What is it: It is a tax-free investment account. You can invest up to R36,000 a tax year into the account. You can do this for yourself, your spouse and your children. All your contributions, investment growth and interest in the account, and withdrawals are tax free, for life. You may withdraw at any time, although it is recommended that you invest for the long term (5 years +). You can contribute up to R500,000 in your lifetime. What is this product suited for? You may consider investing using this product if: you wish to save up to R36,000 per year, or up to R3,000 per month you wish to invest for your child's education fund you wish to supplement your pre-retirement savings you wish to pay no tax on your investment What is this product not for? It is not a transactional account. It is not for short-term investment What are the investment options? Allan Gray offers the Allan Gray Tax-Free Balanced Fund, which is a good option for most investors. We as a Financial Advisor can use external fund managers to put together a portfolio of funds for our clients. We currently recommend the Morningstar TFSA Portfolio. What are the costs? This is the part where it can be difficult to make sense of. Fund managers of the funds you invest in charge fund management fees. The Total Investment Charge (TIC) is expressed as a percentage. Allan Gray as a LISP (linked investment service provider) charges a platform fee of 0.58% per annum, this is deducted monthly, calculated on the account balance. A financial advisor charges an initial advice fee and an annual advice fee for the advice and services rendered. Why do we recommend Allan Gray Tax-Free Investment? 1. Reputable asset management company; 2. Financially sound; 3. Efficient administration platform; 4. Clever use of technology delivers excellent user interface; 5. Excellent staff delivers excellent client service; 6. Competitive platform administration cost; 7. Reduced admin fee for using Allan Gray funds; 8. Select range of good performing unit trusts; 9. Easily creates customisable, informative investment overview; 10. May nominate beneficiaries on the investment; 11. Enables clients to submit instructions online. To find out more how you may benefit from this investment, or to start such investment, please contact Kevin Yeh, email service@daberistic.com.
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MARKET COMMENTARY The first month of 2021 proved to be very eventful for investors, with the news flow at the beginning of the month dominated by political headlines in the US as former president Donald Trump became the first US president to be impeached twice. This was after a group of Trump supporters stormed into Capitol Hill following “inciteful” tweets by Donald Trump in a bid to stop Congress from confirming Joe Biden’s electoral victory in the recently concluded presidential elections. The US political system, however, proved its resilience as lawmakers heavily condemned this behaviour and subsequently confirmed Biden’s victory which led to a successful inauguration which saw him become the 46ᵗ president of the United States. The month also saw the Democrats secure the two seats that they needed to control the senate in the Georgia run-off elections. These developments further increased investor expectations for additional stimulus by the new administration. The bond market reflected these expectations as yields on the benchmark US 10-year Treasury note rose above 1% for the first time since the pandemic started as the market priced-in expectations of higher future inflation on the back of the anticipated stimulus. In other news, “GameStop mania” overshadowed the developments on the vaccine roll-out front in the latter part of the month as market participants processed these developments. GameStop Corp is a struggling bricks and mortar video game retailer that is facing structural changes within its core market which had initially led to significant short positions on its stock by hedge funds in anticipation of an eventual demise. Retail investors, so called “Redditors” sparked a 1600% rally in the stock as they sought to bet against the big hedge funds via online trading platforms such as Robinhood. Frenzied buying amongst retail investors triggered a wave of “short covering” by institutional investors which further fuelled the stock’s rally, until online brokers stepped-in to impose restrictive limits on trading the stock. Moving over to market performance, returns were mixed, with the S&P 500 (-1.0%) ending the month lower and the NASDAQ 100 (+0.3%) managing to stay in the green amongst the major US equity indices. In Europe, the UK’s FTSE 100 (-0.3%) and Germany’s FSE DAX (-2.8%) both ended lower. Japan’s Nikkei 225 (-0.6%) followed other DM’s (developed markets) equities lower whilst China’s Shanghai SE Composite (+1.5%) ended on a positive note. EM’s (emerging markets) outperformed DM’s, with