As Nelson Mandela said, once we’ve climbed a great hill we only find that there are many more hills to climb. When you’re looking up or down the hill, it’s easy to have a skewed vision of what’s really going on. We spend more time going up and down than resting at the top; it’s difficult to hold a level head in times of turmoil.

You may look at your bank statement this morning and see that there won’t be enough to cover your debit orders and upcoming expenses. This is scary! Conversely, you may see plenty of money and fear wasting it!

Money will always flow in and out; the longer we live and earn, the more we are reminded of this.

Whether your financial resources are lean or lush, you may be tempted to make some big moves to manage the coming months as wisely as you can.

When it comes to managing your investments it’s crucial to stay focused on the bigger picture – even when recent events may have you itching to move your investments out of the market and into cash. We need to keep a level head and not skew our vision.

The herd mentality, or groupthink, to ‘cash in’ arises from the fact that cash investments are readily available for use and are mostly free of investment risk. The low risk of a bank failing is essentially the only concern as they are investments on short-term, variable-rate deposits with reputable banks.

However, in an article published at the start of April 2017 in Personal Finance, Leigh Kohler, the head of research at Glacier by Sanlam (South Africa), explained that it’s important in uncertain times to remember that even though a cash investments may seem like a comparably safe option, the returns don’t often beat inflation. According to her, only once between 2001 and 2016, did cash investments outperform local equities and bonds.

Furthermore, if you had been invested only in South African equities over this period, you would have received an average return of 17.12%, compared to just 7.96% if you had only invested in local cash investments.

You are also taking two market-timing risks if you wish to move your investments into cash then back again once things have calmed down, and research shows that getting the timing wrong can be a devastating blow to your portfolio.

What should you do in lieu of making an emotional decision?

• Slow down your decision making process and include your trusted adviser;
• Invest in a combination of asset classes in line with your needs, time horizon, and risk tolerance;
• Invest in a suitable multi-asset fund;
• Ensure you have sufficient exposure to offshore assets;
• Understand and believe in your long-term investment strategy, then stick to it.

Scary times come and go – the burden of responsibility weighs on us regardless. How we protect and use our hard earned wealth and accumulated assets need to reflect what’s truly important to us, and not be a reaction to current trends and happenings.

Do you know what’s going to happen in the markets tomorrow?

Neither do we!

All we know is that the markets are an opportunity to invest our money in helping the economy grow, and watching our money grow with it. That’s a really simplistic view, but it helps us extract our emotional reactions from the final decisions that we make.

Should we ignore fear? Absolutely not – we should talk about it lots! That’s one of the benefits of having a financial adviser that you trust on your side. Talking things through is a great way to avoid knee-jerk reactions.

Having recently researched some articles on Investopedia and USnews – here are some emotional reactions to avoid.

1. Avoid isolating your decisions
Rather examine the potential impact that each decision could have on an entire portfolio. This applies to selling AND buying. Failure to do this can result in you investing too much in a single asset class, industry, or geographic market. It could also result in your selling off when the market is at its lowest. Remember to step back, look at the bigger picture and then make your decision.

2. Avoid looking at the immediate conditions
Don’t just ignore the potential of long-term wealth accumulation in favour of short-term losses or returns. Statistically, losses happen more frequently over a short timeframe and, as people tend to be very sensitive to losses, a behavioural phenomenon known as ‘myopic loss aversion’ occurs, which affects willingness to take short-term risks. This, in turn, results in people making emotion-based investment decisions that can have a negative effect on a portfolio.

3. Avoid blindly following the crowd
A good investment strategy is to buy low and sell high, but if you follow the masses blindly, it’s easy to end up buying high and selling low, which may have opposite results and prevent you from taking advantage of the same market opportunities. A buy-and-hold strategy is often far superior.

If you know that you can be prone to having knee-jerk reactions, you may wish to try to avoid constant information about how the market or your portfolio is performing, so that you can just focus on sticking to your long-term investment strategy. Don’t chase the news or get swept away by fear and groupthink.

4. Avoid frequent trading
Again, if you are prone to having a sometimes irrational bias towards action you need to slow things down. Moving too quickly can result in higher investment costs and an increase in making poor decisions.

