IOL MONEY: The Holiday Edition

IOL

MONEY December 2022

THE HOLIDAY EDITION

– SWEDISH PROVERB

CONTACT US

PUBLISHER

Vasantha Angamuthu vasantha@africannewsagency.com

MONEY EDITOR

Martin Hesse martin.hesse@inl.co.za

DESIGN

Mallory Munien mallory.munien@inl.co.za

PRODUCTION

Renata Ford renata.ford@inl.co.za

BUSINESS DEVELOPMENT

Keshni Odayan keshni.odayan@inl.co.za

SALES

Charl Reineke charl.reineke@inl.co.za

INQUIRIES hello@africannewsagency.com

FROM THE EDITOR

It’s the end of the year and time to chill and enjoy festive times with family and friends. Unfortunately, it’s all too easy while relaxing after a hard year’s labour to let your guard down regarding your personal safety, finances and property.

You may splurge more than you budgeted for on gifts, ratcheting up your credit card debt. You may be more carefree in your driving habits, or worse, get behind the wheel after imbibing too much alcohol, putting the lives of you and your close ones in danger. Or you may drop your guard when transacting online or punching your PIN into an ATM.

And even if you’re careful, others may not be quite so careful, while yet other, darker beings may actively take advantage of the holiday atmosphere to rob or defraud you.

I hope I’m not putting a damper on your end-of-year good times. Be merry, revitalise, create good memories. But stay alert, don’t drink and drive, and don’t take on more debt.

Martin Hesse

He who buys what he does not need, steals from himself.

5 ways you can stretch your rands over the festive season

With purse strings tightening and costs on the rise, Dhivana Rajgopaul and Martin Hesse found out what you can do to stretch your rands to survive all the expenses the festive season brings

South African consumers have been facing tough times due to recent increases in fuel prices as well as rising interest rates and inflation.

These price hikes coupled with the spending that consumers will be doing during the festive period mean you need to practise good money management to stretch your rands.

Here are five ways you can do it:

1. BUDGET

A budget is a plan to help you with your monthly or weekly spending. It will take into account your current and future income and expenses as well as create room for you to start saving.

Sebastian Alexanderson, founder and debt counsellor

at National Debt Advisors, says: “When you budget, you know exactly where all your money goes, where you can make adjustments to save even small amounts, and also how to effectively save and leave enough money for unexpected expenses and emergencies.“

If you are unsure about how start a budget, there are online templates available.

2. DON’T TAKE ON MORE DEBT

It might be tempting to use credit or a personal loan to buy something extra special for your loved ones. But try to keep your gift spending within the limits you can afford. Going into debt will be a burden on your family in the long run.

3. WISEN UP ON FINANCIAL MATTERS

Nomi Bodlani, head of strategic markets at Allan Gray, says that by becoming financially savvy you will start making financially responsible decisions and take control of your future. If you want a better grasp of financial matters or improve your understanding of financial terms, there are numerous online courses you can do. Your bank or financial institution may also offer financial literacy courses.

4. PLAN AHEAD

With the rising cost of petrol, one thing you can do is reduce your petrol consumption. You can plan ahead by doing things such as leaving for work earlier in the morning to avoid traffic congestion, and planning your shopping trips so you can get everything you need at one location instead of making multiple trips to different shops. Planning what gifts to buy for whom and doing your festive-season shopping early will not only save you money; it will ensure that your end-of-year festivities with family are relaxed and stress-free.

5. SAVE

Justin Asher, head of marketing and strategy at upnup, says saving can seem like an impossible task to people who have never saved before. You can start by putting aside small amounts of money in a savings fund every month. As your financial situation improves you can increase your monthly contribution to the fund. It is important to put the savings contribution aside before you take care of other expenses.

Fraudsters are out to scam you: be on your guard

Fraudsters

South Africa has slowly aligned itself with the rest of the world in heralding the start of the festive season shopping spree with its Black Friday shopping event.

“Fraudsters are very active at this time of the year. While there are plenty of special offers in the market, there are a lot of fraudsters who will want to take advantage of our desire to find the perfect deal,” says Manie van Schalkwyk, CEO of the Southern African Fraud Prevention Service (SAFPS).

He added that particular

attention needs to be given to online payments, as these can become low hanging fruits for fraudsters.

Empty promises

A growing trend that South Africans need to be weary of is the practice whereby a company offers products and services at a discount, accepting payment and then not delivering the actual product or service.

