TODAY Issue 1 2020 by Today Magazine

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TE R

N NE R ∙ WI

YOUR FUTURE STARTS HERE

TION FO ICA RU

ISSUE ONE // 2020

N AL M A

how to CRUSH YOUR DEBT READ FOOD LABELS RUN A STOKVEL

Taking

charge

in a changed world

3 BIG LIFE EVENTS AND WHAT THEY’LL COST

PLUS

WIN R5 000

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Ursula van der Westhuizen

T Mnutlane

Lorein Oosthuysen

Deidre Jansen Van Rensburg

M Solomon

Lizl Budhram

Thelma Maritz

Karabo Ramookho

Busisiwe Zenzele

Mokgadi Mohlala

David Caplan

Lesedi Kgofelo

Devina Amtha

Alison Pegg

Ken Walker

Dawn Mhlongo

Lynette Nicholson

Grant Du Toit

Pumza Somhlaba

T Fredericks

Maanda Todani

F van der Berg

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Lindsay Fiamingo

Vuyo Njisane

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Geronne Oaker

Men and women on the frontlines

WEâ&#x20AC;&#x2122;RE HERE FOR YOU

Nomtha Ndoni-Andrews

Nina White

To all the dedicated people fighting the Covid-19 battle right at the edge, the 30 000 employees of Old Mutual thank you for your bravery and for the commitment you show every day. You rock!

Send your message of support using #OMHereForYou

175 YEARS OF DOING GREAT THINGS

EDITOR’S LETTER

for step-by-step tips on tackling debt. This goes for life’s big events too, and we’ve done the maths to show how getting married or having a baby could affect your finances (page 18). Of course, we don’t want to put you off taking these big, happy steps, but we don’t want you to still be paying for that five-star, splash-out wedding when you’re getting ready to retire. Speaking of retirement, we asked a few 60-somethings to write letters to their 16-year-old selves (page 34). Their sincere messages highlight what is really important in life and it was good to be reminded of the value of family, values and making the most of what life has handed you. In other words, that the future does, indeed, start today. If you are in one of the essential services or stepped up to volunteer where help is needed in this time, I thank you. Each and every one who are unable to see their own loved ones to avoid putting them at risk while caring for others have my respect and sincerest thanks. Gugu-Lisa Zwane-Johnson Editor

1 // ISSUE ONE 2020

TIP

If you have any questions, comments or suggestions, please contact me at todayomc@oldmutual.com GLOSSARY

PHOTO: MATT PHOTO

Look out for these icons throughout the magazine. Each will point you to useful definitions, handy contact details and practical tips.

‘It was good to be reminded of the value of family, values and making the most of what life has handed you.’

FINANCIAL ADVISER

aking things one day at a time has never been more real than now. Whatever plans we had for this year – a crosscountry road trip or an eagerly anticipated family holiday – have all been cancelled by the coronavirus. When I first thought of a name for this magazine, I never imagined that the name and brand promise, ‘Today. Your future starts here’, would become even more apt two years later. It really has become a positive mantra for life in lockdown and 2020, the year that made us reconsider how we live. Covid-19 and lockdown have affected us all in different ways. Some have lost everything; others are working harder than before. Many of us were thrown into a whole new way of working that involved juggling our own work and our children’s schoolwork. Did you ever think that there would come a day when you’d have to figure out Grade 6 grammar again? And that you’d have to do it for months and months without being able to escape to the gym or a coffee shop? One thing I do know is that we are resilient no matter what gets thrown our way. Already we are learning to walk the path of this new normal, taking baby steps towards practical solutions and planning how we’re going to manage our new realities. For most, it starts with asking frank questions about our finances. How can we best work with what we have? How can we save? (Find out how modern stokvels make this easier on page 13.) How can we earn a little extra? (You’ll find practical advice for getting a side hustle off the ground on page 40.) More than ever, it is important to be cautious about taking on debt and hyper committed to paying off the debt you do have. To get you started, turn to page 8

CONTENTS

In this issue… UPFRONT

ONE-MINUTE READS ...4

WIN R5 000! 5 READERS EACH STAND A CHANCE TO WIN R5 000. Turn to page 4 for all the competition details.

YOUR LIFE

YOUR DREAMS

YOUR FAMILY

HOW TO BECOME DEBT-FREE If debt is getting you down, this step-by-step guide will help you to break free..........................8

THE ECONOMICS OF LIFE What getting married, having a baby and retiring will mean for your budget....................18

10 REASONS WHY YOU NEED SLEEP Sleep is not only enjoyable, it can also save your life ..........24

THE MODERN STOKVEL Gooi goois and stokvels have outgrown the ‘grocery club’ model. Here’s how...............13

WHAT’S YOUR NUMBER? There is one very important calculation to do with regard to your pension.......................22

HOW TO MAKE SENSE OF FOOD LABELS If ingredients lists are making your head spin, start with these basics to eat healthier............26 EAT, PLAY… LOCKDOWN Make the most of this long family time with these tips and ideas...........................30

2 // ISSUE ONE 2020

13 OLD MUTUAL Editor Gugu-Lisa Zwane-Johnson Project Manager Charlene Murphy Project Assistant Hayley de Vos Email todayomc@oldmutual.com Old Mutual is a licensed financial services provider. Today is published for, and on behalf of, Old Mutual Corporate by John Brown South Africa.

EDITORIAL Consulting Editor Kelda Lund Deputy Editor Charles Thompson Features Editor Erla Rabe Copy Editor Linda Scarborough Art Director Anelia Gates Managing Editor Minkateko Babane MANAGEMENT Managing Director Lani Carstens Group Content Director Justine Drake General Manager Joanne Hope Account Director Delicia Krause Production Director Nina Hendricks John Brown South Africa Tel. 021 486 7600 www.johnbrownmedia.co.za Contributing Writers Brendan Dale, Amy Ebedes-Murray, Nic Haralambous, Palesa Lengolo, Neesa Moodley, Samantha Page, Erla Rabe, Linda Scarborough, Norma Young and Mark van Dijk

YOUR TIME

YOUR WEALTH

60-SOMETHINGS LETTERS TO THEIR 16-YEAR-OLD SELVES Four retirees share openly and honestly with their teenage selves.....................34

FROM IDEA TO INCOME If you’d like to take your side hustle to the next level, here’s some practical advice...........40

SARS AND YOU: WHAT YOU NEED TO KNOW What to keep in mind when submitting your tax return........38

NEW PROVIDENT FUND RULES Provident funds are changing next year. This is what you need to know......................44 WHAT TO DO WHEN YOUR PENSION FUND VALUE DROPS We look at your options, whether starting out or close to retirement .......................48

Copyright © 2020 Old Mutual. All rights reserved. No part of this publication may be reproduced or distributed in any form or by any means, or stored in a database or retrieval system, without the prior written permission of the publisher. Opinions expressed in this publication are not necessarily those of the editors, publisher, or sponsors. Some of the articles in this publication may contain forward-looking statements with respect to Old Mutual’s plans and performance, and wider economic factors. By their nature, all forward-looking statements involve risk and uncertainty because they relate to future events and circumstances that are beyond Old Mutual’s control. As a result, actual financial conditions may differ materially from the plans and expectations set forth. Old Mutual is under no obligation to update any forward-looking statements referred to in this publication or any other forward-looking statements that it may make. While all precautions have been taken to ensure accuracy of information, neither Old Mutual nor John Brown South Africa can be held liable for inaccuracies, injury or damage that might occur. Please note: None of the content in this magazine is intended as and does not constitute financial or any other advice nor does it take into account your personal financial circumstances. It is important to speak to an accredited broker or financial adviser before taking any financial decisions.

Cover image: Gallo Images/Getty Images

One-minute reads Tuck into our round-up of did-you-knows, tips and titbits as well as interesting facts and figures.

WIN R5 000! HERE’S HOW TO ENTER

Simply go to bit.ly/Todaysurvey (please use this exact link) and answer all the questions to be in line to win R5 000 cash to be paid into your bank account.

1. Visit bit.ly/ Todaysurvey and answer all the questions. 2. Submit your survey before midnight on Monday 30 November 2020.

Terms and conditions 1. This competition is open to all residents of South Africa who are in possession of a valid South African identity document, except for employees, family members, relatives and business associates of John Brown SA and Old Mutual as well as employees of advertising and PR agencies associated with them. 2. You may not participate in or be eligible to win a competition if you have won a competition promoted by us within the past six (6) months. 3. The competition closes at midnight on Monday 30 November 2020. 4. Five (5) winners will be chosen in one random draw before or on Friday 15 January 2021. 5. The prize constitutes R5 000 to be paid into each of the five winners’ bank accounts. 6. Winners will be notified telephonically. If three attempts to contact a winner have failed or if a winner does not respond within three (3) days of the last attempt, another winner will be selected in accordance with the rules. By entering, you give Today, John Brown SA and Old Mutual permission to contact you via phone, SMS or email. 7. The judges’ decision is final and no correspondence will be entered into. 8. Neither John Brown SA nor Old Mutual accepts responsibility for entries that have been delayed or lost as a result of a network or computer hardware or software failure of any kind. Proof of sending will not constitute proof of receipt.

BUILDING AFRICA’S BIGGEST DIGITAL CLASSROOM When the act governing Old Mutual was changed in 1965 to allow it to make charitable donations, education was one of the first causes we chose to support. Ever since then, education has remained close to our hearts. In May this year, Old Mutual announced that it had begun to create the biggest digital classroom in Africa with the aim of reaching 20 million learners and 175 000 teachers. As Old Mutual’s Head of Responsible Business Khanyi Chaba says: ‘In the last 10 years we’ve contributed over R500 million to education through building schools, learnerships, bursaries, graduate development programmes and financial education in South Africa. Now we’re going to support all the other countries in Africa where we operate. ‘In the next year we will focus on three – Kenya, Namibia and Ghana – to build on the experience we gained in South Africa.’ Taking a step-by-step approach, the project will work with one country and one curriculum at a time to address problems such as the shortage of teachers, lack of access to resources and materials, and low financial literacy. To do this, Old Mutual will collaborate with engineers, actuaries and innovators as well as its partners and employees. As Covid-19 has shown, internet access is a problem in very many communities. Old Mutual is talking to leaders in the field to find solutions.

‘We are what we repeatedly do; excellence, then, is not an act but a habit.’ - Aristotle //

4 // ISSUE ONE 2020

UPFRONT // ONE-MINUTE READS

FOR YOUR HEALTH DIARY Look out for free health checks and events to mark these health days. 1–7 AUGUST CANSA Care Week 7–11 SEPTEMBER National Kidney Awareness Week 18 SEPTEMBER National Sunflower Day

BEFORE YOU CANCEL YOUR CAR INSURANCE… Many of us have become used to paying less for car insurance during lockdown, but if you want to continue saving on this monthly expense, one thing you should not do is to cancel it outright. The Automobile Association of South Africa recommends one of these alternatives instead. • Increase your excess. This will reduce your monthly premiums, but remember that it means you will have to pay more if you have an accident. Work out which option will save you more. • Insure the car for the market value instead of the retail value. While it will also reduce your premiums, you will be responsible for the difference between the two if the car is written off or stolen. • Change to cover for third party, fire and theft only. This is considerably cheaper, but will only pay for damage to the other vehicle, not your own, if you are in an accident, or if you car is stolen or destroyed in a fire.

