http://www.lawatwork.uct.ac.za/lw/courses/estate-planning

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When you have children at school, money is tight. A catastrophic injury to a child can destroy a family’s finances.

I recently came across an illness and injury product for children which would have brought me so much peace of mind had it been available when my boys were playing rugby.

This product covers children between the ages of 1 and 18 for over 80 different childhood illnesses and injuries.  Some of the conditions covered include:

• Paraplegia
• Major burns
• Dog bites to face requiring plastic surgery
• Open heart surgery
• Organ failure
• Loss of vision in an eye
• Cancer
• More than 48 hours in ICU

This cover is cheap. You can get your child R700 000 in cover for around R120 a month – the price of a pizza.

If you would like more info, contact Susan Meiring on 083 654 2195 or email at susan@financialwellnesscoach.co.za.

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Divorce is a time of major change at all levels.  They need to bring in a skilled and ethical financial planner to help them re-calibrate their finances and reduce their financial risk.  Areas to look at include:

Maintenance cover

What will happen to maintenance payments should the payer:

• Die?
• Become permanently disabled?
• Become ill and cannot work for an extended period?

One can take out insurance on the payer’s life and have the proceeds payable to the child (or a trust) each month till the child reaches an agreed age.  This protects the single parent from the risk of the maintenance disappearing should anything happen to the ex-spouse

This can be written into the divorce agreement.

Investment of lump sum proceeds

If the divorce agreement results in a payment of a lump sum.

A skilled certified financial planner can ensure that this be invested wisely to meet the specific needs of the family.

Bond cover

Often a new property is purchased.  This will result in the need to have bond cover.  A skilled financial adviser can get the right shaped cover at the best price.

Pension payout

Spouses are entitled to a payout from their spouse’s pension fund.

This needs to be invested correctly in investment portfolios that are appropriate for the lifestage of the divorcee. Getting the portfolio wrong by 1% can have up to a 20% impact on the final return.

Re-calibrate finances

Divorces are costly.  Savings will have been used up.  Moving onto one salary will have an impact on the longer term plans.

This requires that a new financial plan be drawn up.

A certified financial planner can help ensure that:

• There is sufficient risk cover to look after the children.
• The correct medical aid gap covers are in place.
• The correct beneficiaries are noted.
• The longer term retirement needs are understood and longer term plans are in place to address them.

There are often short term cashflow issues at the time of a divorce and people often do not want to think about the longer term.  A decent planner can help quantify the need and assist in prioritizing those issues that are critical and figure out a plan of action to address the longer term issues in the future.

If you are going through or have recently divorced, contact me.

I can help put the right structures in place.

Kenny Meiring CFP®

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If you are over 40, you probably have a friend that has had cancer or a heart attack.  No matter how good their medical aids are, the illness has cost them financially.  This could be due to a prolonged absence from work or the cost of medication or treatments that are not fully covered by the medical aid.

We have seen so many of our friends suffer financially after becoming ill and realised – too late unfortunately, that much of this financial stress could have been avoided by having a relatively inexpensive policy.

Speak to us about getting this protection

Brother of the more famous Chris

Most of us have heard of Chris Barnard who performed the first heart transplant.  But not enough of us give credit to his brother, Marius Barnard, who has had a much bigger impact on our lives in financial services – he came up with the idea of Critical Illness cover.

In fact he is in the Insurance Hall of Fame for conceiving this benefit.

He said in an interview that he saw the financial and social impact on his patients that survived a critical illness.  His patients lived for years after the event but “in this time, they died financially”.

We have come a long way since the first critical illness / dread disease product was introduced in 1983.

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At the end of our meeting you will know:

• If your retirement funds are invested in the right portfolios
• Where you should be investing any money
• If there are any gaps in your personal cover

If you haven’t seen your broker in years, give me a call to see if you are on track.

I do not charge for my services but am paid the standard commission from any product supplier whose products I recommend.  You are under no obligation to take any product and I do not engage in hard sell techniques.

I am a Certified Financial Planner and am registered with the FSCA.  I have over 30 years’ experience in financial services, hold an MBA and have studied Financial Mathematics through the Institute of Actuaries in London

Contact me on 082 856 0348 or by email at Kenny@financialguru.co.za

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What do we need to do?

