[vc_row][vc_column][vc_column_text]We’ve uploaded Jonathan Brummer’s presentation for last week’s Smart Event on the topic How Do I Retire. We trust this will be helpful.[/vc_column_text][us_image_slider ids=”5475,5476,5477,5478,5479,5480,5481,5482,5483,5484,5485,5486,5487,5488,5489,5490,5491,5492,5493,5494,5495,5496,5497,5498,5499,5500,5501,5502,5503,5504,5505,5506″ nav=”thumbs” autoplay=”1″ autoplay_period=”0.003″ fullscreen=”1″][/vc_column][/vc_row]
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“Too much of a good thing can be bad. After all, you can drown even in clear, clean, pure water.” (J. Grant Howard)
While long-term insurance is important in any financial plan, you may unknowingly be paying for more cover than you need. This is particularly possible if you have more than one policy in place.
This most commonly happens either when someone has both a personal insurance policy and a group insurance benefit through their employer, or they are required to take out insurance to cover a car or home loan. This duplication can lead to unnecessary costs without providing additional benefits, channelling money away from where it could be better used – for example, adding to your investments.
As a starting point, it’s important to understand how these different types of policies work.
You might assume that having more than one policy means you have double the protection. But this isn’t necessarily the case.
If you have a personal life or disability insurance policy and your employer provides similar cover or you take out another policy to cover a loan, you could be paying for unnecessary duplication. This can happen in several ways:
It is, however, important to consider that you probably don’t want to rely solely on group insurance. That is because it’s tied to your employment, and if you retire, switch jobs, or your employer changes their benefits, you may lose your group cover.
This can leave you without insurance at a time when obtaining a new personal policy might be more expensive due to age or health considerations. For this reason, while reviewing your cover, it’s important to ensure you have a sustainable long-term plan that remains in place regardless of career changes.
To determine whether you are over-insured, consider the following steps:
Insurance is meant to provide financial security, but paying for duplicated cover can drain resources unnecessarily. That’s why you should carefully review your personal and group insurance policies to ensure you aren’t over-insured.
By aligning your cover with your actual financial needs and understanding where overlaps occur, you can strike the right balance between protection and cost-effectiveness.
To discuss whether your insurance cover is appropriate, speak to us.
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.
© FinDotNews
“… the economy needs to grow much faster and in an inclusive manner. This is the central objective of the current administration.” (Finance Minister Enoch Godongwana – Budget 2025)
The tabling of Finance Minister Enoch Godongwana’s fourth Budget in February was marked by an unprecedented three-week postponement, following a deadlock around the original Budget proposal to increase VAT by 2%.
A revised Budget, finally tabled on 12 March, proposed a 0.5% increase from 1 May 2025, with a second 0.5% VAT increase from 1 April 2026 – but the proposal was still not enough to satisfy most other political parties.
In his Budget Speech, the finance minister called the Budget proposals “a bold and pragmatic approach” to ensure the economy grows “much faster and in an inclusive manner”. He admitted that the economy has stagnated for over a decade, with GDP growth averaging less than 2%, while forecasts for medium-term GDP growth are a dismal 1.8%.
While the powers that be attempt to reach consensus on the Budget 2025 proposals, businesses and individuals in South Africa will find little support from the fiscus to survive these low-growth economic conditions.
This is evident from our overview below of the most pertinent Budget 2025 proposals. In a nutshell, the finance minister is trying to cover another substantial Budget shortfall by directly and indirectly increasing the tax burden on corporate and individual taxpayers.
The 0.5% VAT increases proposed for 1 May 2025 and 1 April 2026 will certainly impact all companies in South Africa’s struggling economy, with a disproportionately negative impact on the small and micro businesses that are crucial to economic growth.
There is (on 3 April) still huge uncertainty regarding the budget proposals. Expect a lot of political manoeuvring and perhaps some major changes in the days ahead!
The tax proposals eventually adopted, as well as other technical amendments in the 2025 Budget, will likely require professional tax advice.
If you have any questions about how the budget affects your investments, please speak to us.
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.
© FinDotNews
Since returning to office in January 2025, President Donald Trump has implemented a sweeping series of tariff measures – the latest of which is a 30% tariff on South African exports to the US. These decisions have sent shockwaves throughout the global economy and created significant market uncertainty.