21 SEPTEMBER

OLD MUTUAL TURNS 175

World Alzheimer’s Day 29 SEPTEMBER World Heart Day 1 OCTOBER International Day of Older Persons 10 OCTOBER National Mental Health Day 12 OCTOBER World Arthritis Day

0860 933 333 This is Old Mutual’s new Whatsapp number for retirement fund members. So, if you’d like to have all your fund details at your fingertips, save it to your phone today. Managing your fund from anywhere, any time now is as easy as following the three steps below.

20 OCTOBER National Down Syndrome Day 28 OCT–3 NOV National Stroke Week

Here’s how it works: 1. Save 0860 933 333 to your contacts or scan this QR qode.

2. Connect with us by saying ‘hi’. 3. You will receive a list of services you can use on Whatsapp

5 // ISSUE ONE 2020

What with Covid-19 and adjusting to lockdown, it’s easy to forget that Old Mutual is celebrating its 175th birthday this year. In 1845, coincidentally the same year that the third cholera outbreak began its spread across the globe, John Fairbairn put his idea to form the Mutual Life Assurance Society of the Cape of Good Hope into action. From the first meeting of 16 Cape Town businessmen, the society rapidly grew. In 1955, it broke two records when the total of net sums assured and bonuses reached £500 million and the society assured over £100 million in new sums. (To celebrate this achievement, the assistant general manager bought a cake for the team.) Five years later, Perseus – the first computer in South Africa – was installed in Old Mutual’s administration department. It amazed everyone by doing calculations that would have taken a clerk five years to do in an hour. Some of Perseus’s pieces can still be seen at Old Mutual’s Pinelands head office where they are displayed. It’s impossible to list all the milestones in Old Mutual’s history, but you will find call-outs to a few of them scattered throughout this issue.

UPFRONT //ONE-MINUTE READS

Contributors

Meet a few of the writers who contributed to this issue. They are all experts in their field, from starting businesses to managing personal debt.

PALESA LENGOLO

NIC HARALAMBOUS

BRENDAN DALE

NORMA YOUNG

Palesa runs a company that teaches financial and investment literacy. Her book, Stokvels: How They can Make Your Money Work for You (Penguin Random House), was released in 2018. Turn to page 13 for her take on modern stokvels.

Nic is a serial entrepreneur, and his best-known business is Nic Harry socks. His book Do.Fail. Learn.Repeat: The Truth Behind Building Businesses (Tracey McDonald Publishers) tells what it’s really like to start a business, and he shares what he’s learnt on page 40.

Brendan is a software developer who writes about personal finances on his blog Take Charge Of Your Money. His advice (page 8) for coming to grips with debt is based on his experience after getting rid his own debt – two credit cards, a bank overdraft and a car loan.

Norma is a freelance writer, editor and author, and a full-time mom. She shares her advice for getting though lockdown (and any long period in close quarters with your family) on page 30.

What was your first business? ‘When I was 16, I sold worry beads to my classmates. The school banned them after a few weeks because they made too much noise in class.’

Why did you start blogging? ‘I started as a way to share some of my own experiences, mistakes and learnings. I didn’t imagine that the blog would become so popular, but I’m so pleased that I can help others to take charge of their money.’

What is the biggest money lesson you’ve learnt? ‘When you take care of your money, it takes care of you. I educate myself about personal finance to be able to look after mine better. It helped me when I was struggling with debt. Once I understood credit, I could manage it better and pay off my debt quicker.’

The most expensive business lesson you learnt? ‘I raised R250 000 to start a social network around the same time that Facebook landed in South Africa. Within days, my co-founders and I decided to return the money. In hindsight, it was actually a very, very cheap lesson because it saved our relationship with the investor.’

How do you manage to save? ‘It sounds like a cliché, but whenever I think that I don’t have anything to invest because of my financial responsibilities, I do a proper budget to see where I can save. I also use my accounting and financial skills to earn extra income to invest.’

Which characteristic do all entrepreneurs have in common? ‘Resilience. You have to be able to take the hits and keep on rollin’. “No” is an answer you have to be comfortable with. Then, when you fail, you need to know how to get back up and start all over.’ //

Are you debt-free now? ‘I’m exactly six months away from being completely debtfree. My home loan is the final hurdle and, fingers crossed, I will have paid that off by the end of the year.’

Are you a spender or a saver? ‘I’m quite a cautious spender and try to limit debt. It’s not always easy, and I’ve had to buy big items on credit, but then I set up a plan to pay it off as quickly as possible. Lockdown has certainly helped by reducing my spending. It’s also shown me that I could save more.’

What is the one thing everyone must know about money? ‘As tough as it is, the only way to pay off debt and build wealth is to consistently spend less than you earn. It’s not only about cutting back on expenses; you should also focus on increasing your income, whether by negotiating an increase or by finding a side hustle.’

Any huge money mistakes? ‘A major mistake was not doing my tax return for about five years. Somehow I just neglected to do it. I ended up with a garnishee order on my salary to pay back a rather big sum plus interest. I was mortified that my employer knew about it. Since then, I’ve not missed the tax deadline by even a day.’

6 // ISSUE ONE 2020

PHOTOS AND ILLUSTRATIONS: FREEPIK, GALLO IMAGES/GETTY IMAGES AND SUPPLIED

Do you belong to a stokvel? ‘Yes, I am in a few stokvels. I use them as vehicles to invest or access opportunities because they help me to raise more capital (via contributions) than I would be able to on my own.’

What has lockdown taught you? ‘It has made me realise that families can function as cohesive units, even at the dinner table. We’ve all had to eat meals that weren’t our favourite or the most delicious, but we did it. I hope this lasts beyond lockdown.’

PHOTO: GALLO IMAGES/GETTY IMAGES

YOUR LIFE

A step-by-step guide to paying off debt + How stokvels are keeping up with the times

YOUR LIFE // DEBT MANAGEMENT

CALCULATE WHEN YOU’LL BE DEBT-FREE To work out when you’ll be rid of a debt or calculate the difference paying just a little extra will make, try Old Mutual’s easy-to-use online calculator at oldmutual.co.za/ npw/rewards-debt

8 // ISSUE ONE 2020

YOUR LIFE // DEBT MANAGEMENT

How to get rid of

DEBT

If you’re stressed about your debt, you’re not alone. South Africans had a total of R1.7 trillion in personal debt at the end of 2019 and this is set to increase due to Covid-19. Brendan Dale explains the practical steps that will help you to chip away at yours.

TACKLE YOUR DEBT STEP BY STEP 1. Get the full picture The first thing to do is to make a list of all your debt. Take note of who you owe money to, what it was for, how much you still owe them at that moment, and, very importantly, what interest rate they’re charging. Also write down whether you are in arrears or not. This fictitious example shows what you need to do. You may have to phone some of your credit providers to get this information, and it could be awkward or even embarrassing if you know you’re in arrears. Just do it. Ignoring the problem will only make things worse. Credit providers are generally understanding and will make a plan to help you so that you can pay off your arrears.

here are tough times ahead as the Covid-19 pandemic and resulting lockdown continue to make things significantly harder for many people. It’s very possible that your debt may be getting worse as you deal with this unexpected situation. For starters, it’s important to know that there is no quick fix or magic solution to dealing with debt. It takes time and dedication, and there will be hurdles along the way. If you stay focused, though, you can improve your situation. Even if your problems seem overwhelming right now, tackling these simple steps one by one will help you to understand the full extent of your debt. Only then will you be able to start planning.

WHO DO I OWE?

WHY?

HOW MUCH IS LEFT TO PAY?

INTEREST RATE IN ARREARS?

Credit card

General shopping

R5 899.82

22%

Yes

Mom

Fixing the car

R4 000

Yes

Clothing store 1

Clothes

R2 334.78

15%

Payday loan

Groceries

R1 500

26%

Clothing store 2

Clothes

R52

18%

9 // ISSUE ONE 2020

3. Don’t take on new debt It may be tough to survive the month without taking on more debt. For many people the reality is that their salary just doesn’t last until the end of the month. This is when it takes particular dedication and focus to make ends meet and minimise new debt. Once you can survive a full month without taking on new debt, you’ll see that there is light at the end of the tunnel. When you reach this position, it’s time to move on to the next step. 4. Use the snowball method The snowball method of paying off debt suggests that you start paying a little extra towards the smallest debt you have while continuing to pay the required instalments on the rest of your loans. Once the smallest debt is paid off, close that account and use the money that you were paying towards that debt to pay extra on the second smallest one, which will now be your smallest debt. In this way you will keep paying the same total amount towards your debts while also slowly chipping away at them. Think of it as rolling the payment on one debt over to the next. Each time you do it you will have more money to pay towards the next account.

2. Prioritise and plan Now that you have this information, it’s time to prioritise your debts. Although you need to continue to pay all your bills, the ones that are in arrears or which have a particularly high interest rate are more urgent. Even paying just a small amount extra on them will help you. If you owe only a small amount on one or two of your accounts, pay them off and close those accounts. This will help you when it comes to step four below.

U KNO YO

DI D

YOUR LIFE // DEBT MANAGEMENT

Old Mutual introduced their first bank account – the Money Account – in August 2015. The monthly administration fee of R4.95 makes it one of the lowest-cost bank accounts in the country. Plus, your dayto-day transactional account is linked to a savings account so that you can save a percentage of the amount you spend every time you swipe.

KNOW YOUR DEBT Karabo Ramookho, Strategic Retail Marketing Manager (Personal Finance) at Old Mutual There is a difference between good and bad debt. An example of good debt is a loan to buy something that will increase in value, such as property. Bad debt comes from buying nice-tohaves on credit or by taking out a microloan, which usually comew with a high interest rate. • Use tools to manage your money Knowing exactly where your money goes will show where you can cut back. 22seven is Old Mutual’s free budgeting app that links your bank accounts, credit and store cards, investments, loans and rewards, so that you can see all your income and expenses in one place. • Plan for the future You can always speak to a financial adviser. They will work with you to come up with an achievable financial plan based on your needs and goals.

HOW THE SNOWBALL EFFECT WORKS MONTH 1

MONTH 2

MONTH 3

MONTH 4

Clothing store 1

R52

Payday loan

R540

R540 + R52

R368

Clothing store 2

R320

R320 + R172 + R52

Mom

R500

Credit card

R450

Total

R1 862

10 // ISSUE ONE 2020

YOUR LIFE // DEBT MANAGEMENT

PLACES TO FIND EXTRA MONEY

The economy is tougher than ever, and we really have to count every cent. These suggestions might help. 1. Negotiate your insurance Insurance companies usually increase their premiums each year, sometimes by 10% or more. Whether it’s for your car or household contents, it’s worth going through the policy document. Understand what you are covered for, the excess, and any added extras (such as car hire or chipped-paint repairs). Armed with this information, phone around for quotes and then contact your insurer to negotiate a better deal.

PHOTOS/IMAGES: GALLO IMAGES/GETTY IMAGES, FREEPIK AND SUPPLIED

2. Check your debit orders It’s worthwhile going through your bank and credit card statements every now and then to check the automated payments. You might still be paying for something you thought you had cancelled, like a cellphone that was lost long ago. Also look out for fraudulent transactions, which are costing South Africans over R1.5 billion per year. These are often deductions for R99 that can easily be missed. Report suspicious transactions to your bank immediately.

