MENU
 Registered users can save articles to their personal articles list. Login here or sign up here
 
  84 COMMENTS

  Oooh.......some jealousy here ?...  

 Registered users can save articles to their personal articles list. Login here or sign up here

A blueprint for financial survival

A financial tsunami heading our way… what to do?

In the wake of the credit downgrades by S&P Global Ratings and Fitch, I spent most of the weekend scouring the newspapers and websites that I normally frequent trying to find any worthwhile articles on practical advice for the man-in-the-street on what to do with their investments. 

While there were reams and reams of words written on the downgrade and the macroeconomic impact on the country, I did find very little relating to what Joe and Mary Soap should do, if anything, with their investments.

Read: How Joe and Jane should respond to junk

By and large the odd bits of advice tended to be “don’t panic” and “stay true to your investment plan”, by the spokespeople for the local investment industry. That’s like saying hold on to your beach umbrella in the face of a tsunami bearing down on the bathers on the beach.

For this is a massive financial tsunami bearing down on millions of hard-working South Africans who are only trying to do the best they can. Let’s not beat about the bush.

Listen: A blueprint for financial survival

It is my view — one that I expressed on several radio stations last week — that we are facing a five- to ten-year recessionary period of no or low growth.

The chances are also very good, depending on what happens in the next couple of months when Moody’s – the third of the Apocalypse of the Credit Ratings Agencies Horsemen — reports back on SA’s credit rating, that our financial markets could react violently negative to this news, more than it has up to now.

The outcome of their 30-90 day assessment of South Africa’s financial health is going to be critical and anything government says or does during this period will be carefully scrutinised by Moody’s as well as S&P that also reports back in June.

Equities not always best in the long run 

The investment industry in SA has a historical bias towards equity-based investments and an aversion to cash. The reason for this is not hard to find as the fees earned on equity-linked investments across the board are substantially higher than what can be charged on a cash or cash-type of investment. Over time this bias has worked in favour of investors as the long-term returns on equities have been substantially higher than returns on cash. About that there is no debate.

But returns on cash over the past one, two and even three years now have matched and beaten the returns of the JSE All Share Index. I cannot see the returns of the JSE going forward beating cash unless there is a massive further weakness in the rand exchange rate to the outside world. We have a stock market heavily geared towards rand weakness.

The starting point for any investment recommendation or advice therefore is the risk profile and tolerance to risk of the individual investor. Only the investor and his or her investment advisor will have any idea of what that is. 

I shudder to think what all those DIY- and index-tracking investors are doing right now with their investments. Hell, I need a good investment advisor in these turbulent times, and I do this for a living!

As I stated in my previous Moneyweb column, I am not giving investment advice. Also the Fais Act (Financial Advice and Intermediary Services Act) does not apply to columnists, as some churlish Moneyweb reader seemed to suggest last week. This is an opinion piece (free speech is still protected, by and large) and what you do with it is your business.

 A blueprint for financial survival

Here is what investors need to consider (IMHO) to deal with what is about to hit our financial shores in the next weeks and months:

1.       Sell or dispose of all non-income producing assets such as leisure properties/beach houses/caravan/boats/quad bikes. Anything to do with your ego needs to go. Convert it into cash or reduce your debt.

2.       Carefully calculate the return you are making on those buy-to-let properties you might have. If you are not yielding 6% or more you need to sell, immediately. With bond rates going up and property values declining further — coupled with tenants paying less and less — you could soon find yourself in negative equity.

Negative equity, you may ask? That’s when you owe more than the value of your property to the bank. That’s when the financial storm really starts getting interesting.

And if I am correct and we have a five- to ten-year recession unless the government comes to its senses and pulls us and itself out of this financial kamikaze dive – property prices will decline further in real terms over this period, in some areas drastically so. Local banks are absolutely terrified that SA’s property market moves into such a phase as this will put further risk on banks already under the financial cosh.

3.       Do a full and honest assessment of all your investment portfolios. Personally, I would move all my Regulation 28 investment portfolios 75% into cash and 25% into offshore equity-based asset swaps. This is the best place to have large cash balances as you don’t pay tax on any interest earned. This would include pension/provident funds/ retirement annuities and preservation funds.

