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Covid-19 and the ripple effects

If we could turn back time…

And then the world turned upside down – overnight. I had a dentist appointment this morning, and with a permit, I was allowed to go there. Driving on the highway I was very impressed with the processes our SAPS is taking – every single car is stopped; ID and permit are required – and then you are allowed to continue… For a moment my heart stopped. This is where we are now…

Empty streets and coffee shops, social distancing and faces covered in masks in your everyday supermarket, close friends not being able to greet properly. Hearing from one industry to the next how everyone is hurting. For the first time in many years – we have met a great equaliser. It doesn’t matter if you work in finance, medicine, the tourism industry or education, or if you are a photographer or a singer – everyone got hit, badly.

What I find very interesting in the past few weeks, is the change in behaviour if a real crisis hits. People are running around and panicking to ensure they’re affairs are in order. Updating wills, ensuring your income protection is in place. Do I have enough life cover if something should happen to me? Will my family be taken care of?

The markets had a significant reaction to the virus – and I believe we will still feel the aftershock of the economy as soon as everything goes “back to normal” – or whatever the new normal will be after this. Once again – it took a world pandemic for people to review their investment portfolios – only to realise that they have not been invested in suitable funds even before the crisis. That there was no sufficient retirement planning in place, and no emergency funds to assist during this time.

Will a global crisis be what is needed to get everyone to become responsible in planning for their futures? Is this not exactly what we are planning for in many scenarios? Knowing you have done everything you can  – even if things go wrong.

  1. Do you have an updated will in place? Yes – there is never a “good” time to make time for this.
  2. Are you sure you have the appropriate risk cover in place – not just to protect yourself, but your family as well?
    • Life cover to ensure all debt is covered, and after that – to ensure your family is taken care of should something ever happen to you. Especially if you are the sole income provider.
    • Income protection – this will protect you temporarily or permanently, should illness or disability be the reason that you can not work anymore. This product replaces your income until retirement. Different product providers provide different, more comprehensive benefits, but are an invaluable product to have in place. Together with this, you can also structure capital/lumpsum disability cover ensuring you receive additional funding at permanent disability – any changes needed to a home or lifestyle.
    • Severe illness benefit – Ensuring you have additional capital in a time of crisis – when you might still be able to work, but the effects of a virus, heart attack or maybe cancer is impacting your life, and your family significantly.
    • Education benefits – Ensuring your children will be taken care of in the case of death, disability or illness.
  3. Do you have the right investment portfolio in place? I find more younger people still having the same mindset of this can wait. I don’t need this. On what information do you base this on? Perhaps a global crisis is good for all of us to just be realistic again – placing instant gratification aside – and just being responsible adults for once.
    • Do you have sufficient retirement planning in place? To replace your current lifestyle and needs? Taking into account inflation (medical inflation counts here as well), life expectancy, travelling and tax implications at retirement?
    • Do you have a well-diversified portfolio in place? Well diversified in terms of asset classes as well as fund managers – protecting you against the different perils in life?
    • Do you have a tax-efficient portfolio in place? And are you optimising the available tax benefits you have?
    • Do you have an emergency fund in place? It is advised to have up to three month’s income saved in a quickly accessible investment.

Every challenge in life brings a great turning point as well. Today I was incredibly proud to be a South African and to see how we are all adapting our lifestyles to fight this. It’s not the first time we have experienced this – with Day Zero approaching two years ago in the Western Cape we experienced how we can take on any challenge when we work together.

I do believe we need to start planning our lives better when it comes to financial responsibility – and maybe it takes a crisis to do just that.

In the words of Baz Luhrmann’s song Wear Sunscreen: “The real troubles in life are apt to be things that never crossed your worried mind. The kind that blindsides you at 4pm. On some idle Tuesday.”

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