Are retirement annuities still worth it?

With “RA season” in full swing, many investors are asking whether retirement annuities are still worth it with all the speak of prescribed assets and imminent legislation changes.

The debate is quite hot. As with most things, you will have to look at your own situation, and more importantly, evaluate your personal financial discipline before you will know whether an RA is for you or not. Today we will try to filter through the noise and hopefully help you to decide for yourself.

Before we go into the legislation changes and uncertainty, let’s refresh on why you should consider a retirement annuity right now:

Tax treatment

RAs are by far the most tax-efficient investment you can make. Not only are you allowed to deduct your contributions to your RA from your annual taxable income (up to certain limits), but the growth in your RA is 100% tax-free. No income tax on interest earned, no dividends withholding tax and no capital gains tax when you switch portfolios or when you withdraw.

There will be some tax on the lump sum that you receive when you retire, but this can be completely avoided by taking less than R500 000 as a lump sum (in your lifetime) and amounts thereafter will be taxed on a reduced scale relative to income tax:

Yes, there is that 1/3 restriction limiting how much you are allowed to take from your RA as a lump sum overall, but when you weigh up how much tax you are saving, it may just be worth it.

Compulsory commutation of 2/3rds of your benefit to an annuity;

This is where the debate goes crazy! How dare government prevent us from using our own hard-earned savings any way we want to? Well, you can’t have your cake and eat it. RAs are a completely voluntary investment. If you want to enjoy the tax benefits mentioned above, you have to give back something to the government. By forcing you to convert 2/3rds of your investment to a lifetime income, the burden of having to finance your retirement is removed from government.

While it is our natural instinct to resist being told what we may and may not do, just think about it for a minute…is receiving an income after retirement such a horrible thing? Yes, it may be that your income will be too small to finance your lifestyle and you would have preferred to receive the full amount in cash to use as you please, but let’s face it – that would just delay the problem by a few months. The problem here is not lump sum vs income, the problem is that you haven’t saved enough. Leading me to the next benefit…

No access to the funds until you are 55

At the risk of reminding you of your parents, this rule really is one of those “for your own good/you’ll understand when you’re older” situations. Unfortunately, we see it happen all too often that entrepreneurs (the people that RAs were originally designed for) withdraw from their discretionary investments to push money into struggling businesses that eventually fail in any case. Investors find many “good” reasons to use their savings long before retirement because saving for something years into the future is much less urgent than spending the money now. This restriction forces you to at least keep something for retirement.

Retirement annuities may be very restrictive when it comes to access, but they definitely help with the problem of spending too much too soon in life.

Below are a few other benefits:

Flexible contributions

You can invest a lump sum, or debit order, or a combination of the two. Contributions can be decreased, increased or suspended in line with your current financial situation.

Protection against creditors

Unlike other discretionary investments, creditors may not attach your RA when things go wrong in life.

But what about all the talk of changes to Regulation 28, prescribed assets and changing legislation?

What we know

Emigration as a concept is to be phased out by March 1 2021, as part of an effort by National Treasury to liberalise exchange controls and encourage South Africans to return after their travels abroad. This phasing out of emigration has had the consequence that the trigger for cashing in a retirement annuity will no longer exist. From March 1 2021 onwards, a member will be required to show they have been a non-resident for an uninterrupted period of three years to qualify to cash in their retirement annuities.

So, if you are currently still living in SA, but planning to emigrate soon, your ability to withdraw your RA benefit in full will be delayed by three years from the date you eventually leave the country. Anyone planning to emigrate, should therefore not consider topping up their RA this year.

Rumours and speculation

The issue of prescribed assets has been on the ANC radar since 2017, but as things stand at the moment, Minister of Finance, Tito Mboweni has been working hard to allay fears of the imminent implementation of prescribed assets. He has openly spoken about amending Regulation 28 of the Pension Funds Act, specifically to include construction projects in the category of immovable assets.

It is important to understand that Regulation 28 does not force retirement fund trustees to invest minimum amounts in any asset class. Quite the opposite, it limits the maximum amount of exposure that a retirement fund may have to any particular asset. It seems a bit optimistic that this amendment would achieve an increase in investment into construction projects, but according to Mboweni, “all we wanted to do, [is] try to unlock in the minds of investment managers that they can invest a percentage of their investable funds in infrastructure”.

One can’t help but be reminded of the saying “where there’s smoke, there’s fire”. I can’t imagine a government in the world that has not thought of how many problems they can solve if only they could force private citizens to invest in their sanctioned projects. The backtracking from looking at the viability of prescribed assets to just considering a small change in Regulation 28 during the emergency budget speech, indicates that (so far), ours is taking notice of the immense opposition they will face from their already weary citizens. Having said that, the issue of some members of government (and even some opposition parties) pushing for prescribed assets is a concern that we can’t ignore completely.

Does it mean that RAs are now rendered useless and too big a risk? We definitely don’t think so. If you are not saving enough for retirement, have some spare cash and could use a deduction from your taxable income, go ahead and make that contribution before 28 February 2021!

Article by MoneyWeb, Michael Haldane.

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Burgernomics: Decoding Currency Values with the Big Mac Index

“The secret of Big Macs is that they’re not very good, but every one is not very good in exactly the same way.” (Joel Spolsky)

The concept is straightforward: in theory, the same things should cost the same globally. The Big Mac is a great product to compare because it’s sold in over 100 countries and is nearly identical worldwide. When there are price differences in Big Macs between countries, it can indicate potential discrepancies in currency value .

A tasty take on global currency values

The Big Mac Index compares the price of this burger in one country versus another. As of July 2024, Switzerland had the world’s most expensive Big Macs ($8.07) and Taiwan ($2.46) had the cheapest. But let’s explore how this concept works with the rand and the US Dollar.

A Big Mac currently costs $5.70 in the US and R60.50 in South Africa, meaning the PPP exchange rate is about R10.6 to $1. This is significantly different to the actual exchange rate (R1 is currently worth $17.45), suggesting that the rand may be undervalued relative to the dollar. (Calculations based on the exchange rate on 5 November 2024.)

Why is the rand so undervalued?

Several factors could explain why the rand seems undervalued when compared to the dollar:

Economic conditions: South Africa’s high inflation and unemployment rates tend to suppress the rand’s value.
Investor sentiment: Despite the recent election results, Global investors may still view South Africa as a higher-risk market, which can decrease demand for the rand.
Reliance on commodities: South Africa’s economy relies heavily on commodities like gold and platinum, and a drop in global commodity prices can weaken the rand.

A simple snapshot, not an economic tool

Despite its limitations, the Big Mac Index provides a helpful overview of currency values. Local costs, taxes, import duties, and competition all impact Big Mac prices, potentially compromising the index’s accuracy. In South Africa, for instance, the costs of ingredients and wages can vary significantly from those in the US.

Still, the index can help us to spot currency trends over time and it is included in many economics textbooks. A consistently undervalued rand might indicate more considerable economic challenges, such as inflation or low investor confidence.