SAVING DURING THE RAINY SEASON You must have heard a million times how important it is to save for a rainy day. Now that that rainy day is here, many of us are wishing that we had squirreled something away to tide them over. Yes, it is difficult to save, especially when you’re paying off debt and dealing with other challenges. For those who have seen a reduction in their income or have been put on unpaid leave due to the lockdown, this will be impossible. But if you can put away something, however small, the pandemic might be the encouragement you needed to start building up an emergency fund. Consider opening a separate bank account into which you deposit small amounts as and when you can. Use this money for the unexpected expenses that you simply cannot put off so that they won’t throw out your budget and cash flow for the month. //

3. Share online costs It’s possible to share the costs of Wi-Fi and internet with your neighbour. This may allow you to upgrade to a faster, unlimited package. Also, many online services such as Netflix and DStv allow several people to log in at once on different devices. If you’re savvy, you can share the monthly subscription with friends or family. Bear in mind that you will have to keep track of who has access, and make sure that no one abuses the account limits. 4. Keep your old phone Most people upgrade their phone every second year and often end up paying a slightly higher monthly contract fee. It’s great to have a new phone, but do you really need it if your old one is still working fine? Keeping your old phone and downgrading your contract, or even moving to pay-as-you-go, could save you several hundred rand a month. 5. Save on interest Some personal loans and store accounts charge 20% interest or more. If you borrow R15 000 over 12 months, you’ll end up paying back the R15 000 plus R1 674 in interest. The quicker you can pay it off, the less interest you will pay.

11 // ISSUE ONE 2020

LOCKDOWN LESSONS

3 WAYS TO GET A GRIP ON DEBT If you need help to master your debt and get rid of all the monthly accounts once and for all, you can go one of these three ways.

1 NEGOTIATION Your first option is always to negotiate directly with the person or company you owe money to. You may be able to settle on a reduced interest rate or extended loan period. It may not work with all creditors, but it is certainly worth the phone call.

3 DEBT COUNSELLING Debt counselling (also known as debt review) is an extremely helpful process that teaches you the moneymanagement skills needed to sort out your financial situation. It’s not a quick fix, but with the help of a qualified debt counsellor, you will learn to create a budget and draw up a debt-repayment plan. The counsellor will also negotiate a payment plan with your creditors and will usually be able to reduce monthly fees, get better interest rates and extend the repayment term. This will free up some cash and help you survive the month while paying all your bills. Unlike debt consolidation, this is not a new loan. Your existing loans will remain in place and the counsellor will manage the payments to them.

> There are no fees involved. > If they agree, it will be an easy win. > Success is not guaranteed.

2 DEBT CONSOLIDATION To consolidate your debt means taking out one loan to pay off all your debts. You will then have a single debt payment to manage each month. This approach can be useful as it allows you to pay off and close highinterest loans as well as any overdue ones. The downside is that you’re not solving your debt problem, as your debt won’t be reduced or renegotiated.

> You will get professional help. > You will be empowered with knowledge. > Debt will be renegotiated on your behalf. > You will create a realistic plan to pay off debts. > You will pay a single monthly instalment. > You will enjoy legal protection from your creditors during the process. > You may not take out new loans or open new accounts while undergoing debt counselling.

> You will pay a single monthly instalment. > The single instalment could be smaller than the sum of your individual debt repayments.

TEXT: BRENDAN DALE

> Interest and fees may push up your debt. > Your credit rating has to be good enough to qualify. > A smaller instalment will mean a longer repayment period.

NEED HELP?

EMAIL tmabogoane@oldmutual.com

VISIT oldmutual.co.za/personal/find-adviser

YOUR LIFE // SAVING

The modern

stokvel

WHERE TO LEARN MORE If you want to download a draft constitution, check a stokvelâ&#x20AC;&#x2122;s membership or need further information, visit NASASA at nasasa.co.za or call 087 898 0987.

Stokvels, or gooi-goois, have been part of our savings culture since 1932. Palesa Lengolo looks at ways in which these clubs have evolved over the past 90 years. //

13 // ISSUE ONE 2020

OLD MUTUAL INVESTMENT CLUB

11.5 million

The number of South Africans who belong to stokvels.

Maanda Todani, Fund and Investment Specialist at Old Mutual Wealth

14 February 1988

The first association of stokvels was founded on this day in Soweto.

R50 billion

South African stokvel members are expected to save an estimated R50 billion in 2020.

The main differences between a traditional stokvel and an investment club are the period for which the money is saved and how the funds are distributed. In a stokvel, members accumulate money over a short period, typically 12 months, and then use the funds to buy groceries or rotate the funds among the members. However, in an investment club, members save money together over a longer period to reach a common financial goal, such as starting a business. An investment club therefore requires a more formal structure to protect members’ interests. At Old Mutual, our Investment Club offers the opportunity and structure to save money in a safe, transparent and convenient way. By putting away as little as R350 per member per month, clubs can save towards any financial goal for any period. It offers clubs premium payment flexibility, access to their funds at any time, the opportunity to invest in a wide range of asset classes such as property or fixed-income investments, and free templates for a draft constitution and resolution letter. Many clubs are not aware that there are investment fees, which could eat into the returns on their investment. Old Mutual charges only 0.25% if the club invests more than R30 000 per year in any Old Mutual unit trust fund. To find out more, click here to find a financial adviser in your area.

14 // ISSUE ONE 2020

lot has changed since our grandparents’ and parents’ days, including stokvels. What was once perceived as no more than a social saving mechanism for old women to buy groceries for the family at the end of the year, the appeal of stokvels has broadened in recent years. Today, South Africa’s R50 billion stokvel industry meets the needs of very different consumers. It’s true that the industry is still largely made up of grocery and funeral stokvels, but we have seen the rise of saving clubs and rotational stokvels in the last 10 years. Lump-sum payouts, rotated monthly, allow members to buy bigger items, such as washing machines or fridges. These stokvels also incorporate lending, often with high interest rates. Stokvels have also moved on to become vehicles for building wealth and many are now using technology to manage contributions and make longer-term investments. RUNNING A STOKVEL VIA PHONE Traditionally, stokvel members meet at regular intervals in order to make payments and discuss group matters. While social-distancing regulations have forced stokvels to adjust, some of them were already operating remotely via smartphone. A platform called StokFella, for instance, allows anyone to register a stokvel, or to join an existing group, online via a computer or the app on their phone. With the app, administrators can upload FICA documents, schedule meetings, keep track of members’ payments, send reminders for late payments and handle claims. It also makes the process more transparent, as all members have access to the group’s financial status. Contributions and payouts to members or service providers can all be done with EFTs via the app, without ever having to visit a bank. ‘We really don’t see the point of meeting monthly any more because we used to discuss contributions, mostly – who has paid and who hasn’t, and how much members owe,’ says Thabiso Mazosizwe of Abafana

YOUR LIFE // SAVING

Stokvel Group, which uses StokFella. ‘Now we can see all this just by checking the app.’ Conducting business via the platform further helps members to save because they don’t have to travel to meetings or cater for get-togethers. Using technology instead of having face-to-face meetings does have drawbacks, however. According to the National Stokvel Association of South Africa (NASASA), fraudsters have begun to take advantage of the popularity of WhatsApp-based stokvels by promising high returns in what are essentially pyramid schemes, or disappearing with member contributions after paying out the first few. USING STOKVEL MONEY TO INVEST Part of the legacy of stokvels is the sense of community and ubuntu they bring, but now groups are using them to build wealth, too. Investment club stokvels not only invest the collective contributions to grow members’ money, but also use it to raise capital to participate in business opportunities. Historically, stokvels did not invest because of the short-term nature of their savings goals, as well as the lack of accessible information and investment institutions that would accommodate them. Now most banks and financial institutions have come on board, with apps such as Franc, making it easy for stokvels to invest on the stock exchange. Similarly, property stokvels use contributions to build or buy a home or even several homes for the members. One big benefit of property and investment stokvels is that they create generational wealth. ‘I like investing in property because I understand it, and doing it as a group makes it more affordable,’

says Thabo Masemola, the chairman of the Property Investment Club. WHY START NOW Since the pandemic hit, we have seen the importance of saving – especially for emergency funds. If you struggle to save, a stokvel can provide support and encouragement, as members hold one another accountable to ensure the group reaches its savings goals. A stokvel needs to have money in reserve for times of economic uncertainty, so the group can continue even if some members have lost their jobs and cannot contribute while looking for work. A reserve is raised through a joining fee, for example.

TYPES OF STOKVELS Rotational stokvels Members receive a cash lump sum on a rotational basis, usually monthly.

78%

How many stokvel groups have begun to meet online (Whatsapp, Zoom, Stokfella, Teams) due to the lockdown. Source: 2020 Old Mutual Savings & Investment Monitor

PHOTOS: GALLO IMAGES/GETTY IMAGES, FREEPIK AND SUPPLIED

BEFORE YOU JOIN A STOKVEL • Do your research. Stokvels are based on trust, so it’s preferable to choose a stokvel with members you know. • Make sure the group is focused and stable with committed members. That way you know it will achieve its goals and not be derailed by late payments or disagreements among members. • Ask for bank statements to see the group’s finances and history of previous payouts. The money must be kept in a bank account with several members as signatories. • Understand the terms of payment before you sign up, for example how often you have to contribute and how much, and when you will get your payout. • Make sure you have seen and agreed to the stokvel’s constitution and code of conduct. These documents govern the group’s leadership, rules and aims. • Check if the stokvel is registered with NASASA. Membership is not essential for stokvels, but it’s an easy way to check credentials.

15 // ISSUE ONE 2020

Grocery stokvels Members’ contributions are pooled and used to buy groceries for the members in December, usually at bulk retailers. Savings clubs Each member receives a lump sum equal to their monthly contribution at the end of the cycle, usually annually. Burial societies These societies typically provide policies that cover the funerals of the main member and their family and extended family, as well as support with arrangements and catering. Investment clubs Contributions are pooled and used to buy stock, save in an investment account or invest in a business venture. The investment period varies from group to group. Social clubs These groups pool funds for social activities and outings. Borrowing stokvels Members can borrow money from the group’s collective pool, usually at a high interest rate.

LOCKDOWN LESSONS

5 WAYS FORWARD IF YOU CAN’T PAY YOUR RENT IN FULL Having a place of your own is a top priority, but what if the knock-on effects of Covid-19 mean that you can no longer pay your rent in full? Here are some solutions.

Banks are offering various relief measures for customers of good standing who are having temporary cash-flow problems due to Covid-19. You might be able to get an instalment reduction or payment break on other debts so you can cover your rent. Just be aware that this may result in additional fees or interest.

Your first step should always be to talk to your landlord. You may be able to come to an arrangement without having to take on more debt. Approaching them before they come knocking on your door will help to build a better relationship for the future.

SPEA

K UP

P A UTILI Y YOUR TIES

RBA TER

Offer your services, for example doing maintenance on the building, or something you own in lieu of partial or full payment. There is no guarantee that your landlord will be open to this, but it’s worth a try. Just be sure to put any agreements or amendments to the lease in writing to protect both of you.

Ask for a discount, which you can pay back later or build into the lease over time, almost like a payment holiday. Your landlord might be more willing to negotiate if you commit to paying something instead of nothing.

