Month: April 2020

six-tips-about-drawdowns

Six tips about drawdowns during the COVID-19 crisis

Drawdowns have positive and negative implications for our long-term financial planning. Although ideally, withdrawals should be around 4% to weather any storm, your optimal withdrawal is dependent on multiple factors such as your age, investment strategy and individual cash flow needs. In a time where we feel more helpless and unable to control the outcomes, it is worthwhile looking at some proactive ways we can protect ourselves in volatile times when it comes to drawing down from investment portfolios.

1) Try delay unnecessary withdrawals.
Try not to withdraw funds out of your portfolio unnecessarily. This will happen naturally to an extent as we are not allowed to travel and are staying home. Consider delaying the purchase of vehicles and postponing overseas travel to 2021.

2) Cut back on monthly expenses over lockdown.
Cutting back could allow you to stop or lower your withdrawals from your liquid assets, even if just temporarily while on lockdown. By reducing your drawdown, you reduce the losses realised as the impact of sequencing risk. Your drawdown on liquid investments can be amended at any time so when lockdown measures lighten, and your budget needs to be adjusted, you can readjust your withdrawals where needed.

3) If you are unable to reduce costs, try ways to budget around keeping your withdrawals unchanged.
Do this in consultation with your Retiremeant™ Specialist. They would have already structured your income as efficiently as possible at your last income review. There may be some short-term scope to reduce your risk and the impact of negative compounding. By simply not increasing your drawdown from last year, you can reduce the impact on your portfolios considerably.

4) Amending your Living Annuity drawdown if your anniversary is still months away?
With Living Annuities, you are usually locked into your income until the anniversary of the contract. However, National Treasury has just released COVID-19 tax relief measures on the 23rd of April 2020 that state the following:

“Individuals who receive funds from a living annuity will temporarily be allowed to immediately either increase (up to a maximum of 20 per cent from 17.5 per cent) or decrease (down to a minimum of 0.5 per cent from 2.5 per cent) the proportion they receive as annuity income, instead of waiting up to one year until their next contract “anniversary date”. This will assist individuals who either need cash flow immediately or who do not want to be forced to sell after their investments have underperformed.”

This means that should you be receiving surplus income from a Living Annuity, you are able to apply to reduce your Living Annuity incomes (down to a minimum of 0.5%). Any changes must be done in consultation with your Retiremeant™ Specialist as they have likely already structured your incomes optimally for various reason specific to your individual planning.

In cases where you are under severe cash flow strain you can also increase your Living Annuity drawdown (limited to a max of 20%), but this should be last resort where possible as SARS will still charge PAYE income tax on the incomes and higher drawdown in the current economic environment should be avoided as much as possible

5) Be mindful of your liquidity position.
It may be more advisable to maintain your current drawdown on a Living Annuity to create additional liquid funds if your Retiremeant™ Specialist identifies this as something to be cautious of in your planning. In Retiremeant™ Planning, Liquidity is still king, and should not be sacrificed for short -term reasons.

6) Don’t be tempted to reduce your Living Annuity payment to reduce tax.
It will result in having to increase your withdrawals on other assets which could negatively impact your Liquidity, as well as increase the sequencing risk on those investments. Instead, review your income planning with your Retiremeant™ Specialist. They can ensure that your income is structured as tax-efficiently as possible while catering for your long- term liquidity needs.

Now more than ever, it is vital to have a robust and flexible financial plan. This involves adjusting your planning to react to an ever-changing world. We will all likely come out of this lockdown with a greater sense of awareness of what is important to us, which will give even more meaning to our money.

Podcast

online-security-tips

Online Security Tips

Lockdown has brought with it a learning curve where we have all had to leave our comfort zone and become more tech-savvy, embracing new technologies and ways of communicating. Unfortunately, this new digital world doesn’t come without its risks, and we need to develop good security habits when using technology.