4.       If I had a living annuity, which I have, it would also – depending on risk profile – be a combination of cash or offshore investments. Mine is 100% in two asset swaps – MI Plan Global Macro and Counterpoint Global Equity – but hey, that’s me. I am drawing 2.5% but if I was drawing more I would have some local cash in the portfolio to reduce the volatility.

5.       My share portfolio should have the maximum geared towards offshore investments. My preference would be towards offshore companies in sectors we don’t have in SA, such as Google, Tesla, Facebook and Apple, for instance. Local companies without an offshore earnings boost — such as retailers, building companies and transport — will struggle to maintain margins and profitability during recessionary times.

6.       If you were going to buy property, buy it in the Western Cape. The property market needs the benefit of a demographic dividend to drive prices higher. The WC is currently the beneficiary of a massive demographic shift to the Cape, but at some stage that will also start tapering off. 

Read: A modern day Groot Trek

7.       If I had some spare cash that I could put away for more than five years, it would go offshore, even at these levels. Make use of your annual travel allowance or if you have more, apply for the foreign investment allowance of up to R10 million per year, per individual. How long this concession will still be around is anyone’s guess. My guess? Not very long.

8.       If you were worried about valuations on Wall Street, you could opt for a structured product that offers you 100% guarantee of capital. Speak to Investec who have just launched another in their series of capital guaranteed offshore products.

9.       Hold on to your job and postpone your retirement for as long as you can. This is not the time to be changing jobs just because your feelings were hurt by your immediate boss requesting a better performance or higher sales targets from you and everyone else in the company. Any job you go to will have the same issues.

10. Take up mountain biking or any other sport that reduces stress. Stress levels are about to go sky-high. I have, and it has saved my life.

Magnus Heystek is investment strategist at Brenthurst Wealth. He can be reached at magnus@heystek.co.za.

   84 comments

To comment, you must be registered and logged in.

LOGIN HERE

Don't have an account?
Sign up here

not sure whether I agree with MH on this – BUT then my finances are not facing Armagideon! I would be very wary of buying fixed property anywhere in sa. I’m keeping a close look at atlantic seaboard property waiting for the “Must Sell” signs to go up. the particular one I’m keeping an eye is a Clifton 2 bedroom apartment for R15.5m which is rented for R37,500 per month. that’s a return of 2.9% GROSS! given your interest rates return should be abt 10% with a price of R4.5M. long way to fall – which it will. I use a source for my overseas shares – Motley Fool – who suggest there are THREE shares one must have – APPLE- GOOGLE – EATON. I have the first two – not sure of the last. as regards mr gigaba’s trip to moody’s – all here –
http://www.capetalk.co.za/articles/253398/gigaba-said-he-failed-to-assure-moody-s-about-sa-economic-policy-senior-journo

Ok, Rob – So today the Rand is trading below R13 to the $ – Why don’t you save your sage advice for the the Aussies… See Australia is also starting to close their borders for immigrants – Maybe the government forgot they are all immigrants or ex prisoners? They are like little Trump puppets – Why don’t you give back all your land to the aborigines? You guys cant even decide on a government

Rob’s bitter pill is still stuck in his throat and will be until his death.

I wish you would get off this website, Robert, and mind your Australian affairs. Sad, sad man.

And if 33% of my one big static RA is foreign? If I change the other local asset classes (20% which is property) to cash, then I will be forced to rebalance that 33% back to 25% and I don’t think that is smart… so I guess that advice doesn’t apply to everyone?

Also I’m one of those derided DIY investors. And I don’t see what your issue is with index funds, are you saying the average (those who cannot even take R1 million overseas in their dreams) investors should not buy a cheap S&P 500 rand denominated ETF with their meager funds?

you can take overseas via Interactive Brokers or another entity and buy those offshore shares without be denominated in ZAR.
If you leave it all here the depreciation in the currency negatively impacts CGT for the same instruments.

Too expensive for an average Joe investor like me…

price is low – costs a few rands on the currency conversion rate so doing a 6-month lump sum is better than a monthly, but after that it is around $10 a trade – far lower costs than anything locally offered.

…..2cents here….moved rands to sterling with shyft (Standardbank) and when I arrive in London I will bank it.

Perhaps not the best option but one better than none.

Wow- this is really a shocking doomsday article with dangerous financial advice and implications, especially the ones advising people to touch their Reg 28 retirement policies.