Pay for your electricity and water at least, or the levies. This will ensure that once you get back on track you (or your landlord) won’t have outstanding accounts, penalties or reconnection fees.

NEED HELP?

EMAIL tmabogoane@oldmutual.com

VISIT oldmutual.co.za/personal/find-adviser

SOURCES: BANKING.ORG.ZA, FIN24.COM, BUSINESSTECH.CO.ZA

NEG

OTIA TE

T A YOUR LK TO BANK

PHOTO: GALLO IMAGES/GETTY IMAGES

YOUR DREAMS

The financial implications of three of life’s big events + Doing the maths to prepare for retirement + Why you shouldn’t skimp on sleep

YOUR DREAMS // FINANCIAL PLANNING

The economics

of LIFE

Three of the biggest milestones in life – getting married, having a baby and retiring from work – also come with the biggest price tags. Mark van Dijk looks at how these happy events could impact your finances.

dulting is difficult, and expensive. The dream of taking major life steps can often be ruined by the reality of how much they cost. Knowing what their impact will be on your budget and finances for the foreseeable future, will help you to plan appropriately – and might inspire you to cut back on unnecessary nice-to-haves. It’s time to cash that reality cheque.

GETTING MARRIED How expensive is a wedding? That’s like asking the old question about the length of a piece of string. Your wedding could cost as little as a trip to the closest Home Affairs office, where a designated marriage officer will take about 15 minutes to solemnise your nuptials (you’ll even get a free marriage certificate) or as much as a few hundred thousand rand if you have a big reception. A South African wedding on average can cost anywhere between R80 000 and R150 000, depending on how lavish your party is and how long your guest list is. It’s all about the hidden costs: wedding rings can (but don’t have to) cost R20 000 to R30 000, while the combined price of a wedding gown, bridesmaids’ dresses and groom’s tuxedo could quickly escalate to R40 000 or beyond. To get an idea of costs – and to keep them under control – it’s wise to draw up a budget. Count on 50% going to the venue (including food and drinks); 15% to extras like photography, music, flowers and décor; 10% to the outfits; 10% to invitations and gifts; and the rest to unforeseen costs, all of which tend to add up pretty quickly in all the excitement.

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R300

The average cost of disposable nappies for a month

R175

The cost of two free-flow dummies

HAVING A BABY

50%

The portion of your wedding budget spent on the venue, food and drinks

R20 000 The average price of one Nguni cow if you’re paying lobola

Many couples also have to consider lobola, which further adds to the total bill. Most negotiations start at the cash equivalent of 10 cows – and with the Nguni Cattle Breeders’ Society putting the average cost of a cow at about R20 000, you’re looking at R200 000 or more extra. We haven’t even mentioned the honeymoon yet, and we won’t, because by now you’ll have an idea of the high costs of a wedding. No wonder so many couples end up taking out a loan or, as is increasingly the case, decide to live together without getting married. Total cost: As much as R200 000, or double that if you add lobola

U KNO YO W

When Mr H.S. Schoeman of Pretoria decided to insure his life with Old Mutual in 1966, he became the two millionth person to take out a policy with the Mutual Life Assurance Society, as it was then called. His policy document was handed to him at a special ceremony on 17 February of that year. It had taken Old Mutual 121 years to reach one million policy holders, but only another 12 to reach two million; a sign of the rapidly growing public support of the business.

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Starting a family is a blessed event… but it’s also hugely expensive. The basic monthly costs of your bundle of joy can easily add up to about R2 500 a month (clothes, R650; toiletries, R300; nappies, R300; vaccinations, about R350). If these figures seem high, then trust the experts: those numbers come from the people at Huggies Nappies. This list excludes baby wipes, barrier cream and the cute outfits that you will inevitably feel compelled to buy. Also excluded are dummies, a baby bath, blankets and other items which Huggies estimates could come to about R14 000. Then there’s medical aid, which could be an additional R600 a month. All of this depends, of course, on your personal spending habits and circumstances. Maybe you decided to give birth naturally at home instead of having a caesarean section in a hospital (estimated cost: R40 000). Maybe a relative’s baby has outgrown their first clothes and can pass them on, or maybe you’re using cloth diapers instead of disposable ones. And so the list grows. Most estimates put the total cost of raising a child in a typical South African family at about R90 000 per year from the day they’re born until the day they turn 18. That excludes things like school fees, which could come to R1.6 million for 12 years’ schooling and three years at university; extramural activities, clothes, mobile data, birthday parties (theirs and friends-who-need-presents’ parties) and all the other stuff that kids think grow on trees. So you can at least triple that R90 000, unless you intend to teach your child the value of a frugal lifestyle. It might not feel worth it when they turn into stroppy, door-slamming teenagers who tell you that you’re a terrible parent, but nobody ever said being a mom or dad was easy. Total cost: R20 000, excluding medical fees

YOUR DREAMS // FINANCIAL PLANNING

A TAX-FREE WAY TO SAVE John Manyike, Head of Financial Education, Old Mutual

tmabogoane@oldmutual.com

60%

RETIRING You know that you need to save for retirement, but you probably don’t know precisely how much you’ll need. As Andrew Davison, Head of Advice at Old Mutual Corporate Consultants, explains, the amount you’ll need to save for your retirement will be determined by a number of variables. They include everything from your retirement age, how old you are now and how much you have already saved up, and your gender. Although there’s no official retirement age in South Africa, the government pays an older person’s grant (what used to be called the old-age pension) to people who are 60 years and older. If you were to retire at 60 and needed a pension equal to 70% of your last salary, the recommendation is that you have a certain multiple of your annual salary saved up by then. For 60-year-old men, that number is 10.1; for 60-year-old women it’s 11. So work it out: if your annual salary is, say, R200 000, you’ll need to multiply it by the above-mentioned number. That brings what you need to R2.02 million for a man; and R2.2 million for a woman.

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30%

The percentage of South Africans who say that saving for a comfortable retirement is extremely important

The percentage of South Africans who have no formal retirement savings

That’s a lot of money, and many retirees are finding that, as the economy wobbles and the cost of living increases, they tend to dip deeper and deeper into their retirement savings as time goes by. Old Mutual SuperFund Chairperson Bertie van Wyk observed at the 2020 SuperFund Summit: ‘Over the past year, I’ve increasingly heard retirees expressing concern about their dwindling retirement capital. Suddenly the penny is beginning to drop: when your drawdown rate from your living annuity exceeds the investment return, your retirement capital will slowly but surely disappear.’ Total cost: R2.02 million or more, depending on your needs and gender

PHOTOS: GALLO IMAGES/GETTY IMAGES, FREEPIK.COM AND SUPPLIED

In light of all that’s happening with the coronavirus pandemic, our finances are really being put to the test. The questions most people are asking themselves at the moment are: ‘how do I secure a better financial future for myself and my family?’ and ‘how can I cushion myself against future financial crises?’ Having an emergency fund (usually about three to six months’ salary) is one of the best ways to do this. It will be handy for covering unexpected costs and could stop you taking on too much debt. Want to get a jump-start on yours? Old Mutual’s Tax-Free Savings Account (TFSA allows you to save R36 000 per year or R500 000 over your lifetime without paying any tax on the interest, dividends and capital gains. To really enjoy its benefits, though, it is best to save for longer. You will still be able to access your money when you need to. Plus, you can use it to supplement your retirement income. To find out more, click here to find a financial adviser in your area.

LOCKDOWN LESSONS

5 WAYS TO PANDEMIC-PROOF YOUR BUDGET When the country first went into lockdown, many people rushed to the shops to stock up on groceries, often panic-buying items on credit. Now that we know this is not necessary, it might be a good idea to avoid getting into debt just to buy the basics.

5. BE PROACTIVE If you foresee any bumps in the road ahead with your cash flow, talk to your service providers, creditors and banks to avoid penalties for late payments.

SOURCES: OLDMUTUAL.CO.ZA, MONEYWEB.CO.ZA.

4. PAY NOW AND SAVE LATER Even though it might be possible to get a payment holiday on loans and credit card repayments, it’s important to know that the ‘overdue’ instalments will add to the interest you pay later and extend the repayment period. If you do put payments on pause, be sure to keep your insurance and medical aid contributions up to date.

3. BE RESPONSIBLE Teach the whole family to be more conscious of how they use resources. Turn off the lights when leaving a room, switch off the TV when not watching, and use water responsibly.

2. PLAN FOR THE WHOLE FAMILY Schools will remain closed for some grades for a while yet, which means you need to budget more for data, electricity and water if you have children at home. You’re probably saving on transport, luxury items or entertainment, so put that money towards your increased household budget. 1. DON’T PANIC Don’t overextend yourself to stockpile food or, worse, take out a loan to buy in bulk. Only buy more than you need right now if there is a really big discount on an item, it’s something you use a lot and you can afford to.

LOOKING FOR A TAX-FREE SAVINGS ACCOUNT? EMAIL tmabogoane@oldmutual.com

VISIT oldmutual.co.za/personal

What’s your

NUMBER? Not sure if your retirement savings are on track? We asked Old Mutual Corporate Consultants’ Andrew Davison to explain the maths.

over 11. If, on the other hand, he waited until he was 70, the number of annual salaries needed drops to eight.

f you want to retire comfortably, you’ll need a pension that’s equal to roughly 70% of the salary you earned in the year just before you retired. Why 70%? ‘There’s no “right” number, a suitable level will differ depending on your personal lifestyle and needs and may also fluctuate during retirement as your circumstances change. However, 70% to 75% is a suitable starting point for most people,’ says Andrew Davison, Head of Advice at Old Mutual Corporate Consultants.

HOW MANY TIMES YOUR ANNUAL SALARY YOU NEED TO SAVE FOR YOUR RETIREMENT

SALARIES IN RETIREMENT ‘Many people don’t know how much they have, how much they need, or whether they’re financially on track for their retirement,’ says Davison. That’s why the team at Old Mutual Corporate has designed a simple but useful tool to help you calculate those numbers. ‘The key is that you need an amount equal to a certain number of salaries at retirement to provide you with a decent pension,’ he explains. The number of salaries you need for a pension of 70% of your salary depends on your age when you retire, the type of annuity you choose and whether you wish to provide for a spouse or partner. As an example, a 65-year old single man will need just over nine times his annual salary if he selects an annuity that pays inflation-related increases for life. If he invests in a living annuity, he will need even more times his annual salary. A 65-year-old single woman will need almost 10 times, and a couple (a 65-year-old man and a 60-yearold woman) retiring together will need roughly 10.6 times their combined annual salaries. If the man were to retire earlier, say at 55, the number needed would go up to

Age

Single man

Single woman

Couple

11.1

12.0

12.7

10.1

11.0

11.7

9.5

10.3

11.0

9.1

9.8

10.6

8.5

9.1

9.9

8.0

8.7

9.5

You’ll notice two things in this table. Firstly, the numbers go down as your retirement age goes up. It makes sense because you’ll be working (and saving) for longer, and retiring at a higher age means having to provide for fewer years in retirement. Secondly, the numbers are higher for women. That’s because women tend to live longer than

NEED TO SPEAK TO A FINANCIAL ADVISER? Call Old Mutual on 0860 60 60 60 to find an adviser in your area.