If you ever have itchy feet, it can often be a good idea to wait a few days before executing a big financial decision and seek advice by organising a meeting to discuss an option.

5. Avoid investing money that you cannot afford to lose
It’s important to keep cash on the side for emergencies and opportunities. You may not feel happy having some of your money just sitting there, not earning boastful returns, but having all your money tied up in the market is a risk that’s arguably not worth taking.

To help you make healthy financial decisions, set yourself some rules, such as only contributing a percentage of your monthly income; and establish some realistic targets, such as aiming to save a certain amount of money by the end of the year. Some people can even find it helpful to limit their options by purchasing more illiquid investments to avoid the urge to simply sell or switch on a whim or when the markets aren’t performing as desired.

Many people also find delegation a handy tool. By delegating your financial decisions to a professional who you trust to manage your portfolio, you can spare yourself a lot of stress and rest assured that you will receive sound advice as to how best to execute your financial plan to achieve your goals.

Bad market performance, government lockdowns, global epidemics and loadshedding aren’t what threaten our investing and financial behaviour.

Our biggest threat is ourselves.

Studies have shown that people improve substantially in financial and investment decisions as they get older. When we are young — and perhaps less secure in our financial situation — we have a tendency to be controlled by emotional biases; strong impulses that can be detrimental to our investment habits.

Behavioural economists refer to some typical flaws that are commonly seen in investment decisions as failures of rationality. In order to achieve long-term financial goals, it is, therefore, important to identify and wrestle with some of our personality-driven investing mistakes.

Even more so when we’re going through a crisis and it’s confrontational!

It’s hard, but it’s not impossible.

The first step is to accept that a problem exists in the way that we approach our decision making – before we sabotage ourselves. It is then a question of devising a set of strategies to control, or at least mitigate, harmful decisions.

It’s important to be kind to yourself at this point – sabotaging your future self DOES NOT mean overextending yourself now to keep up with premiums, but it also means not selling off investments out of fear if it’s not in your best interest. The goal is to slow your decision process down so you avoid making errors you will regret.

According to a survey conducted by Barclays Wealth, many wealthy investors realise their tendency to make emotional decisions, and would be happy to have some help dealing with certain issues.

The ability to exercise control plays a vital part in financial decision-making, especially when investment climates can be volatile, confusing, and nerve-wracking. It is important to feel confident in your financial plan, so that you can resolutely commit to whatever investment strategy you decide will benefit your future self best.

For example, research suggests that there is a psychological phenomenon referred to as the trading paradox. A high percentage of investors feel they need to trade frequently in order to maximise their investment gains but, at the same time, many of the same investors feel that their overall returns suffer because they trade too much. Even though certain investors have this realisation and see the downfalls of their actions, they still give in to emotionally-triggered temptations and often miss out on optimal returns as a result.

Behavioural coaching, in this instance, could help someone to focus on methods of changing this behaviour for good.

Behavioural Coaching

Behavioural coaching employs a range of professional techniques to help you to make changes to certain patterns of behaviour. Behaviour comprises actions and reactions, and behavioural coaching has been defined by the Behavioural Coaching Institute as “the art of facilitating the learning and development of an individual, so as to increase their effectiveness and happiness”.

It emphasises that much of human behaviour is, in fact, learned, and that all behaviours result in positive or negative consequences for the individual and those around them.

This model of coaching, therefore, involves identifying and measuring certain learned behaviours and their impacts. To do this requires an exploration of core values and motivations, as well as assessing covert behaviours (such as anxiety or self-defeating beliefs) in relation to overt actions (such as public speaking).

Once you have identified an issue and sought professional guidance in establishing a personal set of effective coping mechanisms, it is important to consistently exercise your newfound good habits. These need to be practiced on an ongoing basis, and regular monitoring and evaluation will help you to achieve long-term success.

When life doesn’t go according to plan, our first response will often be one of fear. Unfortunately, life generally never goes according to plan – so we encounter fear a lot!

Since fear cannot be avoided, we need to develop tools to cope with it so that we can allow it a constructive space in our lives, and not let it be a destructive force if left unchecked.

Hopefully, this brief article can spark conversations that will help us all learn to fight the fear in our daily lives and begin to explore our own unique reactions a little closer.

This blog is how we recognise our stress responses to fear, accept them and move past them.

