Connect Newsletter Issue 1 - 2024

Individual Consulting

Connect Issue 1 • 2024

Connect with news and insights from Alexforbes Enter

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In this

issue Hello everyone! Welcome to our first CONNECT newsletter for 2024. I’m Rita Cool, head of Individual Consulting Strategy at Alexforbes.

Your financial plan for 2024

A quick update on the latest two-pot developments Michael Avery – healthcare podcasts to empower

In this edition, we give you a handy financial action plan for 2024. We also give you a quick update on the latest developments with the twopot system. We introduce you to an empowering series of medical aid podcasts, followed by a short introduction to the Alexforbes Battle Boards Chess Championship. As usual, we conclude with our regular update on the financial markets in South Africa and abroad.

The Alexforbes Battle Boards Chess Championship makes its opening move

Market update

Until next time, happy reading.

Rita

Need more info?

For queries, contact: Telephone: 0860 66 4444 Email: mymoneymatters@alexforbes.com

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Connect • Issue 4, 2023

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Your financial plan for 2024:

monthly tips for improving your savings Every year, we are encouraged to make New Year’s resolutions, and inevitably, most good intentions do not last until the year’s end. This year, why not change that and make it your savings year with goals you achieve each month?

By making one financial improvement each month, you can enhance your financial outcome and build a strong foundation for the future. Put reminders in your calendar for each month’s task and because it takes time to form new habits, set recurring reminders for the future as well.

January – tax season

April – social saving and spending

Make the most of tax benefits before the end of the tax year at the end of February. Contribute more to your employer fund or retirement annuity to maximise tax benefits. You can contribute up to 27.5% of your taxable income to retirement funds, with a yearly limit of R350 000.

Be kind to the environment and reduce expenses by reusing and recycling. Sell unwanted items to free up cash and consider swapping or sharing items like children’s clothing or outfits for special events. Explore solar energy options to reduce reliance on coal-based electricity.

February – financial goals

May – debt management

Set short-, medium- and long-term financial goals for one year, three years and ten years or more.

Look at goals like saving for a holiday, a house deposit or university fees, as well as retirement goals. Define timelines, track progress and establish requirements for achieving your goals.

With rising interest rates, managing debt becomes increasingly challenging. Make regular monthly repayments and promptly address any potential issues with your bond provider to prevent problems. If you have available cash, allocate it to repayments to reduce debt faster.

Begin by targeting high-interest debt, such as credit card or store credit, to maximise the benefits of additional payments.

March – stretch your rand Review your budget and identify areas where you can reduce or revise expenses. Assess your insurance for opportunities to optimise life, house, car and other insurance. Cancel any automatic subscriptions you no longer use and monitor spending on in-app purchases. Avoid withdrawing cash from non-affiliated banks or using credit cards for cash withdrawals, as these often incur high costs and immediate interest charges.

Connect • Issue 4, 2023

June – financial health check Halfway through the year, schedule a meeting with your adviser to conduct a financial health check. Review your will, investments and insurance.

Assess if any changes in your circumstances warrant adjustments to your insurance for your and your family’s financial protection.

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July – year-end planning

October – tax submission

Take advantage of early planning for the yearend. Instead of waiting until December, start your holiday preparations now. Book your holidays in advance, buy gifts on sale and save your store rewards points for year-end expenses. By planning ahead, you avoid last-minute stress and could save money.

Prepare and submit your personal tax returns on time to avoid penalties. If you’ve been working from home, get a letter from your employer to claim qualifying expenses. Make sure you comply with home office requirements and understand the potential impact on capital gains tax when selling your house in the future. Keep track of expenses like electricity and fibre costs that can be claimed as a proportion of overall household expenses.

August – consolidate your investments November – tax refund Combining or consolidating your investment products could reduce costs. If you have a retirement fund from your employer, explore the option of adding preservation funds from previous employers or redirecting any retirement annuity contributions towards your fund. Employer funds typically have lower costs compared to personal investments, allowing you to save on costs without spending more and thereby potentially increasing long-term benefits.

Consult your adviser to discuss available options.

September – emergency funds It’s wise to have savings that you could easily withdraw to deal with unexpected emergencies.

Aim to save three to six months of your income in your bank account or even in your access bond. By having emergency funds, you won’t have to rely on debt to cover unforeseen expenses. Remember not to dip into long-term savings for emergencies.

If you receive a tax refund, consider using it constructively. If you haven’t contributed to a taxfree savings account (TFSA), use the refund to save for your future. The growth on TFSAs are tax free and offer flexibility for different goals. Alternatively, use the refund to make a significant purchase without resorting to debt or allocate it towards debt repayments. If you paid debt, don’t change your monthly repayments, this will accelerate your journey to a debt-free life.

December – planning and budgeting Take time this month to reflect on the past year and set goals for the upcoming year. Review your budget and cash flow, considering occasional expenses such as car registration fees, haircuts and birthday presents. Anticipate more expensive months and include holiday expenses in your budget. Proper planning and budgeting will help you stay on track and avoid financial pitfalls.

By incorporating these monthly financial tips, you can establish a year-round savings mindset. Start planning for the year now, focusing on various areas of personal finance.

