So that was May…

May was an eventful month on a number of fronts and barring moving to level 2, the news was generally good.

Investments

The JSE all share index increased by1.5% giving us a fantastic 13% in growth so far this year. In fact, the stock exchange has rebounded by 34% since the beginning of June last year.

The overseas markets showed similar growth with the USA being up by 13.5% and the UK by 14% for the year so far. The growth since June last year was 37% and 35% respectively.

The question I have been asking investment analysts and economists is whether this growth is sustainable. Many pointed to low inventory levels, the stimulus packages and pent-up demand as reasons why there should be more growth. There will, however, be months when the market contracts. Let’s enjoy the ride while we can but ensure that our portfolios are balanced and can handle any downturns.

Bitcoin

Speaking about downturns, the price of Bitcoin fell by 41% over the past month. It is still up by 279% over the past year though.

As I mentioned in an article I wrote on cryptocurrencies, the challenge with investments like this is that I have no way of valuing it and have no idea whether the current price represents a buying opportunity.

Annuities

There is talk that interest rates may increase by up to 0.5% next year. If you are thinking of taking out a life annuity, you may want to do it sooner rather than later as annuity rates generally decrease when interest rates rise. This means that the monthly pension you can get will be smaller.

Wills and estates

With the challenges of working from home and the increased number of deaths, estates are taking a lot longer to be settled. I have come across several cases where families are suffering real financial hardship while waiting for an estate to be settled.

Take a look at your own situation and make sure that your finances are structured to cover the costs of winding up your estate. Ensure that your dependents have money to live on while this is being done. If you need some help here, give me a call.

Exchange rate

A year ago, the Rand was trading at R17.37 to the dollar. It is now R13.72. If you are thinking of investing offshore, now is the time to do so.

I have spoken about the benefits of not having all your eggs in one basket, especially if that basket represents less than 1% of the world’s economy. A decent offshore investment portfolio can certainly help your family finances, especially with more and more of our children living overseas.

You are allowed to move R1 million a year offshore with relative ease and another R10 million a year with a bit more hassle. The advantage of doing this is that you will not be paying capital gains tax on the currency movement. With the rand being so low, this is very attractive.

Till next time, keep safe.