Last bite

The Big Mac Index makes it a little easier for the ordinary folk to understand currency valuations. It reminds us that everyday prices and financial markets influence exchange rates.

It also explains why South Africans visiting the US often find their money doesn’t go that far. And why Americans travelling to South Africa will probably find that their dollars go much further in Mzansi than they do back home.

While the Big Mac Index isn’t a tool for serious financial decisions, it offers a unique and accessible perspective on international economics, making complex currency concepts easier to digest — perhaps with a side of fries.

Disclaimer: The information provided herein should not be used or relied on as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact us for specific and detailed advice.

When Investing, Focus on What You Can Control

“Some things are up to us and some things are not up to us.” (Epictetus)

Investing can often feel hard. The keys to success may seem daunting.

Is your fund manager making the right decisions? Is the market going up or down? Is the rand strong or weak? These things often play on our thoughts and cause us to worry about our investment plan, particularly because they’re not things we can do anything about (and they’re often the same for everyone).

But the truth is that success in investing doesn’t really rest on any of them. What really matters in the long run are three simple things that are actually in your control – how much you’re paying in fees, how much you invest, and how long you stay invested.

These are far more significant than the worries that tend to grab our attention as investors, and here’s why:

1. Control costs: Small savings add up

Investment costs are one of the few predictable aspects of investing, making them an easy win. Whether you’re investing in a retirement annuity, a unit trust, or a tax-free savings account, every fee that you pay effectively comes out of your return, reducing the effect of compounding. And while fees might seem negligible on a yearly basis, they add up significantly.

Take, for example, two investors, both of whom invest R100,000 for 20 years. One investor pays annual fees of 2%, while the other finds a lower-cost option charging just 0.5%. At an average annual growth rate of 8%, the low-cost investment grows to R466,000, while the higher-fee investment only reaches around R377,000. The extra 1.5% in fees ends up costing over R90,000 – nearly the initial investment amount!

Simply put: by keeping your costs low, you keep a more significant share of your returns, which is crucial for long-term growth.

2. How much you invest: Build wealth through consistency

Another major factor within your control is the amount you save and invest. It’s simple: the more you invest, the more capital you have working for you, compounding over time. Regular contributions, even during market downturns, help you capitalise on periods when asset prices are low, giving you better returns in the long run.

Consider the experience of two investors over a 20-year period. The first invests R1,000 every month, and the second R1,200. This may sound like a small difference, but if both investors receive the same 8% annual return, the first will reach R589,000. The second will have R707,000 – over R100,000 more!

For South Africans, starting early and saving regularly is particularly important given our relatively high inflation rate. The power of a disciplined saving habit helps counteract the effects of inflation, ensuring you’re steadily building wealth.

3. Time: The magic ingredient for compounding

The single most powerful force in investing is time. The longer you stay invested, the more your returns can compound, creating exponential growth. Even modest returns grow substantially when given enough time.

Let’s look at the case of two investors, each investing R50,000. Investor A leaves their money invested for 10 years at an average annual growth rate of 7%, while Investor B stays invested for 20 years. Investor A’s money grows to R111,000, while Investor B’s grows to more than double that – R246,000. By simply remaining invested longer, Investor B achieves significantly better returns.

In the South African context, where markets can be volatile, committing to a long-term view is even more crucial. Short-term currency fluctuations and economic shifts may tempt investors to pull out during rough patches. However, staying invested allows time for the market to recover, smooth out short-term losses, and capitalise on periods of growth.

The benefits of focusing on what you can control

By concentrating on costs, savings, and time, you avoid the distractions of market predictions and news cycles. Trying to time the market can lead to missed opportunities and losses. A consistent strategy is far more reliable, as it is built around principles that remain effective even as conditions change.

Consider the tumultuous year of 2020, when markets initially plummeted due to the Covid-19 pandemic, but rebounded within months. Investors who tried to “time the bottom” often missed the rapid recovery that followed, while those who simply continued their regular contributions benefited from the rebound.

Focusing on costs, savings, and time helps you build resilience into your investment strategy, setting you up for consistent growth rather than reactive decisions. While it’s normal to feel anxious about market movements, focusing on these factors that are within your control provides a much more stable foundation for building wealth.

To discuss your investment plan, speak to us.

Evolving Wealth Part 2: Millennials, a Fresh Take on Values, Habits, and Aspirations

“Life is what happens to you while you’re busy making other plans” (John Lennon)

Millennials comprise 25 to 35% of SA’s population, representing various interests, backgrounds, and lifestyles. It’s also helpful to distinguish between older Millennials and younger ones. The older cohort grew up with PCs and video games, while the younger Millennials were raised on smartphones and apps.

Inside your Millennial mindset

Millennials are a values-driven generation that prioritises family, community, and creativity. As digital natives (especially the younger half of the cohort), you’ve grown up alongside rapidly evolving technology and embrace new forms of communication, enjoying how they allow you to connect with the global village. Your generation also values environmentally conscious practices, often opting for eco-friendly products and sustainable living choices.

Millennials invest heavily in human capital, prioritising education and self-improvement more than previous generations. Although many gravitate towards STEM fields — science, technology, engineering, and mathematics — there’s a growing interest in social sciences and applied arts. Millennials are also known for their willingness to take risks in the workplace. Many pursue passion-driven careers, dream jobs, and side gigs while also emphasising a healthy work-life balance.

Travel is another major priority. Millennials tend to explore the world frequently, often choosing experiences over material possessions. Unlike previous generations, they are more likely to rent than buy, finding flexibility and mobility preferable to traditional homeownership.

Millennials and money

Millennials tend to be cautious investors and are often more focused on avoiding losses than chasing gains. After seeing their parents’ or grandparents’ financial struggles, they typically save more than previous generations (some studies show they save around 18% of their income, compared to Baby Boomers’ 11%).

Many Millennials are risk averse, sometimes to their detriment, as they know about economic downturns. This conservative approach can result in missed opportunities for long-term growth through compounding and equity gains. Quick to adjust based on current data, Millennials sometimes make rapid changes that might impact their investments’ long-term potential.

Millennials use social media, financial apps, and online calculators to find investment insights. They prefer digital interactions and can make investment choices with just a few taps on a smartphone. They are known to dedicate time to tracking their investments (some up to seven hours a month) and are faithful to brands that offer seamless tech experiences. Some Millennials are “crypto-curious” or drawn to robo advisers.

Living longer, planning smarter

Humans are living longer than ever before. Already, global life expectancy stands at over 70 years for men and over 75 years for women. And these figures are expected to increase rapidly due to advancements in healthcare, nutrition, and wellness practices.

A recent study suggests the maximum human lifespan could extend to 150 over the next three centuries. This calls for investing more in equity for retirement.

