Money Issue 1

MONEY THE

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AUGUST 5, 2020

MAGAZINE

FINANCE FOR WOMEN 8 TOP WOMEN IN FINANCIAL SERVICES INSURANCE

3 ways insurers treat women differently Tips for female first-time

PROPERTY BUYERS

CONTENTS FEATURES 8 women in financial services

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Tips for savvy women in their 20s

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Women ‘undervalue their most precious possessions’

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Are you a single mom?

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Buying your first home

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REGULARS Planning Perspective – Part 1 Your ultimate lockdown finance checklist

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Face to Face

Georgina Crouth interviews SA’s First Lady of personal finance, Prem Govender

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Rands and Sense Saving for your child’s education

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Money Basics

14 3 ways insurers treat women differently

Money Quiz 18

BrandStory: Marriott

Important contacts and links

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A big part of financial freedom is having your heart and mind free from worry about the what-ifs of life.

SUZE ORMAN

AMERICAN FINANCIAL ADVISOR, AUTHOR, AND PODCAST HOST

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FROM THE EDITOR WELCOME to our new free digital MONEY magazine that aims at giving you jargon-free, easy-to-understand but essential advice on how to manage your money and build your wealth. I hope it proves as exciting - and rewarding for you to read as it is proving for me to produce.

Judging by the large number of South Africans who get into financial difficulty, especially around debt, financial education is crucial across all sectors of society. Ideally, this should start at school level, but it doesn’t appear to be very high on our education authorities’ list of priorities.

So I am proud to be part of this publication, which hopefully will play a small role in improving the way we regard and use our hard-earned money. The better we do this, and the more we are able to save over our working lives, the more wealth we build not only for our families but for the nation as a whole. Studies have found that truly wealthy people (as opposed to the “superficially” rich) are not necessarily the highest earners. What they do have in common, though, is that they treat their money more wisely and responsibly, with saving being the number-one priority.

This first edition is, as is fitting for Women’s Month, dedicated to women’s money issues. We feature a single mom who advises on children’s maintenance - the bane of so many single moms nationwide. There are articles on savings and insurance tips for women, and a link to a video interview with the ever-gracious First Lady of financial advice in South Africa, Prem Govender.

Each edition will contain a few regular features: a column by financial planner Lesego Monareng, a Rands and Sense column by a guest financial expert, a Money Basics feature by yours truly, in which I will attempt to explain the basics around financial concepts and products, and a quick money quiz, with which you can test your financial knowledge. The back page is full of helpful links and contacts on financial, legal and consumer matters.

Enjoy the read.

Martin Hesse EDITOR | MARTIN HESSE | martin.hesse@inl.co.za

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Designer | Mallory Munien

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WO M E N IN FI N A N C I AL SE RV I C E S

Although men still dominate the financial services sector, women have made huge advances and many now hold top directorship and executive positions.

We feature some of them...

1. ANET AHERN

2. FATIMA VAWDA

Anet has a BBusSci (Hons) degree in economics and marketing, a post-graduate diploma in financial planning, and is a Chartered Financial Analyst. She worked as portfolio manager at Syfrets and was CEO at BoE Asset Management. She spent six years as CEO of Sanlam Multi Manager International. Anet joined PSG as CEO in 2013, where assets under management exceed R100bn.

Fatima holds an MSc in applied maths and has two decades’ experience in financial markets. She has received numerous accolades, including Ernest & Young World Entrepreneur Southern Africa Emerging Category award. She is a member of the Association of Black Securities and Investment Professionals and a director of Association for Savings and Investment SA.

CHIEF EXECUTIVE OF PSG ASSET MANAGEMENT

MANAGING DIRECTOR OF 27FOUR INVESTMENT MANAGERS

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3. JEANETTE CILLIERS (MARAIS)

4. PREM GOVENDER

5. KIM POTGIETER

Jeanette has a BSc in maths and statistics and an MBA (with Honours).

She left Allan Gray last year to take up her positions at Momentum Metropolitan.

She has extensive knowledge of the retail investments market, intermediary distribution and operational aspects of retail asset management. Jeanette started her career at Momentum in 1990.

She filled executive-level positions at Stanlib and Old Mutual before joining Allan Gray in 2009.