At the latest SA Reserve Bank meeting, Governor Lesetja Kganyago summarised the current global state of play: “The world economy is experiencing extreme levels of uncertainty. Trade tensions have escalated, and longstanding geopolitical relationships are shifting abruptly.”
The fallout from the tariff announcements has been wide-ranging. It has triggered volatility in currency markets, particularly affecting emerging market currencies. Developed countries’ stock market performance has sharply diverged, with European equities outperforming the US this year.
The widespread uncertainty has also weakened consumer and business confidence, resulting in many companies adopting more cautious approaches and postponing investment decisions, which could weigh on global growth prospects.
Copper prices are surging to record highs in anticipation of potential tariffs, and gold prices have reached record highs of more than $3,000 an ounce as investors seek safe-haven assets amid the uncertainty.
The tariff situation has prompted the South African Reserve Bank to keep interest rates unchanged at its last meeting despite cooling inflation. This reflects its concerns about the potential inflation impact of tariffs and their impact on the rand.
There will also likely be fewer future rate cuts than anticipated over the next few years as the SARB adopts a “meeting-by-meeting” approach due to the uncertain environment. As Standard Chartered economist Razia Khan noted, “The global risks are real – and the SARB’s caution is justified.”
The impact on SA’s growth will depend significantly on how the tariff situation evolves. If trade tensions ease, the effect may be limited. However, a full-blown trade war would likely have substantial negative implications for economic growth.
As long as tariffs dominate the global agenda, investors in South Africa can expect:
As such, diversification across markets and asset classes remains all-important, and investors should avoid making any rash, fear-based investment decisions. Though the world order may be completely changing before our eyes, unanticipated investment opportunities typically emerge amid maximum uncertainty, so be on the lookout.
If you have any further questions about how all of this affects your investment portfolio, please give us a ring.
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.
© FinDotNews
“The beauty of debit orders is that they make investing a habit, not an afterthought.” (Warren Buffett)
We’re all human – which often means being emotional and not consistently disciplined. Debit orders remove the emotion from investing and encourage responsible behaviour. With debit orders in place, you don’t have to choose between contributing towards your retirement or upgrading your Apple watch to include additional features you’re likely not to use.
Once you’ve consulted with us and we’ve agreed to the amounts, you should set up debit orders for various investments, including an RA, an emergency fund, and the much-needed annual holiday fund.
Investing the same amount every month helps you stay on track and not be influenced by market cycles. We all know it’s a bad idea to try to time the market. Automating your investing via debit orders minimises the risk of losing capital if the market falls shortly after investing a lumpsum amount.
Setting up debit orders for your investments is not just a smart move, it’s also highly convenient. Once you’ve locked in the debit order, the process operates automatically. This convenience allows you to focus on other aspects of your life, knowing that your investments are being taken care of.
A further advantage of regular contributions towards your investments is rand-cost averaging. This concept means that when you use debit orders, you buy more units (of shares or unit trusts) when prices are low and fewer when prices are high. When you invest in well-selected investments, they will grow in the long term, so you benefit from a reduced average cost per unit. In simple terms, it’s like buying more when prices are low and less when prices are high – which should lead to better long-term returns.
The underlying principle of compound interest is that you earn interest on an ever-increasing amount of capital, as opposed to only earning on the original capital amount. This amounts to growth on growth for Titanic profits. Over the years, modest contributions to well-chosen equity funds can snowball into impressive sums, giving you a reason to be optimistic about your financial future. Little wonder Albert Einstein called compound interest “the eighth wonder of the world.”
According to Stats SA, the average inflation rate in 2024 was 4.4%, down from 6.0% in 2023. But it certainly doesn’t feel that way when you shop for food and other household essentials. Medical and education inflation rates are also higher than general inflation.
Inflation erodes the purchasing power of your money over time, so it’s important to ensure that your investments keep up with or exceed the inflation rate. This is why it’s so important you participate in your annual review every year so we can adjust your debit orders to keep up with inflation. Auto-escalations are not a substitute for a financial review, as your investment goals may change.
