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Why we need to be flexible with our New Year’s Resolutions

Towards the end of every year, it is customary to reassess our priorities, take stock of the year that was, and plan for the year to come. The emergence of the 2020 Coronavirus pandemic and global lockdowns disrupted our daily routine and our lifestyle altogether, throwing most plans and resolutions out the window!

Does that mean that planning is no longer helpful? Or does it mean that setting long term goals is no longer relevant?

Not at all – all it means is that we need to progress in our approach to planning.

A big lesson that we can learn from the lockdowns of 2020 is that we need to embrace an approach that works with the times – as we continue adapting our habits to the “new normal”. 

Going forward, we need to determine how to set flexible resolutions. 

With flexible goals, we need to remain aware of a broader spectrum of possible scenarios. 

Here’s why.

Timelines have changed

Traditional goal-setting strategies generally employ a timeline, and when it comes to New Year’s Resolutions, the timelines are often constrained within a year. Partly because we sometimes make these things up on the spot and assume that we have plenty of time to achieve them, and partly because we’ve put pressure on ourselves to see measurable change within a shorter period of time. 

Taking the time to review resolutions and sensibly deciding on them is a good idea. But, an even better view can be to create a larger goal – like a 5- or 10-year goal, which can be engaged with in stages each year.

So perhaps, instead of saying “I want to lose weight this year”, consider a longer-term plan for your overall health. A first priority for the first 12 months could be committing to a healthy meal plan. For year two, you’ll continue eating healthily but could include exercise. As you engage with each stage of the plan, you will slowly start to see the next mini-goals become apparent and shape the long-term goal.

New Year’s Resolutions are often not relevant to us

New Year’s Resolutions are popular conversational trends at the beginning of the year with many of us feeling like we need to ‘follow the crowd’. As a result, we are prone to setting goals that have little or no personal gratification or inherent value; we set ourselves up for failure.

When we make goals – they need to make sense to us and be achievable to our current life stage.

All the legendary athletes, artists and academics who have inspired us had to face failure and unexpected challenges along their journeys. Often, their success has been linked to their ability to ‘roll with the punches’ and their ability to be flexible when plans change.

This is why we need to be flexible with our resolutions. Always remind yourself that a happier life does not depend on achieving your resolutions, but it’s about enjoying the journey and gaining valuable lessons as you work towards them.

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Who’s advice are you taking, seriously?

Times of festivities and celebrations are often paradoxical in that we want to see friends and family, but we find that when we’re with the ones we don’t often see (only for big occasions and end-of-year-bashes), they have opinions that challenge our own and they’re all too willing to offer advice that we haven’t asked for.

This is okay – we don’t have to take their advice too seriously, especially when it comes to managing our money. You can choose to stick to the advice of your trusted financial advisor.

When it comes to managing our finances, listening to too many voices can be dangerous. It’s often said that when you’re buying a car, the more people you speak to the more confused you’ll become. The same is true of your finances.

In our relationship, we want to help you avoid common financial planning and investment mistakes. This doesn’t happen once a year at a lunch party where the financial conversations tend to be rather superficial. This happens regularly and only after deeper conversations around meaning and purpose have been explored and brought into context by the money that you have.

This is instrumental in helping you make decisions that are right for your circumstances and, importantly, helping you to avoid the pitfalls of investing on your own. Recently published on Allan Gray’s website, here are some powerful reminders of why those who have financial advisors (and take their advice…) fare financially better.

Investing without a plan

A well-crafted financial plan is a critical starting point for achieving financial freedom. If you don’t know where you’re going, how will you know when you get there? An advisor will help you to develop a workable plan to suit your personal financial goals and needs.

Investing in the wrong product

The choice of products available is mind-boggling. Different products have different tax structures and different objectives. An advisor can help you make the choices that suit your circumstances.

Forgetting inflation

Time can erode the value of your money, leaving you able to buy less with the same amount of rands. This is called inflation. By putting your money in the right investment, an advisor can help you achieve returns that, at least, compensate you for the length of time that you invest so that the value of your money is maintained.

‘Blowing’ your retirement savings when changing jobs

It’s essential to preserve your retirement savings when you change jobs or if you are retrenched. If you don’t, you probably won’t be able to retire with enough money to live on. An advisor will encourage you to keep your savings intact.

Acting on your emotions

Investors are known to be bad at timing the market and basing investment decisions on emotions. In addition, they tend to switch between investments too often, destroying the value of their savings. An advisor could help you avoid this pitfall.

So – who’s advice do you want to take seriously? When someone has skills, experience and qualifications that can help you AND has spent time understanding your needs and helping you put a plan in place that reflects your goals and your risk appetite – you take their advice, seriously.

