In today’s final newsletter of 2011 we take a look at the good, the bad and the what to look forward to in 2012.We also share our favourite quotes of the year and three financial wishes to see you into the new year.
The Money Marketing Newsletter will be taking an end of year break and will resume publication on January 20, 2012. Thank you for your support.
We wish you well over this festive season. May you have a happy and peaceful time, enjoy any celebrations you have planned, and keep safe and healthy.
The good and the bad of 2011
The earth moved, and the sky moved
Earthquakes, floods, tornadoes and the tsunami in Japan. These natural disasters – one has to wonder if over time we will still call them natural – were massive in scale, caused devastating destruction and loss of life. They dominated the first few months of the year to be replaced by the manmade disaster called debt. The power of nature and our reliance on the earth for survival cannot be underestimated and should not be forgotten when we look back on 2011.
Dithering politicians
Across the globe. Apparently these politicians are concerned with re-election. We understand this – jobs are hard to come by. However have any of these politicians asked how history will judge them – they got elected twice or they messed around? The endless talk and shuffling has not gone unnoticed and there is general dismay with elected officials.
It seems clear that it is not politicians that will save us – it is people.
New acronym for the year – MENA
Middle East and North Africa. Also known as the Arab spring. Uprising and revolt – with lots of catalysts in play – dictators in power for too long, authoritarian regimes, high food prices, good education but no jobs. MENA was a very big occurrence – and likely to play out more in the years ahead.
Europe – still in debt
And still in crisis. Watch exposure to it in your investments and judge a company by the sales it courts and not only the country it sits in. We’ll try and keep it down in 2012 but the region is likely to hog a few more headlines and create a few more market scares.
Tax – more to come
Governments with debt to pay and big promises to keep have to find extra revenue. SA also has to pay these rather large wage bills of the Public Sector. It’s taking money from our infrastructure development and that’s a serious issue to deal with in 2012.
The Annual Budget will be delivered in February 22 and you can get your tax tips in to the Minister and Treasury with some good ideas of where SA Inc can find a bit more money (more jobs ideal of course but hard to come by). Visit the Treasury site www.treasury.gov.za.
Unemployment – why did we hear so little?
Was it another case of too much bad news? At the beginning of the year we heard frequent mentions of this being SA’s biggest problem – and it is. Globally it is at high levels and is not coming down. It’s an issue that is fading too fast – employment creates opportunity, dignity and revenue.
Trains and tolls
Highlight and lowlight. The Gautrain is fabulous and nothing short of the brag of the year title (barring the water in Rosebank issue). The tolls on Gauteng freeways – a lowlight. These were known – but we didn’t know, expensive but now cheaper (but still expensive). So we have to pay for roads – but how much, in what manner and what about the tax we pay? And not wanting to lose focus on this but the state of other roads and rail in SA remains a concern.
The year of the asset allocator
Asset allocation funds are nearly as big (in assets under management measures) as money market funds in the SA collective investment industry.
Regulation 28
New Regulation 28 changes will change the way you and your fund manager invest your retirement funding assets. Money for retirement funding purposes now has to be invested according to a set of both rules and principles and each individuals’ investment has to comply with these. There are a lot more options – a lot more admin – a lot more responsibility and a lot more to consider. Game changing in many ways. Expect to hear much more in 2012. Retirement fund managers have more options but also need to make sure they do the best for their client’s long term interests.
RE Exams
Regulatory exams for many in the financial services industry. Get these done by June 2012.
CRISA launches
The Code for Responsible Investing in South Africa. Are your investments sustainable – will they give you enough to retire on and an environment you wish to retire in? In other words – you may have enough butif the cost of that is destruction of the environment – what kind of a retirement would that be?
Interest rates, inflation
Your important 2012 investment concerns. Keep an eye on that rising inflation and low interest rates – they will mean smart use of cash, use of inflation protection, and in most cases – less spending.
Drawdowns
If lower returns arrive – as expected, and our real experience of inflation goes up and interest rates down, preserving and growing capital in retirement is a must. Take too much capital early in retirement and it runs out too soon. If you have an annuity from which you draw income your top priority in 2012 is to visit a financial planner and make sure it is the right amount.
Smart management of cash
Cash returns are low and not keeping pace with inflation after tax – so how you manage the cash portion of a portfolio becomes a lot more important, how you maximise returns from fixed income assets matters more, and the safety of cash becomes an even more questionable concept.
Favourite quotes of the year
“If you want a guarantee buy a fridge.” Chris Hart, Investment Solutions, speaking at a presentation in October.
“If my children ask me I want to be able to answer – what did I do when the world was changing.” Wolfgang Engshuber, PRI chairman, speaking at the launch of CRISA in July. Engshuber grew up in Germany in the 60s and said it was important when he was growing up to ask this question of the older generation.
“It is old-fashioned to view insurance as a grudge purchase. Very few of us can afford to lose our livelihoods to a once-off catastrophe like that.” Quinten Matthew, Santam, referring to SA’s devastating floods at the beginning of 2011.
“At times, the unscrupulous succeed due to some members of the public’s gullibility and or greed. It is thus important to appreciate that regulation aimed at protecting consumers is not meant to be paternalistic or to eliminate every possible risk there is in financial products and services. Regulation cannot anticipate future wrongdoing; nor can it know the specifics of all products and services. The maxim of “buyer beware” remains the first line of defence.” Abel Sithole , chairperson of the Financial Services Board, in the 2010/2011 FAIS Ombud Report
Financial wishes for 2012
My wish for 2012 is for…
South African policy makers to give effect to their policy plans with diligence, clarity of thought and clear, constructive messages to financial markets and investors. Adrian Saville, CIO of Cannon asset Managers
Budgeting, Running a household’s finance and Investing to become a subject taught at school. Jillian Howard, Financial Coach
More aggressive marketing of investments, less aggressive marketing of debt. Patricia Holburn, Money Marketing
The opinion and comment in this newsletter is opinion and comment only and does not in anyway constitute financial advice. Please seek professional advice from a financial planner for all investment decisions.
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