In fact its more like satire. A real shocker- perhaps the Moneyweb editor will now need to resign (like the Huff Post). Magnus are you even a real person- or is that you under there Mr Des Van Rooyen?

In my opinion the best thing to do is nothing- this too shall pass.

NO it won’t

Uhm. Yes it will and it is already passing. How about this…withdraw your Reg.28 pension- pay those huge fees and penalties for early withdrawal and place it in the US or even MSCI world. Whe, as we speak, investors are flocking to developing nations. Why? Cz as bad as things may seem with the uncertaint in SA- things are even more uncertain out there. Why do you think the rand was so steady in the face of our governments stupidity. The wise…do nothing

+TeamPublicHealth

…you don’t get the term “contingencies”. Thats the narrative here….

What is it with you guys ?

Magnus gives sound advice for what is all intents and purposes,an economy on its knees, and yet he still gets flamed ??

‘TeamPublicHealth’, are you a denialist…..or shooting the messenger

???

Sheesh oom Magnus, you are making me depressed so early in the week – I will have to put extra sugar in my morning coffee!

Regardless, some very topical advice that everybody should consider given their unique circumstances

I think one of the questions that needs to be discussed is whether it still makes sense to be investing into RA and pension funds in SA – especially if we face a Zim-type future? Zim pension cheques are worthless…yes, there are big tax savings etc when using pension/RA funds but I agree that we are facing at least a 5-10 year period of low/no growth and increasing social unrest as a result of the Zuma et al induced mess. At worst we might be facing a 30 year+ financial meltdown like our Northern neighbours and for anyone planning to retire in that period, I wonder if it still makes sense to plan to rely on your local pension/RA fund?

Yes it does – The tax saving is significant (reduces marginal and average rate of tax) – Protected against creditors – Large portion of the JSE is Rand hedges – Not really limited to 25% offshore – Ideally I would like to see 100% offshore but this is 2nd prize in terms of asset allocation – To everybody that is so negative on SA – Lets see what happens to the 1st world economies when THEY start raising interest rates – But they cant… because they cant repay their own debt – SA is not the land of milk and honey but do your homework before you invest in other countries = The resistance in Zim is growing against Mugabe – You can only fool people for so long

Well, it is not an all or nothing issue. You should be investing some of your money in your RA, but the rest should be in other vehicles such as a TFSA and possibly an overseas account. Also make sure you invest at least 15% of your income, otherwise you will not be able to retire at 65.

We are not going to turn into Zim. South Africa is completely different to Zim. Always has been, always will be.

Zim has the MAJOR disadvantage of being a landlocked country. That’s why Zim never really developed past farming. We have several sea ports for importing and exporting goods. South Africa is an industrial powerhouse with an even bigger service sector.

Zim is one of the poorest countries in Africa, whilst South Africa is one of the richest. Just because Zim is our neighbor does not mean we have to turn into it.

Fair question; but what is the answer?

We put all our excess(=TAXABLE) interest into RAs and save up to 41% tax. Is this not wise now?

Opportunity rewards those with cash. Everything will be on sale soon. Savers and those with strong balance sheets will finally be rewarded.

Agree but when?

It’s definitely going to get worse before it gets better. A couple of factors to consider:

– A hike in interest rates will be the nail in the coffin for many households.
– Retrenchments in the middle class and those near retirement age is happening en masse right now.
– There is no growth in youth employment. Who will buy your assets in the future when they cant even get on the job ladder?

What a nice horror story for this gloomy Monday morning. I know lots of elderly people who rely on their meagre dividend and interest earnings so that they can eat a few crusts of bread and pay for their cramped shelter. As a good citizen, I think I am going to try and convince as many of them in the interests of the “Anti anti depression group” to slit their wrists or to join a fast track euthanasia group on Facebook as things according to the author of this article will only get worse, after which, I will crusade for #Free funerals for all campaign.

So What would be the alternative advice to follow until such time that Zuma is finally gone and the government has come to its senses?

Not horror story.

Just facts

But ppl prefer to live in lala land

Maybe its a coping mechanism ?

As far as I’am aware as an RSA citizen or permanent resident , you are taxed here on the interest earned on overseas cash accounts .

And? Those overseas accounts in developed economies pay little to no interest…

Indeed, Natwest savings account (in the UK) paying 0.1 to 0.3% interest depending on the amount. More of a depreciation account than a savings account if you ask me.

