Here’s the thing about financial planning: we don’t plan out of fear; we plan so that we can extend our peace of mind. This is why wills form such a key role in our planning. However, engaging in this process can be clumsy, confusing, and a little hairy, and as Ricky Gervais once said, where there’s a will – there’s a relative!

We need to talk about wills and estate planning so that we can remove the stigmas that stifle our engagement with drafting our will. 

As Mvuzo Notyesi, president of the Law Society of South Africa, says, “If you are a parent, a breadwinner, a homeowner and generally want to ensure that your affairs are in order, it is important that you have a valid will drafted by an attorney.”

Global panic in early-to-mid 2020 us all to think about these documents, and requests for them to be drawn up or updated were aplenty. The risk of creating these documents under duress is that we can make mistakes, sometimes in what they cover and other times in their legitimacy when official procedures are overlooked (or not available as in hard lockdown). Being ready and willing when you’re in a time of clearer, lucid thinking is a much better approach.

Drafting a will on your own or by using a web-sourced template can sometimes be sufficient, but these will not be applicable if you are residing outside of your country or origin, if you have young children, if you have assets in different countries, if you are part of a blended family, or if you are likely to inherit money yourself. These are just a few of the factors that would not be covered by a DIY basic will.

We can connect you with qualified professionals who can establish your needs and offer professional advice on any problems that may arise, before forming your estate plan and drafting your will. You need to have access to the necessary legal knowledge and professionals with the experience to ensure that your will not only complies with your wishes, but is also valid and meets the requirements of the law.

Vague wording like “I leave my cars to my sons” is typical of a DIY will, and may be disputed –  turning into an expensive and lengthy legal battle. What if the one car is worth R80,000 and another is worth R300,000?  What if someone arrives, claiming to be a son? Words like ‘descendants’, ‘my business’ or ‘personal items’ are also legally vague; pitfalls and loopholes are hard to spot if you’re not a trained lawyer.

Legal terminology like “bequest of the residue” are terms you may have never heard of and would certainly not put in your Last Will and Testament – all the more reason to hire a professional and save your family the additional heartache and stress later.

No one likes to plan for a time when we might not have enough money to make ends meet. Often, when we plan or make financial decisions, we assume that our future self will have enough money to pay for the decisions we make today. Sometimes this turns out to be accurate, but sometimes it doesn’t.

And, if the economy slumps and we have a cost-of-living crisis, the pressure on our finances can be debilitating.

Before we look at how to cruise through a cost-of-living crisis, it’s helpful to remember this…

It doesn’t matter how much money you have, what savings you have or how frugal you can be; inflation affects everyone. Every. One.

The first thing we need to do in a situation like this is to acknowledge that we’re not alone. We are pressured to make certain purchases and live a particular lifestyle because we think everyone else is managing and coping fine. But, truth be told, most of us have to make serious adjustments to our budgets and financial decisions when times are tight. If you feel you can no longer afford your bills, there’s a good chance that you’re not alone.

This is helpful when we need to look at other strategies to reduce spending or realign our finances to weather the stormy volatility of increased living costs. Everyone needs to think differently in order to spend and live differently under a strained economy.

The upside to this is that necessity breeds innovation. We learn to make do with what we have. But, it’s not just about making ends meet. In hard times, people unite in extraordinary ways to support and encourage each other. Relationships are forged, communities are strengthened, and our stories are coloured with wonderful, unexpected experiences.

Downgrading a home, moving in with others, selling a car or changing schools are hard things to do, but they can create memories that we will cherish forever. And, it all comes down to our attitude.

This is how we cruise through a crisis; by adopting the right mindset.

Sure, we can scrutinise spending, scale back on expenses, renegotiate debt repayments and look for savings, but ultimately, it’s how we allow challenges and changes to grow us and make us better people. You’re not alone. Let’s chat.

We often think of things like stocks, bonds, mutual funds, annuities and assets as investments. But, investments are a broad area. According to Investopedia, an investment involves putting capital to use today to increase its value over time. An investment requires putting capital to work, in the form of time, money, effort, etc., in hopes of a more significant payoff in the future than what was initially put in.

With the increased use of technology to communicate and distribute value, the world of investing has grown to include many more opportunities than existed a few short decades ago. What we know now, and what we can do now, is leagues ahead. Just consider how Airbnb and Uber turned empty homes and idle cars into sources of income.

One of the more recent trends in alternative investing has been in the fashion industry, with people finding ways to create an income from their second-hand clothes. A decade ago, you would have struggled to offload second-hand clothing, let alone get paid for it, and emptying your closet meant a trip to a charity shop.

In a recent article in the Economist, we read that:

“Once Airbnb and Uber had propelled the idea of a sharing economy into the mainstream, firms turning used clothing into an asset class were not far behind. As with accommodation and transport, not just resale but rental was revolutionised. By Rotation and Rotaro act like sharing-economy apps for wardrobes. Now, whether people are reselling knick-knacks, lending out old clothes, renting a spare room or picking up passengers in their spare time, they are making better use of their assets than before.”

We are literally moving from old bags to new riches. Living in a time where we can be so profoundly connected to how we create and experience value is exciting.

We don’t have to simply invest in a long-term savings account; we can become fully immersed in the grassroots investing of our money. The boredom of covid-19 lockdowns may have boosted resale by giving people time to clear their wardrobes and browse second-hand fashion online. According to estimates from GlobalData, last year saw over 33m new buyers and 36m new sellers of old garb.