An accountant in private practice and Certified Financial Planner, Prem is passionate about helping people to adopt good money habits and embrace a culture of saving. She is a trustee of the Financial Services Consumer Education Foundation set up by the Financial Sector Conduct Authority. She is former chairperson of the Financial Planning Institute and served as director of the international Financial Planning Standards Board.

(Interview with Prem on page 13).

Kim has a post-graduate diploma in financial planning and is a Certified Financial Planner. She is dedicated to helping people understand and embrace their relationship with money, so they are able to view money as an enabler in the fulfilment of goals, dreams and aspirations. Kim established the Women in Finance Forum in 2013, and published her book, Retiremeant: get more meaning from your money, in 2015. She is popular as a public speaker.

6. MUVHANGO LUKHAIMANE

DEPUTY CHIEF EXECUTIVE OF MOMENTUM METROPOLITAN HOLDINGS AND CHIEF EXECUTIVE OF MOMENTUM INVESTMENTS

CHAIR OF THE SOUTH AFRICAN SAVINGS INSTITUTE

DIRECTOR AT CHARTERED WEALTH SOLUTIONS

PENSION FUNDS ADJUDICATOR

7. ELIZE BOTHA

MANAGING DIRECTOR OF OLD MUTUAL UNIT TRUSTS

8. ANNABEL BISHOP

Muvhango holds BIuris, LLB and LLM degrees, postgraduate diplomas in management studies and financial planning, and an MBA. She was Pension Funds Adjudicator from June 1, 2013, having served for a year as the deputy Pension Funds Adjudicator.

Muvhango has extensive knowledge of the pension fund industry, worked as a research consultant and legal adviser to major fund administrators.

Elize holds a strategic leadership qualification from Insead Business School, as well as a BA and an LLB. With 20 years’ experience in the industry, she has directed retail and institutional distribution teams at some of South Africa’s largest financial institutions. In her role at Old Mutual Unit Trusts, she’s responsible for the business on a financial, operational and regulatory basis.

Annabel has a MCom (cum laude) in economics and econometrics. She has worked as an economic analyst and econometrician at Econometrix, economist and bank strategist at McCarthy Bank and at the economics department at the University of Natal.

Annabel joined Investec in 2001. Her team focuses on the macroeconomic, financial market and global impact on the domestic environment.

CHIEF ECONOMIST AT INVESTEC BANK

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TIPS FOR SAVVY WOMEN IN THEIR 20s Financial planner JENNIFER DRAKE shares 5 tips for women in their 20s as they venture out into the world

YOUR twenties are an exciting time, as you wrap up your studies, embark on your career and perhaps even start a family.

But as a woman it is especially important that you begin saving and investing in your future now.

It is vital that women become proactive about managing their finances and saving as early as possible if they are to achieve their financial goals. Whether it is studying for the future, creating your own business, wanting to travel. or saving to buy your own home, it is vital to have a clear plan to achieve your goals.

Here are five simple tips to begin maximising savings:

1. BUDGET: UNDERSTAND WHERE YOUR MONEY IS GOING

Your first and most important financial step is to create a detailed budget that will help you to understand how much you are spending and how much of a margin you have to begin saving instead. Begin by noting what your salary is after tax and then create a detailed list of your expenses, including your rent, utilities, groceries, and other expenses.

2. SAVE FOR AN EMERGENCY

Continue your savings journey by putting some money aside in separate savings or a call account for rainy days. I believe you should aim to put away at least three to six months’ income in an emergency

repaying expensive short-term debt such as credit cards and shop accounts before turning to less expensive long-term debt such as a student loan. When taking out debt it is important to know what you are getting yourself into.

5. DON’T TAKE ON YOUR PARTNER’S DEBT fund that you can easily access when faced with big expenses. We are aware that some emergencies are unavoidable, and when you need help we are here for you.

3. AVOID THE TEMPTATION TO SPLURGE

While the high of earning your first salary means it is natural to want to treat yourself, avoid the temptation to overspend. Look to your budget to guide you in terms of affordability when it comes to buying a large ticket item.

Sometimes a large splurge can be a good idea if it is a worthwhile investment, such as a property.

4. KEEP PAYING OFF THAT DEBT

Excessive levels of debt will prevent you from reaching your true savings potential, and if the interest rate being charged on your debt is higher than you would be earning on investment you will be saving more by paying back your debt more quickly.

