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Sars isn’t the only one that can tax you

Take a look in the mirror.
Image: David Weaver

South Africans “taxed” themselves out of R100 million in investment returns as a result of fears around Covid-19.

 In his previous budget speech, Minister Mboweni mentioned a host of different taxes that the revenue man would soon be collecting from us. From personal income tax, to fuel taxes, corporate and carbon taxes – the list was long. But one tax he didn’t mention – and to his credit it is not an official tax (but I would argue it should be) – is behaviour tax.

The term, coined by our Momentum Investments Behavioural Science team, refers to the long lasting – and potentially very damaging – toll that our emotionally charged decisions have on our finances. In the investment world, as an example, investors who become fearful and hastily switch funds because markets are falling tend to “tax” their own investment returns. Research has shown that these investors never earn what they would have if they had remained calm, stuck to their plan and stayed invested.

The team, together with behavioural science experts at Oxford Risk, have done several pieces of in-depth research to understand how emotions like fear and greed impact our investment behaviour over time.

They recently looked at investor decisions as a result of the onset of Covid-19 which is a perfect example of a very scary and uncertain time for people. About R100 million was lost and 6.5% of investment value was destroyed on average because of investors switching to lower-risk investments in reaction to Covid-19-related market volatility between April and December 2020. As a result, many South African investors’ savings and investment strategies suffered significant setbacks that they could have avoided.

These fear-based decisions are rooted in the stress chemical, cortisol. Our emotions become amplified when the survival of our family, the happiness of our loved ones and our personal futures are in question. It’s therefore easy to see why emotions are inextricably linked to our personal finances.

But as creatures ruled by these innate feelings, are we powerless to override this truth and change these behavioural biases? Luckily, the answer is no. And the ultimate goal is to use this research to help South Africans avoid the negative implications that cost them in the form of a behaviour tax. After all, we can’t be financially successful if our actions are adding to an already long list of taxes we need to pay. 

What can you do? Have a look at the Money Heroes videos on the Momentum website, where we speak about all things money and finance, and we very often reiterate the importance of building and engraining good financial habits. When it comes to our money behaviour and the neuroscience behind it, these are some of the emotions to be aware of and good habits to cultivate around them:


Emotion Steps to take
Fear or nervousness Take a deep breath. Try to visualise what it is you are afraid of and then write it down. Very often, “fear” in behavioural science is also linked to “loss aversion”. Ask yourself, “What am I afraid of losing?” Then write down possible solutions or actions you could take and set up some time to speak to your financial adviser about the pros and cons of each one before deciding.


Jealousy or envy Jealousy (or envy) is probably an emotion that we don’t like to admit that we are feeling. But think about that urge you get when scrolling through social media and everyone seems to be going on fancy weekends away, trying new restaurants or buying new clothes or shoes. Before you make an impromptu purchase, think carefully about whether it’s a want or a need. If you closed your phone and checked back in next week would it be a train smash if you haven’t bought this item? If not, it’s probably not necessary.


Greed Greed is a powerful emotion and links to the commanding hormone, dopamine. In humans and animals, even the expectation or desire of something can release dopamine. Again, you need to take a step back before taking any action. Use awareness and mindfulness to write down what you are feeling, where you are feeling it and what the compulsion is willing you to do. Once you have unpacked this you should have a better sense of whether you want to do this out of greed. And if you are still unsure, this is when you need to consult your financial adviser.


Being able to pinpoint the exact emotion may take some work and self-awareness. But even just being aware that there are indeed underlying feelings that drive our financial choices is a step toward avoiding damaging decisions. Just as you may practice mindfulness in your everyday life, bring it in to your finances. Take a deep breath, sleep on it and review the choices in the clarity of a new day or ask your adviser to guide you.

Jeanette Marais, Deputy CEO of Momentum Metropolitan Holdings and CEO of Momentum Investments


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What nonsense, and from the CEO of Momentum Investments nogal.

You can’t lose or destroy investment value by changing your asset mix, you can only transfer it to others. It’s a zero sum game. If some people lost, it means others benefited.

Really Momentum? Last year’s flash crash during March was just a taste of what will come. A contrarian approach has served me well over the years. Be fearful when others are greedy (like now) and be greedy when others are fearful. Will you belief this behavior nonsense when the asset bubbles burst and do not recover like before. When 50%+ of investors’ life time savings get destroyed Watch and learn! We are at the end of a secular bull market and everything seems fine, like it was in 2007 just before the housing market crash. This time it will by much worse! Investors must do their own homework.

An advertorial just repacking well known studies into behavioral economics and these are not new studies either.

End of comments.





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