IOL Money Issue 5_December 2020 by Independent Media Digital Magazines

IOL

MONEY DECEMBER 2020

Holiday finances

Insurance checklist BUDGETING TIPS Cheap destinations

CONTENTS FEATURES

The 5 cheapest holiday destinations

Plan ahead and avoid a Debt-cember

Have a fraud-free festive season

Your insurance checklist for the holidays 10 How to explain to kids why this festive season will be different

REGULARS

Rands and Sense with Bertus Visser

Fact File: Holiday season road accident statistics

Money Basics with Martin Hesse Travel insurance Money Quiz

14 18

Planning Perspectives with Lesego Monareng

Important contacts and links

“I’m only rich because I know when I’m wrong… I basically have survived by recognising my mistakes.” GEORGE SOROS

BILLIONAIRE INVESTOR

FROM THE EDITOR FOR my family, this festive season will be very different from what we have come to regard as normal for this time of year. I’m sure it will be the same for you. I have told my 10-year-old-son he needs to accept that things will be different this year. It won’t be easy for him. We will be staying home, and although we will see family and friends over the period, the get-togethers will be small, outdoors, and well spaced timewise. We certainly won’t be joining huge gatherings, and will stay well away from crowded shopping centres and tourist meccas such as the V&A Waterfront. We’ll have our own intimate presentopening session on Christmas Day, and may book somewhere outdoors for a Christmas lunch. I have assured my son that when the pandemic is over, we’ll make up for what we missed out on during December 2020, and I think he’s okay with that. We aren’t going away, but if you are, there is advice in the following pages about checking up on your insurance, staying safe, and avoiding fraudsters. If in the unlikely event you are going overseas and relying on the travel insurance that comes free with your credit card, check to what extent you are covered – it might not be for as much as you think. For millions around the world, this festive season will be the first they spend without loved ones lost to Covid-19. Spare a thought for them. Above all, stay safe and don’t take unnecessary risks regarding the virus. And have as merry a festive season as you can in the circumstances.

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

The

CH EAPES T

While it is not advisable to travel overseas at present, because it increases your risk of Covid-19 infection, it is interesting to see where, if you were travelling, you’d get the most “bang for your buck”. The following list of the five most affordable destinations in the world is based on the latest Big Mac Index survey (July 2020). This measure, launched some years ago by The Economist magazine, gives an idea of how much a US dollar would buy you in any particular country, by comparing prices, when the local currency is converted to dollars, of a McDonald’s Big Mac burger. While it may serve as a rough guide to how “cheap” or “expensive” a particular country is for tourists, you need to do more homework before going anywhere. For example, while a Big Mac may be relatively cheap, hotel accommodation or car hire may not be.

h oliday destinat io n s

SOUTH AFRICA

RUSSIA

TURKEY

Our country is the cheapest of all the countries in the Big Mac Index, an indication that our currency, the rand, is extremely weak. According to the index, in July, a Big Mac would have cost you R31, which, at the exchange rate at the time of R16.65 to the US dollar, translates to US$1.86. You cannot buy a Big Mac for less than that anywhere in the world. Hotel accommodation in December, according to Booking. com, ranges from about $60 to $270 per room per night (two adults).

If you’re wanting to travel outside South Africa, Russia is the cheapest country to visit, with a Big Mac burger costing you $1.91 (about R32). Hotel accommodation in December (winter in Russia is very cold, and therefore it is not high tourist season) ranges on Booking.com from $30 to $200 per room per night. In summer a room will cost between $60 and $300.

Picturesque Turkey is the third-cheapest country for tourists, according to the Big Mac Index. A Big Mac will cost you $2.04 (about R33). Hotel accommodation in December is generally very affordable, ranging from $30 to $200. These prices go up considerably in Turkey’s summer season (July and August), to between $60 and $400 per room per night.

Note: The conversions reflect the rand/dollar conversion rate in July 2020, of R16.65 to the US dollar. The rand had strengthened to about R15.30 to the dollar at the time of writing.