Look at the interest rates charged on your debt and prioritise

When entering a new relationship, or if you are in an existing one, the exchange of cash flow within family units and couples sometimes involves taking on a partner’s debt in the event that he or she is unable to afford regular repayments.

If you have not jointly taken out credit, your partner’s debt is not your legal responsibility – and it is important to ensure that you do not spend large amounts of your own money in an attempt to repay your partner’s debt.

Instead of making repayments on your partner’s behalf, consider speaking candidly about your financial situation and – depending on your circumstances – rather recommend that you both consult a financial adviser or a debt counsellor if necessary.

Maintaining a focus on your own financial health is important, and prioritising the management of your own debt and savings goals can help you get ahead.

Drake is a financial planner at Marlin Credit

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UNDERSTAND WHERE YOUR MONEY IS GOING Your first and most important

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financial step is to create a detailed budget...

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HOW TO FINANCIALLY SURVIVE AND THRIVE

FADIA Arnold with her son Zidaan

Are you a single mom?

Lawyer

Fadia Arnold shares her experiences and offers advice for mothers battling to secure maintenance for their children

It’s no big secret that the single mom club has increased its popularity levels. Movies have been made about it, glorifying the single mom club meeting for brunch, discussing their latest dinner spread recipes and almost certainly, the last episode of the Real Housewives of New York.

That’s the glorified affordable version of the single mom’s club.

How do we get there, though? By we, I mean every single working mother living pay cheque-to-pay cheque to support their children.

I am a single mom. To say it’s been difficult since my son’s birth financially, emotionally and psychologically, is an understatement. I know what it feels like to not be able to afford to upgrade your vehicle to a more spacious vehicle for your child. I know what it feels like to not be able to afford a full-time nanny to help while you work a full-time job.

As a lawyer, I have seen too many broken and sad children in court, or at the family advocate’s office watching their parents fight with fuel over who needs to pay for what. It is traumatic.

Most women do not have the privileges I have or the luxuries of the single mom brunch club, but as a lawyer I have assisted many women who are in dire need of assistance.

Starting the maintenance process against the father, stepfather, or paternal grandparents can be a daunting exercise. But it is important to know that the process of applying

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for child maintenance is free.

Once the proceedings commence with a maintenance officer, it is often the case that the individual you are applying for maintenance from attends at court with a lawyer, and suddenly you feel outdone, helpless, clueless and almost as if a room full of professionally educated people with clout are going to ensure your journey for maintenance is long.

Attending maintenance court dates will also possibly create workplace issues for you because you have to work full time and frequent absences from work to attend maintenance proceedings are often frowned upon.

You are not alone! There are women-based assistance organisations to assist you. The Women’s Legal Centre in Cape Town is renowned for assisting women who cannot afford lawyers. Similarly, the Legal Resources Centre and university law clinics are able to assist on a no-cost basis if you are unemployed.

There are dozens of online single parents’ groups on Facebook and personally being a part of those groups have made the single-parent journey less lonely for me.

So sign up and send me a friend request and let’s help each other so we can be the best mothers we can be!

Happy Women’s Month!

Arnold is a lawyer and senior associate at Schoeman Law Inc.

WOMEN ‘undervalue their most precious possessions’

THE LOCKDOWN PRESENTS AN OPPORTUNITY TO REVIEW WHAT YOU SPEND ON INSURANCE, SAYS AN EXPERT

Unsplash.com

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11 SOUTH African women are generally underinsured compared with men. This is especially so when it comes to those personal items most precious to women – for which they have and spent a lot of time saving and acquiring over the years. Women’s designer accessories and clothing are at heightened risk of loss as they are often carried around in handbags or kept in vehicles to be used – or frequently changed – as occasions demand throughout the day.

“With most South Africans, including women, now working – and earning – very differently in lockdown, Woman’s Month presents an opportunity to re-examine the value and safety of their precious personal items,” says Christelle Colman, insurance expert at Old Mutual Insure.

While a relatively cheap addition to a general contents policy, insuring personal items while outside the home is worth the additional cost.

“This is especially so when one considers the value of iPads, mobile phones, cameras, purses, the actual designer handbag itself, or that precious pair of Jimmy Choo shoes, Burberry coat or pearl twin set for that evening work function later on,” says Colman.

Relooking personal insurance and the risks that women run daily on their most precious and essential possessions is important in a challenged economy with a devaluing currency.

