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.
