This month's finances in simple English

What a month! This week I wore a suit and got stuck in a traffic jam for the first time since Cyril taught us to shake hands with our elbows. Things are finally starting to return to some level of normality.

Investments

The markets have certainly done well over the past quarter with the JSE having its best quarter in 19 years. Not to be outdone, the US stock exchange had its best quarter in 22 years.

The question we should ask is what happened in the past after an excellent quarter like this? The table below indicates that most of the time, the growth continues over the next quarters. Let’s hope that history does indeed repeat itself.

What is likely to happen over the next 5 years?

I have been attending lots of webinars, trying to get a handle on where the investment market is headed. One of the asset managers recently shared this

Cash investments like fixed deposits are probably not the place to be

Global equities are expected to do well, followed closely by local equities. An interesting fact which probably accounts for this is that 62% of the earnings of our top 40 companies come from offshore. You are therefore getting significant global exposure even if you are invested locally.

Offshore investing

It is actually easy to invest offshore and there are several options open to you. These range from converting your rands into dollars and investing in through an offshore company to buying a unit trust that tracks a global index. If you need help, give me a call.

There are also some clever structured products currently on offer. These guarantee your capital while at the same time giving you exposure to offshore markets. If you are worried about losing your capital in the current market, an investment like this could work for you.

Wills

I’ve been preparing for a course on estates and wills that I am co -presenting at UCT next week and came across something interesting.

If you die without a will, the government divides up your estate according to a particular set of rules. This is fine if you die in the country in which you typically live. However, should you die in another country, then that country’s laws will determine how your immovable property is divided. While your firstborn son may be happy to inherit all your house if you die in a patriarchal country, the rest of the family may not be to charmed. If you have a will, this problem is avoided so please get one

Till next month, keep safe – event though we may have peaked on the Corona front, don’t let your guard slip

ENDS