GET ADVICE – IT’S PLENTIFUL, AND FREE

Women need to contact a trusted financial adviser or insurance broker who can advise on the best possible insurance solution for their particular needs. Not only will a broker give you good advice on cover options and ways to reduce premiums, but they will shop around on

your behalf. Women routinely undervalue the replacement costs of the dresses, designer jeans and spare handbags that they have collected over the years.

“Take a realistic view of your wardrobe and work out how much it is actually worth,” says Colman.

A good way is to divide clothes into sections such as business, casual, evening and sports – “not forgetting handbags and shoes and those items that are often stuck at the back of the wardrobe or packed away”.

working from home in lockdown – or not working at all – should consider reducing their general all-risks cover. People no longer having to travel to work with their laptops, or no longer socialising or going out wearing expensive jewellery, could, for example, take their smartphones or watches off their all-risks polices for three months or so.

It should never be forgotten that even though finances are stretched, policyholders can achieve savings of up to 10% if they pay premiums annually, in advance. This is an especially good idea in an environment where people could lose their jobs or suffer reduced income at the drop of a hat.

“Paying now, if you have the money, will at least ensure you are covered for the next very difficult year while you find a new job or develop a new income stream,” advises Colman.

UNDERSTAND THE RISKS WHERE YOU CAN OPTIMISE YOUR COVER

Opportunities for women to reprioritise their cover include: Two-car households now working from home can reduce cover on their second car not being used for grocery purchases or other short, necessary, trips.

If the second car is parked securely and not being used, either reducing the cover or increasing the excess will realise a substantial saving.

Households with a student or two studying from home who no longer need cars to travel to campus and back can realise substantial savings by reducing cover on student vehicles or third-party fire and theft.

Alternatively, they could increase the excesses (the amount you pay on a claim) on the policies. Households all

Some of the savings that women can help their families achieve by reviewing their insurance cover “can be used to insure their precious jewellery, electronic items or wardrobe and handbag contents while out of the home at their correct and current replacement value”.

What is most critical for women, however, in these challenging times is to gain a clear understanding of exactly the risks that families face in lockdown, and then tailor their cover to meet only those risks.

Given the value of so many of the items that South African women traditionally undervalue, Colman says she will be very surprised if the exercise does not see, “substantially more woman getting a much clearer view of the value of the possessions that they have quietly built up over the years – as well as how to secure them affordably in these challenging times”.

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Planning Perspectives

HOW is it possible that nearly half a year has passed since we entered lockdown in March?

At this stage, we should all be comfortable wearing masks and we’ve all stocked up on mhlonyane or some other herbal concoction to boost the immune system. Some of us have spent lockdown learning a new skill, although I must admit – I’m glad that fewer people are sharing home exercise videos.

Managing your personal finances, as well as planning and investing for the future, are absolutely essential survival skills.

Here are the first two points on my checklist, which will be continued in Part 2 next month: 1. MAKE A BUDGET

Your ultimate lockdown finance checklist – Part 1 Lesego Monareng teaches you how to survive these covid times by budgeting and learning how to use money better

You might have gotten away with not having a budget in the past, but Covid has shown that nothing is set in stone. A budget is crucial in these uncertain times. A budget shows the relationship between your income and your expenses.

The easiest way to see your expenses in black and white is to download your monthly bank statements. Then compile a table, or use one of many online templates.

No matter how you do it, the important thing is to understand how much you earn and how much you spend. Only then can you start using your money better.

2. MANAGE YOUR DEBT

It’s so easy to get into debt – banks and car companies use loans to allow you to make big purchases that you’d never be able to afford once-off. South Africans love to borrow money – we’re ranked among the top borrowers in the world according to the World Bank.

Whether you have made use of a relief scheme or not, you need to know how long you will be paying off your loans. You might want to consider how much extra you can afford to pay each month to reduce that period.

The good news is that the repo rate has been cut substantially since the start of the lockdown. You might have noticed that you’re paying less on your home loan each month, for instance.

If you can, rather increase the amount to where it was before Covid.

Lesego Monareng is a Certified Financial Planner professional and Managing Director of KLU Wealth & Legacy Management

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Georgina Crouth interviews SA’s First Lady of personal finance,

Prem Govender

WATCH THE FULL VIDEO HERE

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MONEY BASICS

with MARTIN HESSE

3 Ways insurers treat women differently THERE are three ways insurance companies treat women differently from men: two to their advantage and one to their disadvantage.

