The low interest rate environment is not helpful to people who are dependent on income, plus a high degree of capital stability.  A favorable alternative to money market funds, i.e. Cash Plus Funds, could possibly be considered for providing stable income or stable yield to investors seeking returns in excess of money market funds without taking on much more risk.  “The search for yield becomes order of the day” is food for thought offered by Arno Lawrenz, one of our Industry’s respected experts in managing cash-type and income generating funds.  For further discussion and appropriate advice that will suit your needs, give us a call on 041-365 1303. Read the rest of this entry »

According to Delphine Govender, portfolio manager, Allan Gray, “We know for sure that we don’t know where the South African stock market might move to in the short term”. What we also know for sure is that there are a number of “Key investing truths” which we would be well advised to be mindful of.  Read the rest of this entry

My advice to my clients as well as prospective clients is - please do yourselves a good act and read these simple truths presented here by Money Marketing about investing.  The contents bear out what I often emphasise in my practice to clients and which, unfortunately, are not always acted upon - to their own long term detriment.  Here you have it in writing - be wise and read on…. Read the rest of this entry »

We hear a lot nowadays about the importance of avoiding a conflict of interest, and a recent court case illustrates, somewhat dramatically, the effects of an unresolved conflict. This case is Elena van Niekerk v Kathleen van Niekerk and the Master of the High Court 2011 (2) SA 145 (KZP). Mr Basil van Niekerk divorced his wife Kathleen in 1987, and in 2005 travelled to Russia where he married Elena Karipova in Volgograd according to Russian law. Returning to South Africa, the couple got married in 2008 under SA law by ante-nuptial contract. Read on

It is often required of me to “educate” new clients to understand just how important it is to approach their financial planning from a holistic point of view and not from a single need, product driven point of view.  Holistic planning takes more time, but it is the right thing to do if you’re serious about protecting your assets and creating wealth.  

The following article taken from the 05/2011 edition of FIA-Inform, highlights the value of a single, professional financial planner’s role as apposed to utilising the services of different agents/advisors/brokers promoting particular products to address a single need - whether that particular product made sense within the broader context of the clients’ life, overall financial obligations or long term financial plans, was irrelevant.  Read the rest of this entry »

In my practice I am regularly asked by some clients to give my views on the direction of the Rand relative to their investments or those portions of their investments that are exposed to other geographic regions and currencies of the world.  This, of course, calls for extreme caution on my part as I am led in my views by the opinions of the experts on these matters and even they can’t stick their necks out too far in terms of prediction.  What they, however, do is to study the trends and various global influences on currencies in order to arrive at their respective, qualified opinions.  
 
Paul Stewart, managing director of Plexus Asset Management has the following to say: “Ultimately the direction in which a currency trends is a function of aggregate demand and aggregate supply of the currency versus other currencies.  The demand for currencies is largely affected by exports, imports, service payments, portfolio investments, domestic fixed investment, foreign fixed investment and speculation on future expectations.  Based on these factors, how is the SA rand likely to perform in the foreseeable future?  As a general observation, the SA rand is overwhelmingly viewed as overvalued at present and that a sharp devaluation is imminent,” says Stewart.  “In fact, many respected commentators have publicly stated their view that investors should currently accumulate foreign currency exposure, in anticipation of a great unwinding of the rand’s value.”

…….“currency diversification needs to be seriously reconsidered in this new world.  Non-South African exposure for diversification reasons needs to be much more carefully considered. A higher emerging market currency exposure, especially to the best quality emerging markets, should be a core part of one’s investment policy.”
 
In order to bring the above into context  Read the rest of this entry »

According to the 2011 Budget Review, 1 March 2012 will see the introduction of a new dispensation for permissible deductions towards retirement funds. There is a clear twofold message behind these changes, particularly when read together with the taxation of lump sum benefits:

- higher income earners will have to make additional provision for retirement outside of tax incentivised retirement funds; and

- retirement fund benefits are intended to provide annuities at retirement and not tax free lump sum benefits on withdrawal and retirement.

Read On …

Inflation – how to interpret it – how to measure it - how to combat it – how to relate to it in our own financial plans?  These are questions we often ask.  This week’s Money Marketing offers an easy-to-relate-to view on Inflation/CPI worth reading.  In my own office I have an interesting visual aid that has been up on my wall for many years illustrating the effect of inflation. When you visit my office, make sure you take a look at it. The basic story: In 1972, for example, the following mode of transport could be purchased (new) for only one thousand rand (R1 000): a Motor Car. Today it is not uncommon to pay R1 000 or more for a pair of shoes or for your child’s roller skates.  We know the story!  But what are we doing about it?  Read the rest of this entry »

“A 9.0 magnitude earthquake occurred off the north-eastern coast of Japan on 11 March (Friday). This is the largest earthquake ever recorded in Japan and Prime Minister Naoto Kan has said the nation is facing its sternest test since World War II as it tackles the aftermath of an earthquake, tsunami and a growing nuclear crisis. Thus far 1,500 bodies have been found, but estimates of a final death toll are up to ten times this figure.”   Read on…..