UKRAINE

MEXICO

Ukraine, which is to the north of Turkey, on the northern side of the Black Sea, and which borders Russia to the East, is much colder than Turkey in December. A Big Mac burger will cost you $2.17 (about R36). Hotel accommodation in December costs $30 to $120 a room, while in the summer months of July and August you’ll pay $60 to $270, according to Booking.com

Mexico is good to visit all year round because of its moderateto-warm climate. A Big Mac costs $2.23 (about R37), which is less than half the $5.71 (R95) you’ll pay if you cross the border into the home of the Big Mac, the USA. Mexico boasts fabulous beach resorts in sun-drenched Cancun and Acapulco, among other places, but accommodation at a resort hotel is not cheap: in December you are looking at $120 to $400 a night.

Plan ahead and avoid DEBT-CEMBER A financial education expert recommends that you balance what your family wants with what your budget allows this festive season SOUTH Africans who live far from where they grew up love to go home during the festive season to catch up and reconnect with their families. The problem is that this joyous time of togetherness can often be hard on your pocket. John Manyike, head of financial education at Old Mutual, says: “Caring for our families is one of the main reasons why we work as hard as we do, and providing financial assistance is the right thing to do. But it’s very important not to overdo it and risk your own financial security. “It’s vital to have a solid financial plan to get you through this period without getting into debt or being forced to do a ‘vosho’ to impress an ATM in the hopes that it will vomit money despite a R6 bank balance after the festive spending spree.” Manyike says that your plan should be realistic and based on what you can afford. So when deciding how much of your available funds to allocate to family obligations, make sure you balance your family’s expectations with what you can afford. The question for many people is whether they can fulfil their family responsibilities, while also meeting their regular monthly obligations such as the bond or

rent, transport costs, savings and insurance premiums, groceries, and still have some money extra for January, which can be a very expensive month. “People need to remember that there is life after December,” Manyike says. According to the 2018 Old Mutual Savings and Investment Monitor, 36% of working metropolitan South Africans have dependants besides their children. “Whether it is supporting parents by contributing towards their grocery bill for the December holidays, or buying clothes for unemployed siblings for Christmas, the trick is to stay within your budget to avoid visiting ‘uMashonisa’ in the first week of January to cover the essentials like fuel, bus fares, groceries, back-to-school stationery and uniforms.” He offers these budgeting tips to help get you through the festive season:

BALANCE YOUR BUDGET

Don’t go into the festive season without a budget. Before spending a cent on non-essential luxuries, it is essential to fulfil all your regular monthly expenses. No exceptions should be made. Next, allocate some funds towards the family expenses, entertainment and gifts. If you haven’t saved up for this already, you can use some of your year-end bonus (if you get one) or stokvel savings. Be realistic about what you can contribute and don’t spend beyond your means. Using store accounts and credit cards to finance festive entertainment

will leave you bloated with debt and can jeopardise any financial aspirations you may have for the New Year.

REDUCE YOUR DEBTS

Allocate a portion of your bonus towards paying off your debts or back-to-school expenses, and even shop for these essentials during December.

KEEP SIGHT OF LONG-TERM GOALS Don’t forget to allocate a certain portion towards your savings. “Saving towards your long-term goal is important, don’t lose sight of that. Make sure you stick to your commitment towards reaching this goal, whatever it may be.”

UNWIND AND HAVE FUN!

Although it’s important to be responsible during the festive season, it’s also important to unwind and recharge your batteries. Set aside some funds so you can spoil yourself a bit, or put it towards your festive season social budget. Remember that if you get paid early in December, you need to be disciplined to ensure you get you through to your next pay cheque at the end of January. “Don’t fall into the temptation of faking success to impress family members and old neighbours you may not even like with money you don’t have. Instead, communicate openly with your family members and make it clear that your budget is limited. Specify how much you have available to help. This will ensure you stay out of debt and never have to avoid calls from friends and relatives demanding their January ‘parcel’*,” Manyike says. *Parcel: township slang for money owed.