This is because women present a lower risk than men in some areas of insurance, based partly on their behaviour and partly on their physical characteristics.

Some countries have outlawed gender discrimination by

insurers. However, one needs to put it into context: how much you pay for cover (your premium) depends on the level of risk you present to the insurer.

The higher your risk, the more you will pay, because the probability the insurer will have to settle a claim is higher.

There are many factors, apart from your gender, that influence your risk profile –

things like your age, where you park your car at night, your level of household security, how healthily you eat and how much you exercise, whether or not you smoke, and what dangerous activities you take part in, such as mountain climbing.

These are the three types of insurance products that are priced differently according to gender, among other factors:

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Most insurance companies offering vehicle cover give women a discounted premium over men, because it is generally agreed they are better, safer drivers. Statistics gathered over the years in different countries show women are responsible for fewer serious road accidents than men, bearing in mind there are fewer women on the roads than men.

In the UK, The Independent reported that research by price comparison site Confused.com in 2017 revealed “women... are far less likely to be involved in an accident, and cost insurers less when they make claims”.

The study also found men are almost four times as likely to commit a motoring offence than women.

More than 585 000 drivers in England and Wales were taken to court for breaking traffic laws in 2017, of which 79% were men.

Men outnumbered women five to one when it came to drinkdriving offences.

2. YOU PAY LESS FOR LIFE COVER Women present a lower risk than men when it comes to life cover.

This means that, all other things being equal, a woman will pay less per, say, R1 million of life cover than a man.

Other general risk factors taken into account are your age, whether you smoke or not, and your socio-economic status (determined by your education and income levels).

Note that these risk factors apply only on private life cover, not on group life cover, which you may have if you are a member of an employee retirement fund.

Why do women pay less (depending on age, this can be as much as 20% less)?

As mentioned above, women indulge in fewer riskier activities

than men, so are less likely to die in road accidents and other accidents, such as falling off a mountain.

In the US, 24 899 men died in road accidents in 2015, as opposed to 10 166 women.

But women pose less of a risk not just because their behaviour is less likely to result in a fatal accident.

The probability of women dying from natural causes is also lower than men, although this does vary with age.

They also have a longer life expectancy than men, meaning that, on average, women live to a greater age than men do.

According to figures published last year by Statistics SA, the life expectancy at birth for the average South African man is 65.6 years and for the average South African woman it is 72.7 years – a difference of more than seven years.

3. YOU RECEIVE A LOWER GUARANTEED PENSION

Besides insuring you against the risk of dying prematurely, life insurance companies also

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1. YOU PAY LESS FOR CAR INSURANCE

provide pension products, which you “buy” with your retirement savings when you retire. One type of pension is called a life, or guaranteed, annuity.

This works almost in an opposite way to a life policy.

With a life policy, you pay a monthly premium and a large lump sum is paid out when you die.

With a life annuity, you pay the insurer a large lump sum, in return for a monthly pension guaranteed for the rest of your life.

However, for the reasons given above – that the probability of a woman dying at a particular age is lower than a man’s, and that women, on average, live about seven years longer than men – a woman will receive a lower pension than a man for the same lump-sum amount.

For example, according to the latest annuity tables published in Personal Finance magazine, for R1 million, from a certain life insurance company, a man of 65 will receive a monthly pension of R6 654 while a woman will receive R6 083.

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Buying your first home DHIVANA RAJGOPAUL asked three leading estate agencies to share advice for female first-time buyers Unsplash.com

BUYING a new home can be stressful for any first-time homeowner, but the task can be even more daunting for single women.

“It is no surprise that an increasing number of women are purchasing a property in their own name or even jointly in some instances.

Women are increasingly building their own property portfolios by investing in additional properties for the rental market,” says Samuel Seeff, chairperson of the Seeff Property Group.

Gerhard Kotzé, managing director of the RealNet estate agency group says: “We see many young career women buying now as they discover that it can often be more affordable than renting, and older women generally buying to provide a home for themselves and children or grandchildren, sometimes

after a divorce or the death of a spouse.

“This trend is expected to escalate even more now thanks to the interest rate cuts since January, which have made it some much more affordable to get into the market and manage a monthly bond repayment,” added.