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Investing: How elections matter

There are three things we should never discuss around the dinner table: money, politics and religion. Ironically, the three things we normally always talk about around the dinner table… are money, politics and religion!

One reason for this is because they’re all connected, and they’re all HEAVILY influenced by you, me and everyone that we talk to, work with and interact with on a daily basis. The markets, politics and religion all give us a sense of belonging, purpose and stories to share. These are three of the four fundamentals that give us meaning – so… we’re likely to talk about them at any chance we get.

Depending on the crowd we’re with, our conversations will be dominated either by academics or opinions or perhaps a balance of the two. When it comes to elections (both in our country and others), the situation is the same too – so when you’re next around a dinner table, here are two crazy academic points that you can contribute to the conversation.

MARKETS – LOCAL AND OFFSHORE

The most obvious sentiment when it comes to elections is around confidence in the leadership. This confidence (or lack thereof) will directly influence investor confidence. This can be both local and offshore – if we don’t like what our leaders are doing, we are less likely to invest in local business (markets) and more likely to look at a heavier offshore weighting. The same too would apply to those who are sitting outside our country – and determine whether money is pumping in, or out, of our economy.

Administrative policies play an equally important role here as new administrations often like to shake up policies of previous administrations. These affect everything from the support offered to businesses at every level, living standards of the workforce, education and health for their families and the taxes we will pay for goods, services and investments.

This all leads to a more immediate impact – and that is the strengthening or weakening of the currency. Our buying power goes up and down accordingly – and once-again circles back to how much we can afford to invest in our local economy.

TRADE RELATIONSHIPS

Elections in other countries can also heavily influence what happens in our market as we have significant trade relationships with them. In his book, 21 Lessons for the 21st Century, Yuval Harari reminds us that all our communities are so intrinsically connected through trade-relationships that it’s hard to stand for any cause or initiative without indirectly supporting the opposition.

The clothes we wear, food we eat, cars we drive, technology we use and the social media platforms that we communicate with and stay in touch on are all manufactured, harvested, designed and maintained using intricate global networks. 

A trade relationship that affects the parts that my car company needs to import could mean that my car takes longer to service, and will cost me significantly more than before. The food I used to enjoy from my local grocer could also become less readily available and attract a premium for import duties when it is available.

Elections matter – not only our own but other countries’ too. The next time your dinner party runs wildly away with passionate opinionistas, you can throw in the above nuggets and sound like an investment guru!

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The gift of compounding interest

Every holiday season, the search begins for gifts that keep on giving. From music to cooking classes and other hobby-related courses – scores of us try to find a gift that won’t be tossed onto the pile of unwanted, unused and under-appreciated thingy-me-bobs.

We look for things that are ‘cool’ or ‘trendy’ – but ultimately, it’s precisely the same quality that makes a gift trendy that will give it the shelf-life that we’re trying to avoid. 

Most of us don’t think of accounts or investments as gifts – but maybe we should.

Albert Einstein called compound interest the eighth wonder of the world, accrediting it as the most powerful force in the universe. With an accolade like that – surely it would make a worthy gift?

There are two types of gifts – there are those that we give others (most commonly how we view them) and those that we give ourselves (we often feel guilty about these and do this far less often).

Giving ourself gifts is actually extremely cathartic and helps us maintain positive mental health. In a world where stress, constant change and prolific misinformation abound, looking after our mental health has never been more important.

So – whether you’re searching for a gift for yourself, or someone else, how about thinking about the gift of compound interest?

There are three ways to set yourself up for a successful endeavour that reaps the benefits of the gift that keeps on giving:

1 – Create a habit of saving

Longterm investing that benefits from compound interest is ultimately more about the consistency and longevity of saving than the actual amounts that you’re putting in. In the graph below (purely for illustrative purposes) we can see that someone who commits to investing 500 bucks a month from when they’re 25, will have significantly more growth on their money than someone who clocks into the habit in their 50s.

Putting a small amount away, habitually, for many years, is where the most powerful force in the universe starts to shine.

2 – Investigate the tax benefits

Many savings vehicles that are set up for long-term investing have tax benefits that will inadvertently increase the value of your investment. This doesn’t apply to all types of investments, but it’s worth investigating. Remember, a penny saved is a penny earned!

3 – Buy yourself time

As Warren Buffet says; time is your friend and impulse is your enemy. This ties in with the first point in that building a habit of saving will also buy you time. The longer you can invest your money, the more work compounding interest will be able to do to your end figure.

