There is this strange phenomenon in SA called Regulation 28 that is applied to retirement funds. It stipulates that retirement fund members may not have more than 75% of their funds in equities and no more than 25% of the fund invested offshore Continue reading A case for higher offshore weighting within a living annuity?
I remember reading this quote when I started in the financial services industry about 22 years ago and came across it again recently…it’s a timely reminder as we try to make the industry better for our clients.
I was not delivered into this world into defeat, nor does failure course in my veins. I am not a sheep waiting to be prodded by my shepherd. I am a lion and I refuse to talk, to walk, to sleep with the sheep.
The slaughterhouse of failure is not my destiny.
I will persist until I succeed!
From the ancient scroll marked 111 in “The Greatest Salesman in the World” by Og Mandino, ironically!
Dear Old Mutual
If you are going to send me spam emails about your products then I have no issue reviewing and rating them! Please stop sending me unsolicited emails about your products! I don’t rate them and will not use or recommend them.
The Financial Coach
Continue reading Old Mutual Invest Flexible Plan – stay far away!
There are many with strong opinions about the merits of a share portfolio versus a unit trust portfolio. Here’s another one (strong opinion) in favour of a unit trust portfolio.
Continue reading UT or share portfolio
Let’s face it, we’re emotional beings (thankfully). We laugh at comedy and cry at tragedy. We give money more easily to beggars on cold and rainy days, or to mothers with young children than to single men on the side of the road. We buy things on sale (with money we don’t have) even though we don’t need them and yet we dump our investments when the markets go on sale.
Continue reading Emotional beings
I recently tried to make an appointment to see my doctor for my annual check-up only to be informed that he has left to “take a sabbatical”. Bottom line is that he is tired and has had enough and is going to do something else.
Continue reading Suck-session Planning
There’s an old saying about the watched pot never boiling, which simply means that if you wait anxiously for something to happen, it seems like it takes forever. Continue reading The watched pot…
Over the years as we have chatted to clients about financial planning we have settled down to the “big 5” risks that everyone faces and the resulting financial (and emotional) risks that they present to the person and their family. Simply put, these are (in no order of importance):
- Dying too soon
- Living too long
- Funds for emergencies, and
A lot of the work that we have done with clients has been around identifying these potential risks and then implementing strategies to address them.
However, I have recently become convinced that there is a much greater risk that people face but that is hardly ever spoken about. I also think that this risk is likely to increase as the process of disintermediation increases.
Rightly or wrongly, Albert Einstein is often credited with saying that compound interest is the greatest force in the universe (or the 8th wonder of the world, or some other version thereof). And indeed, compounding is a significant force but I have become convinced that another scientist, Sir Isaac Newton, had much more to add to the debate.
Indeed, the “biggest” force that haunts people is to be found in Newton’s First Law of motion (you should have paid attention during science lessons). Newton One states that “a body will continue in its present state of rest (or motion) unless acted on by an UNBALANCED external force.” This is known as the rule of Inertia…or the tendency to do nothing or remain unchanged.
Simply put, we are all subject to Inertia and will continue to do the same things over and over unless we come into contact with an unbalanced external force. And that’s why people have personal trainers to hold them accountable to exercise and get them fit, that’s why we have seen an increase in the demand for life coaches and it is also the role of the financial planner.
Don’t get me wrong, I have no issue with people doing their own financial planning and/or investing. The problem is that they don’t! How else do you explain the father of 2 young kids who has no will 10 years after they were born, or the divorcee who has not changed beneficiaries on her life policy (or updated her will) or the employee who has not yet started saving, or the entrepreneur who has never submitted a tax return? I could go on…
The cold hard truth is that we are often our own worst enemies when it comes to things financial and it is my strong opinion that we all need an unbalanced external force in our lives to get us out of our inertia. As long as Newton’s First Law of motion holds, there will always be work for financial planners and for that I am very grateful! We have an incredible privilege as we help clients identify and manage their financial risks and then keep them accountable to address them.
Today I got a call from a journalist asking a few questions about what a beginner investor should do if they want to start investing. I think that they were looking for “tips and tricks” about which funds or shares to choose. Here was my reply. Continue reading The ultimate savings & investment vehicle!
I attended a presentation by one of the SA asset managers recently…it was a good job that there were no sharp knives around. It was real slit-your-wrists stuff!
Their view is that SA is pretty much stuffed and that unless there is a significant change in ANC leadership that we are on the “low road” scenario. The reasoning is as follows:
- SA stuck is in a no growth-low inflation scenario. The only reason the Reserve bank is not cutting interest rates is due to political risk fallout.
- The global search for yield has kept the ZAR strong (for now) – they see it considerably weaker over 3 years, especially if we get the Moodys’ downgrade on local debt (it seems inevitable at this stage).
- SA consumers are very stressed with much higher than normal variance in the payday compared to mid-month purchasing patterns (there is a massive spike at pay-day compared to mid month and this is much higher than normal). In addition to this, people are switching away from brand names to “no-name” products.
- SA food retailers have noted significant change in the composition of the average food basket – food inflation as measured by retailers is very different compared to what is measured by Stats SA.
- One of the SA retailers reported that for every R100 they are lending consumers, there is an additional R1700 in unsecured credit! Unsecured credit demand has increased radically.
- Another SA retailer has reported worst figures in 20 years.
- There are 17million people on social grants and this number is increasing rapidly…government is running out of money to fund this.
- SA facing poor consumer confidence (reduced spending), poor business confidence (reduced investment in SA) and poor employment numbers.
- The revenue (tax) base is shrinking, SARS is missing money due to incompetence.
- SARS (and treasury) have been haemorrhaging skills and there is a significant loss of expertise at both organisations.
- Tax payer non-compliance has increased as a result (and will continue to increase) thus worsening government revenue.
- Government is going to be desperately short of funds!
- The risk of a return to “prescribed assets” for pension funds has increased and along with this a limit on moving funds offshore and possible cancelling of asset swap capacity for local funds!
It’s a good job that there were no sharp knives around…having said this though, they are still positive medium-to-long term IF the Zuma faction is outed from government.