People need to remember that there is life after December

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If you follow a few sensible precautions, especially when transacting online, you should prevent an attack on your finances by cyber-criminals, says the banking ombudsman

THE festive season is a time when criminals try to take advantage of consumers. The Ombudsman for Banking Services has received and investigated many complaints from bank customers who have fallen victim to scams over the years. In instances where the ombudsman was able to find maladministration on the part of the banks, it was able to recover funds for aggrieved consumers. â&#x20AC;&#x153;October was Cyber Security Awareness Month and we have just

Have a fraud-free festive season

had International Fraud Awareness week (which ran from 15 November to 21 November). These two events are important, as there are increased transactions taking place over the internet, and the festive season is one which traditionally sees a lot more transactions (online and conventional) than any other time of the year,â&#x20AC;? says Reana Steyn, the Ombudsman.

HOLIDAY SEASON FRAUD WARNING Black Friday and Cyber Monday

bring welcome bargains. However, not all specials and bargains are genuine: cyber criminals are becoming very inventive in the way that they commit their crimes. “During this period, fraud is likely to occur when transacting online or with bank cards at the ATM and other point-ofsale devices. Consumers will also receive calls from criminals pretending to be representatives from their bank.

“Even though the caller may know your identity number, name, and card number, consumers are urged to never disclose any confidential information, such as the CVV number on the back of their cards or the one-time pin sent to their phones by the bank. It is very important to remember that the bank will never ask you for your access code, password and PIN over the phone or via email links,” says Steyn. Criminals are ready to prey on innocent bargain hunters transacting at ATMs or online by stealing their bank cards, confidential banking details, as well as by offering fake deals on proxy websites or through unsafe internet connections. Therefore you need to be extra vigilant over the festive period.

SAFETY TIPS

If you want to take advantage of festive season special offers, there are a few important safety tips that you can follow to protect yourself against harm: l Protect yourself online by only using trusted websites. l Safeguard your devices. Keep your cellphones and laptop safe and discourage multiple users on your devices. l Secure your networks. Set strong passwords and ensure that the sites you shop on are secure and are the legitimate websites. The icon representing a padlock on the browser must be locked. l Avoid public wi-fi connections and internet cafes for your online banking and purchasing. Rather use data if you need to make emergency transactions. l Never ask a random stranger for assistance at the ATM and be wary of strangers asking you for help; l If the ATM is in a secluded area or it seems to be malfunctioning, rather go somewhere else to transact; and l Ensure that you will be able to call your bank immediately in the

case of an emergency. If you leave your cellphone at home, it may be too late to stop the withdrawal of funds from your account.

RECOURSE FOR CONSUMERS

While a lot of care is taken to decrease fraud and raise awareness, the reality is that a lot of South Africans will become victims of fraud. Therefore, it is important to let the public know that they do have some form of protection. The Ombudsman for Banking Services is a non-profit company that is tasked to receive, investigate and resolve complaints that arise in the banking sector. The ombudsman provides recourse to aggrieved customers of banks where consumers have suffered losses that are the result of maladministration by banks. It aims to do this in a fair and independent manner. “In 2019, we closed over 5 996 cases. More than 2 356 of those cases were related to allegations of maladministration by banks. “The types of complaints included issues such as allegations of accounts settled and disputes around bank fees and charges. In many of these cases, where we found that there was maladministration on the part of the banks, we made appropriate recommendations in line with the merits of each matter. “The recommendations made included monies being written off or refunds being made to bank customers,” says Steyn. In order to ensure that all South Africans have access to a professional service that would ordinarily be too expensive for most consumers to afford, services are rendered by qualified lawyers free of charge to complainants. The office also has a mandate to create public awareness of its services and to educate consumers about banking matters that may be of benefit to them.

Your insurance

CHECKLIST for the holidays Going away? Sumarie Greybe offers tips on what to do to ensure you are protected and that your insurance claim will be honored in the event of loss

11 MANY South Africans take leave in December. Whether you’re planning a long road trip to satisfy your wanderlust after lockdown, or just a weekend away somewhere close, there are a few things you can do to protect your home and your vehicle. Here is a checklist that will help keep your car and home safe and help you avoid any problems claiming from your home or car insurance should something go wrong while you’re on holiday.