Be aware of phishing scams
Phishing is the fraudulent attempt to obtain sensitive information such as usernames, passwords and credit card details by disguising oneself as a trustworthy entity in an electronic communication. The best way to protect against phishing scams is through scrutinising your emails: who is the mail from, do you know them, and were you expecting it? Take note of tone and formatting as this can raise alarm bells, even if it from a familiar email address. Often, phishing scams are associated with emails where there is a false sense of urgency, i.e. requesting you to confirm details to avoid your account being blocked. Also, check if there are any links to webpages or attachments in the email. Only open the email and its attachments when you are confident it is legitimate.

Ensure your software on your devices is always up to date
The world of online security is constantly changing. Most smartphones and computers prompt auto-updates which you can accept, and this usually links you to the correct place for the update. A link sent via an email or through Whatsapp to update your app is quite likely to be a security threat, so only use the official channels for updates.

Upgrade your passwords
We are all tempted to use one password across all our devices; however, they can usually be easily hacked. When choosing passwords, take the following into consideration:

  • Never re-use passwords. Where possible, you should have a unique password for every online account.
  • Try using passphrases as your password; these are similar to passwords but generally longer for added security. For example, if you are choosing a Facebook password instead of using your name and a popular number rather use a crazy passphrase like- Don’t spy on me Mark Zuckerberg! Or with Apple Music, try a line from your favourite song, for example, Lucy In The Sky With Diamonds.
  • Use special characters and upper- and lower-case letters in your password or passphrase – D0n’t$pyOnMeM@rkZuckerberg!
  • Log out of applications, and don’t opt for your browser to remember your passwords. While most mobile devices have fingerprint access and most devices offer the option to remember your passwords, the safest option, which may be as old as time, is to write down your passwords and store them in a safe space.
  • Activate Two-Factor Authentication. This is when you provide an email address and cell phone number when signing up for an online profile. Whenever a new login from another device is triggered, it sends either an OTP or some form of a link to your cell phone via SMS or an email to notify you of the login attempt and to authorise access. This has become standard practice on most social networking and other online platforms.

Never share sensitive personal information over emails such as online banking profile details or other login information
It’s a general rule that banks and providers will never ask you for login information via an email or attach a link for you to click on to log in to your profile.

Zoom Calls and other online meeting applications
Now that we are meeting online and attending Webinars at Chartered, we also need to stay safe in these environments. Unfortunately, due to the increase in use, Zoom has become susceptible to cyber criminals. If you are going to set up your own zoom calls, then we suggest you make your meeting password protected. Chartered will be using Microsoft Teams for formal reviews or discussions that need confidentiality as it has proven to be more secure. Rest assured Chartered does take every precaution when hosting Webinars on Zoom, so please do join us.

We encourage you to keep security top of mind and remain aware of potential security threats. Should you ever have a concern around a communication you received from an Investment provider or directly from Chartered, please contact someone in your RetiremeantTM planning team, and they will gladly clarify things for you.

sticking-to-your-plan-how-to-be-aware-of-behavioral-biases

Sticking to your Plan – How to be aware of behavioural biases

Sticking to a long-term plan can be difficult. We are constantly bombarded with news and noise that makes us question if we will have the future we want. A plan gives us the framework and roadmap that enables us to navigate through the short-term volatility that we are currently going through and will go through again in the future.

We can start to be aware of ourselves and wanting to act out emotions we are feeling through how it affects us physically. When we have an emotional reaction to a situation, we often display physical symptoms such as a red face, and increased body temperature or sweaty hands. These emotions are natural, and being aware of them can also make us aware of the behavioural bias that can follow.

Bias behaviour is as long-standing among humans as the English language. We each see the world through our own particular lens, and this affects how we process and react to information. Academics have discovered over 100 human bias behaviours, but we are going to touch on three of the most common below.

Confirmation Bias – Reading views/opinions that back up our preconceived idea.

This bias is very common and is being proliferated by the advent and abuse of fake news. The recent case of the very negative article about the Gates Foundation wanting to test a vaccine in Africa is testament to this.

This story was completely fake and was picked up and published by mainstream media around the world. Eventually, the facts were checked and found to be false, and media outlets, such as News24, were forced to apologise. Here confirmation bias manifested itself through those that believed Africa is the testing ground of the world and seen as less important.