Here are tips from three leading South African property agencies for women who are looking to buy their first property:

SAMUEL SEEFF OF THE SEEFF PROPERTY GROUP 1. Property search – the property portals are a good place to start your search as you can see what is listed in an area at a glance. These days, you can find detailed information about the property in terms of the

area, accommodation that it offers, asking price and even associated costs.

2. Property viewing – once you have your shortlist of properties, you can liaise with the agents for more information and photographs and possibly a video tour if you would like to do that first.

Alternatively, you can set up physical viewings in line with the prescribed Covid-19 health and safety protocols.

3. Negotiating an offer – ask the agent to give you a list of the 3-5 most recent sales in the street or area which are similar to the property you are interested in so that you can make an assessment in terms of how much you would like to offer for the property.

4. Deposit requirement – although we are currently in a favourable phase for buyers and some banks are

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offering special packages with 100% bonds, it is never guaranteed that a 100% bond is guaranteed.

To avoid disappointment, ensure that you are able to pay at least a 10-15% deposit on the property.

5. Transfer duty and costs – you will need to have funds available to pay for the costs as soon as the offer to purchase is accepted.

The agent should provide you with a cost estimate for the total costs, which should include the transfer and bond costs should you need to apply for a mortgage loan.

CAROL REYNOLDS, AREA PRINCIPAL FOR DURBAN COASTAL, PAM GOLDING PROPERTIES 1. Get pre-qualified – chat to your banks about the loan amount you will qualify for

so that you know exactly what price range suits your budget.

2. Analyse – ask your local estate agent to give you a market analysis on the area you’d like to invest in, ensuring the area is safe and on an upward trend.

3. Sectional title schemes – if you are buying into a sectional title scheme, ask for a copy of the financials and ensure that you are investing in a well-run complex.

4. Seize the opportunity to buy now rather than renting – the sooner you get your foot into the property market the better.

GERHARD KOTZÉ OF REALNET 1. Check out the area – if you find an area you think would suit you, be sure to visit it at different times.

Things can look very

different after dark or at the weekends when everyone is home from work.

2. Choosing your area – while modern “live-playwork” precincts are attractive, you should probably avoid suburbs that have become “mixed-use” over time, unless they have a co-ordinated community security system.

3. Safety features – examine the safety features of any home you are viewing, including flats and townhouses.

Safety features can be added, but the costs can quickly mount up.

4. Second floor – many single women prefer homes above the second floor, but if the home you like is at ground level, look out for an attached garage with a door leading directly into the interior.

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Money Quiz Test yourself on your financial knowledge 1. If you put R100 into an investment that offered compound interest of 10% a year, how much would you have in total after five years (rounded to the closest rand)? a) R110 b) R150 c) R161 d) R183 2. What is a unit trust fund? a) A type of pooled investment. b) A type of bank deposit. c) A fund for widows and orphans. d) A pyramid scheme

3. Where was the world’s first official stock exchange? a) London b) New York c) Frankfurt or d) Amsterdam

6. At what age can you access savings in a retirement annuity? a) Any age. b) 55 c) 60 d) 65

7. What can long-term insurers cover you for? a) Permanent and temporary disability. b) Your life c) Getting a severe illness, such as cancer. d) All of the above.

8. What is a testamentary trust? a) A fund for widows and orphans. b) A family trust you establish during your lifetime. c) A trust established through your will. d) A type of unit trust fund.

4. What is the prime interest rate? a) The rate you receive on a 12-month fixed deposit. b)The rate banks borrow from the Reserve Bank. c) The rate a bank charges its most creditworthy customers. d) The level of public interest in an investment product.

9. Which of the below is an example of good debt? a) Debt used to buy groceries. b) Debt used to renovate your house. c) Debt used to buy a car. d) Debt used to go on an overseas trip.

5. What are you taxed on? a) Your income. b) The gains in value of your property and share investments. c) What you buy when you buy it, with the exclusion of certain items. d) All of the above.

10. RSA Retail Bonds are a savings instrument offered by National Treasury for: a) All South Africans. b) Previously disadvantaged. c) South Africans only Only investors with R10 000 or more to invest. d) Only children under the age of 16.

ANSWERS: 1c, 2a; 3d; 4c; 5d; 6b; 7d; 8c; 9b; 10a

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Rands & Sense Saving for your child’s education Financial advisers can help new parents plan for their child’s university life, says André Wentzel

DID you know that the typical university degree in South Africa costs about R50 000 a year. And in 18 years’ time this will have ballooned to about R1 million for a four-year degree?

