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Is there more to life than happiness?

There seems to be an increasing drive to pursue happiness; we want to be satisfied and content with who we are and what we do with our lives.

Whilst a few people seem to eventually “find” their happiness, many of us are still trying to figure out what would genuinely lift our spirit… and keep it there!

The usual assumption is that we’ll be happier when we achieve success, but some successful people think their accomplishments are still not enough, not finding satisfaction with who they are and what they’ve done.

Perhaps it’s not about finding happiness, and it’s more about finding meaning. Studies show that people who have found meaning in their lives are more resilient in pursuit of a fulfilling life.

Having listened to Emily Esfahani Smith’s TED talk on ‘There’s more to life than being happy’, here are some ideas to work on.

  • Find where we belong

Belonging does not merely come from showing up or being present. Some people who have been part of communities for a long time still might feel like they don’t belong. The sense of belonging develops in groups or communities where we feel valued for who we are and what we contribute.

Love and kindness are where true belonging is born. Knowing that the contribution we make is appreciated indeed develops a confident feeling of belonging. From this confidence, we can begin to find our purpose, which is another essential pillar of living a meaningful life.

  • See our purpose

Finding our purpose may not happen today or tomorrow; it may take a while to find. 

This could be because deep purpose is not found in what we do, but in what we give. As we grow in our place of meaning, we will start to see that an element of what we do becomes a service to others. It’s about creating space in our lives to serve others and make positive contributions to their lives.

Why do I wake up in the morning? Why do I do what I do? Who am I doing it for? Who else benefits from my work or actions? How else can I make it better? These are some of the questions that can start us on a journey to finding our purpose and transcend the frustrations of daily challenges.

  • Be open to transcendence

Whilst transcendence is often used in a spiritual sense, it can be very practical. It simply means that we’re starting to see that we are part of something bigger than ourselves. Our sense of belonging, our embracing of purpose, helps us see that the work we’re doing contributes to something far more significant and far more connected than we realised.

As we live through these experiences, create memories of meaning and engage in purposeful work, we gather up stories that we can share with others, to encourage and embolden them.

Good stories are significant in living a meaningful life.

  • Personal storytelling

What stories are you telling yourself? What is the story you tell yourself when you reflect on your life?

What you think of yourself profoundly impacts your behaviour and actions.

“It all starts in the mind,” Napoleon Hill once said. “Whatever the mind can conceive and believe, it can achieve.”

Beliefs matter because they can lead to habits.

Positive storytelling can give you the courage to relentlessly pursue the things you want and live a life that will be meaningful to others too. 

Applying these ideas into your daily life won’t be linear or clean-cut, but if you can explore one idea at a time and define them according to your life or what they mean to you, you’ll be taking a step in the right direction.

Remember, all the money in the world will have no value if we have not discovered some sense of meaning.

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Divorce and your retirement savings

Recent times have been life-altering for so many, from emotional and health traumas to relational and financial traumas. We’ve all had to encounter a considerable onslaught of ‘stuff’ to process and deal with.

It may just be life, but it’s still hard.

Divorce is one such trauma that so many have to work through. It has a wide range of social and financial implications, as Lebona Khabo from Allan Gray highlighted in a recent article on their website.

Depending on your matrimonial property regime (considers implications like community of property, accrual, pre-marital ownerships etc.), there may be a sharing of assets you own individually or jointly when you get divorced. One such asset that may be included in this division is your retirement savings, which may have been accumulated over a long time. 

Retirement products fall under several legislations when they represent assets that are jointly owned (subject to tax legislation and family and divorce legislation) – and this creates complex considerations in a divorce settlement. 

Furthermore, some of these products may only mature at a future date, so whilst not available to the principal member, they may have future value to dependants. This needs to be included in a settlement. In many instances, court challenges have made provision for a ‘clean break principle”, which allows for the non-member spouse to receive their share of the benefit, referred to as “pension interest”, at divorce.

Pensions interest encompasses marital regimes and the type of investment, and is a dynamic principle of law that is constantly evolving with applications and legal challenges.

All of this is a very high view of a complex and technical area of financial planning and law, so please remember to check the specifics of your unique situation before making any decisions or signing any agreements.

Ideally, you want to keep things short and simple. A divorce order should: 

  • Ensure that the retirement fund is identified, or identifiable.
  • Provide that the non-member is entitled to “pension interest”. An order that refers to “interest”, “full value” or ”retirement interest”, may be invalid. (this may vary in different geographical jurisdictions)
  • Provide for the pension interest amount or percentage that must be paid to the non-member (e.g. “50% of pension interest”).
  • Instruct the retirement fund to make the pension interest deduction.

If you are going through a divorce, it’s probably one of the hardest things you will ever do. Surround yourself with people you trust to help you make the best decisions for your future. There will be immense pressure to ‘wrap things up’ and ‘end this quickly’ – but this can cause us to make decisions that we will regret later.

Take the time you need and speak to the people you need to before making any decisions that will affect your future financial wellbeing and personal happiness.

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Savings Goals

The hardest time to save is when we’re ‘just saving’ with no end in sight. It’s like going to the gym to train; but, train for what? 