When it comes to investing, confirmation bias is common when people use phrases such as “I knew we should have had more offshore, look what the Rand exchange rate has done.” This is a comment made in hindsight regarding preconceived ideas about South Africa over a short period. Importantly, investors need to understand the facts of their situation, especially in the context of their plan.

Herd Bias – Wanting to follow the perceived crowd in the decision one makes. Safety in numbers.

Yet another widespread bias we all can fall prey to. Herd bias has been very apparent through this current, as well as previous financial crises, as people hear that they need to have more of their investments in cash. Friends repeat this message around the braai (digital braais we hope!) as does the media. Again, investors need to understand what their position is first and what affect their plan moving their investments into cash would have.

Action Bias – If I take an action of any kind, I will be more in control, and I will then feel less anxious/uncertain.

This is a behavioural bias, but it can also be an overriding bias leading to other biases, such as the two above. We all like to be in control, and when this lack of control becomes front of mind, it drives us to seek action to wrestle some of this control back. Action that is based on emotion nearly always leads to outcomes that haven’t been thought out, and are in contravention to the long term plan we have. That’s not to say that we can’t make calculated changes during times of uncertainty. We can look at the parts of our lives that we have control over, such as our monthly budgets, health and learning.

In all the cases above, it can always help to speak to your RetiremeantTM Specialists and talk through the thoughts/emotions you are experiencing. Does it suit my Financial Plan? How will my investments change if…? The RetiremeantTM Specialists ability to help you stick to your plan and cut out the short -term noise is one of the most valuable roles that they hold.

Podcast

what-is-happening-to-the-rand-featured

What is happening to the Rand in this unprecedented time?

As many of you may know, the Rand has depreciated against the US Dollar since the outbreak of the COVID-19 pandemic.

Below is a readily available graph online from www.XE.com to show you the drop in value.

From 1 February 2020 until 6 April 2020, the Rand has depreciated by approximately 26%.

what-is-happening-to-the-rand-image

The Rand has also depreciated by similar values against the EURO and the UK Pound.

Why has this sudden depreciation happened? Is the COVID-19 the only reason for this?

When the COVID pandemic was first fully digested by the world, the reaction from a large percentage of the investment community was to do everything they could to get their investments into cash (particularly US Dollar) so that they could either reinvest into “safer” assets or use to help their investors with the predicted shortfall in liquidity. As with every previous crisis, the reaction by the investment community has been panicked and very emotional.

South African assets are seen as riskier assets due to our economy falling into the label of an “emerging market” (EM). Other major countries in this bracket are Brazil, Russia, Turkey and even China. When the rush to sell out of risky assets occurred, we saw many global investors sell EM assets first, which did not spare us. We further have not helped ourselves by Moddy’s recent downgrade to junk, but the overwhelming drive of the exchange rate depreciation has been the sale of risk assets by the global investment community.

How does this affect me as a South African citizen and client of Chartered Wealth Solutions?

As a South African, the first thing that this does is make overseas travel that much more expensive!

From a local living point of view, the exchange rate can have some blanket effects on you as some goods that we purchase are imported and priced in foreign currency. By far the biggest good is oil and directly, the price of petrol.

We have been extremely fortunate that as this exchange rate has been depreciating, the oil price has hit historic lows. This has countered any increase we would have ordinarily seen due to the weakening Rand. We may not be driving nearly as much as we would during this lockdown but goods that we purchase still need to make it to the shops and our homes which entail transport. These transport costs will remain stable for a while.

From an investment point of view, all local investment strategies that our clients hold have meaningful direct and indirect exposure to foreign currency. The direct offshore exposure is through fund managers who directly invest your money into foreign shares and bonds. This will proportionately increase your investment when the Rand depreciates, assuming the underlying asset at least keeps its same value.

The indirect offshore exposure is through the South African shares you hold as the vast majority of companies have diversified their operations offshore. This means that their earnings are in foreign currency and increase the value of the company when the Rand depreciates. Depending on your personalised portfolio, the South African companies you invest in could have a combined offshore earnings percentage of up to 70%.

