costs.
“The good news about all of these investments into clean energy is that clean energy itself becomes cheaper,” he said.
South Africa could benefit from demand for the materials used in the transition. Teichgreeber said the country holds about 88% of the world’s platinum-group metal reserves and supplies around 70% of mined platinum-group metals.
“When it comes to this energy transition, we are in prime, prime pole position,” he said.
He also cited the country’s R1.5 trillion Just Energy Transition Investment Plan for 2023 to 2027 and more than 10GW of private generation registered since the licensing reforms.
AI could boost productivity as workforces shrink
AI is being adopted at a pace few earlier technologies matched. ChatGPT reached 100 million users in two months, compared with 75 years for the telephone, 16 years for the mobile phone, and seven years for the internet, according to figures Teichgreeber cited.
He expects AI to help people work faster and produce more.
“It’s not about losing your job. You will not be replaced by AI. You will be working faster. You will be doing more, and you will be working better,” he said.
The presentation cited productivity gains in customer service, consulting, professional writing, and software coding. Teichgreeber also referred to World Economic Forum estimates that AI could create 170 million jobs globally by 2030 while displacing 92 million, for a net gain of 78 million.
“AI arrives at a time where there’s massive need for productivity gains,” he said. Advanced economies are already experiencing shrinking workforces, he noted, making productivity gains increasingly important to economic growth.
Longer lives mean a longer investment horizon
South Africa’s life expectancy has increased by about 14 years over the past 20 years, Teichgreeber said.
“It’s funny. I think retirement planning is the only industry in the world where living longer is seen as something risky or negative,” he said. “People living longer is a great thing, but it means that your planning horizon needs to be longer, and it means you need to be better prepared.”
For someone retiring in 2060, that could mean funding decades of living expenses after leaving work. Teichgreeber said the investment horizon could stretch beyond 2090.
Why he favours equities for the long term
Teichgreeber’s argument for equities was rooted in their long-term real returns. He said South African equities had delivered an average real return of 7% over the past 124 years, and Prescient’s current long-term expectation remains 7%.
“Over the last 124 years, 7% real return in South African equities,” he said. “At present, our expected real return for South African equities remains 7% over the long term.”
He argued that returns become more predictable over longer periods, even though short-term market movements are difficult to forecast.
“Often, we think what’s around the corner is easier for us to understand, but what’s further away is hard to understand. But with asset class returns, it’s the opposite,” he said. “Where they will land tomorrow, nobody knows.”
In his view, South African equities have been the strongest tool for generating real returns over long periods. He cautioned that cash and bonds, often regarded as safer assets, may not be as safe when the objective is to save for retirement over decades.
The presentation compared the outcome of investing identical contributions in equities and cash. Teichgreeber said the equity investment would produce “four times more” than the cash investment.
He also argued that short-term volatility should not be confused with the risk of failing to achieve the return needed over an entire investment period.
“Your risk is that over the extent of your entire holding period you won’t achieve the real return,” he said.
His historical analysis showed the chance of a negative real return in South African equities falling to 1% over 20 years and zero over 30 years. Those figures reflect the historical record he presented; they do not guarantee future returns.
Cashing out can leave a lasting gap
Teichgreeber said the investor’s own decisions can undermine the benefits of long-term investing.
“The biggest risk to investing is always the investor itself, the human being, and all the human biases,” he said.
In an illustrative calculation, someone contributing 15% of salary from age 25 and preserving the savings could replace 75% of their income at retirement. Cashing out at age 35 reduced the projected replacement rate to 41%; withdrawing every 10 years reduced it to 21%.
“If you cash out once at the age of 35, you will only be able to replace 41% of your salary once you retire,” he said. “And if you cash out every 10 years, you’ll only be able to replace 21%.”
He also welcomed the two-pot retirement system, saying two-thirds of each contribution is now preserved for retirement. He cited an estimate that only 6% of members were on track to retire comfortably.
“Keep on saving. Keep on preserving,” he said. “And then over the long term, you’ll get those amazing results.”
Disclaimer: The views expressed in this article do not necessarily reflect the views of Moonstone Information Refinery. The investment figures and projections are based on information presented at the conference and are not a guarantee of future returns. This article is for information purposes only and should not be taken as financial advice.
