Dear Valued Clients,
In the world of investing, success is not solely determined by market trends or economic forecasts. Rather, it often hinges on our ability to navigate the complexities of human behavior and emotion. That's where behavioural coaching comes into play – a powerful tool that can significantly enhance your investment outcomes. Behavioural coaching recognises that our decisions as investors are influenced by a multitude of psychological factors, from fear and greed to overconfidence and herding behavior. By understanding and addressing these behavioral biases, we can make more informed and rational investment choices, ultimately leading to better long-term results. Here's how behavioral coaching can benefit you: 1. Emotion Management: Investing can evoke strong emotions, particularly during periods of market volatility. Behavioural coaching helps you recognize and manage these emotions, preventing knee-jerk reactions that could derail your investment strategy. By maintaining a calm and rational mindset, you can avoid impulsive decisions that may harm your portfolio's performance. 2. Goal Alignment: Behavioural coaching focuses on aligning your investment decisions with your long-term financial goals. By clarifying your objectives and risk tolerance, we can tailor an investment strategy that reflects your unique needs and aspirations. This ensures that your portfolio remains aligned with your overarching financial plan, providing a clear path towards achieving your objectives. 3. Overcoming Biases: We all harbor cognitive biases that can distort our perception and decision-making process. From anchoring bias to recency bias, these cognitive pitfalls can lead to suboptimal investment outcomes. Behavioural coaching helps you recognize and overcome these biases, allowing you to make more rational and objective investment decisions. 4. Long-Term Perspective: One of the key principles of behavioural coaching is promoting a long-term investment perspective. By focusing on the bigger picture and tuning out short-term noise, you can avoid making reactionary decisions based on temporary market fluctuations. This disciplined approach fosters patience and resilience, essential qualities for successful long-term investing. 5. Accountability and Discipline: Behavioural coaching instills accountability and discipline in your investment approach. By adhering to a well-defined investment plan and regularly reviewing your progress, you stay on track towards your financial goals. This disciplined approach helps you resist the temptation to deviate from your strategy, ensuring consistency and continuity in your investment journey. In conclusion, behavioural coaching serves as a guiding light in the often turbulent waters of investing. By harnessing the power of psychology and emotion, we can navigate market uncertainties with confidence and clarity. As your trusted advisor, we are committed to providing personalized behavioral coaching to support you on your investment journey. Remember, successful investing is not just about numbers – it's about understanding human behaviour and making smart decisions accordingly. Together, let's harness the power of behavioural coaching to achieve your financial goals and secure a brighter future. Best regards, Kevin Yeh, CFP Director
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The festive season is a time to switch off from work, recharge the batteries and spend quality time with friends and loved ones. It is also a time when many people throw caution to the wind, and sometimes, their budgets as well.
You can avoid a financial hangover in the new year by considering the following tips: Create a spending plan. Draw up a financial plan that accounts for your wants and needs between the end of November to January. As many people get paid early in December, the goal should be to stretch the November salary as far as possible into December, so as not to dip into their year-end paycheck too soon. Prioritise debt and savings. If you are fortunate enough to receive a bonus, maximise the windfall by allocating a portion to your savings and investment accounts. Provisions should also be made for paying off outstanding debt. Hide the credit card. If you are ill-disciplined, remove your credit cards from your wallets to avoid unnecessary and costly spending. Beware of festive season scams. Phishing attacks are prevalent at this time of the year. Be sure to examine emails and SMS messages very carefully, and be cautious of clicking on links. Always hover over links before clicking on them and take note of the URLS they direct you to. As technology advances and digital transactions become the norm, protecting your personal information has never been more critical. As your trusted financial adviser, it's my duty to ensure that your data remains secure at all times. Here are some essential tips to help you safeguard your personal information:
1. Limit Information Sharing: Be cautious about sharing personal information, especially online. Only provide necessary details on secure and reputable websites. Avoid sharing sensitive information, such as your identity number or banking details, unless absolutely necessary. 2. Use Strong Passwords: Create strong, unique passwords for each online account. Use a combination of letters, numbers, and special characters, and avoid using easily guessable information like birthdays or pet names. Consider using a password manager to securely store and manage your passwords. 3. Enable Two-Factor Authentication: Enable two-factor authentication (2FA) wherever possible, especially for sensitive accounts like online banking and email. 2FA adds an extra layer of security by requiring a second form of verification, such as a code sent to your phone, in addition to your password. 4. Regularly Monitor Your Accounts: Keep a close eye on your financial accounts and credit reports for any suspicious activity. Report any unauthorised transactions or unfamiliar accounts to your financial institution immediately. 5. Be Wary of Phishing Attempts: Be cautious of unsolicited emails, text messages, or phone calls asking for personal or financial information. These could be phishing attempts by cybercriminals trying to steal your information. Always verify the legitimacy of the sender before responding or clicking on any links. 6. Secure Your Devices: Ensure that your devices, including smartphones, tablets, and computers, are protected with up-to-date antivirus and security software. Keep your operating system and applications updated with the latest security patches. 7. Secure Your Wi-Fi Network: Secure your home Wi-Fi network with a strong password and encryption. Avoid using public Wi-Fi networks for sensitive transactions, as they can be vulnerable to hacking. 8. Dispose of Personal Information Securely: Shred or securely delete any documents or electronic devices that contain personal or sensitive information before disposing of them. This helps prevent identity theft and unauthorised access to your information. 9. Educate Yourself: Stay informed about the latest cybersecurity threats and best practices for protecting your personal information online. Educate yourself and your family members about the importance of cybersecurity and how to stay safe online. 10. Review Privacy Settings: Regularly review the privacy settings on your social media accounts and other online profiles. Limit the amount of personal information you share publicly and adjust privacy settings to control who can see your information. By following these simple yet crucial steps, you can significantly reduce the risk of identity theft, fraud, and other cybercrimes. Remember, safeguarding your personal information is not just about protecting your finances—it's about protecting your peace of mind and ensuring a secure future for you and your loved ones. If you have any concerns or questions about protecting your personal information, don't hesitate to reach out to me. Your security and privacy are my top priorities. Death, while an incredibly difficult subject to confront, is one of life's unavoidable realities. Yet many investors fail to prepare for this eventuality and put their loved ones' financial futures at risk. According to The Fiduciary Institute of Southern Africa, more than 75% of South Africans pass away without a valid will drawn up.