Navigating your financial future with smart tools

Many Millennials find online calculators and tools valuable for guiding their financial decisions. You can find all kinds of calculators online, including:

Retirement calculators: Estimate how much to save monthly for a comfortable retirement.
Goal calculators: Use this tool to determine monthly contributions to achieve specific goals, such as paying for Junior’s varsity education or taking an overseas trip.
Investment selector tools: Like Tinder for investments: match with investment options that align with your risk tolerance and timeline.
Tax-free investment calculators: See how much tax you can save over time by investing in tax-free funds.

These tools are designed to inform and educate but don’t replace professional advice. Consider them a learning resource to help you understand your financial possibilities.

The power of a personal financial guide

While relying on digital tools alone is tempting, it’s worth putting in the time to build a relationship with a trusted financial advisor. Digital tools and robo-advisors lack the personal context essential for complex financial decisions.

A good advisor knows what makes you tick. And they can use their experience to help you ride out market fluctuations and keep your investment strategy on track for the long haul.

By all means, use those apps and calculators for quick insights – but remember that nothing beats the human touch. Investing doesn’t have to be intimidating. Take it one step at a time, leverage the resources available, and consider the balance that best suits your values and goals.

Contact us if you’d like to discuss any aspect of this article. And please feel free to share it with any Millennials in your circle.

Market Update: The Good, Bad and Ugly of Trump’s Return

While initial enthusiasm surrounding Trump’s likely market-friendly economic policies drove the S&P 500 index above 6,000 points for the first time, investors are now carefully weighing the opportunities and risks ahead. South Africa’s JSE All Share Index fell behind, moving sideways during the month.

Treasury pick calms some market nerves

Markets generally welcomed Trump’s selection of hedge fund manager Scott Bessent as Treasury secretary – one of the few moderate Cabinet nominees. He’s expected to have a moderating influence on some of Trump’s more extreme economic policies and is regarded as a “safe pair of hands” by strategists.

Bessent is expected to advocate for:

A softer, more gradual approach to implementing tariffs
Regulatory reform to boost growth
A “3-3-3” strategy aiming for 3% economic growth, a reduction in the US budget deficit to 3% of GDP and increasing oil production by 3 million barrels a day.

The positive reaction to Bessent’s nomination was evident in currency markets, with the dollar index declining 0.8%.

Key policy concerns

Significant uncertainties remain around several aspects of Trump’s economic agenda. All of these have the potential to impact both the global economy and the South African one.

Trump’s tariff plans: Trump’s proposed blanket 20% tariff on imports, possibly climbing to 60% on Chinese goods, remains a major concern. While Bessent supports tariffs as a policy tool, his preference for a “layered” approach may help moderate their inflationary impact.
US government debt challenges: The debt service burden presents a significant hurdle for Trump’s tax cut plans. With annual debt service costs projected to exceed $1 trillion next year (surpassing defence spending) the administration faces tough choices in balancing growth initiatives with fiscal responsibility.
US monetary policy: The relationship between the Trump administration and the Federal Reserve will be closely watched, particularly as the central bank navigates potential inflation pressures from tariffs and fiscal policy.

Implications for SA markets

South African financial markets face both opportunities and challenges in this environment:

Near-term volatility: The SA market has already shown sensitivity to US policy uncertainty, with the JSE All Share Index underperforming the S&P 500’s November gains.
Rate cut trajectory: Despite SA inflation falling to 2.8% in October 2024 (its lowest level since June 2020) the SARB may be cautious about further rate cuts if US policies fuel global inflation pressures.

Investment outlook

Markets are likely entering a period of increased volatility as Trump’s policy agenda takes shape. While Bessent’s appointment as Treasury secretary provides some reassurance, investors should prepare for:

Potential inflation pressures from trade policies
Higher bond yields as markets price in fiscal risks
Currency volatility, particularly in emerging markets
Sector rotation (changes in which sectors of the economy are performing well) as policy priorities become clearer.

Bottom line

South African investors should remain patient and level-headed while Trump beds down his Cabinet and economic policies and the market transitions to a new reality. .

If you have any questions about how all of this affects your investment portfolio, please give us a ring.

The Importance of Income Protection Cover

“Your greatest asset is your earning ability” (Author Brian Tracy)

Two beliefs common to almost all South Africans are the feeling that we are pretty much immune from injury and illness which will prevent us from earning an income, and that our most valuable asset is our home followed by any vehicles.

The belief that nothing can happen to you is a dangerously and frighteningly inappropriate one, especially when you consider that it has been extensively reported that a person’s most valuable asset is their ability to earn an income. The scarcity of jobs in South Africa puts additional pressure on those who are already earning an income.

Life insurance cover is a vitally important discussion that takes place between you and your financial advisor. Equally important is purchasing income protection. But what do you ask your financial advisor during these conversations?

Shocking statistics

Let’s start at the beginning by putting income protection into context. As much as we would like to be like the superheroes in the Marvel movies, we simply are not. We are made of flesh and bone. Injuries and illnesses that alter the whole course of a person’s life can manifest in an instant and indeed they do occur on a daily basis.

This is the reality faced every day on our roads. South Africa does not have an effective public transport system, so travelling in your own transport is a reality for almost all South Africans. This means that they place themselves at high risk and face the devastating statistics when it comes to road accidents. Statistics show that some 65 000 people sustain major injuries on South African roads every year.

The statistics when it comes to critical illness are also frightening. In 2018, just one life insurer paid claims to the value of R4.69 billion to 28,453 individuals and their beneficiaries. Cancer accounted for 27.9% of all claims, cardiovascular disorders 24.3%, respiratory disease 6%, and cerebrovascular disorders (strokes) 5.7% of all claims.

All of these illnesses showed an increased incidence when compared to 2017. Longevity has increased the chances of you surviving these illnesses. However, many people are never the same after surviving cancer or a stroke.

The importance of income protection

Every financial plan or discussion needs to begin with an analysis about how a client’s current and future income stream can be protected from injury, illness or death.

The importance of this is significant. Financial commitments do not stop when you become injured or suffer a critical illness and are unable to work. You will still have to pay your bonds, school fees, vehicle finance and insurance. Neglecting any of these payments could be devastating, especially if your insurance cover lapses as a result.

Another factor that needs to be considered is the sphere of influence (dependency ratio) in South Africa. An income earner may have five or six people who depend on it. This is a frightening reality in South Africa where the unemployment rate is 29%.

From a business owner’s perspective, this responsibility increases exponentially. Not only do you have to look after your dependents, you also have a financial commitment to your staff who need to provide for their families. An injury or critical illness for a business owner has a significant ripple effect on the people around them.

The final point to consider when looking at the importance of income protection is the prevalence of injuries and illnesses. The macabre reality of life is that you only die once, and when that happens, there are no financial commitments to your dependents. Injuries and critical illnesses are common occurrences and you need to provide for yourself and your family during this time. Statistics show that if you experience an injury or critical illness once, your likelihood of experiencing another injury or critical illness increases by 30%.

So what should you be asking your financial advisor when it comes to income protection?