He means that in RAS pension related all is tax free.

Maybe some withholding tax offshore.

Only a hyper-inflationary scenario can be described as a tsunami.

Huge government debts, like an abnormal outgoing tide, is the sign that a tsunami is imminent. Now in South Africa we have a debt to GDP ratio of 50%. The debt to GDP for the USA and Europe is above 100% and 250% for Japan. Our budget deficit is similar to that of the USA. 90% of local government debt is rand denominated, while China funds American expenses.

The household debt to GDP in South Africa is 34% while the figure for Australia is 123%.
The JSE is the best-regulated exchange in the world and our banking system is of the healthiest. We have got listed companies that are very competitive on the world market.

While the ANC is a criminal organisation and we have a failure of government and a compromised criminal justice system, we are not close to a tsunami situation…..yet. In fact, many countries that are punted as investment destinations are closer to being engulfed by a financial tsunami than what we are. If I was living in the USA, England, Europe or Japan I would be scrambling for the high ground right now……

Very good points. I would also like to add that a failed/inefficient government is not such a bad thing, it keeps the government from breaking the country and gives the private sector a chance to flourish.

Bizarre viewpoint.

I think Chief is right, but only with the strong proviso that the failed/inefficient govt must also be failing to collect taxes.

@GeneDeMurro 3 weeks ago
“I think Chief is right, but only with the strong proviso that the failed/inefficient govt must also be failing to collect taxes”

You nailed it Gene.

100%

Sensei ….

Much as I agree with your figures, comparing first world countries like Australia,USA, Japan with South Africa doesn’t figure. We simply do not have the infrastructure and social support to survive. Hence the Zimbabwe scenario.

This is the issue which is ignored by everyone it seems.

The mighty USA defaulted on it’s debt in 1790, 1933 (devaluation), 1971 (devaluation, Nixon Shock) and some say the USA is in the process of defaulting by devaluation now. After the financial crisis America increased the money supply 4.5 times.

My point is merely this – when inflation takes hold in the first world countries, what effect will it have on us in South Africa and on our international investments? Taking our money overseas is the easy part. Protecting it from inflation and bank bail-ins overseas is the hard part. I don’t lie awake about South African politics, South Africa has been “lion country” for ever. What worries me is the very real danger of my foreign investments being the casualty of a bail-in at some American investment bank.

Yes the debt GDP ratio is higher in developed countries but their interest rates are lower. Debt servicing costs to total budget would be interesting stats. yes our banking services are healthy but when the adviser of the Minister of Finance recommend nationalising the banks we should be worried.

Wow – looking thru rose coloured glasses – or maybe not looking at all. 1stly inflation in western countries is zilch zero nil! Various reasons for this but since GFC money created has gone into massive capital value growth. You need to read & understand the reasons for being junked to really appreciate the situation. The rating agencies are worried about the country’s debt AND govt guarantees.

You forget our interest rates are 3-4 times theirs? Which means our north-of-50% debt/GDP calibrated for comparison is north of 150-200%

Magnus Heystek, lexicon of Moneyweb doom and gloom, what are you doing now you incorrigible old pessimist? Selling mountain bikes to Joe and Mary?

No, he is driving around in his cool new Ferrari.

He probably drives an early eighties Ford Cortina.

@profitfromwhom

MoneyChief 1 profitfromwhom 0

(MH won a cool new Ferrari a couple of months ago…)

Sold my quadbike – Got R40 000. Went to buy a Mountain Bike – R60 000. Still have stress.

Did you try riding the bike?

The above course of action seems reasonable, and in line with my own expectations. I have been predicting a large sell-off in global equities for the past 18 months — I have been wrong so far. But equity values are now stretched even further. I have holdings in Microsoft and Facebook (I sold out of Apple recently), as well as in three preferred share ETFs (PGX, PFF and PSK) yielding around 5% after expenses and US withholding taxes. In addition, I am holding 63% of my investible assets in cash with the expectation of a large equity price decline. I expect the S&P to fall to 1,422 (currently 2,349), at which stage I plan to invest that cash. The only rand hedge that I have is a game farm near Phalaborwa which I will keep in case the rand strengthens any further. But I will keep the rest of my assets in the USA or the UAE where I live in line with the recommendations that Magnus highlights above. Bye from Abu Dhabi.

what about capital growth – those pref.stocks and cash aren’t going up over the long run, so do you have enough equities to offset inflation in global markets?