I have been talking to a number of economic and investment specialists to help me understand what is going on so that I can give my clients decent advice.

 Background

People started becoming ill from the corona virus (COVID-19)at the end of last year.  The number of infections increased exponentially and in late January 2020, the Chinese government took firm action which included the locking down of the city of Wuhan.

By way of perspective, the population of Wuhan is 11 million which is bigger than London (9m) and New York (8.5m).  This is not some remote Chinese village.

The actions of the Chinese government resulted in new infections dropping off dramatically – so much so that the purpose built hospitals for Corona patients have now been closed.  Many factories are starting to operate again.

A similar pattern was seen in South Korea where state interventions resulted in new infections dropping from over 900 a day to under 80.

Action in Italy was not as decisive.  It is reported that after the government announced its intention to isolate the hotspots in the north of the country 25 000 people left Milan.  Instead of isolating the disease to a particular area, it spread throughout the country. The whole of Italy was placed under lock down last week.

This is big.  Italy has the third biggest economy on Europe.

We have seen that if firm action is taken and properly policed, the virus can be contained and the economic activities can resume.

The concern was that there was no decisive leadership being shown on this front in the USA or South Africa.  Donald Trump initially pooh-poohed the danger that Corona held for the USA.  This made investors uneasy.

When USA sneezes we all catch a cold

We do not appreciate how big the USA economy is.  They have had 10 years of excellent growth.  Unemployment is low and consumer spending is high.  In fact, consumer spending accounts for more than 70% of the US economy – this is bigger than the GDP of China!

If the Corona virus takes off in the US and we end up with empty shopping malls for an extended period, we can find ourselves in a worldwide recession.

It was against this backdrop that the share prices started falling last week.

Response

Both South Africa and the USA have taken decisive action.

Large events have been cancelled, travel restrictions have been imposed and sporting competitions placed on hold.

This should impact on the way in which the disease takes hold in the two countries.  Whether it is sufficient remains to be seen but we must applaud the political willingness to take action.

So what do I need to do about my investments?

Last week we had two days when the stock market fell badly.  We were shocked by the extent of the fall.

There are, however, also days when the market goes up significantly.  The challenge is that as investors, we do not know when these days are.

Last Friday I was at a talk given by the economist, Kevin Lings where he spoke about the impact of missing those days when the market went up massively.

He gave an example of investing R100 000 in the JSE All Share from 28/2/1997 to 31/12/2019.  The tale below shows how missing key growth days impacted on the outcome:

Rule 1:  Don’t try to time the market

Time in the market is much better than timing the market when you are looking at a long term investment.

You do not know when those big days will be and you can see the importance of being invested when they do come.

When markets fall dramatically there is often a correction upwards soon afterwards if the fall was not fully justified.

Rule 2:  Time in the market removes volatility

Share prices move up and down and as we saw last week, this can be quite dramatic.  This up and down movement is called volatility.

Your investment horizon determines the amount of volatility risk you should be exposed to.  I like to classify investment horizons as follows:

1. Short term – less than 2 years
2. Medium term – 2 to 8 years
3. Long term – more than 8 years

 While share prices move up and down, over the years the general trend is upwards.  If you have a long investment horizon, you can handle a much more volatile investment than if you had a short term one.

 If you have a medium or long term investment horizon, you can relax.  Market movements are a part of life and will be smoothed out over time.

 Rule 3: Have a plan

This is the most important rule of all.  Too few people have an overall financial plan.

What often happens is that people have a series of separate investments without an overall strategy.  The danger is that they do not appreciate the time frames of these investments and panic when the market drops.  They sell at the wrong time and end up leaving massive amounts of money on the table through poor choices and opportunity costs.

A proper financial planner will sit down with you, discuss what you want to do with your life over the short, medium and long terms and put financial plans in place to achieve that.

If you have a plan and the investment makes sense, then you should act on it and not try to time the market.  Similarly, if you have a plan, don’t exit an investment if there is a downturn.

