Tuesday, July 11, 2017

Dear clients and associates,                                                                                                                                              July 2017
The last quarter has certainly produced plenty of political noise, all of which had a significant impact on our economy. Despite the countries’ credit downgrade and low economic growth, our currency and stock exchange have managed to stay afloat and not crash like many have feared. Inflation has decreased and some economists reckon there is still scope for a slight interest rate cut. However, our economy is still under severe strain and we as individuals need to do whatever we can to protect our financial well-being.
The below table is a comparison of the exchange rate and JSE All share index in February 2017 and June 2017.

28 Feb 2017
30 June 2017

Investments, creation and retention of wealth
Not much has changed in the last quarter in terms of economic outlook. As mentioned above, although we have faced major blows in the last 3 months, the markets and currency managed to keep firm. It is important to remember that it is normal and necessary for markets to go through peaks and dips. During the 2008 market crash, the JSE fell by 46%, but within 6 months grew by 26% again and continued to grow. We therefore maintain that the only way to create and retain wealth is through:
-           sufficient diversification,
-           the use of recognized fund managers with outstanding track records over the long term,
-           sticking with your investment strategy/plan through the good times as well as times with weaker growth,
-           not making emotional decisions.

Furthermore, we should be focussing on reducing expenses, debt and saving more in order to secure our financial well-being.
-          Cancel gym contracts and subscriptions that are hardly used
-          Pay off debt as soon as possible to avoid paying high interest rates.
-          Avoid creating more debt like credit card, retail store accounts and personal loans.
-          Stay away from dodgy dealings. If it seems too good to be true, it usually is.
-          Create a budget and stick to it.
-          Make use of technology. Apps like 22seven or easy budget tracker are great budgeting tools. Majority of the investments houses,    banks and insurers have apps available that are aimed to assist you with your financial needs.
-          Cut down on luxury expenses.
-          Start saving up a emergency fund for unexpected expenses.
-          Start saving toward retirement as early as possible.

Studies show that 94% of South Africans are unable to retire comfortably. Although the millenial generation might have more information at their disposal in the digital age, a large percentage still has no idea about the importance of retirement planning and could be making the same financial planning mistakes as the generation before them.   

Risk cover: Life-, Disability- and Severe illness cover
During tough times, life insurance is usually one of the first expenses we look to cut. This however can be a grave mistake. It is ipmortant to remember that getting life insurance is not always as easy as you think. You might not be as healthy as you once were and the insurers could decline your cover or load your premium, making it even more unaffordable. Without the right cover, you and your family could be left with a massive financial burden in case of death, dissability or severe illness. We therefore recommend that you try and keep your life insurance at all costs or consult with us for advice on how to keep your life insurance and still meet your budget demands.

Short-term insurance
The last quarter has seen its fair share of devastation, especially in the Western Cape. It is estimated that the big storm in June and Knysna fires could cost the insurance industry up to R3 Billion. In our offices, we have recently increased our short-term team to keep up with the growing demands of our clientele. We aim to have continued discussions with our insurance partners to ensure our clients’ get the best service at the best rates possible.

As you are aware the tax season opened on 1 July 2017. SARS have put in a few additional procedures this year to combat fraud and minimize errors. Please note that SARS requires copies all medical aid, retirement annuity and welfare contribution certificates when submitting a tax return.

During a recent study, we found that many our clients’ next of kin, friends or family does not have a financial advisor assisting them with their financial planning. We urge all our clients to feel free to refer anyone who they think are in need of financial advice to us for a free consultation. We have recently expanded our offices in order to take on the growing number of referrals we receive on a monthly basis.
Please feel free to visit our website, www.tvzfinancialservices.co.za, or Facebook page for information regarding market conditions, news of the insurance industry or to comment.

Kind Regards,

From all of us at Toni van Zyl Financial Services