Now that we’ve looked at how debit orders create savings discipline and leverage the benefits of both rand-cost averaging and compound interest, you should have a much higher opinion of these oft-criticised banking instruments.
If you haven’t already done so, please come in for a chat about using debit orders to secure your financial future.
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.
© FinDotNews
“Our greatest motivation in life comes from not knowing the future.” (Thomas Frey)
Investing is an exercise in uncertainty. When you make any investment, you are taking a bet on the future.
This can be a hard thing to do. Markets move up and down, economies shift, and geopolitics can make everything feel unhinged.
At least, that’s how it feels in the moment. At any given time, there’s always something to worry about.
Yet, when we look back, things can seem very different. For example, if you’d been invested in global stock markets over the past 15 years, you would have done incredibly well. From today’s vantage point, it’s easy to say you made a great investment that has gone up in pretty much a straight line.
But, in reality, there were plenty of moments along that journey when things would have felt unbearably uncertain – after all, this period includes a global pandemic, wars in Europe and the Middle East, and five instances where the market fell more than 20%.
Given how things have turned out, it’s easy to forget now the kind of anxiety those events caused at the time. After all, we now know that none of them permanently disrupted the upward trajectory of the market. As finance writer Morgan Housel points out, we don’t feel that stress, because we know how the story ends.
But for anyone navigating today’s market turbulence, uncertainty is all too real. South African investors have been watching global markets react sharply to every comment from the new American president, and even what he says about South Africa. This is hard to stomach, because we don’t know how things will turn out.
We have to, as Housel puts it, “manage the psychology of uncertainty”. Because, to some extent, all investors have to accept an unknowable future. The best we can do is look at what has happened in the past.
And what the past tells us is that the real challenge for investors is not just making good investment decisions, but managing the emotions that come with them. Those who are able to sit out the difficult times, stay invested, and let compounding work in their favour over time have always reaped the rewards.
With that in mind, here are some practical strategies to help investors navigate uncertainty without falling into emotional traps.
Market uncertainty isn’t a temporary phase – it’s a permanent feature of investing. There will always be reasons to worry, whether it’s interest rate changes, economic downturns, or political developments. The key is to recognise that uncertainty does not mean doom. Markets have historically rewarded long-term investors who stay the course despite short-term fears.
Short-term market movements can feel overwhelming, but they are often just background noise in the overall symphony. Looking at a long-term market chart shows a steady upward trend, despite numerous corrections and bear markets. If you’re investing for retirement or wealth accumulation over decades, what happens over the next six months is far less important than your overall strategy.
In an age of instant news and social media, it’s easy to get caught up in every market-moving headline. However, reacting to daily news cycles can lead to poor decision-making. Instead of following every fluctuation, focus on the fundamental reasons you invested in the first place.
A practical step is to limit how often you check your portfolio. The more often you look, the more volatility you will see.
Markets moving up and down over short periods of time may feel disorienting, but it isn’t risk. The only real risk you face is not meeting your investment goals over time. Remind yourself that downturns are a normal part of market cycles, and of investing. Historically, markets have always rebounded.
Investing can be overwhelming, especially during periods of heightened uncertainty. A financial advisor can provide an objective perspective and help you stay aligned with your long-term goals. If you find yourself second-guessing your investments frequently, consulting a professional can give you peace of mind.
Uncertainty is an unavoidable part of investing, but it doesn’t have to be a source of anxiety. By accepting that uncertainty is normal, maintaining a long-term focus, and using disciplined strategies, South African investors can navigate volatile markets with confidence. The key is not to predict the future, but to prepare for it – and to stay the course despite the inevitable ups and downs.
If you have absolutely any questions about your investment portfolio, please give us a call.
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.
© FinDotNews
“I’ll tax the street, I’ll tax your seat, I’ll tax the heat, I’ll tax your feet.” (Adapted from Taxman by The Beatles)
Following a worldwide trend, South African authorities introduced CGT in 2001 to broaden the tax base. Before CGT was introduced, salaried employees shouldered the vast majority of the country’s tax burden, a situation that was clearly unfair. CGT also ensures that affluent citizens who buy and sell assets should pay more tax – as it should be in a country like South Africa.