FOR YOUR HOME INSURANCE POLICY

Must-dos to ensure your claim will be valid: l Check that all external locks and safety doors in your home are in good condition and securely locked. l Activate your alarm and ensure you have a valid subscription with an armed response company (especially if you told your insurer that you have an alarm). l Ensure people like gardening services and other contractors do not have a key to enter your house while you are away. l Minimise any obvious water hazards – for example, don’t leave an indoor fountain running while you’re away and there’s no one in your house. Extra tips: l Let your armed response company know you’ll be away. Ask them to respond immediately without phoning if there’s an alarm, especially if you won’t always be easy to reach on your mobile. l Consider switching the geyser off to save electricity and reduce the risk of it bursting. Even think about switching off the water mains if you’ll be away for a long time to avoid damage from burst pipes. l If you’re taking valuables like your phone, laptop, camera, and sports equipment on your holiday,

It is important to renew sooner rather than later given that the grace period for licence renewals ended on 31 August make sure they’re all insured for their full value by specifying them in your home contents policy. l If you don’t have home contents insurance, but worry about your smartphone or MacBook getting stolen, consider getting standalone cover. You can get a quote and buy within seconds.

FOR YOUR CAR INSURANCE POLICY Must-dos to ensure your claim will be valid: l Your vehicle licence disc needs to be renewed once a year. While most insurance providers are mindful that the lockdown made it difficult for people to renew in time, it is important to renew sooner rather than later given that the grace period for licence renewals ended on 31 August. l Ensure all drivers for your car have up-to-date driving licences. The licence needs to be renewed every five years, which includes an

eye test. If your driver’s expired between 26 March and 31 August, it is valid until 31 January 2021. If it expired before lockdown, it is no longer valid. If you haven’t renewed it, we recommend that you do so as soon as possible. l To improve road safety and ensure a hassle-free claims experience if something bad happens on the road, make sure that your car is roadworthy. Ask a tyre fitment centre to check that your tread isn’t worn out, check that your indicators and brake lights are working, and get your brake pads checked if they have not been replaced for a long time. l Do not exceed the size or weight limit of the roof rack, bike rack or roof-top storage container. Overloading increases the risk of those items being damaged or those items doing damage to other cars if they fall off. It also increases your risk of being in an accident because of the car’s balance being off. Extra tips l If you have added expensive accessories and extras to your car – such as a roof-rack, bull bar, xenon lights, or extra sound equipment – update your policy to ensure they are covered. l Keep your insurance provider’s roadside emergency number on hand so that you call for help if you have an accident or engine trouble. The more progressive insurers will also allow you to seek emergency assistance from their mobile app. Sumarie Greybe is the co-founder of AI-driven car insurance provider Naked

Rands & Sense Level up to get the most out of life

Financial security doesn’t just help you cover any shortfalls, it can also contribute to better health, writes Bertus Visser

THIS year, as some of us lost income, some adjustments were made to insurance too, to reduce premiums or, in some cases, cancel cover altogether. Those who could work from home, or still do, may have been able to benefit from insurance reductions, such as on car insurance. But will it still be as comprehensive as you think, should you pop out to the shop and have an accident, or to cover you on an upcoming road trip? It may be time to level up your cover. We may all be adjusting to this new normal, but that doesn’t negate the old risks. More of us are back on the roads, trying to navigate this new normal. It’s a dangerous gamble without some cover in place. Short-term insurance is often referred to as a grudge purchase, because you can’t always use it or, when you need it, it pays out less than you have anticipated. Your insurance only fails you if you don’t have enough cover in place for what you are insuring, or if you fail to follow the terms and conditions in your policy. Don’t let the warmer weather fool you That rainy day could come, and not having the insurance you should have could cost you. You need not drown unnecessarily in unexpected expenses when you could have some support instead. Paying monthly to have shortterm insurance cover in place could really pay off. The summer weather will also bring hailstorms to some parts of the country. Reconsider your car insurance to include cover against this if you live in risk areas, and any garden or roof maintenance should also be prioritised.