If you ask most people what the typical responses to fear are, they may reply with ‘Fight or Flight’. But what many of us don’t know is that there are two more responses, these are Freeze and Fawn. None of these are good or bad, they’re just typical responses that we lean towards to cope with our fear.

With the help of trauma-informed treatment specialist, Patrick Walden, (LICSW), here are some brief overviews that he shared in an interview with The Mighty.

Fight (anger)
Those of us who tend toward the fight response innately believe power will guarantee the security and control that we may have lacked in childhood.

“Fight looks like self-preservation at all costs,” Walden told The Mighty, adding that this trauma response can manifest in explosive outbursts of temper, aggressive behavior, demanding perfection from others or being “unfair” in interpersonal confrontations.

He also noted that while we typically associate the fight response with men, women can also struggle with anger, though in many cases they direct their anger inward at themselves instead of toward others.

Recognising our default response to be angry will help us temper this response and create space to calm down before making any decisions or hurting people around us unnecessarily.

Flight (anxiety)
This fear response usually shows up in people who are chronically busy and perfectionistic. They may believe “being perfect” is a surefire way to receive love and prevent abandonment by important people in their lives.

“Flight can look like obsessive thinking or compulsive behavior, feelings of panic or anxiety, rushing around, being a workaholic or over-worrying, [and being] unable to sit still or feel relaxed,” Walden said.

Taking time to meditate and reduce anxiety is helpful for those of us who tend towards this type of response.

Freeze (avoidance)
Some of us who experience the freeze response are often mistrustful of others and generally find comfort in solitude. The freeze response may also refer to feeling physically or mentally “frozen” as a result of trauma, which people may experience as dissociation.

“Freeze looks like spacing out or feeling unreal, isolating [yourself] from the outside world, being a couch potato … [and having] difficulty making and acting on decisions,” Walden said.

If you feel like this when fear hits, having a few people you trust and can encourage you to take action would be helpful to overcoming your fears.

Fawn (accommodating)
Fawning is perhaps best understood as “people-pleasing.” According to Walker, who coined the term “fawn” as it relates to trauma, people with the fawn response are so accommodating of others’ needs that they often find themselves in codependent relationships.

“Fawn types seek safety by merging with the wishes, needs and demands of others. They act as if they unconsciously believe that the price of admission to any relationship is the forfeiture of all their needs, rights, preferences and boundaries.”

If you’re a ‘YES’ person and struggle to enforce boundaries, remind yourself that it’s okay to say ‘NO’ and put yourself first. If you don’t work on yourself you will have nothing to give others in times of crisis.

Remember, we will all experience fear – every day in fact. Most of the time the fear that we experience is easy to cope with, but when fear becomes debilitating we need to bring it in check so that we can move forward and not find ourselves stuck in our fear or reacting in fear.

For the full article on The Mighty – click here.

Don’t avoid digital help. Whilst there are many dystopian stories about how robots will take over the world, those projected realities are highly unlikely to ever manifest.

AI, big data and cloud storage can be our friend in making our life easier – which is what technology was always intended for!

Granted, we can easily become disconnected from the material and relational world around us if we immerse ourselves too completely in the digital world, so balance is always crucial – but still, we can be astute in how we use it.

These tips are all about how digital space can create more space in your life

USE CLOUD STORAGE

Everyone seems to talk about ‘the cloud’ as if we all actually understand what that means. If you’re feeling left out, here’s a quick explanation. Storing information in the cloud means that you’re using someone else’s computer (called a hosting or cloud server, like Google Drive) to store your information, and that computer is always online. This means that you can access your information through the internet, from any device, in any location at any time – provided you have internet access.

Google, Microsoft, Dropbox – these are all good examples of cloud servers but there are literally hundreds of options.

The ultimate advantage to you is that your information is kept off-site. So… when you spill coffee on your laptop, a power-surge blows your desktop or you drop your phone in the loo, you don’t lose your data. You can store photos and family videos in the cloud. You might want to scan and save important documents – the options are limitless.

It also helps if you run a business. Instead of having an expensive local server, you can share all information in the cloud so that your team can access what they need. And again – should anything happen to a device (or everything in your office), you can keep valuable business information safe and accessible.