The SAFPS recently received notification from the Consumer Goods & Services Ombudsman

(CGSO) that they had received complaints against several suppliers who accept payments from consumers with no intention to deliver the paid-for goods or services. One Western Cape company offers fireplaces and chimneys at a discount. The customer pays a deposit, but the installation date is pushed out further and further with the deposit never being returned to the consumer.

Between April and September, the ombudsman received 16 complaints about this company.

are very active at this time of the year, when people spend more online, but also tend to let their guard down as the holiday season approaches.

Look out for red flags

“This is a classic case of fraud and there are a number of ways that consumers can protect themselves against this,” says Van Schalkwyk.

Check the company's website for a legitimate telephone number and address. If there is no way to contact this company outside of their website, it may be a red flag that the business is not legitimate. Having an email address is not as trustworthy as traditional contact information. It is always a good idea to call the number provided on their website to speak to an agent in person. Browse the internet on information about a company. The internet has provided consumers with a voice to highlight their frustrations with a company and indicate that there may be problems when dealing with a specific company.

Always look at a request for a deposit with some degree of suspicion. Only pay a deposit once you are confident that you are dealing with a legitimate

company. “It is advisable to deal with companies that are registered with the CGSO as there is a guarantee that they are legitimate and will address any complaints themselves. Consumers can also escalate complaints to the CGSO if there is no quick resolution. All qualifying suppliers of goods and services in South Africa are required to register with the CGSO and comply with the Consumer Protection Act. Accepting payment without delivering the goods or the services is a contravention of the CPA,” says Van Schalkwyk. You can check for registered articipants or lodge complaints on www.cgso.org.za

Protective Registration

Besides online retail fraud, consumers are also subjected to financial fraud, where their documents are used to open cell phone accounts or apply for credit. In this regard, one of the most important services, and the core of SAFPS’s service offering, is Protective

Registration. This is a free service protecting individuals against financial fraud. After applying for this service the SAFPS alerts its members to take additional care when dealing with your details.

Protective Registration provides an added layer of protection and peace of mind regardless of whether the identity of the applicant has been compromised.

“If you want to become proactive in the fight against fraud, the SAFPS is there to serve you. Visit our website on www.safps.org.za. Click on the fraud prevention tab and protect yourself against identity theft with Protective Registration,” says Van Schalkwyk.

As a further measure, the SAFPS can issue you with a Victim of Impersonation letter, which you can share with credit providers to assist in any verification processes.

For more details, go to www.safps.org.za

Your family deserves a holiday –7 ways to do it on the cheap

Armed with a little insider info, you can enjoy a summer vacation that won’t blow a hole in your bank balance

Summer has arrived, and everyone is yearning to get away from it all to enjoy a long-overdue break. After all, the past couple of years have been tough on us all –mentally, emotionally, and even physically.

But financial stress has also risen, meaning that the idea of a holiday nowadays is often so foreign to many South Africans, that they simply don’t even consider it due to the

perceived cost. Yet armed with a little insider info, your holiday could cost less than you think.

Rioma Cominelli, director of First Loyalty Plus and a seasoned traveller, offers the following tips to get you moving in the right holiday direction:

1. Local destination Choose a destination that is close to home as this will result in a significant saving on fuel.

Don’t be fooled into thinking that you must travel miles to relax and unwind – sometimes the very best gems are right on your doorstep.

2. Book in advance and for a shorter period Booking far in advance will not only allow you more time to save for the trip but will also be significantly cheaper than booking at the last minute, when demand is higher.

Choosing to go away for four nights instead of six is savvy; that way you won’t rack up the cost of a full week, and while this may seem too short, consider that five days away is still better than only a weekend away.

3. Consider off-peak times

If you have small children or are retired, and you’re not governed by school holidays or weekends, then take advantage of outof-season/mid-week specials. This way you’ll be assured of stretching your budget even further as school holidays and weekends are usually charged at higher rates.

4. Self-catering

It is almost always cheaper to book self-catering apartments or cottages rather than hotel rooms. Eating out is also expensive, so save costs by eating in.

This needn’t mean hours in the kitchen for mom; pack a picnic for a fun, outdoor adventure, enjoy family braais or make use of ready-made pizzas or meals.

5. Make a list

What good is a summer holiday without your fave cozzie, hat and book that you’ve now forgotten at home? If you don’t make a list to ensure that everything gets packed, you’ll be forced to waste time and money shopping for things you have left behind. So, keep costs down by not having to spend unnecessarily.