We are very comfortable and confident that the asset consultant that looks after your Financial Plan strategy is very well positioned and equipped to make sure you have the right mix of local and offshore assets. By taking the risk of the exchange rate into account, they are always testing to make sure that your portfolios are positioned as best they can be to deliver your investment strategy.

Please speak to your RetiremeantTM Specialist if you have anything further you want to discuss on this topic!

reporting-from-the-helm-1

Keeping an open mind while adapting

As we come to the end of day six, the novelty of the Lockdown is starting to wear off, and the reality of the situation is setting in. I am fortunate to have my wife and four children, ranging in age from 12 to 19, at home. We have enjoyed many firsts as a family, including touch rugby in the garden, basketball competitions and very short golf chipping competitions. We are each taking turns to prepare a meal – this is not a strength of mine, so when my turn comes, it may be a braai.

The news continues to be dominated by the coronavirus, and we seem to be spending endless hours trying to differentiate between fake and real news. These hours could be more wisely spent educating ourselves about the virus. Cyril Ramaphosa continues to demonstrate exceptional leadership qualities; he has taken this head-on and continues to impress us with his strategy and foresight. This is a somewhat desperate situation as we have a significant population that can barely be expected to stay in their shacks for extended periods.

At Chartered, although all at home, business continues as usual, we just no longer have the temptation of Moses’ cappuccinos and the delicious cake. Our online meetings are productive, and many of you may have engaged with us over the past two weeks in either a Teams or Zoom online meeting. I am struggling without the human element; it’s just not the same. We are fortunate in our business to spend our days face- to -face meeting with all kinds of people, each with their own story. These various meetings and conversations from markets to families and holidays help us maintain such a connection with people, something, which during these times, we value more than anything.

Our team is incredible in the way that they have adapted to this new norm. There are often 25 of us in an online meeting, looking at each other in our homes, with the occasional squawk from a child or even a coffee delivery from a partner.

With each news alert, it has become a habit to reach over to my phone and look at what impact the event may have on the markets. This has been a rollercoaster like never before, to the extent that a 3 or 4 % move by the market in a day is met with relief. However, we all know that we need to sit tight during these times and not make any irrational decisions. Markets go up over time.

An exciting development is the launch of our new Chartered App. This can be downloaded from the Apple App Store or Google for Android devices. Many of you have probably transitioned from using internet banking on your computers to mobile banking on your phones or tablets. This tech world in which we are living is all about speed and convenience. We felt it would be prudent to develop an app that can deliver newsletters, invitations to events, instant access to your Retiremeant™ specialist and their team, social media links and interactive tools. During the months ahead, we will explain to you the process of getting your investment statements off the app and have access to specific documents in your client folder, etc. The best part of all is that it can be done from the comfort of your couch. We are very conscious of the security requirements, and you will need to log in with a username and password to enjoy all the benefits. We will be sending out instructions on how to set up the app in due course.

In closing, I encourage you all to avoid the noise, keep healthy, embrace and enjoy the time you have with your loved ones, these times will pass, and we will all emerge a little more resilient and appreciative of the small things in life.

Warm regards
John

chartered-app-featured-1

Chartered Wealth Solutions App Guide

PLEASE NOTE: As important documents are shared on the Chartered Wealth Solutions App, we encourage you to be mindful of the security passwords put in place for the sake of your confidentiality.

We have noted that there are slight differences between Android and Apple devices when accessing the Chartered Wealth Solutions App. The appropriate instructions are given to help you navigate your way around the App.

If you have any further queries please contact kate@charteredwealth.co.za or on 011 502 2800

Step 1

ANDROID
On your mobile home screen, you will find a ‘Play Store’ icon.
Click on the ‘Play Store’ icon.

app-guide-android-1-1

APPLE
On your mobile home screen, you will find a ‘App Store’ icon.
Click on the ‘App Store’ icon.

app-guide-apple-1-1

chartered-wealth-content-spacer

Step 2

  • Select the search bar and type in ‘Chartered Wealth Solutions’.
  • Click on the search (magnifying glass) at the bottom to direct you to the next step.
Android Guide 2
Apple Guide 2
chartered-wealth-content-spacer

Step 3
Select the ‘Chartered Wealth Solutions’ App.