USE A VIRTUAL DIGITAL ASSISTANT (VDA, VA or DA)

Most smartphones come with a built-in DA (Siri and Alexa are great examples), but we use them to do fun things like finding out the time in a different country and playing a specific song.

But, you can use your DA to set up tasks and reminders. This can range from phone calls that you need to make, emails you might need to follow up on in two to three months or everyday tasks like managing your shopping list.

If you couple this tip with cloud storage, you can create shared lists that anyone in your family or team can update. From shopping lists, monthly budgets and wish lists for holidays, birthdays and home improvements, integrating your use of Siri in your daily life will make your life WAY easier.

If there is something in your life that is causing stress because it’s clumsy or cumbersome, see how you can change it to make your life easier!

Every time we say ‘YES’ to something new, it seems to just make our life more complicated down the line; more events to attend, increased responsibilities and less time to relax and do what we really want to do.

Finding just the right amount of order in your life is one of the secrets to making your life easier (learning to say ‘No.’ is another secret…)

Whilst we can’t just stop growing and adding more to our lives, we can look at ways to make other things in our life easier. From planning our budget to organizing our laundry, no task is too mundane to refine and review!

There are so many great ideas on the web – but here are some of them from www.harvardhomemaker.com.

THE THREE BAG LAUNDRY SORTER

Whether you run a household of seven or live the single life, laundry has to be sorted. It seems completely pedestrian to ‘plan’ your laundry sorting – but it will save you time and frustration which ultimately opens up space in your life.

Set up three baskets or bags – one for whites, one for darks and one for colours. Label it and make sure everyone in the house knows what’s potting. This way – when one bag or basket is full – that’s the load you do. You’ll save loads of time on every load of washing!

THE DOUBLE-COOKING PLAN

When you’re cooking a pasta, rice or curry dish – prepare double the amount that you need and freeze the leftovers. This requires two levels of discipline – the first is in the planning and the second is in the eating!

Cooking double what you need DOESN’T cost you double. In fact, it costs you less: buying ingredients in bulk, using electricity once, and cleaning up pots and pans once. It does require some forethought, it’s not something you can easily do at the last minute on a Tuesday night. Many people who employ this trick will plan and cook meals on a Sunday for the week ahead.

When it comes to dishing up, only put out half of the food to avoid the temptation of having seconds simply because the food is there. Once in the freezer, you can easily enjoy that savvy meal up to a week later.

THE FILING CABINET

These are not just for work! When you receive statements in the mail, have important documents (IDs, passports and certified copies) or information packs that come with your digital devices (these also often have important codes that you may need later), have a filing cabinet or draw where you can store them vertically (like a concertina file).

When you have easy access to this information and the space to store it you will be more likely to file it away safely instead of piling it on the nearest counter to fall over and cause frustration in your life.

Making your life easier is not about changing one thing, it’s about learning how to adjust to the constant change in your life.

Every day our lives get a little more complicated. That’s the reality of the world that we’re currently living in. It’s not easy to keep order in your life – even if you’re one of the few who excel in keeping things in line!

Finding just the right amount of order in your life is one of the secrets to making your life easier (learning to say ‘No.’ is another secret…)

When you can find what you’re looking for, quickly and easily, you will have more time to be creative and work on projects that will help you grow, but you also won’t need to go out and ‘buy another one’…

There are so many great ideas on the web – but here are some of them from www.harvardhomemaker.com.

USE ONLINE GROCERY SHOPPING

Think about it: do some clicking in the comfort of your own home at night; select your delivery option – and it’s done. The groceries magically appear – you (and your family) don’t even have to get into your car.

Most of the local online grocery options also enable you to order previously purchased products, keeping a list of your popular items – making it quicker and easier to top up your fridge and pantry each time you log on to your account.

Both Pick ‘n Pay and Woolworths offer great options.

USE HANGING SHOE HOLDERS – NOT FOR SHOES THOUGH…

Whether it’s behind the bathroom door for extra toiletries and medicines, hanging inside the broom closet with your detergents or in the garage with tools, paints, chemicals and odds and ends – these simple, ridiculously-cheap, organizers can be hidden away and hung almost anywhere discreet and give you considerably more shelf space – and allow you to see the full scope of what you have.