In drier parts of the country, avoiding fire risk is important too. This extends to both outdoor meals and cooking in the kitchen, as well as those still chilly nights around the fire. If your insurance doesn’t cover the full replacement cost of your property, make sure you change that to avoid any summer dreams or plans going up in smoke. Feeling safe contributes to feeling better Financial security doesn’t just help you cover any shortfalls, it can also contribute to better health. Prolonged financial stress (such as having to use your credit card to fund an emergency expense and then having to pay it off over time, battling the interest that builds up) can erode your sense of well-being and contribute to health issues. It can lead to symptoms such as sleep problems, migraines, depression and heart disease. Insurance can help maintain your overall sense of security and well-being by reducing your need to worry about your financial position should anything go wrong. An insurance safety net can ease stress Putting your safety net to good use means you have to install it properly. If you are not insured adequately based on your risks, your insurance policy may have some holes. And we all know a safety net with holes is somewhat redundant. Working closely with your adviser will help to spot any gaps in your cover. Keep communication honest and regular and you are unlikely to feel the full effects of any hard knocks that may come. Bertus Visser is Chief Executive of Distribution at PSG Insure

Holiday season road accident statistics BECAUSE of the Covid-19 pandemic, South Africa’s roads are likely to be far quieter this December than in previous years, so the road accident statistics are likely to be lower than normal. However, it is worth pausing and considering the risks associated with travelling over the festive season, and taking precautions: ensure your car is roadworthy, don’t drink and drive, don’t drive when you are feeling sleepy, and be extra vigilant for errant drivers. Also, make sure you are properly covered – that your car is insured, and that you and your family are covered for injuries and death. The Road Traffic Management Corporation compiles an annual report on road accidents over the festive season (the period from 1 December to 11 January). Here are some sobering statistics from the State of Road Safety Report: 2019/2020 Festive Season.

FATALITIES

A total of 1 616 people lost their lives on our roads between 1 December 2019 and 11 January

FATAL ACCIDENTS

There were 1 362 fatal accidents (an accident in which at least one person dies). The provincial breakdown of fatal accidents was: l KwaZulu-Natal: 278 (20.4%) l Gauteng: 229 (16.8%) l Eastern Cape: 207 (15.2%) l Limpopo: 184 (13.5%) l Western Cape: 129 (9.5%) l Mpumalanga: 118 (8.7%) l Free State: 88 (6.5%) l Northwest: 85 (6.2%) l Northern Cape: (3.2%)

FACT FILE

LAWFUL AND UNLAWFUL VEHICLES

this year. The breakdown is as follows: l 24% drivers l 36% passengers l 35% pedestrians l 1% cyclists About three-quarters of the people killed were male and about one-quarter female. Of the 388 drivers killed, the age groups with the highest fatalities were: l 30-34: 23% l 35-39: 19% l 25-29: 12% l 40-44: 11% In other words, 65% of the drivers who died were between 25 and 44. Of the 582 passengers killed, the age groups with the highest fatalities were: l 30-34: 16% l 25-29: 14% l 20-24: 10% l 35-39: 10% Children below five years of age accounted for 7% of passenger fatalities.

At the end of 2019 there were about 11.5 million registered motorised vehicles (cars, trucks, buses, minibuses, motorcycles) on South Africa’s roads. There are more than one million unroadworthy and/or unlicensed vehicles on the roads. Unroadworthy vehicles are one of the major contributors to fatal road crashes in South Africa, according to a release by the Road Traffic Management Corporation. “Seven percent of road crashes during the festive season last year were attributed to the unroadworthiness of vehicles. Tyre bursts, defective brakes, smooth tyres and dysfunctional lights are some of the factors that have been identified as leading causes of fatal crashes involving unroadworthy vehicles.”