By doing so, you’ll develop healthy financial habits and reach your goals. Make this the year you prioritise savings and secure a brighter future.

Connect • Issue 4, 2023

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A quick update on the latest two-pot developments

1 SEPTEMBER

2024

There have been four new developments with the proposed two-pot system.

The proposed changes include:

Implementing the two-pot system is now set for 1 September 2024

retirement pot

Confirming that the new two-pot system changes will not automatically apply to provident fund members who were 55 years or older on 1 March 2021 – but they can choose if they want to join the two-pot system.

savings pot

Increasing the maximum amount you can withdraw from your savings pot from R25 000 to R30 000 – depending on how much you’ve saved.

It’s important to remember that the final legislation has not been issued and parliament must still approve these changes.

Confirming that a tax directive won’t be needed – the fund administrator will deduct the correct amount of tax.

Michael Avery Podcasts We’re thrilled to share with you our 12 part podcast series, “Health and Wellness Insights: Navigating Medical Schemes and National Health Insurance for Employee Benefits in South Africa,” hosted by Michael Avery on Classic Business. This comprehensive series aims to provide valuable insights into health and wellness topics.

Throughout the series, we cover a wide array of essential themes, starting with an exploration of the current health landscape in South Africa and the critical role of medical schemes and National Health Insurance (NHI) in employee benefits. Later episodes discuss topics such as choosing the right medical scheme, understanding benefit options, managing healthcare costs and promoting preventive health initiatives.

Connect • Issue 4, 2023

We also explore subjects like:

• • • •

mental health support in employee benefits complimentary or supplementary cover leveraging technology for enhanced healthcare access the potential implications of NHI on employee benefits

The intricate balance between NHI and existing medical schemes are discussed, providing insights on how employers can proactively champion employee health. These discussions will equip you with valuable knowledge to navigate the complexities of health and wellness in the workplace and in your personal life.

Listen to the podcasts and empower yourself, here.

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The Alexforbes Battle Boards Chess Championship makes its opening move Alexforbes is proud to announce its sponsorship of the first Alexforbes Battle Boards Chess Championship for high schools across South Africa. This exciting online chess championship is ready to challenge learners from Gauteng, Western Cape, North West and KwaZulu-Natal. It will act as a platform to encourage inclusivity and competition while celebrating one of the world’s most strategic sports.

The Championship will start on one line with 128 schools and 1 280 players competing in their provincial pools. The top eight school teams from each province will qualify for the final stages, ending with a grand showdown on 24 February 2024 to crown the champions.

Chess is not just a game but potentially a game-changer for the learners. It encourages players to develop strategic planning skills, optimise the resources on the board and build character under stressful situations.

The Alexforbes Battle Boards Chess Championship is an important milestone for high school chess in South Africa. It will allow schools across the full range of socioeconomic circumstances to compete against each other in an online format that will be live streamed. Like most sports, success is built on preparation, teamwork and passion. But where chess is different is that it is a sport that everyone can play and where any school can win the championship.

Our next move will be to expand this championship to all nine provinces. Watch this space!

Visit www.battleboards.co.za for more information.

Connect • Issue 4, 2023

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25859-2024-01 • Getty images

Market updates Global macroeconomic and financial markets

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United States of America: • The US Fed keeps rates unchanged • US inflation cools to 3.2% as fuel prices drop and the rise in housing costs slows • The US economy grew by 5.2% in the third quarter,more than initially estimated • The US’s manufacturing PMI contracted in November China: • China’s prices drop once more, raising concerns about deflation • China’s economy shows signs of improvement • China’s manufacturing Purchasing Managers’ Index contracts in November, constrained by weak market demand Europe: • Euro area economic growth dropped in the third quarter of 2023 • Euro area consumer confidence rises more than expected and euro area PMI eased • The eurozone’s inflation fell more than expected, edging closer to the European Central Bank’s 2% target

Macro developments in South Africa

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Tax revenue collection, higher service costs and a larger budget deficit worsened in South Africa South Africa’s AGOA access at risk South Africa’s mining and manufacturing production both fell in September 2023 South Africa’s unemployment rate improved marginally RMB/BER business confidence index dropped again in the fourth quarter of 2023 Headline consumer price inflation surprises up in October 2023 SARB holds rates again at last MPC meeting of 2023 South Africa’s manufacturing PMI rose to 48.2 in November 2023

Read the complete commentary here.

United Kingdom: • The Bank of England kept its main interest rate unchanged at 5.25% • The United Kingdom’s manufacturing PMI rose to 47.2 in November 2023

Disclaimer: Please note that while care has been taken to ensure that the information provided in this article is correct, it represents an overview of the topic under discussion and as such does not constitute advice.

While Alexforbes has taken reasonable effort to ensure that the information contained herein is true and correct it will not be held liable in respect of any loss arising from any advice provided arising out of the contents of this circular.

We suggest that you contact your financial adviser before taking any decisions based on the information herein.

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The following businesses are licensed financial services providers: Alexander Forbes Financial Planning Consultants (Pty) Ltd (FSP 31753 and registration number 1995/012764/07) Alexander Forbes Investments Limited (FSP711 and registration number 1997/000595/06)