Android Guide 3
chartered-wealth-content-spacer

Step 4

ANDROID
Click on ‘Install’ and wait a few seconds for the Chartered App to download onto your mobile device.

app-guide-android-4

APPLE
Click on ‘Get’ and wait a few seconds for the Chartered App to download onto your mobile device.

app-guide-apple-4
chartered-wealth-content-spacer

Step 5
Click on ‘Open’ – The Chartered Wealth Solutions App will automatically open the home page.

app-guide-android-5
app-guide-android-6
chartered-wealth-content-spacer

Step 6

  • Below are the Chartered Wealth Solutions App home pages.
  • It is important that you click on to ‘My Profile’ (on the second home page) in order to login to your personal account.
app-guide-1-2
app-guide-2-2
arrow-left

Swipe left to access the second home page

chartered-wealth-content-spacer

Step 7
Click on ‘Log in’

app-guide-3
chartered-wealth-content-spacer

Step 8
Login using your email address and the password supplied to you.

app-guide-4-3
chartered-wealth-content-spacer

Step 9

  • You will then be required to set a ‘new password’. When setting a new password choose a password that you will remember, and make a note of it somewhere safe as confidential documents may be shared/accessed on the App.
  • Once you have inserted a new password, make sure to ‘Confirm new password’ before clicking on ‘Log In’.
  • Lastly, click on ‘Done’ to take you to your personal account.
app-guide-5-6
chartered-wealth-content-spacer

Step 10
Your personal account will include the necessary icons and look like the following:

app-guide-7-1
app-guide-8-1
chartered-wealth-content-spacer

Step 11

  • Once you have accessed your personal account, we encourage you to adjust your settings in order to improve your overall Chartered Wealth Solutions App experience.
  • First, click on ‘My Profile’, then click on ‘Account Settings’ – here you will be able to change your personal details. Don’t forget to click ‘Save’ once you have made any changes to your account settings.
app-guide-9-2
chartered-wealth-content-spacer

Step 12

  • To access your statements please contact your RetiremeantTM specialist. With permission they will upload your statements onto your Chartered App account.
  • You can find your RetiremeantTM Specialist Team under ‘Your Planner’.
app-guide-12-1
chartered-wealth-content-spacer

Read the latest Client Stories through our mobile App.

app-guide-13-1
chartered-wealth-content-spacer

Take the Balance Test on our mobile App.

app-guide-14-1
chartered-wealth-content-spacer

Access our closed RetiremeantTM Community Facebook group on the App.

We encourage all Chartered Wealth Solutions clients to join the closed RetiremeantTM Community Facebook group. Included is a guide on how to join the closed group.

app-guide-15-1
chartered-wealth-content-spacer

Access our Newsletters on the App

app-guide-16-1
app-guide-17
chartered-wealth-content-spacer

Access our Websites on the App.

app-guide-18-1
chartered-wealth-content-spacer

Connect with us on our social media platforms.

app-guide-19-1
covid-19-and-your-spending-plan

Covid-19 and your Spending Plan

“How long will my money last?” and “will I have enough to retire on?” are probably the most asked questions during RetiremeantTM Planning. Our aim as Planners is to make your money graph last beyond the age of 100 years, and during these discussions, the most likely responses we receive from clients are “don’t worry, I will be gone long before then!” or “I hope I don’t live that long!”

Whilst we fully understand this sentiment, we do need to be prudent with your RetiremeantTM capital and consider the unforeseen and “what if” events which could impact your RetiremeantTM journey. The 2008 sub-prime lending crisis is a prime example; unexpected illness or life changing events leading to unplanned expenditure is another – and so is Covid-19.

The aim of our Planning approach is to ensure that our clients maintain their lifestyles, in spite of market volatility or unforeseen events – we certainly don’t want you to have to cut back on your spending or tighten your belts when markets don’t perform the way we hope. But no-one could have foreseen the drastic impact of Covid-19 on our finances. Not only are the markets affected, but our lives have been impacted as well.