MAKE SURE YOU ARE

PROPERLY COVERED –

THAT

YOUR CAR IS INSURED , AND THAT YOU AND YOUR FAMILY ARE COVERED FOR INJURIES AND D EATH

MONEY BASICS with MARTIN HESSE

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TRAVEL INSURANCE

Can you rely on your credit card?

WHAT YOU NEED COVER FOR

The three main categories of risk for which most travellers expect to be adequately covered are: l Medical treatment and associated costs in case of an emergency resulting from an accident in which you are injured, or from sudden illness. The costs could run to hundreds of thousands, even millions, of rands, particularly if you happen to have your accident, or contract your illness, in a remote area and need to be airlifted to a reputable medical facility, possibly thousands of kilometres away. l Loss or theft of baggage and personal effects. Although the financial implications are low compared with emergency medical costs, they could be fairly substantial if you have valuable items with you or in your baggage. l Travel cancellation costs. If you have to cancel or curtail your trip, changing or cancelling flights or accommodation bookings, either before you leave or after arriving at your destination, you need to be covered for non-refundable costs. Be aware that while credit-card cover will insure you against medical emergencies (up to between R1.5 million and R10 million, depending on the card), it may not cover baggage loss or travel cancellation costs. If you think you are not adequately covered by the

insurance on your credit card, or if you want a greater amount of cover, you can buy “top-up” travel insurance cover for a relatively low price.

EXCLUSIONS AND CONDITIONS

Travel insurance policies have common conditions and exclusions about which you should know before you embark on your dream holiday. Some of the exclusions can be covered by additional insurance. They include: l Cover is limited to 90 days travelling. l You are generally not covered for pre-existing conditions. For example, if you have a heart condition, you will not be covered if you suffer a heart attack during your trip. l Most regular policies provide cover only to the age of 70 or 75. If you are over the cut-off age, you need to take out separate seniors’ cover. l Most policies cover pregnant

women who have a pregnancyrelated complication or emergency only up to the 26th week of pregnancy. l Injuries resulting from hazardous pursuits such as diving, skiing or white-water rafting are not covered. l Dangerous countries: travel to countries at war, such as Syria or Libya, is not covered under most regular policies. l Acts of terrorism: you usually need extra cover for a medical emergency arising from an act of terrorism. You also need to know how “terrorism” is defined in your policy. An important point is that the insurance company may not cover you if you don’t obtain authorisation for a particular claimable expense that exceeds a certain amount. Another thing: you may not be covered by credit-card travel insurance if you pay for your journey using air miles or benefits from a frequent-flyer programme.

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IF YOU are planning an overseas holiday and are relying for travel insurance on the automatic cover that comes with paying by credit card, you need to take a closer look at what the policy covers. As with other types of insurance, many people read the small print only if they have to claim or, worse, if their claims are rejected. But ignorance of policy conditions, and even the basics of how much you are covered for versus how much you need, seems to be particularly common with travel insurance.

You need to prepare your children for the fact that their gifts may not be as fancy as last year and the celebrations not so lavish

How to explain to kids why

THIS FESTIVE SEASON WILL BE DIFFERENT

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NEARLY six out of 10 South Africans (56%) are planning to spend a third less than they normally do, on average, this festive season, with a quarter aiming to cut their usual holiday budget by as much as half. That’s according to a recent survey by global comparison platform Finder.com. Downscaling on the traditional celebration children are expecting this year is bound to create anxiety among parents, says Sharon Moller, financial planning coach at Old Mutual. “Talking about why there is less money this year can trigger our deeply ingrained fears of not having enough and not being able to give our loved ones what they want,” says Moller. To reduce this stress, Moller

17 the other hand, increases the likelihood of lashing out or sending children ‘mixed signals’. Kids constantly monitor the money attitudes (often non-verbal) and behaviour of their parents, and any misalignment between the two can result in negative money behaviours as adults.” Even flippant comments (“Money doesn’t grow on trees!”) can shape their ideas about financial health for a lifetime, which is why it’s so crucial to choose your actions and your words mindfully – but without getting overly hung up on saying exactly the right thing. Moller offers the following tips for constructive conversations and a life-affirming approach to a more frugal festive season.