CGT is just one component of your income tax. When you sell an investment, 40% of the profit is added to your income and taxed at your marginal tax rate. CGT applies to shares, unit trusts, property, crypto currency and the sale of privately-owned businesses.
The only surefire way to avoid paying CGT is by investing in retirement funds (RAs, provident funds, pension funds or tax-free savings accounts) as these don’t attract CGT. It’s impossible to avoid CGT by hanging onto an investment because when you die, the law deems your investments sold, and CGT kicks in.
Thankfully there are! Some big exemptions include:
If you sell a home that’s jointly owned, both parties must declare the total gain to SARS. Both the profit and the primary residence exclusion will then be split. Both parties will also be able to utilise their individual annual exclusion of R40 000.
The primary residence exclusion of R2 million doesn’t apply to ordinary trusts but it can apply to special trusts (for example, for a person with a disability).
If you trade in forex, cryptocurrency, shares or property with the intention of making a short-term profit, your profits are seen as income and taxed at your marginal rate (generally higher than CGT).
If you sell an investment at a loss, you can’t write this off against your income. You can, however, use the loss to reduce how much CGT is payable. This loss can also roll over to subsequent tax years.
The only way around CGT is to invest in retirement funds because you are deemed to have sold any investments held when you die. After death, there’s a R300 000 exemption on CGT.
All information was correct at the time of writing but some of the finer details may change after the budget speech is (presumably) delivered on 12 March.
While capital gains tax (CGT) can seem very unfair, why not look at it from another angle? At least it means you’re improving your financial situation year-on-year – which is not something many South Africans can say.
Of course, minimising tax is integral to financial planning, but you should never avoid selling an investment because you’re wary of CGT. We’d advise investing in retirement funds, holding other investments for the long term, and always working closely with us.
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.
© FinDotNews
Europe and South Africa have turned the tables on the US stock market, outperforming them in February and year-to-date due to signs of a slowing US economy, trade policy uncertainty and a rotation out of tech stocks. Trump-related investor optimism has dissipated, leaving the US stock market in the red since he took office.
While the STOXX Europe 600 has achieved an impressive 8.82% gain, and South Africa’s JSE All Share Index is nearly 4% ahead year-to-date (despite the budget speech postponement), the S&P 500 has managed to deliver a paltry 2% increase, with the index having lost all post-inauguration gains since Trump took office.
Several key US-specific factors point to why this may be happening:
In South Africa, investors shrugged off the short-term financial market sell-off in response to the unprecedented delay in the government’s annual Budget Speech, after the DA refused to sign off a proposed VAT increase. The All Share Index fell 0.8% on the day, and the rand weakened 0.9% to R18.57 to the dollar. However, analysts interpreted the events as evidence that the GNU coalition is working and markets have since recovered the lost ground, with the All Share Index almost 4% ahead year to date and the rand trading back at R18.47 to the dollar at the time of writing.
SA equities are presenting compelling valuations, which Rezco CEO Simon Sylvester describes as “offering better value than Nenegate, at a better than Ramaphoria opportunity with lower political risk.” The mining sector has rallied on higher precious metal prices, with gold approaching a landmark $3,000, after breaking record after record.
Despite all the global uncertainty and Trump’s disruptive macroeconomic and geopolitical decisions, market analysts generally believe the fundamental case for global equities remains intact. However, the performance divergence between regions may persist in the near term.
If you have any further questions about how all of this affects your investment portfolio, please give us a ring.
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.
© FinDotNews
“Focussing is about saying no.” (Steve Jobs)
In simple terms, there are only two reasons to invest:
Investors who understand these goals also understand why fear of missing out (FOMO) gets in the way of a good investment strategy. In both cases, what matters is achieving consistent growth over time, not quick wins.
The problem with FOMO is that it encourages exactly the opposite – chasing trends and new ideas in the hope of a short-term windfall.
FOMO is rooted in the human impulse to compare ourselves to others. When we see friends or family making quick profits, we want a slice of the action. This can lead to impulsive decisions such as:
One of the most misleading aspects of FOMO is that those talking up an idea rarely share the full picture of their investments. They may boast about being invested in a particular stock that doubled in value, but forget to mention how much of their portfolio was actually invested in it.