Take a Lesson from Warren Buffett.  He recently increased his holdings in Delta Airlines, despite the fall off in value due to the Corona Virus.   He has a plan and a view on the market.  He sees value in owning shares in an airline and the current market conditions allow him to buy these shares cheaply.  He is not deterred by impact that the current travel restrictions will have on short term earnings.

 In conclusion

If you don’t have a plan, you can end up making short term decisions that have a long term impact.

Use these challenging times to take stock of your situation, speak to a certified planner and get a plan in place.

If you need one, call me.  I don’t charge for the first consultation and there is no obligation to make any further use of my services afterwards.

In these times of isolation, I am equipped to run these consultations remotely via Skype, Zoom and Google Hangout.  In fact I did my first Corona related virtual consultation last week.

 Kenny Meiring MBA CFP ®

082 856 0348

Kenny@financialguru.co.za

Financialguru.co.za

Disclaimer The above does not constitute financial advice.  It is offered as a perspective to help you make sense of these important developments.  Each person’s situation is unique and a proper analysis is needed before advice may be given

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Our investments are worth less, there’s a mean virus out there and now we face the prospect of not working and, for many of us, not earning for 3 weeks.

I’ve had several of my clients contact me with advice on what to do.  It is natural to want to withdraw everything and put it into the safety of a bank.

But is it the right thing to do?

In my last blog post, I showed an example that you would lose almost half your potential returns if you were not invested for the 10 best days of growth over a 22 YEAR period.

I can’t tell you when the next big days of growth will be – however, I can say that there is a very good chance of one or two of them will happen over the next couple of months.  It does make sense to be invested in the market if you have a longer investment horizon.

The head of research at Glacier did an analysis of what would have happened  if, after the last couple of major stock market collapses, you

• left your investment as is.
• moved into the money market.
• moved into a 100% equity investment.

In each instance, moving into the money market gave the worst returns while the 100% equity one gave by far the best result.  I am not advocating that you blindly move all your investments into equity as there are other factors that must be considered.  However, this does illustrate that often the time to invest is after a major collapse.

Keep safe over the next 3 weeks.   If you need to chat, I am available on the phone, WhatsApp and FaceTime.

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The more understanding we have of what is going on, the better our chances are of ending up on the making of great fortunes side so at the moment I am tending to over communicate because there is so much happening.

One of the perks of the lock-down is that more investment presentations are given via webinar which means I get to attend more of these talks.

I attended a really interesting one this morning on The impact and opportunities of the recent market volatility …but before you do, here are the headlines!

It is often at times of high market volatility that the best opportunities to buy shares in companies at very attractive levels present themselves.

• This is the fastest market correction ever.
• SA shares have priced in the worst downturn in history.

This is an event driven market correction.  These corrections have a sharp V shape and typically recover quickly.

South African Companies have never been this cheap and the current market fall has opened up some massive investment opportunities going forward.

Call me so we can look at your personal circumstance before you enter this market where great fortunes could be made or lost.

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• retrenchment
• retirement
• death
• illness

People facing these challenges need to make important financial decisions.

They need someone wise, experienced and ethical.

We are fully set up to help you remotely.

In addition to the specific counseling, we help people understand the often bewildering world of investments, retirement and life insurance by doing the following.

• Individual financial advice

Kenny is a registered and certified financial planner and is licensed to provide one on one financial counseling and advice.

• Talks and workshops to employees or groups about basic financial planning

We offer talks and workshops to groups and companies on various aspects of financial planning.

We can cover areas like:

• How to budget.
• How to get out of debt.
• How to protect you and your family if you cannot earn.
• What are the biggest investment mistakes and how to avoid them.
• How much money will you need to live when you stop working.

These can be tailored to meet the needs and benefits offered by specific companies.

• Benefit counselling to members of retirement funds

We unpack the benefits offered by a retirement fund and help the members make the right decisions. Getting a person into the right investment portfolio at the right time can have a massive effect on their overall quality of life.

Kenny holds an MBA and is Certified Financial Planner with over 30 years financial industry experience. You will be dealing with someone who is experienced, licensed, knowledgeable and ethical.

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