1. OWN YOUR OWN ANXIETY

suggests you address the issue head-on and have simple, frank and age-appropriate conversations with your kids. “Children are like sponges and can absorb our unspoken fears and anxieties about money. It’s for this reason that it is always better to have these conversations, no matter how uncomfortable it might feel.” A 2020 survey by the American Psychological Association found that 91% of children know when their parents are experiencing stress. Thirty percent of children say they are worried about their family not having enough money, but, according to the same survey, only 18% of parents believe money is a source of stress for their children. “Leaving things unsaid, on

It’s perfectly okay to admit to your children that you are feeling anxious, provided you take responsibility for your own emotions – and for the story and beliefs that generate them – rather than making them feel they’re to blame. Doing this won’t break your children. On the contrary, it will build a connection and trust between you and teach them emotional awareness, too.

2. FOCUS ON BIG-PICTURE POSITIVES

Share in a way that promotes resilience – a sense that this too shall pass – and awareness of others’ experiences. We are living through a global trauma, rather than a personal setback. And as difficult as it is, there are big life lessons to learn about the world and about ourselves.

3. GIVE TO YOUR COMMUNITY

Show your children that caring for others is a responsibility – and a great joy. What’s more, it needn’t mean giving money or things. Spending time with the elderly or with children in need is a valuable lesson in compassion,

connectedness and purpose.

4. TEACH YOUR CHILDREN HOW MONEY WORKS

In the age of instant gratification, learning by lived experience what it means to save for something they really want will give your children an understanding of the value of money. Open a bank account for your child and give them the opportunity to work for some pocket money, even if it’s just R20 a month.

5. CONNECT IN NEW AND CREATIVE WAYS Make family gift vouchers that your children can cash in with you and with each other for experiences – rather than things – they’d love to have: baking cupcakes, watching a movie together, camping in the backyard, playing board games or going to the beach. Find the things they love to do and give of your time rather than in the form of expensive gifts.

6. MODEL SELF-AWARENESS, SEEK PURPOSE

If your children express jealousy of others or a sense of deprivation, help them uncover the meaning behind their desires. It’s human to want what we don’t have, but it’s also an opportunity to have conversations that get right to the heart of some of life’s biggest questions. Why do we want what we want? How would having those things help us be who we want to be or to follow our purpose? “Our children have a very primal need to be seen and understood for who they truly are. By spending time over the festive season deepening our conversations and relationships with them, we can meet this vital need and share lessons that will last a lifetime,” says Moller – long after they’ve forgotten the gifts they received over December. Supplied by Old Mutual

Money Quiz Test yourself on your financial knowledge 1. If you saved R1000 a month in an investment that offered compound interest of 10% a year, how much would you have after 10 years (rounded to the closest rand)? a) R120 000 b) R121 200 c) R206 552 d) R490 073 2. What is an exchange traded fund? a) A pooled investment traded like a share b) A type of derivative c) A capital venture equity investment d) A property investment 3. Who said â&#x20AC;&#x153;Markets can remain irrational longer than you can remain solventâ&#x20AC;?? a) John Maynard Keynes b) Albert Einstein c) Warren Buffett d) George Soros

6. What is the maximum percentage that a South African multi-asset high-equity fund can invest in shares, excluding property shares? a) 50% b) 75% c) 80% d) 95% 7. Who is the Financial Services, or so-called FAIS, Ombud? a) Zweli Mkhize b) Judge Ron McLaren c) Judge Bernard Ngoepe d) Adv Nonku Tshombe 8. At what age can you claim a secondary rebate on your income tax? a) 55 b) 60 c) 65 d) 70

4. What index measures the US stock market? a) JSE/FTSE All-share Index b) JSE/FTSE Resources Index c) S&P 500 Index d) MSCI World Index

9. Which government body is responsible for tax collection? a) The Department of Trade and Industry b) The SA Reserve Bank c) The Financial Sector Conduct Authority d) The SA Revenue Service