In South Africa, life insurance is sold two or three times more often than income protection. Yet, you are more likely to have repeated injuries or critical illnesses than you are to die. Prioritise a conversation with your advisor around planning for being disabled in addition to planning for death.
The second conversation should be your future insurability. A recent study indicates that clients – particularly Millennials – do not know how much they will earn in the future. They underestimate this figure by as much as 30 to 40%. Your financial advisor can assist you by forecasting your future earning potential and making sure that you cover 100% of your income.
The third conversation should be around waiting periods. Clients should be taking the shortest waiting period possible when it comes to income protection as most South African households cannot afford to suffer a financial loss of even R10,000. Imagine the losses associated with not being able to work and having to go through a long waiting period for your income protection policy to pay out.
Your final discussion should be around the method of payment. A common practice in the industry is that insurers pay disability payments in a lump sum and then expect their clients to plan their finances accordingly. The urge to spend the lump sum at once – whether by choice or by necessity – is a real problem in South Africa. You should be talking to your advisor about an annuitized option when it comes to disability cover.

The departure point of any financial discussion should be the protection of your most valuable asset; your ability to earn an income now and into the future.

6 Winning Strategies That Top Investors and Elite Endurance Athletes Share

“Excellence is my new habit.” (Dirk Stroda)

Athletes know that excelling in endurance sports and building wealth both require more than pure skill. They also demand resilience, patience, and discipline.

Here are six habits that top investors and elite athletes share. Read on to find out how to win your race – be it financial or physical.

1. Dare to dream big

Greatness starts with audacious dreams. Whether you’re aiming for financial freedom or the finish line of an ultramarathon, the bigger the goal, the more room for growth.

Successful wealth builders don’t shy away from ambitious targets. They know that even the most significant financial goals can be achieved with consistent effort over time. The key? Being specific. When you define precisely what you want, it becomes something you can chase relentlessly.

Running hundreds of kilometres may seem daunting, but it shifts from impossible to inevitable with steady discipline. The same goes for building intergenerational wealth: one step at a time is the only way to get closer to your goal

2. Master the art of steady progress

Accumulating wealth, like running the Comrades or completing the Cape Epic, is all about endurance. The finish line isn’t going anywhere, but rushing there often leads to burnout or injury. Successful investors know to trust the process, staying the course even when progress feels slow.

Endurance athletes know this well: pacing is the key to conquering long distances. A strong start is impressive, but the careful, strategic strides carry you to the end. There’s no prize for reaching the halfway point first. As the story of the tortoise and the hare illustrates, the victory only comes when you cross the final finish line.

3. Harness the power of expert guidance

No one wins alone. Successful investors surround themselves with seasoned advisors who’ve seen the markets’ ups and downs. These coaches can filter out the noise, offer strategic insights, and guide them away from risky choices.

Similarly, top athletes have coaches who are motivators and sounding boards. They provide clarity, feedback, and perspective, helping athletes push through doubts and unlock their full potential. A good coach doesn’t just teach you how to win – they teach you how to learn from your mistakes and grow.

4. Leverage cutting-edge tech for success

In a world where tech dominates, winning is as much about brains as it is about brawn. For investors, technology is a powerful ally. From checking your spending against your budget to monitoring portfolio performance and setting goals, smartphones have become invaluable financial assistants. (Tech is great for tracking stuff. But do remember that your financial advisor offers a big-picture human perspective that no app can compete with.)

In the same way, technology has revolutionised training in the athletic world. Athletes can monitor their pace, recovery, and nutrition in real-time. And they can use tech to identify their opponents’ weak spots. But there’s a catch. Too much information can overwhelm. Both investors and athletes must avoid ‘analysis paralysis’ – the temptation to overanalyse every move instead of focusing on the bigger picture.

5. Stay focused on the ultimate goal

The best investors understand that building wealth isn’t just about managing portfolios to balance liquidity, tax strategy, fiduciary duties, and risk. It’s a holistic process that keeps the end goal in sight, even when the details seem overwhelming. This is why it’s important to prioritise your health (mental and physical) and to spend time doing the things that are important to you with the people who matter most.

Likewise, any top athlete knows success isn’t just about running faster or harder. It’s about growing physically, mentally, emotionally, and spiritually. Without balance, performance falters, whether on the track or in the market.

6. Turn setbacks into stepping stones

Both investors and athletes know one universal truth: not everything will go according to plan. The road to success is often paved with failures, setbacks, and unanticipated hurdles. It’s how you respond to those bumps that defines your journey.

In financial planning, strategies may need adjusting when times get tough. The ability to adapt and stay the course separates the winners from the rest. The same holds for athletes: every race and every training session is a learning experience. Mistakes aren’t failures – they’re opportunities to refine, recalibrate, and return stronger.

Adopt an athlete’s mindset

At your next financial review, let’s think like athletes and focus on growing your wealth in the long term. As your financial endurance coaches, we are here to help.

Why the Rand Shouldn’t Be Your Main Reason for Investing Offshore

For many South Africans, the fact that the rand weakens over time against the dollar feels like the biggest reason for investing offshore. When you think that one dollar cost less than R7 in 2011 compared to over R17 today, it seems obvious that having money offshore is imperative.

Over long periods of time, this trend will probably hold. The rand is likely to steadily get weaker. But it’s important to understand why. Primarily, this is due to South Africa having a higher inflation rate and a higher risk premium than developed markets. Significantly, both of these things mean that returns from South African assets should also be higher.

It’s complicated

The past year has been a very good one for South African investments. Local property has gained more than 50%, and both shares and bonds are up more than 20%.

Image source: Visio Fund Managers

Notably, the rand has also been strong. It’s gained around 10% against the dollar in the past 12 months.

This is only a short period, but it’s a reminder that markets never move only in one direction. After many years of South Africa underperforming, local assets have been very strong this year. This further highlights the importance of having a diversified portfolio.

In the long run, these factors and rand weakness actually tend to even themselves out. In dollar terms, the returns you earn in South Africa have actually been better over long periods of time than you could earn just about anywhere else – ours is the third-best performing stock market in the world in dollar terms in the period between 1900 and 2019.

Are you a gambler or an investor?

While the fluctuating rand often seems like the only reason you could ever need to seek refuge in offshore investments, there are far more meaningful reasons to diversify internationally.

Currency movements are notoriously difficult to predict, and the rand is no exception. Over the years, the rand has experienced periods of significant depreciation, only to stabilise or even strengthen later.

For example, the rand weakened sharply during the 2008 global financial crisis and again in 2015 during the “Nenegate” scandal. This alarmed many investors, who sent large sums of cash offshore. In both instances, the currency subsequently regained some strength, resulting in losses for those investors. Relying on these short-term movements as the main reason for investing offshore is speculative and risky, especially for long-term investors.

D is for diversification

The primary reason to invest offshore should be to diversify your portfolio, not to hedge against a weak rand. South Africa represents only a small fraction of the global economy, and offshore investments provide access to a broader range of sectors, industries, and companies that are not well-represented in the South African market.