22 // ISSUE ONE 2020

TEXT: MARK VAN DIJK. ILLUSTRATIONS: GALLO IMAGES/GETTY IMAGES

YOUR DREAMS // RETIREMENT SAVINGS

men, so their retirement savings need to last longer. ‘If you’re a woman, you have to save more,’ says Davison. ‘There’s no two ways about it. While a woman won’t get any higher investment returns than a man, she has to provide for a longer retirement than her male counterparts. Therefore her options are either to save more, which sadly means that she, who probably already is earning less than men, will be even worse off in terms of take-home pay; or to retire later. Unfortunately, it is true that women tend to retire earlier, especially if their husbands are older and they want to retire together.’

RESILIENCE THROUGH SAVING Knowing your ‘number’ – that is, how many multiples of your annual salary you’ll need to save before you retire – is only half of the job, though. You’ll have to make sure you’re saving enough to reach that number. A few calculations will tell you whether you’re on target. ‘Then you can adjust your plan to make sure you’re on track,’ says Davison. ‘For example, if you’re behind, you can investigate options to target a higher return, by taking a bit more investment risk, for example. If that’s not possible then an option might be to increase your contributions. This

might seem hard at first but increasing your contribution percentage by just 0.5% each year, at salary increase time, and keeping it up for five years, will boost your contribution by 2.5% of your salary without you even feeling it. If that still doesn’t work, you could consider delaying retirement for a few years and retire at 65 instead of 60, or at 70 instead of 65. If it’s not possible in your current job, that shouldn’t stop you from exploring other ways to earn an income for another few years.’ Either way, he stresses the importance of saving enough for your retirement: ‘You don’t know what the future holds, so there’s very little risk of saving too much.’ ‘Savings also make you financially resilient,’ he says. ‘The Covid-19 crisis again proves this. Those who went into lockdown without debt and with savings in the bank could weather the storm better, whereas those who’d been living on the edge financially and had a lot of debt were much more vulnerable. The same applies to retirement. You need that buffer.’ So regardless of whether you’re a man or a woman, single or married, at the beginning of your career or close to retirement, the message is clear: save more! As Davison says, ‘When it comes to preparing for retirement, you want to be an overachiever.’ //

23 // ISSUE ONE 2020

In March 1902, Old Mutual for the first time began offering group life assurance after the Cape Government Railways asked them to provide life cover for their employees. These first policies stipulated that the contributions of high-risk employees, such as firemen and train drivers, would be 10% higher than others’. Before long, the Transvaal railways also took out life cover with Old Mutual, as did the Johannesburg post office and about 3 000 Witwatersrand mineworkers.

YOUR DREAMS // STAYING SHARP

10 REASONS why you need sleep Sleep is often the first thing we cut back on when we become busy and have too much to do. Samantha Page explains why this isn’t the best idea.

3. BOOST YOUR BRAINPOWER The US National Institute of Neurological Disorders and Stroke believes that sleep removes toxins that build up in the brain while we are awake. This helps the brain’s neurons to communicate with each other, and if your neurons are firing on all cylinders, so are you. 5. SLEEP MORE TO EAT LESS Have you ever craved certain foods when you’re tired? That’s because a lack of sleep increases the stress hormones as well ghrelin, the hunger hormone, in the body. As a result, you tend to want more energy-rich carbohydrates and sugars, and could gain weight. 7. LEARN FROM SLEEPING BEAUTY When Julie Hembree, a New York City photographer, photographed several young people after they’d been awake for 48 hours and again after they’d had eight hours’ sleep, the results were clear: they all looked healthier, happier and friendlier after some shut-eye. 9. HELP YOUR BODY TO FIGHT CANCER ‘After just one night of only four or five hours’ sleep, your natural killer cells – the ones that attack the cancer cells that appear in your body every day – drop by 70%,’ neuroscientist Matthew Walker, who has been studying sleep for more than 20 years, told The Guardian.

34 56 78 9 10

2. SLEEP YOUR WAY TO BETTER HEALTH A University of California study found that people who sleep only six hours a night or less are four times more likely to catch a cold. In light of the Covid-19 pandemic, remind yourself of this next time you push yourself to stay awake to get that one more thing done. 4. SHIFT WORKERS, THIS IS FOR YOU Shift workers tend to have more on-the-job accidents when they are tired or sleepy, reports the British Medical Journal. While irregular working hours make it difficult to stick to a routine, try your best, and don’t delay going to bed when you get home. The longer you stay up, the more awake you will become and the more you will struggle to fall asleep. 6. LESS IS MORE South Africa is in the top 10 of countries that put in the longest hours at work, says Africa Check. At the same time, Stanford University found that productivity per hour declines sharply after a 50-hour working week, and that there’s no point in carrying on once you pass 55 hours. So, don’t burn the midnight oil if you want to be on top of your game. 8. SLEEP KEEPS YOU ‘SOBER’ AT WORK According to Harvard Business Review, workers who slept only four hours for four or five nights in a row were slower and couldn’t solve problems or take decisions. In fact, Harvard Medical School Professor Clifford Saper reported that their brains worked no better than that of someone who is legally drunk. 10. SLEEP MAKES YOU HAPPY Researchers at the University of Pennsylvania found that people were more angry, stressed and mentally exhausted after being sleep-deprived for a week. As soon as they went back to sleeping normal hours, their moods improved dramatically.

This information is intended as a general guideline. If you have ongoing problems with insomnia, consult a medical practitioner or healthcare professional. //

24 // ISSUE ONE 2020

ILLUSTRATION: FREEPIK

1. DON’T GO FOR THE WORLD RECORD On 8 January 1964, 17-year-old Randy Gardner from California set the world record for staying awake – 11 days and 25 minutes. By the second day, he was struggling to focus, and slurred when speaking. By the eleventh, he couldn’t do simple sums (he forgot what he was supposed to be doing and simply stopped), had become paranoid, and couldn’t stand certain smells. While Randy recovered remarkably quickly, others have died from going without sleep for days.

PHOTO: GALLO IMAGES/GETTY IMAGES

YOUR FAMILY

The good, the bad and the ugly of food labels + Making the most of lockdown

How much sugar are you drinking? Based on typical store-bought can/bottle sizes Water

0 teaspoons

Energy drink (250ml)

6 teaspoons

Iced tea (500ml)

7.5 teaspoons

Sports drink (500ml)

7.5 teaspoons

Fizzy cooldrink (375ml)

9 teaspoons

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YOUR FAMILY // YOUR DIET

H W TO

make sense of food labels Itâ&#x20AC;&#x2122;s not necessary to have a degree in science to make sense of all the information on food labels. Amy EbedesMurray explains what to look out for and how to eat more healthily on a budget.

27 // ISSUE ONE 2020

ore than half of the adults in South Africa are considered either overweight or obese, according to the World Health Organization (WHO). Being overweight is attributed to a combination of an inactive lifestyle and a poor diet high in kilojoules, largely from sugar, fat or both. Being overweight and obese both can result in chronic diseases of lifestyle, including high blood pressure, high cholesterol and type 2 diabetes. Knowing more about what’s in the foods on supermarket shelves, understanding exactly what you’re putting into your body, and making a few small changes to your daily diet could help to bring about significant changes in your weight, energy and overall health.

DECODING THE INGREDIENTS LIST Have you ever flipped over a tin of food or the packaging of a microwave meal and wondered what the names and numbers on the back are all about? In South Africa, our food labelling regulations make it compulsory to list all the ingredients in a product, and to provide the nutritional analysis for that product. The simplest way to decipher what’s in a product is to look more closely at the list of ingredients. • The order: The first thing to know is that ingredients are listed according to how much a product contains in terms of weight. Typically, the first three ingredients form the bulk of an item. So, if sugar appears as one of the first ingredients, for example, it’s safe to assume that the product is very high in sugar. • Names you don’t recognise: The more obscure and unpronounceable the ingredients, and the more of these there are, the further the product is from being natural, and the better off you’d be putting it back on the shelf. If an ingredient is followed by letters and numbers (E104, for example), it means that a product contains preservatives and colourants. Often, the likes of sugar and salt are disguised in the ingredients list. A few common hidden sugars are glucose, corn syrup, dextrose, fructose, honey, maple syrup and sucrose. Similarly, MSG and words containing sodium indicate the presence of salt and ingredients made from salt. An active, healthy adult should eat no more than 25g or 6 teaspoons of sugar and 5g or a teaspoon of salt a day, advises the WHO. • Nutritional information: The nutritional value of a product is presented in a table that details its nutritional breakdown per serving size and per 100g. Typically, this will include the total energy (kilojoules); macronutrients, including carbohydrates; total fat and its breakdown (saturated, monounsaturated, polyunsaturated and trans fats, and cholesterol); and micronutrients (vitamins and minerals). //

28 // ISSUE ONE 2020

• Serving size: The serving size is either the size of the item (the 50g bar you’re holding) or the recommended serving size of the product (two slices of bread). The serving size is not necessarily the same as the package size. When comparing products, look at the values per 100g and not the serving size. • RDA: Labels sometimes include how much of the recommended dietary allowance (RDA) one serving provides. As an example, if it’s recommended that you need 90mg of vitamin C per day, the RDA on the label indicates what percentage of the recommended amount of vitamin C you'll get in one serving of the product.

YOUR HEALTHY DICTIONARY Once you understand the different parts of the ingredients list, you’ll need to do some further interpretation. Use the following guidelines to make informed decisions. • Energy: The average adult needs around 8 000kJ per day. (This does, however, vary depending on factors such as how active you are and your health.) So it’s important that the total kilojoules in a product fit in with your energy requirements. A fast-food breakfast can easily contain 2 500kJ, which is nearly a third of the allowed kilojoules for the day.

Plant-based proteins Pick from these budget-friendly protein sources to ensure that you’re getting your daily fix. Grams Lentils

1 cup (cooked)

18g

Butter beans

1 cup (cooked)

15g

Chickpeas

1 cup (cooked)

12g

Oats

1 cup

10g

Pumpkin seeds

2 tablespoons

Peanut butter

2 tablespoons

T o calculate how much protein you need in a day, multiply your weight (or goal weight, if you’re aiming to lose weight) by 0.8. For example, 70kg X 0.8 = 56g of protein per day.

YOUR FAMILY // YOUR DIET

THE QUICK GUIDE TO HEALTHY-ISH TAKEAWAYS There’s no way around it: takeaways are loaded with unhealthy fats and sauces with mystery ingredients, and they’re high in kilojoules and low in actual nutrients. If you simply cannot resist, keep this in mind. Choose grilled over fried There’s no denying that fried food is extremely high in ‘bad’ fats and kilojoules. Opting for grilled proteins means you’ll still get a flavourful meal, but with significantly fewer nasties. Say cheerio to chips Fried chips? Yup, they’re also packed with ‘bad’ fats and kilojoules. Swap them for a side salad to greatly reduce your kilojoule intake. Sauce on the side Many sauces are loaded with sugar and preservatives. Ask for your sauce to be served separately. That way, you can still enjoy the flavour but control how much you eat. Farewell, fizzy drinks There are nine teaspoons of sugar in a 375ml cooldrink can. Leaving it out is a no-brainer.