For example, your buddy might claim they made a 100% return on a hot investment – but if that investment only made up 2% of their overall portfolio, the impact on their total wealth is minimal. This selective storytelling can give others a distorted view of the potential returns and risks involved.
This highlights the importance of diversification and managing risk. It’s crucial to remember that successful investing isn’t about finding one magical investment, but rather building a balanced portfolio that grows steadily over time.
To keep FOMO out of your investment strategy, consider these practical steps:
The source of FOMO is always seeing or hearing some recent success story. It’s human nature to want to participate in something that’s going well.
But the reality is that it’s almost impossible to rescue a failing investment plan with a high-stakes gamble. What definitely does work, however, is being an investor who sticks to a well-constructed financial plan for achieving financial independence steadily and sustainably.
To discuss your investment portfolio, speak to us.
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.
© FinDotNews
“A life of luxury sounds nice, but generational wealth sounds better.” (Unknown)
As the old adage goes: “The first generation creates wealth, the second generation preserves wealth, and the third generation squanders it!” Our goal is to prevent this.
If you’re fortunate enough to have created generational wealth, it’s extremely important that your heirs know about your hopes for the future use of your wealth. The conversation doesn’t need to feel as if you’re walking on eggshells. In fact, these chats can actually be fantastic opportunities to strengthen family connections, protect your money value system, honour the creation of wealth and pave the way forward for your family’s future financial security.
Your heirs must know where you’ve filed your Last Will and Testament, Power of Attorney, and Living Will. (Your doctor should also have the latter on file.) Deceased estates can take a long time to finalise, so make a plan for your family to have access to funds in the interim – life policies, family trusts, and separate bank accounts are common recommendations.
Turning tough talks into lasting legacies doesn’t have to involve developing a family constitution. You could choose to have ongoing family meetings without any documentation. The principles could be included in your letter of wishes. But family constitutions can help to formalise your hopes regarding the wealth you have created.
If you decide to document your wishes, a family constitution should ideally outline the principles, roles, and guidelines for managing and passing down family assets. It’s all about providing a harmonious script to avoid the breakdown of family relationships.
Some of the recommended elements include:
Developing a family constitution (or even just discussing your legacy plan) often starts with a group meeting with your advisor and a facilitator, a professional who is skilled in managing group dynamics and ensuring everyone’s voice is heard. The facilitator helps to smooth the way ahead and ensures that the conversation is productive. You may wish to share your Last Will and Testament at this meeting. The conversation should open the door for everyone and preferably be held in a ‘safe place’, such as a home rather than a boardroom.
After signing a confidentiality agreement, the facilitator could host individual meetings with heirs. Heirs may wish to express concerns about their inheritance confidentially, which they prefer not to share with the whole family. The facilitator could then draft a report to be shared with the wealth founder.
All the conversations should preferably balance the heart and the head and acknowledge emotions with empathy.
Remember to start the process early so that the constitution can be changed annually according to changes in circumstances. These may include revised priorities, the voices of additional heirs, changes in wealth, businesses, or family dynamics. Early planning is key to staying ahead and being prepared for any changes.
The process works very well if it reflects everyone’s voice. Working together collaboratively ensures the document is respected and relevant, fostering a sense of unity and shared purpose within the family.
As your financial advisors, we can start the process and consult with the facilitator. We can also broach the topic with your heirs if you prefer not to be the first to bring it up.
Remember: when families steer the ship together, they strengthen the ties that bind and create legacies worth celebrating.
Contact us if you want us to assist you and your family in preserving generational wealth.
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.
© FinDotNews
“A big lesson in life is never to be scared of anyone or anything”. (Frank Sinatra)
If you were born between 1946 and 1964, you are part of the Baby Boomer generation. This generation is known to be flexible and robust, having lived through many bulls and bears over the decades.
Whether you’re contemplating retirement or already ticking off your bucket list, here’s what you need to know about managing your money to make the most of life.
As mentioned in our previous Evolving Wealth articles, it’s not safe to generalise about an entire generation. Baby Boomers are often split into two different groups with some shared traits:
Retirement can stretch for decades these days, making planning beyond traditional company pensions essential. We highly recommend that Baby Boomers continue to work for as long as possible to accommodate rising healthcare costs and general living costs.
