What a year it has been! It will certainly be remembered for its uncertainty. It was a year where asset and currency swings were huge exposing the anxiety and risk of the markets.
Paging through various investment data for the year the stats reveal the following three biggest price falls on our markets for the year.
The rand against the dollar – 31,8%
Touching as high as R16 to the dollar this has had a devastating affect on our economy as imports are just so much more expensive. This will in turn translate into price increases on various goods and services increasing the strain on household budgets.
The biggest drop in commodity prices is Oil – 32,4%
Who would have thought that the dollar price of oil would fall to levels in the mid $30’s? Especially when not too long ago a barrel of oil tipped $140. It’s a pity that our currency has weakened as much.The cost per litre of petrol hovers around the current levels of R12. We are extremely lucky that the oil price has fallen by as much. If it stayed at previous levels we would be riding bicycles, thats for sure.
The Resource Sector dropped the most on the JSE – 45%.
World demand for resources has fallen dramatically as a result of slow growth. We depend so much on exporting our resources but with demand being at an all time low the sector has nearly halved in value.The weak rand has cushioned the fall in resources to a large extent as they are generally priced in Dollars.
The burning question for 2016 is, “Can these prices fall even further?” My view is that they possibly could get worse before things turn. Remember that assets move in cycles. Also watch the rand. It has surprised us many times over the years. Just when you think you know where it’s heading it makes a move in another direction.
So uncertainty still prevails……
At the risk of sounding prophetic and sounding like the Grinch, next year is likely to be tougher than 2015.
This is the last week before Christmas and perhaps there is still a chance to take control of that urge to splurge.
Here are some things to consider:
Put on the brakes
If you haven’t already maxed out the credit card and still have some cash to spare then take stock and think wisely about next year. Who knows what 2016 has in store for us. So, the last thing you need is to have to chase down expensive debt in the new year.
Don’t turn a blind eye
The way forward in your financial planning is to live under your means, not above them. If your debt is increasing things are getting worse especially in the face of rising interest rates. It simply means you are getting poorer. So don’t take a holiday to avoid things. Face them now as things don’t get better by themselves.
Perhaps a way forward is to consider online shopping where you can. It has the benefit of saving on parking and petrol and queuing for that matter. You also get to choose more wisely as you surf through the product catalogues. You can compared prices more logically and avoid getting trapped up in the mall experience where everything is aimed at enticing you to spend.
Prevention is better than cure and next year will have a tough start. So change your sails whilst you can… there’s a storm brewing.
It is the final week before many of us set off to have a great holiday and enjoy a well deserved break. What a year it’s been!
Just before you take off here is a personal finance check list:
Medical plan for next year
You still have time to consider an appropriate plan for next year.
Ensure that your option has been received and applied ready to cover you from the
1st January 2016.
Short term insurance valuations adjusted
Contact your insurance broker and ensure that your possessions are accurately covered.
You want peace of mind that should something happen over the festive season, your policy will comfortably replace any loss. You don’t want to get caught in a wrangle with your insurer because your goods are under insured.
Check and service your alarm system
A probable condition with your insurer is that your alarm system is in working order. So, whilst you are updating your valuations you will do well to service your alarm system ensuring it is working while you are away.
Cover your January expenses
It’s a long way for most to January’s pay day as many get paid early in December.
Make sure there are sufficient funds in your account to cover your debit orders which will come off on the 1st January. If you don’t have enough funds you could have a claim repudiated on your short term insurance, life assurance and medical aid policies if you miss a premium.
Clean out your Loyalty Rewards
You may have rewards on various loyalty programs which could be bundled together to give you some value over the festive season. You could use these rewards towards paying for your trip or for a few gifts for family and friends. You probably are paying to be on the loyalty program, so use this time of the year to get something back.
Update your will
Before you take off on holiday, ensure that your will is updated and that someone close to you knows where to find it.It is such an important document which many of us ignore. Don’t be complacent and leave it for another day. This time of the year is risky for all South Africans.
A sound financial plan provides peace of mind that your affairs are in order. You will have a much better time over the festive season if you have prepared yourself that much more for the New Year. Happy holidays…..
The traditional approach to sound financial planning is to buy a property as soon as you can instead of renting. The rationale is that you will be better off paying for your property as soon as you can with the rent you are paying to your landlord.
However, there are reasons to rent a property before buying.
Cash fund first
If you are starting a new job, business, or if you are a contractor or freelancer you need to be confident that you can comfortably generate consistent income. Buying a property binds you to a long term financial commitment which you will need to cover over the long term. You should aim to settle down first and get a good fix on your income over a period of time.
You need the peace of mind that you can cover your monthly expenses for at least 6 months. So step one in your planning is to save into a cash account until you can comfortably cover your living expenses for 6 months before even considering buying.
Property binds you
If you buy a property you immediately bind yourself to a location. If you find a new contract on the other side of the city or country for that matter, you will then be burdened with the extra cost of commuting further or relocating, Renting will allow you to consider options of moving closer to where your work takes you.
Cash is king
Whilst you are a tenant the risk and costs associated with owning a property belong to the owner. Whilst renting you are freed up to save as much cash as possible for the eventuality of buying your own home one day when you are well settled in your career have saved a comfortable cash fund.
Currently the property market is pretty flat and there is no compelling reason in the foreseeable future to rush in and buy. Mindful of the fact that interest rates are on the rise, the cost of borrowing will be that much more and your interest on your savings account will be that much better.