The above graph is based on someone investing 500 bucks a month with a 7% return and shows the projected return at 65, after investing from 25, 30, 42, 45, 50, 57 and 60. The later you start, the less you get.

Most of us know these principles, but a regular reminder is helpful to either start a wise investment, or stick to one we’ve already started.

If you’re not already enjoying the gift of compound interest, hopefully this blog will inspire you to take the next steps!

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Being responsible means so much more

Festive celebrations will look a little different this year (and possibly every year going forward!). No matter where you find yourself this December, everyone has had a year of heightened awareness around health and personal space.

It has not been easy to follow precautions of preventing the spread of Covid-19. Having to wear masks all day and sanitise at every entrance took time to get used to. These experiences have changed the way we look at everything – from nipping out to the shops right up to blowing out the candles on a cake. 

Festive season celebrations will need a fresh look at what it means to be responsible. Usually, celebrating responsibly means not overindulging and putting yourself and others at risk – now it will include keeping guests to a minimum and extra consideration around how much we expect ourselves and others to spend.

The responsible thing to do this holiday season could very well be to socialise less and stay at home more. This doesn’t mean we cut all ties and burrow away; it just means we need to rethink our traditions of spending time together over the holidays.

Here are a few ideas…

Create some space

Over socialising and ‘trying to fit everyone in’ is no longer advisable. In some ways, it removes the pressure to attend so many events that we slide into the new year completely exhausted.

For the year-end functions that you can’t avoid organising, many are choosing to split these into mini-events. Family gatherings could be something smaller, with extra consideration given to those who are elderly or at higher risk. If someone chooses to pass, we shouldn’t take offence or pressure them into not missing out. 

Hybrid events, where some guests attend in person, and others are linked through a screen, are also popular ideas to keep in mind.

Keep yourself fit 

Keeping fit is good and could help keep your blood pressure low – which is beneficial for boosting your immune system and coping with stress.

There are free apps with short, effective workouts that you can download on your phone and start on right away. Taking regular walks outside is a great way to improve health, circulation and mental stamina – and doesn’t cost a cent!

Shop away from the shops

With everything online, going to the shops is a choice and no longer a necessity. 

Be mindful of cyber-security and verify whether you’re paying the right store before inserting your personal information on any platform. Stick with brands and providers that you know and trust.

Stay updated with safety regulations

2020 reminded us all that rules and regulations can change from week to week. Keep your guests aware that you’re flexible and try, where possible, to have a plan B in place.

It’s also not merely about your event, but how others can travel and which business may stay operational. If you need access to specific catering services, make sure they’re also allowed to operate and won’t affect the success of your event.

Let us all try our best to embrace safer ways of celebrating during this festive season. If you’re not doing it for someone else’s safety, do it for your own.

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Gifts for the cost-conscious

As our finances ebb and flow, we will sometimes face a festive season where we have to think out of the box for holiday gifts. Gifts are a wonderful way to let our loved ones know how much we appreciate and value them, but they can be expensive and out of reach if we don’t give them enough thought.

Gifts don’t always have to be a physical, fit-in-a-box, wrappable item – they just have to be meaningful and well-considered. Most people don’t actually want the plastic swizzle sticks from the local Crazy Store that have been sitting on the same shelf for the last seven years.

If you’re willing (or needing) to be a little more cost-conscious in your gifting, then here are some great ideas to add to your list.

Memberships and subscriptions 

Instead of designer socks or a new skincare regime pack, how about paying for that SkillShare class or MindValley course your friend has been talking about? If you’re getting gifts for someone who reads a lot, why not pay for an Audible subscription or Kindle voucher? 

If you’re looking to reduce the stress and boredom of someone who’s housebound, you could get them a gift voucher to NetFlix, iTunes or Spotify.

Even if it’s a three-month subscription (remember, the first month is generally free), they’ll think of you every time they enjoy the ease of choosing what they want to watch or listen to.

A ticket or voucher for an experience

Vouchers for dinners, a day in a theme park or a guided tour are downright exciting! Whether it’s to a local wine estate, or that touristy balloon thing that no locals ever pay to do, this type of gift can be well-tailored to the person you’re gifting.

Of course, you’ll have to look for gift options that will be fun but affordable at the same time. If you’re going for a road trip or flying somewhere you may have to fork out more, whereas, if it’s dinner at a niche restaurant or a ticket to a concert you could spend less than on those designer socks…

Try secret Santa

Giving gifts can be an interactive event that includes everyone. With so many events going virtual, you can have a virtual secret Santa, for exchanging gifts with colleagues as well as friends and family.