As Lewis Carrol once wrote ‘If you don’t know where you’re going any road will get you there.’ Goals help us set the direction and motivation for our choices, and speak to our integrity and authenticity.

Whilst most people want to enjoy a prosperous life, a proper plan for creating wealth is not always high on their agenda. If we want to change this, we need to have a clear goal in mind as to what we want our financial future to look like.  

When we set clearly defined savings goals we have a better chance of accomplishing them because we know what we’re working towards. It’s not simply putting money in your bank account or relying on what’s left after your monthly expenses; that money can be easily spent if there’s no clear purpose for it.

Often the best place to start is by considering our life goals, and then aligning our savings goals to help us achieve those life goals. The two are intrinsically connected – so the planning should be connected too!

Here are two tips on how you can set achievable financial goals:

Save for the next big life transition

This could be retirement, marriage, buying a car or house, paying for university or any other big life goal that you have.

Each of these transitions have unique costs, considerations and timelines, which means that you could be saving for more than one of them at any given time.

The longer you have available to save, the more you can include strategies that account for  compound interest accrual and tax efficiencies on the different investment products. 

You can also start working towards these savings goals by either investing a lump sum or making regular contributions to the investment portfolio. 

Have an emergency fund

Whilst life transitions are events that we can reasonably plan for, we have to figure out a smart way of dealing with the eventuality of unexpected expenses. 

Your roof may cave in or there may be a burglary and that will cost you money. It helps to know you’re secure for those future events that will need you to dig deeper into your pockets.

A very smart way of protecting yourself (aside from insurance) against unexpected expenses is to create an emergency fund. This is to ensure you don’t clean out your savings accounts or have to rely on loans and credit cards for emergency expenses.

It is ideal to save up for six months of living expenses. Of course, this won’t be easy but the goal is to have a backup beyond your income source(s). You can start by including emergency fund contributions in your budget. 

The beautiful part of this is that you decide how much you’ll dedicate towards the emergency savings. So throw in what you can afford to. Once you’ve paid off all your debts, you can add more.

Creating savings goals will give you more peace of mind in the future and ensure you have more financial security in your life. A productive and positive attitude towards how you work with your savings is just as important as amassing the actual funds.

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Tax Savvy Investing

Nothing is certain in life, except for death and taxes. Benjamin Franklin said this almost 300 years ago, and it still rings of truth.

The economic and political landscapes are now even more complex and connected than they were in the early days of American politics and free-market exploration. Making money has never been easier, whilst at the same time, it’s never been harder to keep.

Saving and investing seem to be things that ‘only the wealthy’ get to do, but the reality is that we can all save and invest in ways that are both accessible and appropriate for personal setup. Every country has its own opportunities to invest… but they also have their own tax laws. With the global community in which we live, many of us have opportunities to work in other countries (whether we emigrate there, or work remotely) and this creates deeper levels of complexity to our financial planning.

Regular tax assessments of our investment policies and products allow us to benefit (if we’re staying informed and on top of them!) from tax relief. Receiving a monthly pay-check is becoming less certain as contract work and freelancing become the new normal for many of us. This means that we may not be paying tax every month and could be caught off guard by tax responsibilities at the end of the tax year. 

There are ways to structure your expenses, and investments, to lower your tax bill. 

Here are some of the most common ways to invest in a tax-savvy way.

Maximise your tax-free investment limit 

Whilst most long-term investment products are designed for retirement, that conversation is fast reaching the end of its shelf-life with investors realising that there are other ways to support a retirement lifestyle (in addition to retirement savings). As such, tax-free investment products offer a little more access to invested money but are usually capped by the Government to limit the abuse of these investment structures. As the limitations are reviewed every year in the treasury budget speeches, and most of us don’t usually contribute to these products often, there could be some headroom in there to stash some cash and keep it tax savvy.

Bolster your RA 

As mentioned above, a retirement annuity (RA) is a staple choice for long-term investing. As you explore other supplementary investment options, don’t forget this one! If your employer doesn’t provide some sort of pension fund benefit, a retirement annuity is a great way to invest for the future. 22seven recently put it like this – 

“The benefit of a RA is that interest, dividends and capital gains earned accumulate within the RA and aren’t taxed until you retire. A comfortable retirement is important to everyone and you don’t want to give all your years of hard work away to the Tax Man.”

Every country and region differs slightly in how they structure these products, so if you’ve recently moved, or changed jobs, it might be helpful to double-check.

Get savvy around capital gains tax (CGT)

In a nutshell, when you sell assets, shares, stocks or any investments and you generate a profit, this is considered an income (your capital has gained) and will be taxed according to its income code. In some cases, you may be liable for a CGT exemption or relief if the profit earned is below a certain threshold. There are further stipulations for assets that are held by a legal entity (not a natural person) – and these differ from one jurisdiction to another. 

What this means is that if you’re wanting to sell off some investments, it might make sense to time them either side of the tax year-end in order to benefit from annual exemptions. You may also want to consider transferring assets to your company, or to your person, in order to leverage other savings. But, don’t make it more complicated if it doesn’t have to be.