YES, but at least I get to sleep well at night instead of worrying about my equity exposure. Besides, I have 37% in Microsoft and Facebook and preferred shares. I keep my market exposure in line with my comfort levels, rather than being overly concerned about the ideal asset allocation. A large capital base makes this possible, instead of relying on equity appreciation to meet my retirement goals. The benefits of working in a tax free environment I suppose.

1422! No chance.

Let’s see. My calculations are based on the level of S&P earnings as of August 2015, admittedly a little out of date. But for the S&P to revert to its mean level of earnings, or at least to the level at which I am comfortable going back into the market based on historical P/E levels, it requires a drop of 39% from where it is now, something that is definitely possible given current extended asset valuations. Charles ARNESTAD CA(SA), CFA.

@Charles, give us a timeline for your 1422 expectation? My guess is that you will continue to be wrong as you have been for the last 18months….although i hope you are right as I am largely in cash.

Well so far you appear to have missed out on the biggest property boom in various cities around the world that has ever been recorded, the trump boom over past 6 months – to mention just two. Not bad for a CFA plying his trade in a country that he will never be a citizen of! My suggestion get yourself citizen ship of a 1st world country & buy yrself a home there. That’s what everyone did when I was working in the Middle East many years ago

@charlesarnestad. I hope that you bought the Microsoft and Facebook shares long ago and not recently. Both those shares are now trading at a P/E of 32 and a price that is more than 7 times book value. I am a layman, so maybe they are priced fairly, wouldn’t know. In your shoes, I would at least be a little concerned.

I’ll take advise from someone who chooses to live in Nebraska, but the UAE? Ugh. This is moneyweb, but surely there’s got to be more to life…

I am sorry to point this out in the forum… These Downgrades are merely a political party’s downgrade….. Relax everybody the markets are doing their own thing, the Rand is not hearing the noise. Shouldn’t it be 20 to the Dollar by now… We wake up and it is below 13, yet Ramaphosa is “dissing” Zuma and his “other camp”… Be still, let things unfold, let the chips fall as they may. The market knows best.

Were you around the last time we were junk status in 1999? Remember interest rates of 20% plus?

The last time junk status was mentioned for SA was by S & P in 1999/2000 which hardly affected our economy and the other ratings companies did not downgrade the country. Prior to that we had a debt standstill in the early ’80’s
There is just too much noise around this junk status issue, it is a clear message to the government to let them know that politically they are running the country into the ground and are at risk of being force to borrow from the IMF and put them in a worse situation.
Also many people talk about off shore funds if you are invested in a local fund which has secured off shore instruments then your funds are not off shore – you can’t ask the investment company to convert your portion in a foreign currency – the initial funds are Rand denominated and as such must flow back into the country. The only real way to have funds off shore is where you open a broker account in a foreign country and physically move funds ex SA via the exchange mechanism. If you think finding a astute investment advisor is a mission have fun trying to find an astute and “trustworthy” foreign advisor – they all seem to be driven by revenue they can derive for themselves.
If anybody has funds invested with a broker in London whom you consider trustworthy and have invested with them then please publish their company names
My considered opinion is that this will be less of an event compared to 2007/2008 as all the major countries in the world have their own set of problems they are facing from Trump to Brexit to Germany, Japan, France

@grahamcr – Hargreaves Lansdown (UK Based). They have a wide selection of funds and stocks including ETFs. They have been around for a very long time.

MC – thanks for the heads up

MC – just read an article in The Telegraph the article byline is “Why investors should leave Hargreaves Lansdown” – you may wish to read the article but it attacks them on their charges

This junk status thing blows my mind a little. What were those subprime mortgages rated again? Why are we all fellating these agencies?

I get that there’s rules in other people’s investment portfolios and whatnot, but the media and public need to stop giving us the sense that our future and fortune depends on what some suit in the U.S. thinks our debt is worth.

They should clean their own house as far as I’m concerned.

I’m excited by the opportunities that are starting to present themselves – some JSE shares getting reverting back to the norm, ie retailers, commodities. Banks still interesting but with lots of downside risk.
Offshore looking ok with strengthening Rand – scary valuations still in the US, but if you aren’t diversified then obviously important to get cash out of SA.