There are great apps to help with a virtual secret Santa (like Elfster or Giftster), but with a little innovation, you and your squad can draw names and use local online shopping to send gifts to people.

If you think about it – this becomes an awesome idea for groups of friends, colleagues and families who find themselves on completely different continents.

Remember, costly gifts are often the ones that go unused. You don’t have to spend outside of your budget, and you don’t have to pressure others to do so either. You can start a trend and set the pace for more responsible spending and celebrating this festive season!

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Savvy celebration tips when times are tight

Tough years lead to leaner budgets and lighter wallets. But it’s important to celebrate and the festive season is traditionally a time to enjoy and celebrate friends and family. Families and businesses host and cater for large groups of people, and the costs can add up quickly.

Enjoying the holiday season during tough economic times means that we need to change our usual game plan. In addition to the material costs, being mindful of new social norms like social distancing (not an issue for most of us pre-2020) and other fluctuating government protocols, curfews and restrictions is a priority.

Here are four ideas to help us have a merry and safe festive season!

Dine together – online

During the “new normal” we became accustomed to virtual meetings and video chats. Savvy celebrators are taking it one step further and dining virtually! It sounds like a challenge-and-a-half but when one considers the logistics and costs that go into hosting and catering for IRL (in real life) events, it’s not so daunting. Being limited to a small screen on your smartphone or laptop can be conquered.

There are ways of making the experience interactive and fun for everyone involved. 

If you usually plan the menu together or cook together, you can create a live Google doc or spreadsheet that you can use to list the recipes and have how-to-guides, that other family members and friends can use to prepare the same dishes in their own homes. Because they’re interactive documents, you can also share tips and alterations that you make to the menu based on your restrictions or budget constraints. 

This way you’ll end up having the same meal and treats together, albeit not in the same room. You’ll be able to tease each other and communicate over a meal, on video.

Cater for a small circle

Adapting to the times and hosting a small group seems to be the most ideal thing during trying times. Preparing food for three or five more people instead of 12 or more is enormously cost saving and reduces health risks for those who may be uncomfortable with larger groups. 

If you feel it could save you more time and money, you can order pre-cooked or already prepared meals with smaller portions from your local deli or home-enterprise, this way you’re also supporting local businesses and boosting our economy of small businesses. 

Eat outside 

Apart from having the health benefit of being outside, having a garden meal helps reduce the cost of things like decor and fancy furnishings. Having a picnic-styled meal reduces many costs, makes it easier for guests to contribute what fits with their budget and keeps us breathing fresh, clean air.

Do your shopping from home

With click and collect services now all the norm, and so many more retailers upping their online game – shopping for food and gifts online is only getting more convenient.

Not only is it healthier for those who don’t feel comfortable in large public spaces, it’s a super way to shop the specials, save on transport and parking!

Major global events and economic downturns can place immense pressure on us, and in some cases; radically change our lifestyles. This doesn’t mean we should hide away and pinch every penny, it means we must adapt our ways in order to keep getting the most out of what we have and who we can share it with.

The festive season does not always have to be the same – we can create new traditions. We can be more mindful and respectful of others and share on a deeper, more authentic level.

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Taking stock and talking stocks

Anyone with a mediocre knowledge of investing will be familiar with the term “stock”. 

But few people are aware that there common stocks and preferred stocks. And they’re fundamentally different.

Stocks have been traded for over 400 years – the first common stocks were made available in 1602 through the Dutch East India Company. They form the building blocks of our modern-day economy and have taken on personalities of their own.

In a nutshell, here’s what we need to be clear about when it comes to working with preferred stocks and common stocks.

Both represent a piece of ownership in a company, and both are tools that we can use to try and profit from the company’s future successes. The differences come down to what privileges or rights we will enjoy and how risky our investments are.

The first key difference is in voting rights. Preferred stock owners do not have any say in how the company is run, whereas common stock owners enjoy voting rights. This is most often one vote per share-owned and allows a say in concerns like the election of board members who oversee management’s major decisions. Common stockholders can influence corporate policy and management decisions where preferred shareholders do not.

While they may have less say in the company direction and management, preferred shareholders have priority over a company’s income and are paid dividends before common shareholders. This offers slightly more investment security and predictability when a company performs poorly, as dividends are generally paid out more regularly and aren’t always paid out to common stockholders. In times of liquidation, the preferred shareholders have first dibs on assets and earnings.

Common stockholders are last in line when it comes to company assets, which means they will be paid out after creditors, bondholders, and preferred shareholders. In this way, preferred stocks are very similar to bonds. 