The very thought that an item might be rented out or resold in the future changes how we approach buying it in the first place. From Meta (Facebook) groups and Telegram channels to apps and blockchain platforms that allow us to exchange value like never before, the future of finance and our economies are colourful and dynamic. Anything can happen.

When the purse strings are pulled tight, it’s challenging to look at your statement and see monthly amounts deducted for insurance payments. Whether the risk policies are for health care, income protection or the protection of assets, seeing them come off your account can be painful.

As a result, many of us cut these policies quickly to create immediate relief to our finances because it feels like one of the few things we can control. But if we do this out of panic, and not strategic intent, we may very likely regret the decision.

If we miss a payment or cancel a contribution, our policy will be in danger of lapsing. Different companies and countries have various rulings on the timelines for this, but the general guideline is that if you stop paying, you will lose your cover within 30 days. A lapsed policy could mean more than just the loss of cover; it could also be linked to other integrated products in your portfolio.

We all know that life can become complicated and uncomfortable without notice. We can lose a job tomorrow, or receive a dread-disease diagnosis next week; we’re not in control of what will happen. But, we are only in control of how we will respond to life taking a turn for the worse. 

This is where we can become powerful and push through the tough times to emerge stronger and better than we were before. Here are a few strategic decisions that can help you make healthy decisions and avoid lapsed policies.

If your finances have become constrained, it’s possible that a reshuffle or reduction of your policies could be beneficial. Rather than cancelling them without a second thought, you can look to reduce costs or change options. This is where, together, we can help you make powerful choices to keep some cover in place and identify critical areas of focus.

It’s also essential to remember that cancelling a product now may mean that you will no longer be eligible for it again in the future. Many legacy products in the financial sector cannot be reinstated after they have been cancelled or lapsed. Make sure you know what you’re letting go of – especially if it’s linked to a rewards programme.

Another beneficial strategy is to engage (sometimes through your financial planner) with the product provider and ask for a payment plan or a payment holiday. Communication is immensely valuable in a crisis, and it’s often the hardest thing to do when we’re feeling overwhelmed and vulnerable. 

Before you lose out, reach out. Let’s touch base and see what the best steps forward will be to keep you in the most beneficial position possible.

Whilst it’s good to have someone on your team (your financial adviser) who knows what’s happening in the markets, it’s not always helpful to relay all that information to you and have you make decisions about it. We can’t control the markets, but we can control our conversations about money.

That’s why it’s not always helpful to ask what is happening in the markets; it’s more beneficial to ask what problems we can work on in our own lives, that we can choose to influence or overcome.

Because these will always, always, affect our money.

In some of the most recent financial planning conversations, we’re trying to focus on some of the most common emotional, behavioural and financial problems we can help our clients solve.

EMOTIONAL PROBLEMS

1. Anxiety
2. Fear
3. Uncertainty

It is empowering to talk about and plan for what could or might happen, it’s not always pleasant (because it’s so filled with anxiety!), but it’s necessary. Through this, we can deal with and confront what is happening at any given point and become comfortable with uncertainty, helping you paint a more understandable and accessible future.

BEHAVIOURAL PROBLEMS

1. Risk Management
2. Control
3. Confidence

We live in an era that is pleading with us to be kinder to ourselves, and it’s a wonderful space in which to be present. It’s not about ignoring pain or problems, but it could be about planning to be less wrong tomorrow. We can reduce the big blow-ups and mistakes and let the boring be beautiful! This helps us gain a better sense of control and restores confidence in bucket loads.

FINANCIAL PROBLEMS

1. Do we have enough?
2. Paying too much tax
3. Giving

This first question here is one that often needs as much reframing as the one in the title of this blog! Our challenge is to deal with the intersection of enough vs more and align money and time with what’s most important to us. This then helps us with some of the more practical concerns, like minimising tax and finding a way to make our money expand, and not reduce, our legacy. It’s powerful to be able to give with a warm heart, not a cold hand.

If you want to explore these questions more, and change how you engage with your money and how it affects your quality of life, let’s chat!

“Genuine travellers travel not to overcome distance but to discover distance.”
James P Carse

Investing money is always a paradox: it’s simple, complex, straightforward, challenging, mathematical, and unpredictable. It’s because of our emotional influence that plays a significant role in every decision we make.

When investing in the markets, many have said it’s all about time in the markets, not timing the markets. When trying to time the markets, our emotions can offset our mathematical thinking and trigger our unpredictable, irrational thinking. Just like the genuine traveller, who would more often choose the scenic route than the shortcut, we cannot allow panic to have us second-guessing and looking for a shortcut to sustainable wealth.

Seasoned investors, like genuine travellers, know that the markets will always have twists and turns, hills and valleys. They often choose the road less travelled because it’s about discovering, not overcoming. But it’s also not always about taking a longer route as much as it is about realising that the course may have unexpected scenery, delays or alternate routes.

Another helpful comparison from this analogy is that successful, memorable trips often have a navigator and a map. In our financial journey, when the road gets hairy or it looks like we’re heading off course, we need someone to help us check in on our map to either assure us that we’re on the right road or quickly find alternatives for us.

The markets and your investment strategy will always have you second-guessing; that’s simply the nature of important decisions. Every big decision we make will always present many alternatives and that’s why it’s helpful to have relationships with people we trust and respect to help us make and stick to our best decisions.