Yields on bonds and interest rate instruments are great in SA – in fact anything where we can take the other side of people previously overgearing is looking good – property outside of CT, second properties, loans, cash instruments, all giving very nice yields and potential. So I see a lot of opportunity because of cash to be deployed…

“Take up mountain biking or any other sport that reduces stress. Stress levels are about to go sky-high. I have, and it has saved my life.” But make sure you have an excellent medical aid cover for when you crash your bike.

We have been in cash and bonds for over a year now and at 8% returns are happily beating the Top 40 ..

Now we know why?…”Flying high: Weed in the workplace, MW 22 April 2017″, even the courts new what was coming for opening this backdoor…(puf)…ya’man…(puf)…uuugh…ain’t that bad.

All we get is a blue picture with a gear on it. Where is the picture of Magnus looking depressed?

I have been working with South African advisers and their clients for many years, recommending diversification into global markets as both a Rand hedge, as well as to obtain access to global markets, quality international equity stocks and actively managed portfolios. Our firm is based offshore (Jersey / Guernsey), holds a FSB Cat One licence, is an independent LSE listed business, manages over £9.3bn for our investors and offers true offshore managed portfolios from $25k or currency equivalent. Diversification of investments is a fundamental requirement, and investing offshore is simply a component of that strategy. I expect that any professional independent financial adviser can provide you with guidance in this regard… SA residents can invest ZAR10m p.a. offshore under the specific excon allowance – well worth using this opportunity!

OF your 10 points, number one is the most important. I have lived through 6% interest rates and I have lived through 26% interest rates. The common denominator is that it is your debt that will sink you. The most sage advise now is to annihilate your debt, especially unsecured debt. You shouldn’t have unsecured debt anyway, but if you do, now is a good time to eradicate it. When interest rates start to ramp up and inflation really starts to bite you will thank yourself for it. Also make sure you have an emergency account for those unexpected expenses. You don’t want to have to take out a loan at a 20%+ interest rate to cover some medical bills or whatever.

Most people will rather tinker with their investments and ignore their debt as it is the hard one to do. Smashing your debt will have a far greater impact on your financial survival than fiddling with your investments.

My view, for what is worth!
Magnus, I always followed and enjoyed most of your articles and advice. I share your FAIS Act comments…in this case I might differ on a couple of points in your article with regards to the USD/Rand exchange by comparing it to Brazil, that also received Junk status, and as it has always been a benchmark for taking views on trading in ‘’emerging markets’’, together with the Rand.
The USD/BRL 2-year historical graph (on Google) confirms the weakening of the Brazilian Real from around 3 to the US$, pre-downgrading, to a high of approximately 4.15 to the US $. Thereafter the BRL started strengthening to USD/BRL 3.1500 currently.
I have repeatedly mentioned my USD/Rand longer term views on Moneyweb’s blog and said that I don’t see any further weakening from the highs of 16.50 in the beginning of last year. My predictions were that the USD/Rand with trade between 12.50 and 13.00 by 2016year end (it got very close!), especially the Fund-managers (Google trained foreign currency traders!), that hit all the Dollar/Rand offers in their quest to invest the 25 % offshore!
I based my view on the fact that I learned during my 40 years plus dealing/Treasury involvement that, the’’ market is never wrong’’ – the market always buys the rumour and sells the fact (this is what is happening lately). Most of the hot money invested here by a plethora of investors for many different reasons (both short-and long-term) got spoofed and starting disinvesting. Many of the longer-term investors must have lost a lot of money as the monthly median Dollar/Rand exchange, over the last 10 years, is approximately 9.6500, as the fund managers saw what was coming well in advance (hedge funds – pension funds are not allowed in terms of their mandate to invest in junk status), hence the disinvestment statistics that confirmed this over time.
Moody’s always seems to follow the other two big ones, and if we don’t get rid of JZ 783 soon – the worst possible Junk for us in the shorter term could happen, in a case where the big 3 downgrade all our debt (both foreign and local), to Junk status.

