By Thys van Zyl – Head of Product Development at Everest Wealth
Don’t be caught off guard
Economic events in the first quarter of the year did little to instill confidence in consumers and, moreover, really ripped their pockets.
Underperforming economic growth, load shedding, interest rate hikes and the rise in the general cost of living are hurting consumers financially. Investor confidence is waning due to South Africa’s problems and has been exacerbated after the country was placed on the dreaded gray list.
Interest rates and financial hedging
Thys van Zyl, head of product development at Everest Wealth, believes consumers must take proactive steps to protect themselves financially. “Build a buffer around your budget for unforeseen expenses, such as sharp increases due to interest rate increases. Work smarter and avoid short-term debt with higher rates. Instead, try to pay off debt faster and thus save interest. Cut bad habits or unnecessary expenses from your budget and invest that money instead.”
With higher interest rates, everything becomes more expensive and can result in people withdrawing more money from investments to keep up with rising living costs.
“In the midst of turbulent times, a financial advisor can advise clients on which strategies to follow and where to invest in order to meet everyone’s unique expectations.”
Investors must remain focused on their long-term investment goals, even amid the unknowns and uncertainties.
The diversification of different investment options is directly linked to certain risk factors that affect the specific fund invested in, for example certain funds will be more sensitive to changes in currencies, while others may react more sensitively to government announcements.
Don’t let yourself be caught off guard and your investment portfolio suddenly feel the effects of uncertainty and fear. Be prepared to overcome any difficult circumstances. The forward management and planning of finances is critical for consumers to secure and protect their finances.
The International Monetary Fund (IMF) expects South Africa’s economy to decline sharply this year. The IMF believes that, among other things, urgent attention must be paid to the energy crisis, transport problems, the straightening of state institutions and unemployment.
“There is no doubt that the government is failing to manage state institutions efficiently. For this reason, failed institutions should be privatized as this will result in job creation which in turn generates tax revenue.”
The potential for bartering in South Africa remains high despite its gray list status, but there must be continuous better facilitation, especially so that the private sector can play an even greater role in the economy.
Since the beginning of 2023, foreign investors have sold approximately R100 billion in South African shares and government bonds, as well as an increase in the sale of the country’s fixed assets. Beurtkrag, which costs the country millions of rands daily, also played a big role.
“This is a clear sign of a decline in investor confidence which is now exacerbated by South Africa’s gray list status.”
At the end of February, South Africa was placed on the so-called gray list by the International Financial Action Task Force (FATF). The FATF believes that South Africa is doing too little to combat corruption and money laundering, among other things, and the country will now be under increased monitoring.
“Political uncertainty drives a very large misperception regarding confidence in the South African economy. The rand is an undervalued exchange rate and is not currently a direct reflection of the economy.
“However, everything is not moonlight and roses, especially considering the political situation and poorly managed state enterprises, but we have a rapidly growing private sector that is taking more and more responsibility as it is allowed.”
Do you need help to secure and protect yourself financially? Feel free to send the word “PRIVATE” to 45906 or visit our website at www.everestwealth.co.za to find out how you can invest in private equity. Text messages cost R2. B’s & V’s apply.
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