Sometimes we can over-optimise and land up paying fees in other areas that could be more costly than the tax we’re saving.

Ultimately, it pays to have a professional helping you navigate these options. You don’t have to make these choices alone, let’s have a chat if you think you could be saving where you’re currently spending!

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How to set flexible goals

Last week we looked at why it’s important to become flexible in setting goals. This week we’ll consider how we set flexible goals.

Setting personal goals can empower us to transform our lives and drive towards our wishes – but if we feel like we’re not achieving our goals this can have an adverse effect. With the major changes we’ve all experienced in recent times, we need to shift to set flexible goals.

What are flexible goals and what do flexible goals look like?

Flexible goals have a timeline but the focus is on how they adapt with the times, rather than ‘keep to the times’. 

With flexible goals, we prioritize tracking our progress as well as development and growth, rather than achieving the end goal – helping us focus on progress rather than perfection.

Here are three tips on how to set flexible goals: 

Record your journey, daily  

Journaling remains one of the best ways we can remind and keep ourselves motivated in pursuit of our goals. You don’t actually need a notebook for this. There is an abundance of smartphone apps and other resources that you can use to organise your thoughts, daily activities and plans.

Identify a tool that will be easier for you to visit every day. One that you can use as an accountability partner that’ll keep you measuring your progress.

Remember – it’s about progress, not perfection, so when (not if…) you have bad days, be kind to yourself, allow yourself the space to alter course or take a rest when needed.

Size down your time and your goals

One of the best ways of evaluating your progress is to size down your goals into mini-goals. This helps you break down your targets into smaller, achievable goals so you can find it easier to work on them every day. 

Again, journaling can help with this.

Evaluate your progress daily, weekly and monthly so that you can keep one eye on managing each day as it comes, and the other on how much you’re growing towards your longer-term plans.

Have a willingness to learn

Embracing teachability expands our knowledge and gives us a more rewarding life experience. It allows us to be more informed about the world and not be limited to our own opinions, thoughts, feelings and views. 

Whether it is learning through self-discovery or interactions with others, being open-minded and curious is highly beneficial for cultivating a growth mindset.

In your social interactions, always look to pick up lessons that will be valuable in your journey of success. Evaluate your shortcomings and look at what you can do better should you be in the same situation again.

Learning to set flexible goals opens us to more of the opportunities we are seeking in life. With a growth mindset, we can be flexible and accomplish more than we ever thought we could.

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Stocks vs Shares

In the world of investing there are myriad ways to create wealth. These systems are complex, integrated and offer just enough certainty to attract our attention, but not enough to be a sure-thing.

Two investable options that are talked about daily are stocks and shares. They sound and look very similar, but are in separate categories of investing and offer slightly different opportunities and have disparate risk exposure.

In this blog, things may get confusing, so if you need a conversation about what’s going on, just ask!

Here’s a quick overview:

Whilst both stocks and shares offer opportunities for ownership or profit earning in a company, they represent different denominations of value. Stocks are sold to investors in order to generate capital when a company needs to raise money, and these stocks are broken into shares. We can loosely think of shares as equal fractions of ownership in a company. Stocks can include shares from multiple companies (spreading risk) whereas shares exist inside one company.

Shares are normally issued at the startup of a company and divided amongst the directors, but can be offered in packages to new staff to attract them to the benefit of staying and building the company.

According to educba.com, they set the differences out like this:

  • Stocks are the collection of shares of multiple companies or are a collection of shares of a single company.
  • Shares are the smallest unit by which the ownership of any company or anybody is ascertained.
  • A stock is a collection of something or a collection of shares. Shares are a part of something bigger i.e. the stocks.
  • Shares represent the proportion of ownership in the company while stock is a simple aggregation of shares in a company (or multiple companies).
  • Shares are of equal denomination while stocks are of different denominations. Shares can also never be transferred in the fraction, whereas stocks can be transferred in the fraction.
  • Shares are issued at par, discount or at a premium. It is known as stock when the shares of a member are converted into one fund.

For instance, let’s say Mr. Schmidt has bought certificates of Apple Inc. then in this case we will call these certificates as shares as it can be seen that Mr. Schmidt has bought certificates from a particular company. Now, on the other hand, if Mr. Schmidt has the ownership of certificates from several other companies as well, it can be said that Mr. Schmidt has certificates of stocks and not shares.

Those who own stocks in a public company may be referred to as stockholders, stakeholders, and shareholders, and in reality, all three terms are correct.

As these concepts start to merge and integrate on deeper levels, it gets a little more complicated. Although the term shares generally refer to the units of stock in a public company, it can also refer to other types of investments. For example, you might own shares of a mutual fund. Some companies also offer plans or incentives in which employees get a share of their profits. It’s common among start-up companies to offer profit-sharing plans to attract talent, though some established companies engage in this practice as well.

Both stocks and shares are important in their own terms and they help us when determining the ownership in a company, or companies in their respective cases. They are used interchangeably when talking about company ownership and stock markets.

Source article

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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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