Brazil has a much higher percentage of government and corporate debt denominated in foreign currency, than the South African Government, making their debt dynamics more difficult than South Africa’s. Hence a USD/BRL currency depreciation for Brazil should be much worse for them than for South Africa, after a full scale downgrading by the big three.
I have also always believed that South Africa, after many years of economic sanctions, should rather have followed the Far Eastern economic and exchange rate policies by allowing our exchange rate to weaken to stimulate and enhance a ‘’commodity led’’ export recovery, as it is not too inflated away.
Which begs my question Magnus, what can current pensioners do with our investments already ‘’cast in stone’’?
I think JZ 783, will eventually make like ‘’Donald and Duck’’ – the ANC will get its house in order – and we will continue watching the DA doing what they are dong best, ‘’bitch and complain’’!
The Rand methinks will range, rather than trending against most major currencies, between 12and 14 against the US$.

Isn’t standard financial advice, based on innumerable studies across countries over the past 100 years or so, that equities represent the best way of beating inflation (and CASH) over the long-term (5-10 years)? Is the move from equities to cash based on evidence? Don’t studies show that missing the 10 best days in the equity markets over a decade massively reduces your returns? Don’t the JSE Top 40 companies (and hence Index Trackers like Ashburton Top 40, Satrix 40 and Satrix Indi etc) earn something like 75% of their income outside of South Africa? Did Warren Buffett not say “be fearful when others are greedy and greedy when others are fearful”? Is this article not simply an expression of extreme fear? Does moving money around not reduce your returns via CGT & transaction costs?

I’d advocate the one major item missing from this list is gold bullion – I’ve been investing for some time, and as is described in this latest quarterly report from SA Bullion – it provides great ‘optionality’ – which I firmly believe is a crucial quality to have in mind during these uncertain times. At under ZAR13/$ – I’d think dollar denominated gold is a no brainer… http://sabullion.co.za/magazine/the-sa-bullion-gold-report-first-quarter-2017/

Gold has a terrible long term track record and it is known as an unproductive asset. It does not produce anything. It makes no sense to “invest” in it whatsoever. Oh, and if the apocalypse hits, people are not going to want gold, they are going to want food, water and petrol.

Have to agree with MoneyChief. And the gold coins in your safe are probably not insurable, or very expensive to insure. And will be the second thing that the burglars take from it.

Perfect thread for a bitcoin update. Its tax free, the illegitimate government doesn’t know where your money is, usage skyrocketing from China to Japan, no banks, no fees, decentralized, massive money in fin tech around the world chasing it. I find South Africans are naive with regards to how big the world is. Stop planning your life savings around illegitimate governments that come and go, tax or regulations that constantly change with the intent to screw you over. Start being a global citizen, and therefore a global investor.

More info please…………..I am one of those naive ones.

How to become a global investor?

I trade from SA platform – ICE3X, – great support and info and local.
nice info site on BC is 99bitcoins.com, full of useful info on BC to learn more, use him a lot.

Check out Luno.com, based here in Cape Town, they also have a great app. I move money around the world off my Iphone.

Paratac if you are not into online porn you won’t understand cripto-currencies for it is the same basically. You can look at it and it goes up and down but you can’t touch it, talk to it or have a relationship with it. You can fica whenever you want to, but you don’t have to.
When you shut your computer down it is gone, so no hugging, nagging or monthly costs, plus you can get rid of it without having to part with half of your assets. Nobody knows that you have it unless you tell them, almost like std’s.

Agree, its as if BC is still refer to as a fab that’s going to go away, believe crypto currencies will be the future of money.

Can put a bit in crypto currencies, but for now everyone is holding for the price to go up, so for me it is still speculative.

Also, 98.5% of the trade in the market is from Chinese speculators so I’d be weary. In terms of any regulation in China it is going to hit Bitcoin hard. Happy to lose out on some speculative gains until then.

I agree with some of Magnus’s advice (and it is indeed advice by any other name). Paying off debt as soon as possible is a good thing to do in any situation. Holding on to your job is another. Moving everything to cash, is not! Move offshore and increase cash exposure, but not as drastic as suggested.
And perhaps Moneyweb could finally answer the million dollar question: what to do with RA/Pension fund contributions?

When advisers get paid for the financial plans they produce and no longer get fees for the products they peddle many of them will be changing jobs.

LATEST CURRENCIES  

ZAR / USD
ZAR / GBP
ZAR / Euro

Podcasts

MONEYWEB NEWSLETTERS

Subscribe to our mailing list

* indicates required
Moneyweb newsletters
GO TO SHOP CART

Follow us:

Search Articles:Advanced Search
Click a Company:
server: 172.17.0.2