You’ll never buy too much jik, or lose your spare razor blades again!

USE A TASK SCHEDULER THAT IS DIFFERENT TO YOUR EMAILS

This is great for your work ethic!

When you’re trying to be super productive at work, nothing is more disruptive than an email coming through that is asking you to ‘quickly’ do something. It breaks your creative work flow, slows you down and increases your stress levels.

Many of us allow our emails, texts or phones to govern our task scheduling. We start off the day with one project in mind – and then if a message comes through, instead of prioritising and scheduling it for later, we deal with it now because we know that if we close that message… we might forget.

Asana and Monday.com are great tools to use – the former has a free version whilst the latter is a paid-for solution.

Having a task programme that is separate to your emails, allows you to transfer requests, schedule them and stick to the job at hand. And you won’t miss a beat.

Hopefully these ideas help to make your life a little easier and less complicated!

After owing its name to the mindful Fransciscan monks, the Capuchin friars, many of us overlook our daily cappuccino (or other frothy delight) and how much we spend on these little luxuries in life.

One of the best ways to add meaning to our money is to be mindful about how we spend it, and our financial well-being is closely linked to how we feel about our money and what it means to us.

If we use the example of buying a daily cup of take-away coffee (this could be from Woolies, Starbucks or your local hipster cafe) – we can learn a lot about our spending habits and bias.

Many people savour the flavour of this power drink each morning, and many caffeine addicts can happily knock back a few in a row. However, some calculations show that if you’re willing to give up just one of those daily cappuccinos, you could save nearly R40,000 in five years and over R90,000 in a decade. 

With the ominous effects of inflation and the cost of living on the rise around the world, it can often seem impossible to save more money without the help of a big bonus or salary increase. However, Hildegard Wilson, a member of the Actuarial Society of South Africa’s investment committee, is quick to ascertain “that you can save without compromising your overall standard of living. With the power of compounding, where growth on your investment earns additional growth, these kinds of ‘breadcrumb’ savings can turn into large amounts over time.”

If you buy a cappuccino from Monday to Friday at an average cost of R25, your coffee habit is costing you roughly R500 a month. If you opt to forego the cappuccinos, you could alternatively commit to investing R500 a month in a multi-asset high-equity unit trust fund. Over the past decade (calculated up until March 2017), high-equity funds have delivered average annual returns of 8.2%. Although this figure offers no guarantee of future performance, if your investment were to achieve an annual average return of 8.2%, you would have just over R37,180 after five years and R93,130 after 10 years.

Foregoing just one cappuccino a day, you could generate a significant lump sum, which could make a serious dent in your debts, or top up an education or retirement fund.

The goal is not to give up a cappuccino, it’s to be mindful of how you use your money and acknowledge that the little things all add up in the end. So… next time you order your beverage of choice, hopefully it makes you think!

For many, the way in which we save and invest is not a daily conversation, so it’s easy to forget what we have in place AND WHY we have it in place. Here’s a quick reminder!

An RA… or Retirement Annuity is one such product that can often confuse many.

RAs have been around for a long time and are basically private pension plans that help you to save for retirement. As we near the end of yet another tax year, we move into a period that is often referred to as RA season, which is a good time to weigh up the advantages of this investment product. 

These investment products have evolved into much more flexible and affordable investment vehicles than they once were, and investors can now benefit from “new-generation” RAs on linked investments platforms (LISPs). These offer a vast selection of underlying unit trusts, and they allow contributions to be made at the investor’s discretion, without penalties for missed contributions.

The most significant benefit of having a retirement annuity is the tax deductibility of contributions. Exactly what these deductions and allowable contributions look like are dependent on legislation, so it’s always best to check in on your portfolio to ensure that you’re maximizing the benefits.

An investor can expect to receive an annual tax refund in line with their income, and this RA rebate can considerably boost your retirement benefit.

Capital gains tax normally needs to be paid for any discretionary investment, but this isn’t the case with an RA. Interest and dividends are also not taxed in an RA, which means that the entire growth of your investment is tax-free, which makes a significant difference over the long-term. 

When you retire after the age of 55 and are allowed to take up to one third of your RA in cash, you will have to pay tax on the proceeds taken. However, a portion of the lump-sum benefit is tax-free and the rest is taxed on a sliding scale. And, as you have deferred paying tax on the proceeds, a larger investment amount has had the chance to compound tax-free over time. 

