| Liberty Monthly Communication |  |
March 2010 |
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There's been an economic recovery across the globe, especially among developing countries. However, the cost
of the recovery, namely the massive stimulus packages, is coming home to roost as many developed economies
reach record levels of debt relative to their economic output. This has increased concerns about the sustainability
of the recovery.
Locally, South Africa is in a better position with relatively lower debt levels. However, the government is now running a large budget deficit which will need to be financed. February was a big month for consumers with Finance Minister Gordhan's first budget and the announcement of Eskom's price hike. Middle to upper income earners will find themselves squeezed by taxes and electricity costs. Find out more in our global and local economic reviews. |
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While economic indicators suggest this year will be an improvement on 2009, these are still very uncertain times. Now is a good time to assess ones financial risks and to set goals to improve your household finances. Lowering debt and creating a savings buffer is the best way to prepare for uncertainty. Pay down debt With the next interest rate change expected to move upwards, now is not the time to be taking on new debt. Rather focus on getting your debt levels into more manageable numbers. If you are considering taking out further debt such as buying a car or home, calculate an affordability rate which includes an extra 10% on your repayments every month. This will protect you against future interest rate hikes as your lifestyle has already gotten used to the higher repayments. You will also pay off your debt quicker which will save you a significant amount in interest in the long run. Starting a savings plan In these difficult times, it is hard to find that extra money to put away. Rowan Burger, in his article, Save more tomorrow, sets out a simple and painless way to create a long term savings plan. Covering your risks While global risks may be increasing, you also need to review your own personal finance risks to ensure you are covered against those events that could leave you financially destitute such as disability or dread disease. In the article Death is not your only risk, Neelan Porthen writes how dread disease is on the increase as our lifestyles become more stressed and unhealthy. While people tend to focus on life cover, we are 4 times more likely to suffer a dread disease before we turn 65 than we are to die. We encourage you to speak to your financial adviser to work on a financial plan that will provide you with the tools you need to protect you against uncertainty. |
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The general consensus of Minister Gordhan's first Budget address was that he managed to find a balance without rocking too many boats. There were some interesting proposals in the budget that will have an impact on financial planning. For example, estate duty is to be revised and there is talk about removing the tax benefits for group life cover. People who are to be retrenched can now draw down up to R300 000 tax free from their pension fund. Although announced in the last budget, the roll-over for spouses on estate duty abatement (decrease) comes into effect this year. It is important that you speak to your financial adviser to ensure that your financial plan adapts to these changes. Consumer Economist Tendani Mantshimuli takes us through the budget in more detail in her economic review. |
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Thank you for the feedback we have received on these newsletters so far. Your comments and suggestions will help us to give you relevant information for planning and managing your finances. Please keep talking to us and telling us what you think! You can email your comments to [email protected] Kind regards Steven Braudo Chief Executive Officer: Liberty Insurance |
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Global economic review
STANLIB economists Kevin Lings and Melissa Dyer look at the risks that are facing the global recovery. Read more. Weekly economic updates
The Weekly Focus is a commentary on markets, economies and investments prepared by Paul Hansen, Kevin Lings and Melissa Dyer of STANLIB. You can read the latest developments every Tuesday by following the link on www.stanlib.com |
Local economic review
Liberty consumer economist, Tendani Mantshimuli looks at events that affected consumers last month as well as the highlights (and low lights) of the 2010/2011 Budget. Read more. |
Preparing for uncertainty
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"Liberty Group is an Authorised Financial services Provider in terms of the FAIS Act (Licence no. 2409). The information contained in this communication, including attachments, is not to be construed as advice in terms of the Financial Advisory and Intermediary Services Act of 2002 ("FAIS") as the writer is neither an appointed representative of Liberty, nor a licensed financial services provider as contemplated in FAIS. Please consult your financial adviser should you require advice of a financial nature and/or intermediary services." |