Brod Von Brughan & Associates CC

Correspondence, July 2009

2009-11-26T14:17:00.000+02:00

Brod Von Brughan and Associates CC
FSP License No: 34998
13 Kantor road, Assagay, 3650
Tel: 031-768 2840 Ÿ Fax: 08655 87438 Ÿ Cell: 083 412 0099
bvonb@redeye.co.za
Greetings,

I hope everybody is having a fantastic year.
This email contains 4 points that I have had on my mind. Maybe one or two will be useful to you.

1. Investments.
I have noticed a difference between the way fund managers and economists speak these days compared to the way they spoke 9 years ago when I first joined Liberty Life. Back then people were more sure, willing to predict the Rand/Dollar, more able to determine the effect the news of the day would have on the markets.

These days the JSE can be influenced by many things that happen in the world and markets are closely correlated. Our stock market is one of the better ones in the world-both in the way that it is managed and the transparency of it.

Please peruse the following graph, it is our market Share Index since 1960. The bottom line reflects investment performance categories. The years have been allocated accordingly. I.e. 1974 the markets grew between 0-10%: in 1999 the markets performed at over 50%.

We can all see that 2008 was not the best year, quite the opposite actually. However there is a lot of value in the markets at the moment, and for the long term investor it’s possibly a great time to climb in.

But the investment companies are seeing a lot of irrational movements by clients climbing out of the markets and moving into cash. Thereby banking the awful losses incurred, or keeping money in Money Market, waiting for the markets to improve before climbing back in… emotional decisions aren’t great, and even though there is volatility a sound financial plan does a lot in easing the uncertainty of the day.

2. Fortune Magazine.
The current issue has a photo of Bill Gates and his father on the cover. The heading is “The BEST ADVICE I ever got”. It has good advice from other people as well. I recommend it.
Fortune Magazine is like a celebrity magazine but it reports on people with substance and it is interesting having insights into the people who influence our lives, more so than the entertainment world.

This issue in particular is helpful. It has some gems like: “Unless you read different points of view, your mind will eventually close, and you’ll become a prisoner to a certain point of view that you’ll never question.” – Mohamed El-Elrian, and Bill Gates Snr. speaking about raising a child. It is a very good issue.

3. Life insurance.
Death and taxes, both quite real which is why everyone who needs life insurance has life insurance. Dr. Marius Barnard proposes that we should call it death insurance.

Premium patterns in insurance are very different from one policy to the next. Some are age rated (they are cheap now, but increase quite rapidly), and others are level (you pay a little more now, but know that your premiums won’t rocket in the future).

A good way to decide on which plan is most suitable for you, is to calculate what will be spent over the next 15 or 20 years. Instead of saying that the monthly premium is R1000, you would say that over the next 20 years you will spend R240 000 on life insurance. An age rated premium may be cheaper now but over 20 years you will spend R275 000 as example.

There are also a number of things that have a direct influence on your premiums.
Age
Smoker status. (Smokers have fewer birthdays)
Income
Marital status. (Married people live longer)
Education
And importantly occupation.

If your details have changed, it may be good to update them on the system.

4. The Petrol Price.
Today Brent Crude is $61.71, we know that this is quite cheap and will likely go up a bit. This is something we can see and work out ourselves that inevitably the price of petrol will go up.
I was 18 when petrol cost about R2.60 per liter. I remember a price increase of 7c was being reported on the news. The general feeling from the people around me was one of grave concern and gloom. A quick calculation pointed out that 7c X 60 liters was an additional R4.20 per tank, hardly equal to the sorrow being felt.
And if you fill your tank 4x per month then its an additional R16.80 not enough reason to feel sad.

On the radio we hear words like, “Commuters brace themselves for another increase!”

Don’t let the media influence our emotions, I don’t know why they try creating a feeling of gloom, but it is not necessary.

Enjoy the day.

Brodwyn.

October 2008 - A Perspective

2009-11-17T08:48:00.000+02:00

The following contains a few points I have had on my mind. When we have a surplus, we are able to be more creative and helpful to others.

It appears that throughout the history of humankind, the greatest aspiration has predominantly been the quest for 'Freedom'. As a civilization today we seem to have outgrown the concern that a neighboring town, village or country would arrive and take us away to build their cities and grow their grain.

Today however, a form of slavery far more expansive and wholly destructive has emerged throughout the world. This time it knows no bounds and is not confined to a certain nation or people. I speak of the very real and glaring reality that many have lost their freedom to the banks. The following is a definition of slavery and is not too different from debt:

As a social-economic system, slavery is a legal institution under which a person (called a 'slave') is compelled to work by another (sometimes called a 'Master' or 'slave owner').

Evidence of slavery pre-dates written records, and has existed to varying extents, forms, and periods in almost all cultures and continents. Slaves are held against their will from the time of their capture, purchase, or birth, and are deprived of the right to leave, to refuse to work, or to recieve compensation (such as wages) in return for their labour. As such, slavery is one form of unfree labour.

Much of the chaos seen in the world comes from the fact that people have been too cavalier in the debt that they have taken on. In America, it is surmised that for every $10 earned, $14 is owed. These creditors deliberately market to people who are more likely to have problems paying predatory lending and that the creditors benefit from the connections to the government, the debt collection industry, and from lawmaker apathy.

Thankfully we live in South Africa, where we have mostly been protected from this due to 1. Our banks who have been overcharging us, so now they are quite strong and 2. The National Credit Act thanks to Tito and the lads.

Today people lose their freedom in little amounts by the decisions that are made daily. Credit gives the illusion of posperity. We think we own things, but in reality things own us. The banks own us.

Debt is a financial termite. The world is cleverly designed to help us spend our money. If, however, we are prepared to have the same standard of living that people had in the 50's, we would all be close to retirement. Not all debt is bad. In fact the following are considered good debts; your home and properties, your first car, and an education loan.

It is my wish that where there is debt, there may in the future be savings; where there is fnancial crisis there may be financial reserve; where there is interest paid there may, in the future, be interest earned; and where there may be stress today there will be financial peace and security in the future.

Viva le Revolucion!

August 2008,

2008-01-09T06:13:00.000+02:00

Hi there,
I have recently fulfilled a long term dream; I now have a home office.
Please note new contact details:
Office: 031-768 2840
And
Email: bvonb@redeye.co.za

Kind regards,

Brodwyn.