In the spirit of National Wills Week this month, we want to empower you to prepare adequately and help you leave a lasting legacy by posing these questions: • Is your will up to date? Make sure you keep me abreast of any material and life-changing events, such as marriage, the birth of a child, or a death in the family. • Are your retirement fund nominees' details up to date? • Are the beneficiaries of your various policies up to date? If your investments are structured as a life policy, you will need to make sure your service provider has the correct beneficiary appointments on file to ensure speedy payment to your intended beneficiaries. • Have you planned for immediate needs? Make sure you have made provisions for any immediate expenses, such as funeral costs, that may need to be covered before your investments can be accessed. • Have you spoken to your beneficiaries, dependents, and nominees about the contents of your will? Contact us on service@daberistic.com if you want a financial planner to review your financial affairs. Research indicates that women tend to dedicate more time to researching their investment options and are twice as likely as men to rely on financial advisers for guidance in their financial planning decisions. Numerous studies also suggest that women approach investing with a longer-term perspective and are more inclined to hold investments for extended periods rather than attempting to time the market. These characteristics can be leveraged to achieve financial independence and close the investment gap.
As we commemorate Women's Month, here are four tips to empower women to take control of their financial well-being: 1. Establish a budget and define financial goals. Avoid vague objectives and strive for specificity. For example, rather than setting a general goal like "save money for the future," define specific objectives such as "save R10,000 per month for retirement by contributing R5,000 to a retirement fund and R5,000 to a long-term investment portfolio." This level of specificity provides clarity and direction, making it easier for you to track your progress and stay committed to your financial goals. 2. Develop a comprehensive plan. This should encompass both a savings strategy (including an emergency fund) and an investment plan. 3. Automate the process. Set up debit orders for your investments and consider scheduling annual escalations in advance. This will help you invest more every year on autopilot. 4. Allow decisions time and space. Recognise your biases and external influences, and be thoughtful in your decision-making. Here are three common examples of biases: 1. Confirmation Bias: This is the tendency to search for, interpret, favour, and recall information in a way that confirms one's preexisting beliefs or hypotheses. For example, you might be more likely to remember and focus on information that supports your investment decisions while ignoring or downplaying contradictory information. 2. Overconfidence Bias: This bias involves overestimating one's own abilities, knowledge, or judgments. It can lead to taking excessive risks in investments or being overly confident in the success of certain strategies without considering potential downsides. 3. Loss Aversion Bias: Loss aversion refers to the tendency to strongly prefer avoiding losses over acquiring gains of the same or similar value. It can lead to overly conservative investment decisions, such as holding onto losing investments for too long in the hope that they will recover, rather than cutting losses and reallocating funds to more promising opportunities. Local statistics reveal that only 6% of South Africans can comfortably afford retirement. Conflicting priorities often make it difficult for investors to balance immediate needs with long-term savings goals. Despite stretched household budgets, there are strategies to enhance your retirement savings.
In the spirit of Savings Month, here are three levers you can utilise to maximise your finances: Lever #1: Prioritise Retirement Savings: Allocate any additional income received, such as tax returns, bonuses, or supplementary earnings, towards retirement savings. Lever #2: Preserve Retirement Savings: Early withdrawals significantly impact South Africa's low retirement savings rate. Preserve your retirement funds when changing jobs to maintain long-term financial security. Lever #3: Delay Retirement: Consider extending your working years to allow your investments more time to mature. This extra time can significantly enhance your retirement nest egg. As you approach retirement age, you will be looking to your financial advisor to guide you in selecting the right retirement income solution to provide a sustainable income for the rest of your life. Life or Living Annuity? Living annuities allow you to retain full control over your retirement capital: You can control your investment allocation, change your income drawdown annually (within a legislated range), and leave any remaining capital to your appointed beneficiaries upon your death. You will also need to manage the risks that come with this control by choosing an appropriate investment allocation and a suitably prudent income drawdown. Life annuities (or fixed annuities) allow you to receive a guaranteed income for life, with an insurer taking on some or all of the risks that you live longer than expected or returns are lower than required. You pass control of your retirement capital to the insurer, and typically, there will be lower or no capital for beneficiaries upon your death. You can add a guarantee option of 10 or 20 years to ensure income for your beneficiaries after you death for the remainder of the guaranteed period. Determining Income Drawdowns for Living Annuities The general rule of thumb for individuals retiring at around 60 to 65 years of age and drawing income from a living annuity suggests that you withdraw 4% of your capital in the first year of retirement and adjust for inflation only each year thereafter. This is based on investing and maintaining at least 50% in equities, which has been needed to sustain this income over 30 plus years in retirement. Ready to Plan Your Retirement Income Strategy? Speak to your financial advisor today to discuss your retirement goals and find the best income solution tailored to your needs. Your advisor can help you navigate the options and make informed decisions to secure a comfortable and sustainable retirement. Email service@daberistic.com or schedule a meeting with Kevin using this link: calendly.com/daberistic/60min |
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