Global markets, especially in developed economies, offer exposure to industries like technology, healthcare, and renewable energy that may not have the same growth potential locally. Diversifying into these sectors allows you to tap into global trends and reduce the risk of being overexposed to South Africa’s economic cycles.

We all know that South Africa faces many structural challenges, including political instability, slow economic growth, and reliance on commodity exports. Investing in global markets allows you to reduce your exposure to local risks and focus on economies that are more stable and diversified.

For example, the COVID-19 pandemic hit South Africa hard. However, international markets, particularly in the US and Europe, recovered quickly due to massive government stimulus packages and the strength of large multinational companies. Investors with offshore exposure were able to benefit from this global recovery.

The proof is in the pudding

The underlying growth in global equities and bonds – as opposed to the performance of the rand – is what ultimately drives these gains.

This theory is borne out in practice. Historical data shows that globally diversified portfolios tend to outperform South African-only portfolios in risk-adjusted terms over long periods.

The final word

Ultimately, offshore investing should be part of a broader, long-term plan focused on diversification, asset allocation, and risk management. The rand’s movements should not be the primary driver of this decision. Instead, you should look to global markets for access to growth opportunities, protection against local economic risks, and better risk-adjusted returns.

To discuss how best to diversify your investment portfolio, speak to us.

Evolving Wealth Part 1: Gen Z, Trailblazers of the Digital Investment Era

“Life’s tragedy is that we get old too soon and wise too late.” (Benjamin Franklin)

Born between 1997 and 2012, the youngsters of Gen Z are driving change in the investment world at lightning speed. Unlike the rest of us, they’re totally at home in a tech-driven world. For them, managing money via mobile apps and online platforms isn’t just convenient, it’s essential. Forget slow and steady approaches like retirement annuities (RAs) and unit trusts – Gen Z is all about speed, efficiency, and micro-investing.

With nothing more than a smartphone and a 5G connection, they’re fully equipped to navigate global markets, invest spare change, and even participate in crowdfunding bright ideas.

Ethical investors

Gen Z isn’t just looking for profits; they want their money to stand for something. These young investors are at the forefront of the socially responsible investing movement, putting their money where their values are. Sustainability, green energy, and ethical business practices are top priorities, and they’re not afraid to demand change.

By choosing to invest in companies that champion environmental and social causes, Gen Z is pressuring businesses to adopt better practices. Their influence goes beyond financial returns – it’s about reshaping corporate behaviour for a better and more sustainable world.

The gig economy: Gen Z’s secret weapon

Rising living costs and the desire not to be stuck behind a desk all week have seen Gen Z embrace the gig economy with a vengeance. For them, work isn’t confined to a 9-to-5. Instead, they’re Airbnb hosts and freelance providers on Upwork while also holding down a ‘conventional job’ and working digitally from cafes.

This flexibility gives them greater control over their income streams and the freedom to pursue diverse revenue sources. Micro-investing fits perfectly into this world, allowing them to put small sums of money to work for them. It’s an era of adaptability and resourcefulness, where the barriers to entry in investing are lower than ever.

But with freedom comes challenges. While the gig economy offers flexibility, it can send your work-life balance into disarray and erode traditional financial safety nets like employer-sponsored pensions and group benefits. As side gigs become main gigs, it’s essential to weigh the risks of losing core income stability.

Glass half-full

Despite these pressures, Gen Z is relentlessly optimistic about its financial future. They understand that knowledge is power and are fiercely committed to further education, constantly consuming online courses, podcasts, and articles to stay financially savvy. Their hunger for learning (and avocado toast) and their interdisciplinary mindset mean they’re pretty good at adapting to today’s ever-changing financial landscape.

Shadows on the horizon

Of course, no generation is perfect. Gen Z faces some unique challenges on their financial journey, including:

Market volatility: Gen Z is more likely to invest in high-risk assets like cryptocurrencies, which makes them more vulnerable to extreme market swings.
Trusting the machine: While apps simplify investing, relying too much on automation can lead to a superficial understanding of core investment principles.
Social influence: Social media is a double-edged sword. While it offers a wealth of information, it can also lead to herd mentality and impulsive investment decisions.
Wet behind the ears: Being relatively new to the game, Gen Z may need to learn to recognise scams or avoid common pitfalls in volatile markets.
Bigger picture: Particularly in regions like South Africa, where economic instability looms large, local conditions may constrain or impact investment opportunities.

Balancing optimism with caution is crucial. Gen Z must pair their enthusiasm with a good dose of old-fashioned prudence to navigate these challenges.

The bottom line

There’s more to financial planning than just investing. As advisors, we use tech-driven strategies to our advantage. Our value is helping clients weave these modern tools into comprehensive plans that also include risk mitigation and estate planning (no matter how young you are.)

Whether you’re part of Gen Z or just intrigued about how they’re shaking things up, this generation’s innovative spirit is a wake-up call. It’s not just about keeping up with the times – it’s about redefining what wealth means for the future.

Watch this space

Stay tuned for the next article in this series, where we’ll dive into how millennials continue to evolve the financial landscape.

If you’re curious about any of the above, please don’t hesitate to call us. We’re here to help, whatever your age. And please do forward this article to your Gen Z family and friends…

Market Update: Reasons for SA Investors to Be Hopeful?

Stock markets took a breather in the second half of October in anticipation of the US elections. The S&P 500 flattened out in the second half of October, leaving it less than 1% higher for the month, while the SA All Share Index gained 0.5%. Both markets have, however, notched up healthy double-digit gains for the year to date.

Domestic financial markets will be driven by the S&P 500’s election-related ups and downs in November. However, there are several reasons to be optimistic about South Africa’s longer-term investment outlook.

GNU era scorecard

The SA stock market has been riding high on positive sentiment since the formation of the Government of National Unity (GNU), which passed its 100-day mark in early October. Investors, particularly foreign investors, remain cautiously optimistic about the new coalition government’s performance but need to see more concrete evidence of policy progress before they are all in.

IMF vote of confidence

The IMF’s recently released economic outlook report for Sub-Saharan Africa painted an encouraging picture of South Africa’s economic achievements. While the Fund did urge the central bank to implement further rate cuts, it said it was encouraged by recent trends and speedier economic reforms that put the country in a position to make the most of global monetary policy easing and lower inflation.

Proactive investment drive

Deputy Minister Paul Mashatile wooed foreign investors during a week-long roadshow in the UK and Ireland in early October. His main message was that the government understands the need for more private investment in sectors such as energy, water and infrastructure and welcomes foreign investment.

Inflation surprises positively

The latest inflation data highlights that the SA Reserve Bank’s inflation fight is yielding better-than-expected results. Consumer inflation fell below the 4% mark for the first time since 2021. However, the central bank can be expected to be cautious, given the inflation risks associated with recent geopolitical events.

GNU delivers on fiscal promises

The coalition government has consistently committed to delivering on its fiscal goals. Although October’s Mid-Term Budget fell slightly short of expectations, that commitment should keep National Treasury on track to stabilise debt at 75.5% by 2025/26 versus the 75.3% pencilled in at the February Budget. This will be a crucial milestone because lower debt repayments unlock money to spend on other critical areas, including job creation, education, social spending and service delivery.