the MSCI Emerging Markets Index (+3.1%) ending the month on a strong footing on the back of positive performance by Asian EM’s such as China. Overall, the MSCI World Index delivered a return of -1.0% for the month, driven mostly by the poor performance across DM equities. Gold (-1.3%) gave up some of its gains from the previous month whilst Platinum (+10.0%) ended the month on a much stronger footing. Oil (+7.9%) followed up on last month’s performance with another positive showing. The US dollar was largely stronger against most of the major currencies for the month, appreciating against the Japanese Yen (+1.4%) and the euro (+0.7%), however, the greenback was weaker against the pound sterling (-0.5%). *All data is sourced from Morningstar Direct as at 31/01/2021. The performance of global asset classes is quoted in US dollars. Source: Morningstar
MARKET COMMENTARY Despite starting the year on a strong footing, global markets ended the month slightly weaker, as ongoing concerns around the pace of global Covid-19 vaccine rollouts as well as continued lockdowns in the UK and certain areas in Europe weighed on sentiment. US President Joe Biden was inaugurated on the 20th of January, as the US courts rejected continued unsubstantiated claims of voter fraud by Donald Trump and his campaign. This followed violent protests from Trump supporters at the Capitol building, a demonstration which led to the death of five people. At its meeting in January, the US Federal Reserve left interest rates unchanged and announced that it would continue with its bond-buying programme. This, along with a proposed $1.9 trillion economic aid and rescue package announced by President Biden, will continue to provide support to the US economy in its recovery from the Covid-19 pandemic. South African equities finished the month higher, bucking the trend in global developed markets slightly. The upward move in the local index was largely due to strong performance from large index constituents such as Naspers and Prosus, as well as resource counters. Local bonds ended the month higher, supported by foreign buying (albeit at a slower pace than previous months) as well as a slight flattening of the curve resulting from the decreased likelihood of further interest rate cuts. Local listed property continued to exhibit volatile performance, as the stricter adjusted level 3 lockdown announced at the end of December acted as a headwind and increased uncertainty regarding the outlook for the sector. The rand was weaker against most major developed market currencies for the month, as broad US dollar strength acted as a headwind for most emerging market currencies. The South African Reserve Bank’s Monetary Policy Committee (MPC) announced during the month that it will leave the repo rate unchanged at 3.5%. This was the third consecutive meeting where the MPC decided to leave the rate unchanged, despite two of the five members of the MPC favouring a cut. SA headline CPI eased to a year-on-year figure of 3.1% to the end of December (from 3.2% in November), as transport inflation eased following the petrol price decrease in December. The rate of inflation for the 2020 calendar year was the lowest since 2004 and the second lowest since 1969. South Africa’s trade surplus narrowed to R32 billion in December (following a revised figure of R35 billion for November), with the trade balance supported by strong precious metal prices. The JSE All Share Index (+5.2%) ended the month higher for a third consecutive month, with the strong performance driven by large industrial and resource constituents. From a sector perspective, Industrials (+8.4%) and Resources (+5.1%) ended the month with decent performance, while Financials (-2.6%) struggled. The top performing shares amongst the largest 60 companies on the JSE in January were Sappi (+30.2%), Sasol (+23.2%) and Truworths International (+21.1%). The worst performing shares in January were Discovery (-16.2%), Northam Platinum (-9.3%) and Anheuser-Busch InBev (-7.2%). Listed property (-3.2%) gave up some gains during the month, as the uncertainty around the prospects of the sector were exacerbated by the more stringent level 3 lockdown measures. Local bonds (+0.8%) ended the month higher, supported by continued foreign buying as well as a slight flattening in the yield curve following the decreased chances of future interest rate cuts. Cash delivered a stable return of +0.3% for the month. The rand was weaker against most major developed market currencies for the month. The rand depreciated against the euro (-1.7%), the US dollar (-2.4%) and the pound sterling (-2.9%) during the month. *All data is sourced from Morningstar Direct as at 31/01/2021. The performance of South African asset classes is quoted in rands Source: Morningstar