The payoff for common stockholders (the most popular form of stock allocation) is that the gains can be significantly higher in the long term if the company grows and finds a solid footing in the market as a profitable entity. They may not reap the rewards of dividends in the early days, but they stand to reap more in the long term.

Depending on your personal investment strategy and event horizons, it may be worth considering preferred stocks over common stocks or vice versa. It’s good to remember that preferred stocks can be converted into common stocks, but we can’t go in the other direction.

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Three ways to survive a bear market

What do you do when a bear attacks?

For many of us, we don’t live near any bears, so we’re likely to be unprepared. When it comes to a bear market, the situation is not too different. No one can predict a bear market, and for some it’s not even easy to recognise when a bear market begins and when it ends.

The general agreement is that bear markets are characterized by a consistent drop in the market, accompanied by negative investor sentiment. The more we work with markets and investing, the more frequently we are reminded that emotions are instrumental in driving the markets. Negative sentiment is, therefore, quite an important element of being in a bear market.

As we look at ways to bolster our investments in bear market conditions, here are a few strategies to employ (taken from Investopedia.com), but before you try any of them, make sure we’ve had a chat to understand your unique situation. If a bear rummages through a campsite, it’s possible for your tent to remain unscathed. Not everyone struggles in a bear market!

Keep calm… and move slowly

Just like the wilderness encounter, experts advise you to remain calm and make no sudden movements in the presence of a bear. The same is true of the stock markets. Sudden movements and panic decisions can cost you an arm or a leg…

Diversify

Diversification is almost like looking for a more solid footing and spreading out a little. This not only gives you more stability but it ‘keeps your head down’ and allows you to physically take up a little more space without placing yourself in a more precarious position. Being caught off guard can also mean that we’re caught off-balance. Diversification of stock allocations helps us ensure balance and encourages stability in our portfolio.

Only invest what you can afford to lose

Bear markets are often accompanied by other market downturns, with people in all sectors needing to tighten their belts and sharpen their pencils. There is less expendable income, making it even more important to focus on covering our bases first before extending our risk. It’s wise to have savings and investments, but we also need to put food on the table and take care of our everyday needs. Even small adjustments in the market (in the wrong direction) can be detrimental to your portfolio, and it will need time to recover. 

The markets always present opportunities, even in a bear market, but it takes a comprehensive strategy and a team of astute investors to survive. Don’t go it alone, and don’t dabble without weighing up the risks.

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Planning reduces anxiety

We don’t plan because we fear the future. We plan because we realize we can enjoy today more by reducing the anxiety of tomorrow. 

Most people accept that planning offers us a detailed proposal for doing or achieving something. When we plan, we map out the possible steps of our ideal life journey before taking them. Some of our biggest fears orbit around the unknown, so if we can clarify what our future might look like, our planning will reduce our anxiety.

Planning could be as large-scale as our long-term financial planning or building a family or business, but it could also be as simple as planning a weekend away or a simple trip to the shops!

Here are four tools that will help us in our planning.

1. Write it down

Journaling helps us to review our habits and routines regularly. For this to work, we need to be honest. We need to be able to look at different areas of our life and identify what we want to change.

Here are some questions to ask yourself when jotting down these ideas:

  • What do I want to do differently?
  • What do I want to do more?
  • How can I achieve my goals? 
  • How can I continue growing along the way?

2. Prioritize your values

When asked to write down the things that we value, it’s easy to create a list that includes many great values. These can be overwhelming to engage with, so we need to start with the full list and then begin to order them in terms of what we feel are most relevant and engaging to us in our current life-space.

As we grow and experience changes in our lives and responsibilities, these values might change in order of priority – writing them down and shuffling them around helps us maintain a sense of authenticity and accountability while reducing our anxiety.

3. Get support

Sometimes we can accomplish more, in less time, with help. Fortunately, we live in a time where we do not always need to engage in face-to-face conversations with real, live human beings for help. There’s a plethora of newsletters, blogs, podcasts and videos online that we can use to encourage us on our journey.

But, when it comes to holding us accountable, especially when life presents us with roadblocks, having support from family, friends, or a coach, or hearing stories of people who have faced similar challenges, can help us navigate them and reduce anxiety. 

4. Keep looking ahead

Planning your journey into the future can help you maintain your vision and reduce the anxiety of not seeing instant results. Looking ahead helps to keep us mindful of the bigger picture, the bigger plan.

Often we give up on plans because we want instant gratification and confirmation that what we’re doing is right, and that our approach works. 

It’s important to realize that progress is not only in achieving something. Just thinking about and working towards progress speaks volumes about your personality because you know the type of person you want to be, and you are committed to being that person every day.

Keep that in mind and celebrate it with a smile every day.

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