Closer to getting off the grey list

The Financial Action Task Force (FATF, a global anti-money laundering body) shared the good news that South Africa has “largely addressed” eight outstanding actions that stand in the way of us being removed from the grey list. That leaves six to address before February 2025. These are the most challenging and include the government proving it is investigating and prosecuting complex crimes.

The bottom line

South African financial markets are historically subject to the vagaries of global risk appetite. However, an improving fundamental economic picture is setting the country up for success when foreigners do turn their attention to emerging markets – and SA can show it is one of the most attractive investment destinations in the world right now.

If you have any questions about how all of this affects your investment portfolio, please give us a ring.

Don’t Fall Prey to the Most Common Cybercrimes!

“The bottom line is that cyber risks sit right alongside rising systemic risks, and is the biggest emerging, and constantly evolving risk facing businesses today.” (SHA Specialist Risk Review 2022)

In Africa, Interpol has identified phishing – particularly Business Email Compromise (BEC) – as well as online scams, as both the biggest current crime threats, and the crimes most likely to increase in the next three to five years.

This is Interpol’s list of the prominent cyberthreats identified in the African region:

Business Email Compromise
Phishing
Cyber extortion including ransomware attacks
Online scams
Banking trojans and stealers

Below, find out how these cybercrimes are perpetrated and how to protect yourself, your company and your employees with tips from SABRIC and CISA.

Business Email Compromise (BEC)

For 7 consecutive years, BEC attacks have been the most financially devastating cyber threat worldwide, and continue to be the most prevalent cybercrime, says Interpol. A type of phishing attack, it causes significant financial losses and often reputational damage.

It includes cybercriminals using an organisation’s email account to send out fraudulent messages with malicious links or attachments that install malware or steal confidential information.

Most commonly, however, BEC involves cybercriminals manipulating emails, especially payment requests containing bank account details. This is because it’s common business practice to send confirmation of or changes to bank details, or invoices containing bank details, via email.

In BEC attacks, these emails are intercepted – or fraudulent emails or invoices are created – changing the account details to the cybercriminal’s account. Any payments subsequently made are lost to cybercrime.

A recent High Court ruling in this regard, set a precedent applicable to all businesses, as the judge noted: “… the plaintiff’s case established clearly that sending bank details by email is inherently dangerous, and so must either be avoided in favour of, for example, a secure portal or it must be accompanied by other precautionary measures like telephonic confirmation or appropriate warnings which are securely communicated.”

Specific BEC preventative measures include:

Inform clients that your company will never change banking details via letter, SMS or email.
Consider not putting banking details on your invoices – rather ask customers to phone you to check the details they have.
Use bank-defined beneficiaries for online banking where possible.
Before making payment to a supplier’s bank account after receiving an emailed invoice, check that the bank account details on the invoice are genuine.
If you receive any instructions to change banking details from a supplier, call them to verify.
Check with your insurers if you can get cover for this risk.

Phishing

One of the oldest, most pervasive cyberthreats and a major source of stolen credentials and information, phishing is a cyber-attack aimed at stealing sensitive information like usernames, passwords and credit card details, typically using deceptive emails or websites, apparently from trusted sources, that contain malicious attachments or links to viruses or malware.

Phishing is linked to an estimated 90% of data breaches and causes not only direct financial losses but enables other forms of cybercrime.

Cyber extortion and ransomware attacks

Cyber extortion involves cybercriminals using digital methods to threaten or extort victims for money and/or assets. It often involves the attacker threatening to reveal embarrassing personal information, delete important data, sabotage systems and networks, or launch distributed denial-of-service (DDoS) attacks.

An increasingly popular type of cyber extortion is ransomware, a malicious software that locks users out of their own data, business systems and devices by encrypting their files. Victims must pay a ransom to have their files decrypted and regain access.

Such attacks can be extremely costly to businesses with substantial financial losses incurred due to ransom payments and recovery efforts, as well as downtime, lost production, and reputational damage.

Ask your accountant for help in preparing a business continuity and disaster recovery plan so you are prepared if the worst happens.

Online scams

Online scams take advantage of users’ poor levels of digital literacy to lure them with false promises. Below are the most common online scams increasingly prevalent in the African region.

Advance payment scams – fraudsters ask for financial deposits and then fail to deliver goods or services.
Shopping scams – criminals deceive online buyers to pay upfront and then receive counterfeit items or nothing at all.
Romance scams – criminals create a false social media identity and build an emotional connection with a victim, with the aim of soliciting money or gaining access to personal accounts.
Tech support scams – criminals posing as representatives from technology companies offer technical assistance to gain access to users’ computers and extract valuable data such as passwords and financial information.
Cryptocurrency scams – criminals entice investors into buying fake currencies.

Banking trojans and stealers

These malicious software programs are spread through phishing emails and malicious websites to steal sensitive information such as usernames, passwords and financial data by capturing keystrokes or stealing login credentials from unsuspecting victims. Cybercriminals may use the information to steal money directly from the victim or sell the information on underground markets.

What are the risks?

According to the 2022 SHA Specialist Risk Review, cybersecurity ranks third on the list of top threats for local businesses, after power disruptions and labour matters.

The report says that not addressing cybersecurity opens companies to a range of risks, including:

the financial loss of payments made into incorrect accounts due to BEC;
the financial impact of business interruption due to a cyberattack;
the financial impact of having to pay a ransom;
the legal consequences that follow a breach of confidential or personal information;
the reputational consequences that may impact a company’s share price and brand.

How to prevent becoming a cybercrime victim

Keep applications, software and operating systems (OSs) updated with the latest patches.
Use and keep updated preventative anti-virus and anti-malware protections, software and protocols, as well as data encryption, firewalls and email filters.
Use long, complicated passwords and change them often.
Always double check you’re really on the right website or app. Only download apps from trusted app stores.
Use YIMA, a website vulnerability scanner, to do website security checks for scams, known vulnerabilities and security headers.
Register for 3D Secure to secure your card details and use secure payment portals with two-factor authentication (2FA).
Backup your system and other important files, and store on a separate device not accessible from the network, like an external hard drive.
Beware of phishing emails. If an email looks suspicious, verify the email’s legitimacy by contacting the sender directly.
Do not click on links or icons in suspicious or unsolicited emails, and do not reply – delete immediately.
Be careful when clicking directly on links in emails or opening email attachments, even if the sender seems legitimate.
Don’t fall for any offer that seems to be too good to be true – it usually is.
Never provide your password, credit card or other financial information, or control of your computer, to a third party who calls unexpectedly.
If you suspect you are being targeted by a scammer, stop all communications immediately and report it.
If you click on a harmful link, immediately disconnect your device from the internet by unplugging your network cable or disconnecting from the Wi-Fi, then run a full anti-virus scan.
Regular, mandatory cybersecurity awareness training for all employees is crucial to keep everyone informed about the latest cybercrime techniques.