The dangers of an unsigned will and intestate succession.

A will is essentially a contract one enters into with the person one wishes to take charge of dealing with all one’s assets (and liabilities) after one dies.  A non-existent, unsigned or incorrectly signed will can cause practical problems and place surviving family members and dependants under immense stress when one is not around to assist them in making financial decisions. Read on….

Volgens Arthur Kamp, Beleggingsekonoom, Sanlam Beleggingsbestuur het  “…….die opwelling in die binnelandse ekwiteitsmark vanaf die resessie-geïnduseerde laagtepunt in 2009, gehelp on ’n terugspring in huishoudelike netto welvaart te stut, wat die herstel van huishoudelike verbruik verder ondersteun het.  In der waarheid het verbruikersbesteding die konsensus-verwagtinge op verrassende wyse deur die loop van 2010 oortref, met ’n gemiddelde groei van tussen vyf en ses persent (teen ’n jaarlikse koers) per kwartaal van 4Q09 tot 3Q10.
 
Soos die sakesiklus se opswaai ontvou, kan daar verwag word dat die opbrengskoers op kapitaal sal verbeter, wat die herstel in vastebeleggingbesteding en werkskepping in die privaat sektor sal aanmoedig.  Derhalwe word daar verwag dat die opswaai in binnelandse finale aanvraag deur 2011 en tot in 2012 momentum sal behou.” Lees verder….

According to Arthur Kamp, Investment Economist, Sanlam Investment Management  “……the surge in the domestic equity market from its recession induced low in 2009 has helped underpin a bounce in household net wealth, thus further supporting the recovery in household consumption.  Indeed, real consumer spending surprised consensus expectations to the upside through 2010, advancing, on average, at an annualized rate of between five and six per cent per quarter from 4Q09 to 3Q10.
 
As the business cycle upswing unfolds the rate of return on capital can be expected to improve, which should encourage a recovery in private sector fixed investment spending and job creation. Hence, the upswing in domestic final demand is set to maintain momentum through 2011 and into 2012.”  Read on….

Next Wednesday sees the presentation of the annual Budget by Finance Minister Pravin Gordhan. This is a very big occasion for SA inc and pages are devoted to it, opinions are expressed and written. The Budget is – in essence – our roadmap as a country for the year. So while next week will be devoted to the National Budget we felt it appropriate to take a few lessons into our own budgets.

Lessons for our budgets from the nation’s Budget

The Budget is one of the biggest occasions in the country – extensively followed. In coverage and opinion it may rank second only to announcements of various sporting teams and natural disasters. Each year South Africans are invited to submit their Budget tips on the National Treasury website. But there are many lessons we can take from the country’s Budget and put into practice in our own budgets. Budgets are massive occasions for the country and for businesses – they are that important and we need to make our own budgets equally important.   Read the rest of this entry »

Executive Summary

Last week was an amazing week for our stock market and offshore markets. In the midst of concerns about a correction and Egypt, the market promptly jumped 4.3% in rands (3.4% in dollars, not shabby) to another post-crash high as the US market gained 2.7% in dollars and the MSCI World Index gained 2.3%.

• For good measure, Anglo American stole the show, jumping 12% in one week, followed by Billiton and Sasol’s 9%. So yes, the JSE Resources index was up 8.7% to its best level since mid-2008, while the Financial & Industrial Index rose just 1.3%, despite a nasty 7% fall in the Construction Index.
• The ALSI 40 Index, with 48% in Resource shares (including Sasol), is benefiting from this run (Anglo & Billiton comprise 29%), while 44% of the All Share Index is in Resources, also quite high. Most SA fund managers benchmark themselves against the SWIX Index (Shareholder Weighted Index), which excludes foreign holders of our shares and has about 32% in Resources.
• Meanwhile, the SA Listed Property Index is now down almost 8% from its recent January 10th high and is also trading 5.5% below where it was 4 years ago (peak in 2007). On a forward dividend yield of 8.8% 12 months out, it is starting to look quite attractive relative to bond yields (now at a similar yield after a big jump) and money market yields (now 5.6% and maybe 7% in 18 months time).
• However, the unknown is whether the rand continues to weaken. If it does, it may cause bond yields to rise over 9%, which could negatively affect listed property further. If investors wanted to buy listed property at this stage, perhaps using a phased approach makes more sense, i.e. buy some now and hold off pending the rand’s movements.

To see the full review; please Read on…..

By Dr Simon Pearse, Marriott Asset Management CEO

The hottest question in the investment industry right now is “where is the rand going to go?” The answer, of course, is not simple.

There are numerous factors influencing the currency at present, not least the attempts by many countries to weaken their currencies in order to export their way out of recession. With much of the developed world having opted for this path, their currencies, and notably the dollar, have seen value erosion. Read the rest of this entry »