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
|
|
Rand/Dollar
|
R13.01
|
13.08
|
|
Rand/Pound
|
R16.17
|
17.00
|
|
JSE ALSI
|
51497.16
|
51611.01
|
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.
Tax
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.
Conclusion
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
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