I recently watched someone using a leaf blower to clear their pavement. As I watched, it struck me what a pointless exercise it was and it crossed my mind that the leaf blower must be one of the most senseless machines yet invented. Continue reading It’s time to do the Mickey Blue (again)
A few years ago, during the National Budget Speech, government put a cap of R350k pa on retirement contributions. It appears that no one at treasury has given this much thought Continue reading It’s time that treasury stopped being short-sighted when it comes to the wealthy!
Am I the only one who dislikes Tax Free Savings Accounts (TFSA) and all the hype that goes with them?
Let’s take a step back before getting all excited about TFSA’s. They were introduced (by Government) to encourage non-savers to save and unfortunately, Continue reading The great Tax Free Savings Account con!
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
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.
I was in the bank recently and while I was waiting in the queue I was gob-smacked by how many people (mostly elderly) were making withdrawals or giving notice on their 32 day notice accounts.
Consider the good (old fashioned) 32 day notice account: Your money is locked away for at least 32 days…in the hope that you are going to get a decent interest rate. Think again. The “big four” banks are currently offering the following interest rates on an investment of less than R10000:
Why would anyone make use of such an account when you can get more than 7.5% from a money market unit trust account where there is no upfront fee and you can access all the money at 48 hour notice? And how can anyone at the bank actually advise clients to still make use of these accounts?