PHOTOS: GALLO IMAGES/GETTY IMAGES

• Sugar: To be considered low in sugar, a product needs to have no more than 5g of sugar per 100g. • Dietary fibre: Aim for 3g or more per serving. • Fats: The types of fat in a product are more important than the total fat. Avoid ones that are high in ‘bad’ fats, that is, more than 1g/100g of trans fats and more than 3g/100g of saturated fats. Trans fats can be found in baked and fried foods made with vegetable shortening and oil, such as fries and doughnuts. When you see ‘partially hydrogenated oils’ on a label, that means it contains trans fat. Instead, look for products that contain more monoand polyunsaturated (or ‘good’) fats. • Sodium: To be low in sodium (salt), a product needs to contain less than 120mg per 100g.

WILL A PLANT-BASED DIET HELP? One of the simplest ways to eat more healthily is to eat more foods that come predominantly from plants, including fruit, vegetables, whole grains, pulses and legumes (for instance, dry beans, peas, lentils, chickpeas), nuts and seeds. In general, these foods have undergone very little processing or refining, or none at all. Following a predominantly plant-based diet is the simplest way of knowing what exactly is going into your body.

This doesn't mean you have to give up meat entirely: small changes can lead to big results. Why not jump on the Meat-free Mondays bandwagon and eat plant-based meals only on that day? When you’re ready, you can commit to one plant-based meal every day or, if you’re ready to take an even bigger plunge, eat only plant-based meals at home and save the meat for when you go out.

BUT ISN’T IT EXPENSIVE? Just as certain cuts of meat are pricier than others, certain plant-based alternatives can have a higher price tag. Health benefits aside, incorporating the likes of lentils, chickpeas and beans into your diet is a budget-friendly way to stretch meals, keep you fuller for longer, and ensure that you’re getting a good dose of protein. There’s no need to choose trendy, pricier produce; as long as your plate pops with colour, you’re on the right track. As the adage goes: eat the rainbow. Think leafy greens, carrots, cucumber, beetroot, tomatoes, sweet potatoes and more. Roast them, steam them or eat them raw... A quick Google search will yield endless recipes to inject max flavour into seemingly simple veggies. All quantities in the article are averages and based on the requirements of a typical healthy adult. This information serves as a guideline only. Consult your doctor if you have concerns about your health.

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NOT SURE OF THE PERFECT PORTION SIZE? To find out how many slices of bread or spoons of sugar make up a portion, visit Stellenbosch University’s Nutrition Information Centre at tiny.cc/ portionsize

Eat, playâ&#x20AC;¦

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YOUR FAMILY // TIME OUT

LOCKDOWN Any family that spent lockdown under the same roof will tell you that being in one another’s company 24/7 can be a strain. Whether having to cope with Covid-19 or any other crisis, Norma Young has some practical advice.

hen lockdown struck, it felt a lot like an unexpected bout of loadshedding – having to adapt to an entirely new way of doing things, and having to come up with Plan B and C and D for keeping up with schoolwork and making sure that everyone is entertained and not flopped on the couch all day, and even planning when and how to shop. And that’s without having to deal with staying calm in a pandemic as well as striking a balance between being informed and safe without becoming overly anxious due to information overload.

SWITCH ON PEACE AND CALM As frustrating and disorientating as the circumstances may be, it’s important to find ways to deal with the stress that comes with being cooped up with your family all day every day. Of course you love them, but that doesn’t mean that the situation is not stressful. In the course of a normal day, everyone had a break when the kids went to school and you went to work, or when your partner went to gym for an hour. One way to grab that break is to use free time for yoga or meditation. All you need is a mat or even a towel, and, according to Johannesburg-based yoga teacher Sheena Bagshawe, a calm and open mind.

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YOUR FAMILY // TIME OUT

Coping with this strange new world

Unlike other forms of exercise, it’s not about chasing goals or winning. Whether you choose to do yoga or pilates or a quiet meditation practice, engaging in one of these activities every day will serve you well. They’ll not only be a way to pass the time, but will also leave you better equipped to deal with life. ‘Yoga has helped me become more focused, calmer and less reactive,’ says Bagshawe. ‘I'm a passionate person and learning to harness that instead of getting too fired up has been so helpful.’

FIRE UP YOUR CREATIVITY If a Saturday afternoon is seeming interminably long because there’s no sport on TV, use the opportunity to do something creative together. Find some chalk and have a family draw-a-thon down your driveaway. You could assign different portions of the road to each person or work together on a single drawing. For a really fun exercise, get one person to start with a shape or line. Then the next person must try to decipher what they think is being created and then continue the drawing. The rule is that everyone’s contribution ends when they have to lift the chalk. Once they’ve lifted the chalk, it’s the next artist’s turn to add in their bit until you all decide the drawing is now complete. //

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According to a study conducted by Drexel University in the US, art-making activities that aren’t formalised or up for critique spark happiness. Their research revealed increased blood flow in areas of the brain related to rewards while study participants completed a variety of art-making projects. ‘This shows that there might be inherent pleasure in doing art activities independent of the end results,’ said Girija Kaimal, assistant professor in the College of Nursing and Health Professions at the university.

LIGHT UP YOUR MIND We’re so accustomed to turning to technology for hobbies and leisure-time activities that we’ve forgotten that our brain – and not devices – is actually the most vital resource we need for recreation. Not being able to go to the movies or attend a weekend market is a chance to learn or practise a skill. There are excellent apps for learning a new language, such as Duolingo, which is free. And don’t forget oldschool ways such as dictionaries to help you. Paging through one will soon send you on a trail of discovery and perhaps you’ll even pick up nuances of spelling that you might miss when listening to a language app. For families that are up for a musical challenge, work on writing a new song together. You could break up into teams – one group working on the tune, and the other working on the lyrics, and then have an unplugged performance together. For inspiration look around the house for items that can be turned into instruments. You could also get everyone to choose one kitchen utensil or piece of furniture and then make sure those things are included somewhere in the lyrics. If you love books and reading, lockdown might be a blessing in disguise. But what about making this an opportunity not just to indulge in a hobby but to also work your brain a little? You can do this by choosing comic books or graphic novels instead of conventional books, or by opting for a genre you normally wouldn’t read, such as short stories instead of novels, or science fiction instead of biographies.

PHOTOS: GALLO IMAGES/GETTY IMAGES AND SUPPLIED. ADDITIONAL TEXT: MANDY COLLINS

It’s all very well teaching ourselves to weather change, but what about your children? How can we help them grow into resilient adults? The answer is simple: by setting a good example. ‘Show them that you are resilient, even in the small things,’ says Johannesburgbased leadership coach Ruth Everson. ‘Don’t act like it’s a big drama or rant and rave when you drop a plate and break it: your children are watching.’ ‘It also helps to take time with your children to connect with them and reflect on the changes they’ve faced in the past, and those they are currently going through,’ says life coach Judy Klipin, also from Johannesburg. ‘Take them back to a time when things felt devastating, but are fine now. Point out that what feels devastating now may feel fine in a few weeks too.’ Finally, says Everson, humans need hope and purpose to survive, so teach your children to find them in the smallest things. ‘Think of one tiny good thing that happened today – it can be a song, a walk, a flower – but be deliberate in finding something. That tiny act can really disrupt negative thinking patterns.’

PHOTO: GALLO IMAGES/GETTY IMAGES

YOUR TIME

What four retirees wish they knew at 16 + All the important need-to-knows when submitting your tax return

If you had to write a letter to yourself at 16, what would you tell that young person about to take the first step towards adulthood? Samantha Page asked four retirees to put pen to paper.

16-YEAR-OLD SELVES

to their

60-somethingsâ&#x20AC;&#x2122; letters

YOUR TIME // LIFE LESSONS

ANNUITY noun During your working life, you contribute to a retirement fund. Once you retire, that money is converted to an annuity, or series of regular payments, to provide a steady stream of income like a salary throughout retirement.

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ACCEPT PEOPLE AS THEY ARE

MAKE SURE YOU BECOME YOUR OWN MAN Lazarus Seopela (58) has worked for Barloworld for 36 years, spending much of that time as a union representative and retirement-fund trustee. He hopes to retire in five years’ time.

Kathie Buley (71) studied medicine at the University of Cape Town. In 1977, she stopped working full time to balance being a mom with an academic career. In 2016, she joined Red Cross War Memorial Children’s Hospital where she worked for 35 years, before retiring to Hermanus.

Dear 16-year-old Kathie,

Coming from a poor family background and being raised by one parent might be a tough start in life, but listen to your mother’s advice and work hard. With her as inspiration, you won’t fail. Even though it is disappointing not to get encouragement from your teachers to guide you in choosing your career, stay competitive and keen to learn. Your potential will be noticed. Remember that without education you are nothing. Hang on to your dreams, as they are your guiding stars to your future. Never look back! When I meet young people today, I encourage them to become their own entrepreneurs. The most successful people are those who work for themselves. Make sure you become your own man. If you had someone to guide you, they would tell you to start saving. Even if you start with just R5, in only 10 years’ time, you will have something. You may not realise your dream of becoming a teacher, but you will be an educator in your own way, and you will achieve your ultimate goal of being empowered with knowledge. You will make sure that your children have the guidance and education that you never had. In fact, your last-born will become a teacher and pass on your legacy.

For as long as life is yours, live joyously and spend your brief spell on this planet as best you can. Every teenager doubts themselves at some point, but it’s important to remember that happiness comes from within and depends on your inner self-esteem, which is a feeling of worth in your abilities and qualities that nobody can take from you. This is different from self-esteem based on social approval, success or outer beauty. Inner self-esteem makes you feel peaceful and in harmony with your environment. This is how I learnt it, and here’s what else I’ve learnt along the way: 1. Later in your life you will discover that happy brains are wired for lasting wellbeing. Try to be positive, cultivate resilience, and be generous of spirit. Be kind and helpful, and don’t worry so much! Life is too short. 2. Try to identify negative emotions, such as anger, resentment, envy and anxiety, and let go of them – sooner rather than later. 3. Sound ethics and values will take you very far. Identify your ethical framework and be aware of your own belief systems. 4. Accept people as they are. Try to understand them and where they are coming from. Don’t try to change how someone thinks or acts, but rather try to understand someone’s behaviour, and then change the way you respond to them. I know you’re going to be fine, Kathie, because your inner self-esteem will help you to step out into the world and do the right thing. Be mindful and curious, and live in the moment. Never lose your ability to find ways to be creative and generous, and above all, always ask yourself, ‘What would love do now?’

Love, Yourself

Love, Your 71-year-old self

Dear Lazarus,

YOUR TIME // LIFE LESSONS

IT IS IMPOSSIBLE TO PLEASE EVERYBODY

Dear 16-year-old Ken, When you’re young and carefree, it’s hard to believe that there will be challenges in your life, but I know something you don’t: you are resilient and you will survive. Learn to accept that life won’t be easy, but that, with self-belief, you can accomplish anything. There’s something liberating about being a teenager, and school won’t always be high on your list of priorities, but a sound formal education is very important as life progresses. Give time and attention to your studies, even when you think they're irrelevant, and continue to invest in your education throughout your life. A lesson you’ll learn when you're older is that it is impossible to please everyone. Try not to base your decisions and actions on what will make others happy. If you trust your gut and stay true to who you are, most things will work out. I promise. Give credit where it's due and try not to be judgemental and critical of others. You never know what they have been through, so I encourage you to lead with compassion and empathy. Not everything will go your way and that's fine, but it’s good to cultivate the ability to adapt to different scenarios quickly so that you can become part of the solution, not the problem. Ken, sometimes you are too hard on yourself. You are already on the right track – you just have to trust yourself and learn to forgive yourself for your missteps, because you still have so much growing up to do. I can assure you that if you dedicate your life to helping others, you will be greatly rewarded by the joy you get from it. Time passes extremely quickly, so spend your time wisely and enjoy every moment. Last but not least, love yourself and your family unconditionally. They are the most important people in your life and they will always love and support you.