I write this article sitting at my dining room table, pondering where I can tighten my own belt (which is tough because working from home means my kitchen is only five steps away.) But I do have to revisit my budget, and I’d like to share some tips and thoughts to keep in mind in case you’re doing the same:

1. Automatic savings
None of us will be travelling or going on holiday in the near future. We won’t be going out for dinners or enjoying a weekend braai with friends or family, and we can only shop for essential items such as medicine and food. Our travel and fuel expenses will also reduce.

2. Payment holidays
This term has typically been linked to mortgages. Basically, it means that you take a break from your monthly payment, for a short period of time of one to three months. At the end of the holiday, your payments must start again. This means that your payment term will extend, for example by three months.

Insurers have also been facilitating payment breaks. You must be aware that you stand the risk of not having cover for the month that your premium is not paid.

Before making any adjustments to your monthly payments, please make sure you fully understand the consequence. We encourage you not to make use of payment holidays or breaks where possible.

3. Services that you are not using
Gyms across the country have been forced to close, with the larger gyms freezing your membership during the lockdown and therefore, your monthly payment.

Personal grooming trips to the hairdresser or barber, manicures and other treatments will also fall away in the lockdown period. I am sure many of us will use this time to pamper ourselves at home – at greatly reduced costs.

Domestic help is a tough one. Even though your gardener and domestic helper cannot come to work, we do encourage you to continue supporting them where you can.

4. Payments which may increase
Staying connected and reaching out to our friends, loved ones, and others in need with the help of technology, has been a positive experience. We are all learning much more about the technology available to us and it allows us to feel a sense of togetherness. We are using more data, but many internet and cellular providers have announced that they have reduced their data prices, which should be a big help.

If technology is unchartered territory, keep a lookout for Chartered Tips on how to stay connected with technology.

5. Non- negotiables
Covid-19 is a health risk. Your medical aid premiums and proper nutrition are more important than ever. We encourage you not to cut back in this area. Continue your medical aid premiums, eat healthily and stay as active as you can within the confines of your home. If you are left with no alternative, rather opt for a less comprehensive plan than cancelling your medical aid entirely.

Remember that your Planners are available telephonically or to meet with you online to discuss any question you have relating to your budget, the prevailing market conditions, or planning in general. We will get through this together – as American singer, Jimmy Dean said: “I can’t change the direction of the wind, but I can adjust my sails to always reach my destination.”

Podcast

life-is-a-roller-coaster-featured

Life is a Rollercoaster

When I sit back and look at what has happened over the past six to eight weeks, I realise that we are living in a period that we will remember forever and that in all likelihood will be spoken about when we are no longer around. It feels as if we are all on a rollercoaster, both emotionally, and in terms of the markets. We have experienced the gut-wrenching first decent, we are at the bottom, hanging upside down and patiently, or not so patiently, waiting to turn around and come back up.

Who knew that a simple coronavirus could cause so much mayhem? There was a video on Twitter where Professor Hugh Montgomery explained how infectious this virus is. He describes it like this – if you get regular flu, you will infect on average 1.3/1.4 people. When those people pass it on, that would be the second time it is passed on, and once this has happened ten times, you would have been responsible for 14 cases of flu. With Covid-19, however, if you get it, you are likely to pass it onto three people on average.

Although this doesn’t sound like much, if this also happens ten times, you are responsible for infecting 59 000 people.

When you look at it this way, it is not surprising that countries have had to go into lockdown to slow this rate of infection. It is also not surprising that we have seen a drastic decline in markets both locally and globally.

John Campbell mentioned in his letter, (Reporting from the Helm,) that the JSE (prior to recent positive days) lost approximately 31% of its value. We were not alone on this, although South Africa was hit particularly harder given the unstable economic environment we were in to start with.

What makes this market crash so significant and “different” to others is that it impacted all asset classes apart from cash. Asset classes are shares, bonds, property and cash – local and offshore. When we see our money going down, it is tough not to get emotional.