Here are some other savvy moves for Baby Boomers to make:
You’ve spent your life working hard and thinking out of the box, and retirement should be no different. With careful planning, the years ahead can be some of your most rewarding. Ready to take charge? Please get in touch with us if you’re a Baby Boomer and want to discuss any of the above.
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.
© FinDotNews
Retirement Annuities (RAs) offer significant tax breaks as contributions to the investments are tax-deductible, and the growth within the funds is tax-free.
You can contribute a maximum of 27.5% of your taxable income to retirement funding each year, up to a maximum of R350,000.
The other bonus is that Regulation 28 now allows more funds to be invested offshore, which assists in geographical diversification and lowers the risk inherent in your RA.
Tax-Free Savings Accounts (TFSAs) offer another tax break. You can contribute R36,000 annually with a lifetime limit of R500,000. The contributions are not tax-deductible but similar to RAs, the growth within the fund is tax-free.
The funds within TFSAs are not governed by Regulation 28, and the total amount can be allocated offshore.
Please don’t wait until the end of the month to arrange your top-ups! There’s a bit of admin involved on our side, and we don’t want you to miss out.
If you have any questions about tax efficiency, please drop us a line.
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.
© FinDotNews
January has been a volatile month for global and SA equities. Stock markets experienced a “Trump bump” after his inauguration on January 20, driven by expectations of market-friendly policies. However, equities retreated to end the month with modest gains as investors weighed tariff uncertainties, shifting interest rate expectations, and growing concerns about the sustainability of the technology sector’s remarkable run.
So, what can investors expect?
While none of the 20 executive orders signed on Inauguration Day addressed trade tariffs, they remain a potent tool in Trump’s arsenal, with potentially far-reaching implications for the global economy and financial markets.
UBS Global Wealth Management’s base case scenario envisions China’s effective tariff rate rising from 11% to 30%, alongside measures to protect technological interests and new tariffs on European automobiles. The administration’s threats of 25% tariffs on Canada and Mexico are primarily viewed as negotiating tactics in an “escalate to de-escalate” strategy.
Under this scenario, UBS projects the 10-year Treasury yield would decline to 4.0%, while US and Asia ex-Japan equities could rally approximately 10%. However, a more aggressive tariff policy could trigger severe market reactions, potentially pushing the 10-year Treasury yield to 5.0% and causing US equities to decline by 15%, with European and emerging market stocks falling by as much as 20%.
Strong US economic indicators and the potential inflationary impact of tariffs are likely to result in fewer Federal Reserve interest rate cuts than initially anticipated. Current market pricing suggests only two 25-basis-point reductions this year. As US rates traditionally set the global benchmark for fixed-interest investments, these decisions will influence central banks worldwide, including the SA Reserve Bank. While Trump has signalled his intent to pressure the Fed for rate cuts, he will struggle to do so given the central bank’s legal independence.
The vulnerability of the US technology sector’s market dominance was highlighted in the last days of January when Chinese AI company DeepSeek emerged as a serious competitor, triggering the Nasdaq’s most significant single-day decline since September 2022.
Investor concerns about the sustainability of the AI-tech rally have been gaining ground despite the Magnificent 7s impressive 63% share price performance in 2024 after surging 75% in 2023. Questions persist about how these companies will turn their massive AI investments into concrete profits.
DeepSeek’s recent success in capturing US market share is particularly notable given that it spent just $5.6 million on its base model and has achieved overwhelmingly positive Silicon Valley reviews. This despite using less sophisticated technology due to US restrictions on China’s access to advanced semiconductor chips.
Though many of Trump’s economic policies are seen to be market-friendly, the first month of the year has shown that it is going to be more complicated than that. Investors would be wise to maintain diversified portfolios that can withstand potential geopolitical developments, particularly in US-China relations and their impact on global trade and technology leadership.
If you have any further questions about how all of this affects your investment portfolio, please give us a ring.
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.
© FinDotNews
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Physical Address:
73 Kariba St, Lynnwood Glen, Pretoria, 0081
Telephone:
+ 27 12 348 1386
Fax:
+ 27 12 348 3706
Email:
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