NEVER UNDERESTIMATE YOUR ABILITIES Wendy Canterbury (55) is a wife and mother of two adult children. She retired three years ago after working for the Western Cape Provincial Government for 25 years in their Asset Management and Supply Chain Management division.

Dear Wendy, As I write this letter, I am reminded of what life was like at 16: fun, busy, interesting and exciting. It really was a carefree, colourful time, and you had a zest for life that, I'm happy to report, hasn’t become any less in the four decades since. I love that you have maintained your positivity and your love for people from all walks of life. Life is good, and I really can’t complain, but looking back, I do have some advice I’d like to give you. While embracing life and living every moment to its fullest are important, try to learn balance. It’s good that your relationships with family and friends are important to you, but it should be balanced with a rich spiritual life, which will be your rudder if you should ever lose your way. You are lucky to have excellent role models in your parents and grandparents, and the values they uphold will never go out of fashion. I want to assure you that life has much to offer and you should never underestimate your abilities. Stay strong and steadfast when it comes to your goals. Don’t take success for granted. Everything worth anything is achieved through hard work. Constantly keep track of your goals so that you feel a sense of accomplishment. This is a hard one, but sometimes you are so focused on others that you forget your own needs and dreams. Taking care of yourself is not selfish; it’s self-preservation. I don’t have many regrets, but I wish someone had told me to invest in property sooner. From the moment you start working, think carefully about what you spend your money on and save regularly. I know you are going to thank me for this advice. I have no doubt that you are going to leave a colourful mark on the world. Love, Your older (and wiser) self, Wendy

Love, Ken

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PHOTO: GALLO IMAGES/GETTY IMAGES, FREEPIK.COM AND SUPPLIED

Ken Walker (60) has worked in different business units at Old Mutual for most of his working life. He is married and has two daughters and three granddaughters. Ken is passionate about using his life in service to others and is involved in the development of junior golfers in South Africa.

LOCKDOWN LESSONS

5 WAYS TO LOOK AFTER YOUR MENTAL HEALTH DURING LOCKDOWN

In times of crisis, it’s normal to feel anxious, sad, hopeless and even numb. Here are five ways to restore balance to your mind while social distancing.

1. HELP OTHERS Obsessively watching the Covid-19 infection rate can spike the stress levels. Don’t check the numbers more than once a day or even once a week, if that feels more manageable to you.

A good way to take the focus away from yourself is to help someone else. Offer to go shopping for an elderly neighbour, volunteer to make food for a feeding scheme, or work a few hours a week in a community food garden. 2. PRACTISE SLOW BREATHING

5. DON'T WATCH THE NEWS 24/7

SOURCES: PSYCHOLOGY TODAY, WHO AND BUSINESS INSIDER

By breathing more deeply and more slowly, we send messages to the brain, muscles and heart that we are calm. Count to three seconds as you breathe in and three seconds as you breathe out. Do this for two minutes whenever you feel stressed.

4. CONNECT WITH THE PEOPLE IN YOUR LIFE

3. GET MOVING Feeling anxious or sad? Doing a YouTube-guided exercise routine or putting on some upbeat music and dancing around the house can help lift your spirits. Even vigorously sweeping your home will help.

Make time to call your friends, family or colleagues. It’s helpful to remind yourself that you’re not alone. If you need to speak to a trained counsellor, contact Lifeline on 0861 322 322. Their services are free of charge.

WORRIED ABOUT YOUR FINANCES? EMAIL tmabogoane@oldmutual.com

VISIT oldmutual.co.za/personal/find-adviser

YOUR TIME // TAX MATTERS

SARS AND YOU: What you need to know Even if you’re used to filing a SARS tax return each year, some of the rules keep changing. Neesa Moodley looks at the tax breaks that apply for the 2020/2021 tax year.

MEDICAL EXPENSES Regardless of how much your monthly medical-aid contribution is, you can deduct a fixed amount every month. SARS calls this the Medical Scheme Fees Tax Credit (MTC) and your employer normally will take it into account when calculating your PAYE. Once you have retired, you will be responsible for claiming this on your tax return yourself. The main member and their partner or spouse can each claim R319 per month. If you have additional dependants, you, as the main member, can claim an extra R215 per dependant. A family of four could therefore qualify for an annual MTC of R12 816. Supporting documents: Your medical scheme tax certificate, which is usually mailed or emailed to you. You can also claim all medical expenses that you paid for yourself. This includes treatment by a registered medical practitioner, dentist, optometrist, homeopath, naturopath, osteopath, physiotherapist, chiropractor, herbalist or orthopaedic surgeon as well as prescribed medicine not paid by your medical aid.

DID YOU KNOW? You can save up to R36 000 per year in a tax-free savings account without paying any tax on the returns. For more information, call Old Mutual on 0860 60 60 60 to find a financial adviser in your area.

2020/2021 TAX DEADLINES 31 October 2020 For submitting your tax return at a SARS branch 4 December 2020 For submitting your tax return via eFiling or SARS app 31 January 2021 For provisional taxpayers who use eFiling

Supporting documents: A spreadsheet that shows the date of treatment, name of the service provider and the amount you paid from your own pocket with the total for the tax year. SARS will then calculate your credit based on this total. It is important to also attach all invoices as proof of payment. PENSION, PROVIDENT AND RETIREMENT ANNUITY FUND CONTRIBUTIONS You can claim a tax deduction of up to 27.5% on all contributions to your retirement savings made from your taxable income. This amount is capped at R350 000 a year. Supporting document: A tax certificate from your fund, which is usually mailed or emailed to you. If not, remember to request one when doing your tax. TRAVEL EXPENSES If you receive a travel allowance, SARS will reimburse you R3.61 per kilometre if you’re using your own car. Supporting documents: A travel logbook in which you’ve recorded all your business trips. (Download a free template from SARS at sars.gov.za.) Each entry must state the date, the destination, the reason for the trip and the kilometres travelled. On 28 February 2021, the last day of the tax year, you must also record your closing odometer reading. If you need any help, contact SARS on 0800 00 7277.

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PHOTO: GALLO IMAGES/GETTY PHOTO: GALLOIMAGES IMAGES/GETTY IMAGES. SOURCE: SARS.GOV.ZA

lthough your employer deducts PAYE – Pay As You Earn – tax from your salary every month, there are a few things you could deduct on your personal income tax return to lighten your tax burden.

PHOTO: GALLO IMAGES/GETTY IMAGES

YOUR WEALTH

Practical advice for first-time entrepreneurs + The new provident fund rules + The drop in investment markets and your pension

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Nic Haralambous is a serial entrepreneur best known as the founder of Nic Harry socks. He shares what he has learnt â&#x20AC;&#x201C; from his failures and his successes â&#x20AC;&#x201C; about starting a business.

IDEA TO INCOME

Taking your side hustle from

YOUR WEALTH // YOUR BUSINESS

READY TO GROW YOUR BUSINESS? Read up on credit vetting, brand building, growing your profit margins and more at oldmutual. co.za/business

DEFINE SUCCESS AND FAILURE A business, however small, has to be built for the right reasons, and those reasons have to be defined upfront. It may be that you need some extra cash to pay off your house or car. You may want your side income to become your full-time job down the line, or you may just want to have some fun. Whatever they are, make them clear. Write down your definitions of success and failure. If going six months without one sale is your definition of failure, stop and consider trying something else when you hit that mark. If you define success as earning R10 000 a month in net income, continue doing more of what you’re doing once you hit that mark, and make sure your

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f the pandemic state of the economy has you thinking about starting a side hustle, there are probably a million things going through your mind right now. That’s normal. The anxiety and stress of spending your own money, and the fear that comes with the potential for failure are all things that matter. Something most people don't think about is what the Japanese call ikigai (pronounced ick-eeguy). In short, ikigai is the overlap of what you are good at, what you can get paid to do, what you love to do and what the world needs. While we all need to strive for our personal ikigai, that doesn’t mean your side hustle should be all of these things So, you’ve found your idea... now what? The first step is to get serious about getting started. Get over the fear, ignore the people telling you it won’t work, and get going. If you don’t start today, then you probably won’t start tomorrow either.

U KNO YO W

By 1845, there were several insurance companies in the Cape, but not one mutual assurance company that was owned by its policyholders. John Fairbairn wanted to introduce one, so he called a meeting on 22 April 1845 at Heerengracht Street in Cape Town to test the waters. It was attended by 16 businessmen. Within days their proposal attracted the support of 160 people, and the Mutual Life Assurance Society of the Cape of Good Hope, which later became Old Mutual, was officially formed on 12 May 1845.

YOUR WEALTH // YOUR BUSINESS

NEVER FORGET… Prepare to fail Almost 85% of businesses fail in their first year. Side hustles and startups are hard to build. The trick is to keep going. Don’t think too big If you persevere, you will get there. But first, start small.

Don’t rush Yes, it’s important to get started, but don’t be hasty. Save money, prepare, and when you go live, really go for it!

You spend so many months of your spare time writing plans that you never actually begin. Stop writing and start building.

Find a thousand true fans That’s all you need to build a business: a thousand true fans. If a thousand people pay you R10 a month, you will have earned R10 000 a month.

THE THREE F’s When you have a clearly defined idea, start talking about it. I know this is not the standard advice. Usually, your gut instinct will be to keep your idea close to your chest and hide it from the world. That’s the wrong approach. Tell anyone who will listen, starting with the three F’s: friends, family and fools. They are the three groups most likely to buy your first products. Your friends want you to succeed, your family feels obligated to get behind you, and fools are the early adopters who love trying new things. Talk to them about your idea and gather their responses. They are not going to steal your idea from you, they probably have their own, I promise.

Personal brands matter It’s important to ‘always be closing’ (the ABC of doing business) and that holds true in your personal capacity, too. When I build a business, I shift my entire online brand to that business. My social media reflects the business and my personal life becomes a part of the story. At every dinner, lunch or event, I tell people what I do and how they can find it and buy my product. Don’t be shy about promoting your business through your personal brand. Go big on social media You might mistakenly assume that social media is for selfies and pictures of babies and cats. It’s not. If you have a side hustle, exploit social media to make sure that everyone you know understands that you have a side hustle. Remember to hit up your three F’s first: friends, family and fools.

revenue remains consistent. Whatever it is, do yourself a favour and clearly define what success and failure look like to you. If you don’t do this for yourself up front, it’s easy to become disheartened or distracted. Your friends will want you to grow bigger or do more. Your partner might say you’re failing when you actually aren’t. The more clearly success and failure are defined, the better the chance your business has of survival. DON’T WRITE A BUSINESS PLAN I have built 12 businesses since I was 16, but written only one business plan. In my experience, business plans prevent you from actually building a business.

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BUILD AN MVP An MVP (minimum viable product) is the very simplest version of your idea that you will be able to sell. It needs to be the earliest version of your product or service that people would be willing to pay money for to own. Build it as quickly, cheaply and simply as you can, and then get it out into the market. Done is better than perfect, so get it done and get it out. You never know how your customers will respond to your product or service until you have actually begun to sell it. You’ve heard the saying that too much analysis leads to paralysis. It does. Also, perfection destroys good. Start and learn and modify as you go. And don’t forget to enjoy yourself!