This can seem overwhelming, especially to new parents who are probably sleep-deprived, emotional and deeply immersed in other fundamental questions like choosing a guardian, updating their wills, and changing medical, life and disability cover.

It’s all about breaking big goals into smaller goals that are more achievable. If I told you that to save R1m in total, you’ll need to save R1 200 a month. Suddenly, this seems much more doable.

The first step is to have a ballpark figure of how much you need to save as part of an overall goal to give your little one the best possible education – plus, picking the right savings vehicle. Step two is to break this down into smaller, manageable, monthly savings goals, with the help of a financial adviser.

Step three is to map out a plan to be able to contribute to this each month.

If your little one hasn’t been born yet and you’re having a baby shower, why not ask your loved ones to give monetary contributions to your child’s education fund?

Another tip is to drop some major hints for friends and family to give you food delivery vouchers.

New parents need takeaways. It’s just one of those little talked about, but well-established facts. Sooner or later the freezer lasagnes generously given by all your aunties run out, and then you turn to Mr D on speed dial!

Again, the money you save can go towards education. It’s also important to recognise that inflation means costs go up – and your savings contributions have to increase accordingly.

And, for nine out of the last 10 years, tertiary education costs have increased by more than general inflation.

So, it’s very easy to go off-track. That’s where a financial adviser who is able to help you review and make little adjustments is worth his or her weight in gold.

Wentzel is the solutions manager at Sanlam Personal Finance.

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Investing in quality companies will keep you on track through turbulent times Market Cap Filter Dividend Filter Economic Screen Industry Screen Company Screen Yield Screen

At Marriott, our investment philosophy is to buy high quality, diversified and resilient companies with a history of paying reliable and growing dividends. We take a long-term view and select companies we are comfortable holding in our portfolios for 10 years or more. This strategy has served our investors well over the long-term and is proving to be especially beneficial for our investors through the current COVID-19 crisis.

We apply a stringent filter process when selecting companies for our portfolios. This ensures we hold only top-quality companies that can reliably grow their dividends through all stages of interest rate, business and economic cycles for a successful long-term investment outcome. The diagram below outlines how the filter works.

Filters out small-cap companies Filters out companies that don’t pay reliable dividends Filters out cyclical companies vulnerable to economic downturns Filters out companies in volatile industries Filters out companies with weak balance sheets Filters out expensive income streams

The companies that make it through the filter process tend to be market leaders with strong brands, robust balance sheets, reliable cash flows, and produce goods or services that are integral to the lives of their customers. These are qualities that are often under-appreciated when times are good but become increasingly valued in times of economic uncertainty.

Johnson & Johnson, for example, was able to increase its dividend by 6.3% in June, representing a 58th consecutive annual increase.

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In an environment characterised by low interest rates, companies that are able to grow their earnings, and produce reliable dividends, are an attractive long-term proposition.

Attractive Dividend Yields We only invest in companies that pay reliable dividends. In our opinion, companies of this nature are currently offering very good value as the differential between their dividend yields and the 10-year US Government Bond yield is the widest it has been in over 30 years.

An added benefit is that these dividends tend to grow over time, whereas the coupon from a Government Bond is flat for the term of the bond. The below highlights the weighted average dividend yield (3.1%) of the international equities held in the Marriott portfolios, compared to the 10-year US Government Bond yield (0.5%).

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Resilient Dividend Growth Our income focused investment style emphasises multinational companies which are resilient in nature and offer timeless products and brands. As such, we anticipate that 90-100% of the businesses we invest in will either maintain or grow their dividends in 2020 despite the current uncertainty.

Below are details of just two of the companies we hold in our international portfolios:

Company

Dividend Growth

How they are successfully navigating the COVID-19 crisis

VISA

Up 20%

Visa, the number one global credit card network, has recently been included in the Marriott portfolios. The company benefits from high incremental margins, low capital expenditures, and high free cash flow. In the 2019 financial year Visa processed over 138 billion transactions to the value of $11.6 trillion – more than MasterCard, American Express, JCB and Diners Club combined. Their business model, global presence and market dominance enables the business to produce high and stable EBITDA margins approaching 70%. Since the start of the crisis, VISA has experienced a massive increase in digital transactions with millions of consumers moving to e-commerce for the first time.