October is Cyber Security Awareness Month – Stay Alert!

Public Wi-Fi: An ultimate guide on the risks + how to stay safe

Whether you work remotely, travel frequently, or just love staying connected wherever you go, chances are you’ve used a public Wi-Fi hotspot.

They are nearly everywhere — airports, restaurants, coffee shops, libraries, public transit, hotel rooms, you name it.

Using these free Wi-Fi hotspots is super convenient, allowing you to access online accounts, catch up on work, and check emails while on the go. But these networks aren’t perfect and could leave you vulnerable to cyberattacks.

To learn more about public Wi-Fi, its risks, and how you can safely use it, read through this comprehensive guide.

What are public Wi-Fi security risks?

A graphic highlights the risks of public Wi-Fi.

The problem with public Wi-Fi is that there are a tremendous number of risks that go along with these networks. While business owners may believe they’re providing a valuable service to their customers, chances are the security on public Wi-Fi is lax or nonexistent. Follow along to learn more about public Wi-Fi security risks.

Man-in-the-middle attacks

One of the most common threats on these networks is called a man-in-the-middle (MITM) attack. Essentially, a MITM attack is a form of eavesdropping. When a computer makes a connection to the internet, data is sent from point A (device) to point B (service/website), and vulnerabilities can allow an attacker to get in between these transmissions and “read” them. So what you thought was private no longer is. Scammers may also carry out a MITM attack using phishing emails. In these emails, they’ll impersonate a trusted source to trick you into sharing your private information.

Unencrypted networks

When using an encrypted network, the information sent between your device and the Wi-Fi router is in a “secret code.” Because of this, nobody can see the information without a key. Most Wi-Fi routers have encryption turned off by default and must be turned on when setting up the network. If you connect to an unencrypted network, it is much easier for a scammer to get ahold of your web traffic and use it for nefarious activities like MITM attacks. While the public Wi-Fi network you want to use may be encrypted, there is no sure way to tell if this has happened.

Malware distribution

Thanks to software vulnerabilities, there are also ways that attackers can slip malware onto your computer without you even knowing. A software vulnerability is a security hole or weakness found in an operating system or software program. Hackers can exploit this weakness by writing code to target a specific vulnerability, and then inject the malware onto your device.

Wi-Fi snooping and sniffing

Wi-Fi snooping and sniffing is exactly what it sounds like. Cybercriminals can buy special software kits and even devices to help assist them with eavesdropping on Wi-Fi signals. This technique can allow the attackers to access everything that you are doing online — from viewing whole webpages you’ve visited (including any information you may have filled out while visiting that webpage) to being able to capture your login credentials, and even hijack your online session.

Malicious hotspots

Malicious hotspots, also known as rogue access points, trick victims into connecting to what they think is a legitimate network because the name sounds reputable. Say you’re staying at the Goodnyght Inn and want to connect to the hotel’s Wi-Fi. You may think you’re selecting the correct one when you click on “GoodNyte Inn,” but you haven’t. (Note the capital N.) Instead, you’ve just connected to a rogue hotspot set up by cybercriminals who can now view your personal information.

How to stay safe on public Wi-Fi: 11 cybersecurity tips

A graphic lists 11 cybersecurity tips to help you stay safe on public Wi-Fi.

Now that you know the possible public Wi-Fi security risks, you might be wondering how you can use a public network safely. While there is always some degree of risk, there are ways to protect yourself from the dangers of public Wi-Fi. Follow along to learn how you can stay safe when using a public wireless connection.

1. Avoid accessing sensitive information

When using a public Wi-Fi network, it’s best to avoid accessing sensitive information. If you need to get online to browse for directions or do something else that’s less sensitive, you can probably do it. But if you’re trying to pay your bills or buy something, it may be best to wait.

2. Use a VPN

A great way to minimize public Wi-Fi security risks is to use a virtual private network (VPN). By using a VPN on public Wi-Fi, you’re accessing a private network, or VPN tunnel, through which you send and receive information, adding an extra layer of security to your connection. While some VPNs are free, you’ll likely have to pay to get the best security features. Be sure to buy your VPN from a trusted provider to ensure your data is safe.

3. Stick to “HTTPS” websites

Only browse websites that include an SSL certificate while on public Wi-Fi. A website has an SSL certificate when the URL begins with “HTTPS.” Website addresses that start with “HTTPS” are encrypted, adding an extra layer of security and making your browsing more secure. If you connect to unsecured Wi-Fi networks and use “HTTP” instead of “HTTPS” addresses, your traffic could be visible to anyone else on the network.

[H3] 4. Use browser extensions

Consider installing an extension like HTTPS Everywhere* which will force all websites you visit to connect using “HTTPS.” This is a Firefox, Chrome, and Opera extension produced by a collaboration between the Electronic Frontier Foundation and The Tor Project. By using this extension, you can reduce the risk of ending up on an unsafe website.

5. Adjust your connection settings

Configure the wireless settings on your devices to not automatically connect to available public hotspots. You can do this by turning off the “Connect Automatically” feature on your devices so they don’t auto-connect and search for known Wi-Fi networks.

Doing this can prevent your computer or device from broadcasting that it’s trying to connect to your “home Wi-Fi” network and allow an attacker to create a bogus network with the same name.

6. Use a privacy screen

If you must access sensitive information in public areas, consider putting a privacy screen on your devices. A privacy screen will blacken your display for everyone but you, keeping fraudsters from being able to copy or photograph any of your sensitive information.

7. Turn off file sharing

Make sure you turn off file sharing before accessing public Wi-Fi. If you keep file sharing on, your folders may be accessible to anyone connected to the same public network, allowing a hacker to get their hands on your private information without your permission.

8. Use two-factor authentication

When you’re using public Wi-Fi, cyber snoops could gain access to your passwords. One way to enhance your protection is by enabling two-factor authentication (2FA) on any services that offer it. When enabled, this ensures that even if someone gains access to your password while you’re using public Wi-Fi, they still won’t be able to access your accounts. Usually, you’ll receive a second login step — a call or a code on your smartphone, for instance — that you’ll use to log in to your account.

9. Keep your operating system up to date

It’s crucial to always update your operating system (OS). OS updates often include important security patches that can further protect your device from Wi-Fi threats. By always installing the latest updates, you can browse the web knowing you’re protected by the most up-to-date security features.

10. Remember to log out

When you’re done browsing, be sure to log out of any services you were using. Also, check your settings to make sure your device will “forget the network” and not automatically reconnect to that network again if you’re within range without your permission. This can help minimize the time your device is connected to a public network.

11. Use antivirus software

Using antivirus software is another great way to stay safe while using public Wi-Fi. With antivirus software installed, you can use public Wi-Fi networks knowing you are protected against cybersecurity threats such as computer viruses and spyware.

Now that you know how to safely use public Wi-Fi, let’s take a look at some of the signs of an unsafe network.