PHOTO: GALLO IMAGES/GETTY IMAGES

Don’t sacrifice everything You do not need to suffer to build a side hustle. Spend as much money as you can afford, and allocate as much time as you have.

LOCKDOWN LESSONS

5 THINGS YOU NEED TO KNOW WHEN WFH For some of us, lockdown meant having to work from home (WFH for short). If you were one of them, there are some important things to be aware of.

SOURCES: BUSINESSTECH.CO.ZA, GOLEGAL.CO.ZA AND NORTONROSEFULBRIGHT.COM

5. FORCED ANNUAL LEAVE MUST BE GIVEN BACK If you were forced to take annual leave during the lockdown, the new amendments to the Department of Labour’s Temporary Employee Relief Scheme (TERS) state that an employer must give you credit for it. (They can then apply for a refund from UIF for salaries paid while staff were on compulsory leave.)

1. YOUR HOME = YOUR OFFICE The Occupational Health and Safety Act and the Basic Conditions of Employment Act require that employers provide a safe workplace for their employees. The definition of a workplace can extend to your home office – even if it’s the kitchen table.

2. TOOLS AND TRAINING MUST BE PROVIDED Your employer needs to do their best to ensure you have the necessary and appropriate equipment, training and supervision to perform your duties.

4. YOUR RIGHTS DON'T CHANGE Even though you are not physically at work, your rights as an employee are protected. Annual and sick leave still apply, for example, and if you earn below the threshold prescribed by the Basic Conditions of Employment Act (R205 433.30 per year) you still have to be paid for overtime work.

EMAIL tmabogoane@oldmutual.com

3. YOU MAY BE ASKED TO SIGN AN INDEMNITY FORM Due to the lockdown, employers won’t be able to assess the safety of your workplace, so they may ask you to confirm in writing that it is reasonably safe, and/or sign an indemnity form. Without either of the above, employers are liable if you are injured while working at home.

NEED ADVICE?

VISIT oldmutual.co.za/personal/solutions/short-term-insurance

YOUR WEALTH // RETIREMENT

HAVE QUESTIONS ABOUT YOUR PROVIDENT FUND? Contact an Old Mutual financial adviser on 0860 60 60 60.

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YOUR WEALTH // RETIREMENT

What the new provident fund rules

WILL MEAN FOR YOU Government is set to annuitise provident funds in 2021. Old Mutual Corporate Consultants’ Michelle Acton explains how it will affect your retirement income.

hen you retire, you’re faced with an important choice: should you take all your retirement savings as one lump sum payment, or reinvest your savings and draw what feels like a monthly salary? While it’s a difficult decision for some, it’s a lot easier for others – in most cases, they simply take the money. But, warns Michelle Acton, Principal Consultant at Old Mutual Corporate Consultants, although that may be the easy choice, it’s usually not the best choice. ‘One of the biggest challenges our industry faces is that provident funds allow members to take the full amount they’ve saved as cash,’ she says. ‘As a result, most members cash out their benefits as a lump sum when they retire, and spend it all.

U KNO YO W

Old Mutual established South Africa’s very first umbrella fund in 1985. Initially called Orion SuperFund, it was renamed SuperFund in 2010 and offers a pension and a provident fund, as well as a preserver option. To date, SuperFund has paid out a total of R12 billion to members.

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If I were to give someone R1 million and tell them to make it last for the rest of their life, very few would make it past the first year. It’s human nature to spend, especially in South Africa, where we have such an incredible spending culture. ‘This is the scenario that faces many retirees. If you’ve done everything right, you should have saved between eight and 12 times your annual salary by the time your retire,’ says Acton. ‘Depending on what you earned during your career, and how committed you were to saving, it’s very possible that you’d have more than R1 million invested by then. Making the wrong choice at that stage could undo years of good saving behaviour. ‘The other challenge is that you don’t know how long the rest of your life will be.’

WHAT IS AN ANNUITY? An annuity is a financial product that retirement annuity (RA) WHAT WILL CHANGE offers a series of regular payments funds were required to buy Considering these two factors, over time. For retirees, an annuity a pension with two thirds it’s not surprising that many makes sense because it works like a of their retirement savings South Africans use up their monthly salary. ‘Many people who are when they retired, and were retirement savings, often early still working forget that they receive a allowed to deduct a portion on, if they take the cash as salary every month, which goes toward of their contributions from a lump sum. ‘The reality is that their monthly expenses, like insurance, their income tax to make most people’s money simply car and house,’ Acton says. up for this. Provident funds doesn’t last once they are ‘When you reach retirement and take were given the same tax retired,’ says Acton. your entire savings as a lump sum, you break, but weren’t obliged That’s why, in the National cannot pay all those expenses upfront to purchase annuities. This Treasury’s 2020 Budget so you’re covered for the rest of your life. Your insurance, car and mortgage doesn’t make sense, and Review in February this year, payments aren’t added up in one bill. It it’s essential to align the the South African government doesn’t work like that. The bills – water, treatment of both types of announced that provident electricity, insurance, and more – are funds. ‘When the changes fund members will no longer going to keep coming in every month. go live in March 2021, be able to cash in their entire Therefore, it helps if your income is provident fund members savings. Instead, their savings monthly, too. will have been “scoring” will be treated like a pension for five years on both fund, where they can take fronts,’ says Acton. only a third in cash. ‘Currently, the only THE REASON FOR difference between a How many South Africans consider themselves THESE CHANGES pension fund and a provident to be spenders, not savers* What if you don’t want fund is the fact that pension an annuity? After all, there’s funds allow you to take up a reason why so many to one-third of your savings people cash in all their in cash, and you have to How many South Africans struggle to make savings as a lump sum. It is buy an annuity (or monthly ends meet most months* your money, so you should income) with the balance. If be able to make your own you belong to a provident choices without having fund, you can take everything the government telling in cash,’ Acton explains. How many South Africans are worried that they you what to do. Right? ‘Government’s push for haven’t saved enough for retirement* Wrong, says Acton. ‘The annuitisation will mean that changes to the legislation provident fund members will are designed to encourage everyone to save for their also have to lock in an income for life, rather than taking it retirement, because it’s in everyone’s best interests to all in cash.’ have everybody financially secure in retirement so that When the new provident fund regulations come into effect they won’t be dependent on the state,’ she says. on 1 March 2021, members will only be able to take ‘To encourage that, Treasury is offering a deal: we a third of the money they invest after that date in cash when won't tax your contributions to a retirement fund (pension they retire. The other two-thirds will have to be invested in or provident), or the growth on your savings. In return, an annuity. However, nothing will change for money saved you have to use those savings to support yourself with a before 1 March 2021 or if you are over 55. monthly pension throughout retirement. So yes, it is your money, but it’s not there to give you a nice lump sum at TAX BREAKS retirement age – it’s there to provide you with a monthly Annuitisation has been under discussion for some income to last the rest of your life.’ time already. In 2016, members of pension and

27%

42% 71%

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TEXT: MARK VAN DIJK. PHOTO: GALLO IMAGES/GETTY IMAGES. *SOURCE: OLD MUTUAL SAVINGS & INVESTMENT MONITOR 2019

YOUR WEALTH // RETIREMENT

LOCKDOWN LESSONS

5 THINGS TO KNOW ABOUT PENSION FUNDS, PROVIDENT FUNDS AND RAs

What are the important differences between these three ways to save? Who pays what, who makes the decisions, and how much can you access before, and when, you retire?

RETIREMENT ANNUITIES Since you will take out an RA in a personal capacity, it remains in place no matter where you work. • It is your own investment, and contributions are made by you only. • When you reach 55, you can withdraw a lump sum of up to onethird of the total. The remainder must be used to buy an annuity.

If you pay any of the monthly contributions to your pension or provident fund yourself, you can get a tax refund of up to 27.5% of the total amount you paid for the year, capped at R350 000. This also applies to RAs.

PENSION FUNDS A pension fund is chosen by your employer. • The contributions can be made by you, your employer, or both. • You have to stay in the pension fund while at the company. If you leave the company before retirement age, you have to leave the pension fund, too. You can then reinvest the money from your pension fund in your new employer’s pension fund or provident fund, your own RA, or a preservation fund, where it will grow until you retire. If you cash it out, you will be taxed on the amount, and have to start saving for a pension all over again. • When you retire, you can take out a maximum of one-third of your total savings as a lump sum, which will be taxed. What remains must be used to buy an annuity, which will give you a series of regular payments, like a salary.

PROVIDENT FUNDS Provident funds are much the same as pension funds, except you can withdraw all your savings when you retire in one lump sum, which will be taxed. • However, new regulations coming into effect in March 2021 will mean you will only be able to take a maximum one-third lump sum, which will be taxed. • The balance will have to be used to buy an annuity – just like a pension fund.

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Q&A

WHAT DOES THE DROP IN MARKETS MEAN FOR MY RETIREMENT SAVINGS? Covid-19 affected more than people’s health, it also weakened the value of their savings due to its impact on the global economy. Thabi Simelane, Senior Investment Consultant for Old Mutual Corporate Consultants, explains what it could mean for you in real life.

My daughter is 25. How will it affect her? If she starts investing now, it’s probably good timing because she is entering the market at depressed prices. If she is diligent and never cashes out, we are looking at an investment horizon of 40 years before retirement, if she is to retire at 65. She will therefore have enough time to recover from market crashes and dips during her savings journey.

delaying spending your money. If your employer has a set retirement age, this will mean taking up a job with another employer or working from home. If you can do both, the losses during this downturn can be smoothed out. And once I’ve retired? If you do take cash from your retirement fund, consider using it to pay off debt and investing the balance in money-market investments which can then provide you with two to three years’ income. Leave the rest in a diversified market portfolio. After three years, top up the short-term account. If you are buying a living annuity, take a lower initial pension so that your capital can recover.

CAPITAL PRESERVATION noun A conservative investment strategy aimed at preserving capital (money) and preventing losses through safe shortterm investments.

Source: Investopedia.com

THABI SIMELANE joined the industry in 2004 and has worked for Alexander Forbes, Nedbank and Acsis. She has a BCom (Hons) Accounting degree and has completed the GIBS Management Development Programme. As Senior Investment Consultant, Thabi is responsible for advising clients on their investments.

PHOTO: FREEPIK.COM AND SUPPLIED

What does the 30% drop in retirement savings mean? Will my income be 30% less than what I had bargained on when I retire? A 30% drop in their retirement savings will be a bitter pill to swallow for anyone and can cause panic. However, being a successful long-term investor takes patience and courage. A retirement plan must be adaptable, and shortfalls can be recovered in one of three ways. You could target higher returns, make higher contributions, or continue working. Ultimately, time is your friend, and staying invested, particularly during a downturn, and not cashing out your retirement fund, will be to your advantage. When the market recovers, your savings, plus the contributions you made while the market was down (when most shares are cheaper to buy), will benefit from the improved returns.

I will retire five years from now. Is there anything I can do to improve my outlook? Consider increasing your contributions. If you’re in the correct portfolio based on your retirement plans, it could improve your position significantly, especially towards the end of your working life. Pre-retirement investing is always a trade-off between capital preservation and growth. Also consider delaying retirement and therefore

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