So, what is essential to remember while we feel like we are left hanging at the bottom of the rollercoaster route with your feet dangling in mid-air?

  • While the impact on investment portfolios is significant, we must remember that this is not likely to be a long-term event.
  • While this market crash feels different, and it absolutely is, keep in mind that we felt like it was different in every prior market crash (2008, 2003, 1998 and the list goes on).
  • We rely on our professional investment consultants to make any strategic decisions in our portfolios. They can do this without the emotion that we feel, which enables them to make the correct decision for long term growth.
  • Since markets are down, this also means that there is a great opportunity out there for managers to take advantage. For example, shares are looking cheaper than they have in a long time. Further to this, bonds and property are also offering opportunity.
  • While the recent price war in the oil industry caused extra havoc for markets globally, a low oil price is good for consumers. This could even help counter some of the effects that we may see coming out of South Africa’s downgrade to junk status.

The most important thing to remember over these periods is to stick to your investment strategy. The risk of switching to cash (safe haven) now is that you may miss out on the recovery.

While we don’t know if markets are out of the woods yet, historically when markets have recovered, a significant portion of this recovery has taken place in the first 60 days. The graph below illustrates this on four previous market crashes (1987, 1998, 2003 and 2008).

life-is-a-rollercoaster-1

If at the bottom of the crash in 1998, for example, you had R100 at that point. Your R100 would have grown to R120 by remaining invested in the JSE All Share Index. This is a return of 20% in just 60 days, not to mention the positive gains that followed the 60 days. This is far more than an entire year worth of interest that you could earn in the money market (cash). Hence, we do not want to miss out on a recovery as the long-term effect of missing this recovery is significant.

And so, I leave you with one more graph below, that we received from Old Mutual, which represents what the JSE (Johannesburg Stock Exchange) has done since 1974.

life-is-a-rollercoaster-2

I am sure you can identify a few memorable events along the way to get us to where we are today. The red arrows mark the market corrections and the dotted arrows, the time it took to full recovery. The general long-term trend has been upward. This period that we are in is going to mark another memorable event in our history, locally and globally. I hope this gives you some peace of mind.

Remember these positive points while you feel like you are hanging upside down at the bottom of your rollercoaster.

Podcast

portfoliometrix-rebalance-featured

Rebalancing Your Portfolio – Why do PortfolioMetrix do this?

Rebalancing your portfolio is a key function of what we entrust PortfolioMetrix (PMX) to do while managing your investment.

The reason they rebalance your portfolio is twofold:

  1. To make sure the asset allocation (how much you own in shares, property, bonds and cash) is still the right mix to achieve your specific investment strategy.
    The risk you take in investing is PMX’s number priority and so rebalancing the asset allocation mix makes sure they are taking on the least risk possible to achieve your investment strategy return.
  2. To take advantage of good opportunities in asset classes and therefore generate a real return, over time.
portfoliometrix-rebalance-2

What changes are PMX making to my Portfolio?

With the recent drop in local shares and local property, PMX are going to be moving money from local cash, local bonds, global bonds, global equity and global property back into local shares and local property.
This is exactly what we entrust PMX to do, especially in volatile times when they need to stick to their philosophy and process.
The simplistic graphic below shows you the process described above:

When will this happen, and what do I need to do?

PMX will implementing this rebalance starting on the 7th of April 2020 and will be using the month of April to make sure all client portfolios are fully and correctly rebalanced.
This is done entirely by them through your administrator, and you do not need to do anything.

Importantly, you will still receive any income from your investment, and you will be able to make contributions, at any stage in this process, to your investment.

If you have any further questions, please contact your RetiremeantTM Specialist.

Johannesburg Office
Tel: +27 11 502 2800
Eastern Cape Office
Tel: +27 41 001 1026
Western Cape Office
Tel: +27 21 001 0048
Connect with Chartered

Chartered Wealth Solutions is an authorised financial services provider
(FSP no. 13909)

Newsletter Subscriptions

Subscribe to Chartered Wealth Solutions Communications

FPI Approved Professional Practice Logo
0:00
0:00