Last Month we shared our pocket guide to money. This month let's focus on Step 1 - Make as much money as you can. For most people, most of our money or wealth comes from our ability to work, to earn an income. Most of us were not born into a rich family. Many in South Africa were born into abject poverty. We had to learn, acquire skills, find a job or start a business, to provide for ourselves and our family. It is therefore important to improve your education, knowledge and skills, to network with the right people, to enhance your employability, or be equipped to have your own business. 1. Formal education This is the official way of certifying that you have a certain level of education. While a matric certificate is probably the minimum requirement when looking for employment, many young people study further, to get a degree, honours, or even masters and doctorate, to gain in-depth knowledge in certain discipline, to increase his job and income prospects. An example is a medical doctor. A student will need to complete a 5 year Bachelor's degree in Medicine and Surgery. he then works 2 years as a Clinical Intern. Then he becomes a Medical Doctor. A Medical Doctor has an income of R50,000 to R110,000 per month. If he studies further for 5 years to become a specialist, he can expect to have an income of R100,000 to R300,000 per month. So by studying further, a medical doctor increases his income potential. What you study is important. You will want to study something that you enjoy, that has applications in real-life work. 2. Study to become a skilled tradesman This is so underrated, but skilled tradesman like plumbers, electricians, handyman, carpenters, builders are in demand and earn a good income. If you don't like studying but like doing things with your hands, this may be the job for you! 3. Learn something new and useful YouTube is arguably the undisputed largest video library in the world. 1.3 billion people use YouTube. 300 hours of video are uploaded to YouTube every minute! Almost 5 billion videos are watched on YouTube every single day. Instead of just watching fun, entertainment, sports and gaming videos, choose a topic you want to learn and watch videos on that topic. Over the last 12 months I have watched videos on cooking (and that helped me make delicious bolognese and chicken biryani); technology and financial planner coaching (and that helped me transform my business to be remote working ready); chess (thanks to Agadmator channel, I have improved my chess game); news (in English and in Mandarin, to understand how the world is evolving); investing and book summaries. Recently I have decided to become a YouTuber, so I have been watching tons of videos on how to develop a YouTube channel and contents, and video editing. There is so much to learn out there, but focus on one thing at a time. Watch videos that are related to your work or business. I highly recommend anyone watching lots of YouTube to subscribe to YouTube Premium. It costs R71.99 per month, and the family plan costs R109.99 per month. It gives you ad-free viewing. Consider this as an investment in yourself and your family. Why try save the (little) cost and waste all the time watching/enduring the ads, not to mention the interruptions. 4. Start a business While starting a business is not for the faint-hearted, it can be rewarding. A successful business can meet a customers' need, create employment, contribute to the economy, and generate sustainable income to its owners. When I was in my university years, I was already fascinated by the idea of starting my own business one day. In 1991 I bought my first book in this pursuit, Small Business Opportunities in South Africa by Ian Clark and Eric Louw. Over the years I bought or received many business books. Only in 2006 I stepped into starting my own business, a financial advisory business. I had a plan, I wanted to focus on investments only, but after I got into contact with my target market, I quickly realised I had to broaden my offering to one-stop shop, covering life insurance, medical aid, car insurance, business insurance and investments. 15 years later, in 2021, I have a viable financial advisory and insurance brokerage with a sustainable annuity income, providing income to 12 families. Along the way I have made mistakes, faced challenges and setbacks, had to learn quickly, continuously adapt to ever-changing regulatory and business environment. During this period we went through at least three global crises: The 1997 Asian financial crisis, 2008 Global Financial Crisis, and 2020 Coronavirus pandemic crisis. If you want to start a business, you need to do at least 4 things well:
5. Networking In business, it's about who you know. Whether you are a salaries employee or business owner, it is important to network with the right people, to learn, to exchange ideas and to get exposure. You should consider networking with:
I hope this gives you some ideas you can implement. What is the one thing you want to do? Write it down, stick on your wall, and do it. Next time, I will talk about "Do not spend more than you earn." With lockdown and Covid 19 creating an environment for more home based businesses, running a business from home has become a convenient choice for many entrepreneurs. It gives you flexibility and precious family time, and helps to keep overheads low. However, anyone who owns a home-based business – no matter how small – faces the same risks as any other company. Use these tips to see if it’s time to get business insurance for your venture to protect yourself from damages and liability. Home office vs. home business Simply put: a home office is covered by personal insurance, a home business is not. Anything in your cosy study is covered by your homeowner’s insurance if you occasionally work from home, however the moment it becomes your primary place of business, you have to notify your insurance company. For example, if your home is burgled and the thieves take both personal belongings and business items – e.g. your three sewing machines and a few leather handbags from your fashion business – then an insurer could reject your claim because you did not declare your home business. Evaluating your risk There are a few key areas of risk you need to watch out for. Ask yourself:
How to cover yourself against risks and claims If you answered “yes” to any of the questions above, it might be time to consider specific insurance for your small business. Here are the types of risk and claims you will be covered against:
Worker’s compensation If you have one or more employees at your home-based business, it is your duty to protect their safety by registering with the government’s Workmen’s Compensation Fund. Employers who pay their annual Workers Compensation fees are protected from being sued by employees who are injured at work, while employees are protected from financial loss. Read all about Workmen’s Compensation on Labour.gov.za. We understand that every small business is unique. Companies like Santam Commercial, through their special small business insurance offering (focussing on retail, administrative and manufacturing businesses), they will help to ensure that your start-up is properly covered in an emergency such as a fire or theft. Starting from just R162 per month, you will also be covered for product liability and client legal liability up to R3 000 000. If you would like an obligatory free quote for your company contact Edmond or Marizka from our Short-term department tel 011 658-1333, email service@daberistic.com Source: Santam
A welcome relief announced by South Africa’s Council for Medical Schemes (CMS), has added COVID-19 vaccine to its list of Prescribed Minimum Benefits (PMB). Meaning, Prescribed Minimum Benefits must be paid for by every medical scheme for every member, regardless of their plan. Discovery health has announced that they have budgeted for sufficient funding to fully cover vaccines (whichever vaccines are procured) for its members. Discovery stand ready for rapid and efficient rollout of vaccines to members. What will the process look like and what is hoped to achieve? According to the Department of Health’s Covid-19 Vaccine Rollout Strategy, the vaccine will be made available to all South Africans in three phases, starting with frontline healthcare workers, followed by other essential workers and high-risk groups before the rollout is extended to the broader population. Achieving population immunity in South Africa with the help of COVID-19 vaccines is what is hoped to be achieved. Meaning, by the end of phase three it is expected that 40 million South Africans (representing 67% of the population) will have been vaccinated. Discovery’s Chief Executive, Adrian Gore, “I recognise that this note does not answer all of the questions that you may currently have in mind. We undertake to write to you regularly, to keep you fully updated as the details of our country's COVID-19 vaccination project become clearer.” For full article from Discovery’s Chief Executive, Adrian Gore, click here. Source: Discovery For more information on the process for the vaccine, please contact Tammy or Jo in our Health department,
tel: 011 658-1333, email: service@daberistic.com We also have a Pandemic Shield cover which is an insurance solution to provide a safety net for people who are hospitalised due to COVID-19, you may contact Tammy in our Health department, tel: 011658-1333, email: service@daberistic.com Whether you’re seeking cover for yourself or you’re a business owner trying to find the best insurance cover for your employees, using a broker like us can save you time and money.
We as brokers simplify the process of buying insurance and we make it easier to find cover well-suited to your needs and maintain changes on your policy. When you work with us, a broker, the duties we will perform are:
It is important to note the following:
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