5. If the inflation rate is 5% a year, how many years will it take for your money to halve in value? a) 10 years b) 14 years c) 20 years d) 27 years

10. If your estate is worth R3 million, how much estate duty will need to be paid if you die suddenly? a) None b) 10% c) 20% d) 25%

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

Planning Perspectives

Do yourself proud this festive season It’s fine to let your hair down, but don’t let your guard down, otherwise you’ll start 2021 with a serious debt hangover, writes Lesego Monareng

THIS year will go down as one of the strangest in history. So much has changed since January: the way we work, the way we shop, the way we teach our children… It might not have been a good year, but 2020 has certainly been momentous. It deserves a proper send-off and a little celebration in December. But the festive season has its own set of problems and pitfalls, especially when it comes to your money. It’s fine to let your hair down, but don’t let your guard down, otherwise you’ll start 2021 with a serious debt hangover. Research into behavioural finance has shown how important emotions are when it comes to making decisions about money. Here are some tips to help you keep your emotions in check and be smart with your finances.

LOOK BEYOND DECEMBER

Dream! Choose one important short-term financial goal that you want to achieve in the next 12 months. It’s human nature to want to progress and improve – visualise yourself in 2021 and think about how to be better than you were in 2020. Some prudent goals might include becoming debtfree or starting an emergency fund, but you can aim for bigger, brighter things: buy property, upgrade your car, or treat the family to a welldeserved holiday? Having a goal that is important to you – and only you – will help you avoid reckless spending. Once you’ve safely navigated Christmas and New Year, you can start saving towards that goal.

RESIST TEMPTATION

Retailers know all about the power of emotion. At this time of the year, they deliberately put things in front of you that

are so tempting: those fancy chocolates, that beautiful dinner set, a new summer dress – and it’s on sale! Make a list of the things you need before you go to the shops to limit aimless browsing and spending. Even better: use online shopping.

EXPLORE NEW WAYS OF MAKING MONEY

Out of crisis comes opportunity. Now is a great time to reflect on the year that has passed and see how you did and how you can do better. Morgan Stanley’s MSCI All Country World Index, which tracks broad global market performance, was up 20% for the period January to November 2020 – far from the predicted doom and gloom. Sectors booming include healthcare, technology, online shopping and logistics. Chat to a Certified Financial Planner (CFP) about investments that track the best-performing sectors of the market to deliver long-term growth. A CFP will help you set up clever saving funds for non-negotiable payments like rates, electricity and school fees, which will free up income for investments.

GIVE YOURSELF A BREAK

Do your annual financial health check: review your monthly budget, check on any investments you might have, decide whether you still need all the insurance you’re paying for and see which monthly costs you can cut. All good? Now give yourself a break. You’ve earned it. The poet and US civil rights activist Maya Angelou said: “No matter what happens or how bad it seems today, life does go on and it will be better tomorrow.” Here’s to coming back with a bang in 2021!

Information

click on the links to visit the website

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 BANKING 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 CREDIT AND DEBT Credit Ombud MaxiCall: 0861 662 837 or phone: 011 781 6431 Email: ombud@creditombud.org.za www.creditombud.org.za National Credit Regulator ShareCall: 0860 627 627 or phone: 011 554 2600 Email: complaints@ncr.org.za www.ncr.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 Email: 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 www.medicalschemes.com RETIREMENT FUNDS Pension Funds Adjudicator ShareCall: 0860 662 837 or phone: 012 346 1738 Email: enquiries@pfa.org.za www.pfa.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

IOL Money Issue 5_December 2020

Articles inside

Planning Perspectives

Money Quiz

How to explain to kids why this festive season will be different

TRAVEL INSURANCE

Holiday season road accident statistics

Rands & Sense

Your insurance checklist for the holidays

Have a fraud-free festive season

Plan ahead and avoid DEBT-CEMBER

The 5 cheapest holiday destinations

From the Editor

IOL Money Issue 5 Content