Signs you may be connected to an unsafe Wi-Fi network

A graphic highlights the warning signs of an unsafe public Wi-Fi hotspot.

While many hackers love public Wi-Fi networks, some may go the extra mile and create a hotspot solely for malicious purposes. To help you avoid these types of networks, take a look at some of the common signs of a rogue Wi-Fi network.

The network name matches a trusted network: In some cases, a hacker may set up a fraudulent Wi-Fi network to impersonate an existing network. An example of this is seeing duplicate network names or being connected to your “home network” even if you’re away from home.
“HTTPS” sites render as “HTTP”: If you’re trying to connect to a secure website and notice that the page is loading as an “HTTP” site instead, you may be connected to a rogue Wi-Fi hotspot. This could mean that someone is trying to steal your information using a MITM attack.
The name is generic: Certain rogue networks may show up in a highly populated area with vague names such as “Free Wi-Fi,” hoping to lure in users. In most cases, legitimate public Wi-Fi networks such as ones at coffee shops will have a more specific name that is displayed in their place of business.

Now that you know the nitty-gritty of public Wi-Fi safety, its risks, and how you can use it safely, you’re well on your way to maximizing your internet safety no matter where you go. To ensure your personal cybersecurity doesn’t stop there, you may also want to assess the security of your own Wi-Fi network to help keep your home Wi-Fi safe.

FAQs about public Wi-Fi

Still wondering about the risks of public Wi-Fi? Take a look at the answers to some common questions about staying safe on public Wi-Fi.

Is it unsafe to use public Wi-Fi?

While it’s not a guarantee that you will run into security threats when using public Wi-Fi, it can be risky. Because of this, it’s crucial to be aware of public Wi-Fi security risks and take the proper precautions to stay secure online.

Can public Wi-Fi see your history?

Yes, it’s possible. Most Wi-Fi routers keep a log of the websites visited using their connection. Because of this, the owner of the router can look through the internet activity of the connected users, therefore exposing your history.

What should you not do on public Wi-Fi?

If you do have to use public Wi-Fi, it’s best to avoid any internet activity that includes sensitive information such as:

Online banking
Shopping
Paying bills
Filing taxes

By avoiding these activities altogether, you decrease the risk of your private information ending up in the wrong hands.

Is public Wi-Fi as safe as private?

No, a public Wi-Fi network is not as safe as a private network. Unlike your own private network, you won’t know how the public Wi-Fi network was set up, who runs it, or who else is using it, making it much riskier to use.

Can public Wi-Fi give you a virus?

Yes, a public Wi-Fi network can expose your computer to a virus. Due to its lack of security, a public Wi-Fi connection may be compromised by a hacker, allowing them to inject your device with viruses and malware.

*The inclusion of products, websites, or links does not imply endorsement or support of any company, material, product and/or provider listed herein.

Cyber threats have evolved, and so have we.

Norton 360™ with LifeLock™, all-in-one, comprehensive protection against viruses, malware, identity theft, online tracking and much, much more.

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Author: Clare Stouffer

Source: Norton

Herewith the link:

https://us.norton.com/blog/privacy/public-wifi#

With Gold at Record Highs, Should You be Investing?

“Gold is the universal language understood by all nations.” (George Herbert)

Just a few weeks ago, the gold price climbed above $2,500 per ounce for the first time in history. This has once again got South Africans talking about the attractiveness (or otherwise) of gold as an investment.

Gold is probably one of the easiest assets to understand. You can see it and touch it, and we all know that there is a limited supply and constant demand. That is why the gold price naturally appreciates over the long term.

But it’s also important to bear in mind that gold is not a foolproof investment. There are times – like now – when it makes impressive gains. But there have also been periods when it the opposite has been true. Between 2013 and 2019, for example, investing in gold would have lost you money.

It’s important to understand the pros and cons of investing in the precious metal, as this will help you to appreciate whether it should be part of your portfolio.

Pros of investing in gold

A safe haven during economic uncertaintyHistorically, gold prices have surged when financial markets have been in trouble, as investors seek stability. For example, after the 2008 financial crisis, gold prices soared from around $800 to over $1,900 per ounce within three years. This trend is visible again today, as gold has been attracting investors who are wary of other assets.
DiversificationGold tends to behave differently to other asset classes such as shares and bonds. That is why having a portion of gold in your portfolio can help to manage risk, particularly when other assets are performing poorly.
LiquidityGold can be easily bought and sold in global markets. This liquidity ensures that you can quickly convert your gold holdings into cash when needed, which provides flexibility in your portfolio.
Long-term valueGold has historically preserved its value over long periods. Its ability to retain its worth through various economic cycles makes it a reliable store of wealth, even across centuries.

Cons of investing in gold

It doesn’t produce incomeOne significant drawback of gold is that, unlike stocks that pay dividends or bonds that give you interest, gold does not provide a regular cash flow. This can be a disadvantage as it does not produce any inherent compounding effect.
VolatilityAlthough it has grown steadily over very long periods of time, the gold price can fluctuate a lot in the short term. That is because it can be heavily affected by market sentiment and speculative activity.
Storage and insurance costsIf you own physical gold, you need to store it somewhere and that comes at a cost. Insuring it against theft or loss adds another layer of expense. These costs can erode your overall return.
Opportunity costIt’s always important to remember that if you are allocating substantial funds to gold, you might be missing out on potentially higher returns from other asset classes. Despite gold’s solid long-term record, it has underperformed the stock market over the last 100 years.

Should you invest in gold?

Any investor needs to take all of these pros and cons into account when deciding whether to allocate some of their money to gold. While it’s not for everybody, for many people it does make sense to have somewhere between 5% and 15% of your portfolio allocated to gold.

Three ways to invest in gold

Physical goldAnyone can invest in physical gold by buying Krugerrands or other gold coins. While many prefer this tangible ownership, it does require secure storage and insurance. There are countless stories of people who lost Krugerrands or had them stolen, so don’t just take physical ownership for granted.
Exchange-traded funds (ETFs)Gold-backed ETFs allow you to invest directly in the metal without having to hold it physically yourself. These funds invest in gold bullion and give you the exact return of the gold price, providing an easy way to invest without the hassle of storage.
Shares in gold mining companiesGold shares have long been a big part of the South African market, and it’s important to consider that if you have any local equity exposure you probably already have some gold shares in there. Always bear this in mind when thinking about your total gold exposure. Also consider that shares in gold mining companies can potentially offer higher returns, but they also come with higher risk.

All that glitters

Investing in gold offers numerous benefits, including protection against inflation, a safe haven during economic uncertainty, and diversification. However, it also comes with drawbacks such as lack of income, volatility, and additional costs.

By exploring the various ways of investing in gold and carefully considering the pros and cons, South African investors can make informed decisions about incorporating gold into their investment portfolios. As always, its best to consult with your financial advisor to tailor investments to your individual goals and risk tolerance.

To discuss whether an investment in gold makes sense for you, speak to us.

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