Come retirement, the other two thirds of the proceeds from your RA will be used to purchase an annuity, which will then provide you with an income to sustain you in your golden years. You will need to pay tax on your monthly “income”, but many individuals’ personal tax rates decrease after they retire. 

An RA presents another advantage when it comes to estate planning, as it falls outside of your estate, so the proceeds from your RA will be paid directly to your nominated beneficiaries when you pass away, without the estate duty or executor’s fees. For the most part, your money is also protected from the claims of creditors, which is another great RA-minder! 

In spite of this list of positives, many investors feel uneasy when it comes to retirement annuities and are reluctant to consider them as an investment option. However, it’s important to understand that RAs have evolved significantly, become much more affordable, and new regulations have been implemented to minimise risk and force investors to diversify.

This may not be considered as a positive thing by everyone, as Regulation 28 of the Pension Funds Act does restrict investors to a maximum of 75% allocation in shares, which many people debate as shares have managed to outperform all other asset classes over the long-term. However, this risk management method was implemented to benefit broad spectrum investors in different environments, and it offers more investment protection when markets become volatile.

If your objective is to specifically save for retirement, a retirement annuity could be the best vehicle for you.

Is it time for some romance without the rands? You can sweep someone off their feet whilst keeping yours on the ground.

Valentine’s Day has gained the reputation of being a Hallmark holiday that promotes Lindt rather than love. 

Ahead of rushing off to the shops to buy a big bunch of flowers or box of chocolates, you may wish to take a moment to reflect on the meaning behind the day and how you can best show your affection. 

THE STORY BEHIND THE HISTORY

Valentine’s Day is thought to go back to a fertility festival held on 15 February that was dedicated to a Roman god — the traditions of which were believed to guarantee fertility and ease the pain of childbirth. However, the rise of Christianity resulted in pagan rites being outlawed, and the festival was replaced with another annual highlight that revolved around the story of Saint Valentine.

He was a priest who secretly married young people during a time when it was forbidden, as unmarried soldiers were thought to be better fighters because they didn’t have the fear of leaving a wife behind. He was eventually imprisoned and sentenced to a three-part execution consisting of a beating, stoning and decapitation for his crime of defying the then-Emperor’s edict.

However, by remaining resolute in his belief about the sanctity of marriage (in spite of the risks and his eventual punishment), he is regarded by many as a martyr to his Christian cause; and 14th February — the date of his execution — is now celebrated as a day of love.

He also allegedly healed the judge’s blind daughter, and he ended a letter he wrote to her with the words “from your Valentine”, which has become a focal part of the modern love missive.

THE SAVVY OF HOW YOU CAN SAVE

Nowadays, the amorous event is celebrated in a variety of ways across the world. In South Africa, for example, some women pin the name of their sweetheart to their sleeve, and this is how men can discover that they have a secret admirer. 

For the average South African, spoiling that special someone on Valentine’s Day can become quite a costly affair, but you can still be romantic without splashing too much cash unnecessarily. The key is to plan in advance and budget accordingly. Also consider more experiential or bespoke gifting options that are personal to your relationship.

Write a list of things that your loved one loves, along with how much each thing costs —  be this a night out at the movies, or a gift of jewellery. Once you have an idea of prices, set a feasible budget and make a plan of action that sticks to this. 

Blowing all your savings on one day isn’t actually very romantic if it means you wind up begging for loans or eating plain pap for the rest of the year. It’s better to be realistic about what you can afford, and prioritise meaningful presents or experiences over sheer decadence. Alternatively, you may wish to consider skipping some luxuries now so that you can save enough to make your other half happy on the big day itself. 

You can also spread the love without breaking the bank by making a gift rather than buying one. For example, rather than getting into debt by taking your date for a seven-course tasting menu at a fine dining restaurant, try creating a romantic atmosphere in your home and cooking a delicious dinner that you both can enjoy by candlelight. 

Furthermore, if you want to do something particularly special, have a look for any deals that can make an enjoyable day more cost effective. You can still have fun at a low price, and a bit of effort and consideration can be worth far more to someone than simply picking up a large bill.