Abbott Laboratories

Up 12.5%

Innovation, together with the ability to adapt quickly, will always be a key attribute for successful companies. A good example of a company demonstrating this characteristic is Abbott Laboratories, who were able to design a COVID-19 test for their portable ID NOW testing instrument. With this fast, molecular point-ofcare test, results can be delivered in as little as 5 minutes. Just as importantly, it is portable and can be used outside of traditional hospitals in locations such as doctors’ rooms and clinics.

Investors can access these companies with Marriott in two ways: • Using their individual offshore allowance of R11 million per annum to invest directly into: - Marriott’s direct offshore share portfolio (International Investment Portfolio), or - Marriott’s international unit trusts • Using Marriott’s asset swap capacity to invest in our local feeder funds which invest directly into our international unit trust funds.

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International Investment Portfolio Invest in high quality companies for more predictable investment outcomes.

Contact our Client Relationship Team on 0800 336 555 or visit www.marriott.co.za

Information

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Here are sources that can help you with financial education, give you more information on savings and investments, and afford you recourse if you have a consumer complaint or a complaint against a financial services provider

FINANCIAL EDUCATION Financial Sector Conduct Authority MyMoney Learning Series https://www.fscamymoney.co.za South African Savings Institute #WaysToSave https://waystosave.co.za/ OMBUDSMAN & REGULATORS Ombudsman for Banking Services ShareCall: 0860 800 900 or phone: 011 712 1800 Email: info@obssa.co.za www.obssa.co.za CONSUMER ISSUES National Consumer Commission Toll-free: 0860 003 600 or phone: 012 428 7000 Email: complaints@thencc.org.za www.thencc.gov.za CONSUMER GOODS AND SERVICES OMBUD ShareCall: 0860 000 272 Email: info@cgso.org.za www.cgso.org.za

FINANCIAL ADVICE Ombud for Financial Services Providers phone: 012 470 9080 or 012 762 5000 Email: info@faisombud.co.za www.faisombud.co.za INVESTMENTS Financial Sector Conduct Authority ShareCall 0800 110 443 or 0800 202 087 info@fsca.co.za www.fsca.co.za LIFE INSURANCE Ombudsman for Long-term Insurance ShareCall 0860 103 236 or phone: 021 657 5000 Email: info@ombud.co.za www.ombud.co.za MEDICAL SCHEMES Council for Medical Schemes MaxiCall: 0861 123 267 Email: complaints@medicalschemes.com or information@medicalschemes.com www.medicalschemes.com

CREDIT OMBUD MaxiCall: 0861 662 837 or phone: 011 781 6431 Email: ombud@creditombud.org.za www.creditombud.org.za

RETIREMENT FUNDS Pension Funds Adjudicator ShareCall: 0860 662 837 or phone: 012 346 1738 Email: enquiries@pfa.org.za www.pfa.org.za

NATIONAL CREDIT REGULATOR ShareCall: 0860 627 627 or phone: 011 554 2600 Email: complaints@ncr.org.za or (debt counselling) dccomplaints@ncr.org.za www.ncr.org.za

SHORT-TERM INSURANCE Ombudsman for Short-term Insurance ShareCall 0860 726 890 or phone: 011 726 8900 Email: info@osti.co.za www.osti.co.za

TAX Tax Ombud ShareCall: 0800 662 837 or phone: 012 431 9105 Email: complaints@taxombud.gov.za www.taxombud.gov.za PROFESSIONAL ORGANISATIONS Fiduciary Institute of Southern Africa (FISA) phone: 082 449 2569 Email: secretariat@fisa.net.za www.fisa.net.za Financial Planning Institute of South Africa (FPI) Phone: 011 470 6000 Email: info@fpi.co.za www.fpi.co.za South African Institute of Tax Professionals (SAIT) Phone: 012 941 0400 Email: info@thesait.org.za www.thesait.org.za FINANCIAL DATA ◆For ◆ the latest financial market indicators, go to https://www.iol.co.za/business-report/ market-indicators ◆For ◆ the latest quarterly unit trust performance, go to https://www.iol.co.za/ personal-finance/collective-investments ◆To ◆ look up performance of a particular unit trust fund go to https://www.iol.co.za/ personal-finance/fund-look-up