6. Free activities

They say that the best things in life are free, and how much better when you’re on holiday. Many hotels, for example, have daily planned activities that won’t cost you a cent. In addition, you can go on a hike, go for a bike ride in the mountains, make use of sports

facilities such as tennis courts, do some fishing or spend a day at the beach. Don’t be pressurised into thinking that you need to jam activities into every minute of the day to enjoy your holiday as this will be a stressful and expensive mistake.

7. Join a loyalty programme

Accommodation is notorious for eating up the largest slice of your holiday budget, and one of the easiest ways to minimise this is to sign up for a loyalty programme.

Rioma concludes: “The benefits of a family holiday go far beyond the obvious rest and relaxation; it’s the lifelong memories that you’ll create when you’re away from the daily grind that will last for years to come. By planning your next holiday smartly, you’ll be far more likely to make that dream an affordable reality.”

HOW TO PLAN FOR JANU-WORRY

The end of the year is upon us. While you are slowly getting into the festive spirit and planning some muchneeded R&R time, a dark cloud hangs over you – the prospect of another Januworry.

Janu-worry is a term most of us will be familiar with. Janu-worry is the hangover of the holiday season overspending and the reason you need to eat instant noodles and baked beans until your January salary hits your bank account. Janu-worry is the reason the gap between your December and January salary feels like 87 days. But, with a little planning and a bit of discipline, Janu-worry can become a thing of the past.

Plan your holiday expenses ahead of time

One of the reasons for feeling the January blues is over-spending in December. December is the month of Christmas parties, end of year staff functions and holidays. All these events can be extremely expensive and place unnecessary pressure on your budget. One of the solutions to be battle-ready for December and January is to plan ahead. Make a list of your possible December expenses and estimate what the associated costs will be. This will give you a better understanding of your goals and how much you need to put away to cover these expenses. You will also feel more in control of your own finances and start the new year off on the right foot.

Save surplus funds in an easily accessible account

Now that you have a better understanding of your possible expenses over the holiday season, you need to start putting money away to cover these expenses. As

you will need to access these funds in the short term, they can not be exposed to too much market volatility – which rules out the stock market and cryptocurrency. For example, if you need R10 000 to have the December of your dreams, you cannot invest this in the stock market. If the stock market goes down by 20%, you will only have R8 000 – leaving you short of your goal.

The account you stash extra cash in for your shortterm needs should be easily accessible and offer a competitive interest rate. Examples of good holiday savings accounts are money market funds and current accounts.

Avoid bad debts

Debt is an unavoidable part of life for most people. It is, however, important to distinguish between good debt and bad debt. Good debt refers to money owed for things that can build up your wealth in the future like a mortgage or a student loan, while bad debt refers to things like credit cards, store credit and personal loans which do little to improve your overall financial situation. It is crucial to avoid paying for holidays, gifts and other ‘nice to haves’ on credit.

Bargain hunt

The internet is one of the most powerful tools we have at our disposal. Do your research and shop around to find the best possible deals. By doing a bit of research and planning ahead, you can get huge discounts on flights, accommodation, gifts and pretty much anything you can think of.

Rossouw is a Certified Financial Planner at Fiscal Private Client Services

Johann Rossouw

NEDBANK PRIVATE WEALTH GIVING REPORT

We tend to think of wealthy people as being selfish and miserly, but, as is so often the case with stereotypes, that perception is far from the truth. In fact, some of the world’s richest people, including Bill Gates, Jeff Bezos and Warren Buffett, are also the world's greatest givers, donating billions of dollars to charities of their choice each year.

Here in South Africa, and despite the economic challenges brought on by the pandemic, affluent members of society are still committed to giving of their money, time and talents to help and support vulnerable people and communities.

That’s according to the fifth edition of the Nedbank Private Wealth Giving Report, a survey that investigates the giving practices of high-networth individuals (HNWIs) in South Africa.

Marilize Lansdell, Nedbank’s managing executive of wealth management, says that while the 2022 report reveals some changes in giving habits – due to a variety of factors, not least Covid-19 –the philanthropic spirit is alive and well in South Africa.

“No less than 83% of the HNWIs surveyed gave of their money, time or skills during 2021,” Lansdell says, “with approximately R4.2 billion in cash, R2.6 billion worth of goods and services, and a total of R 3.2 million hours of physical volunteerism provided.

“While the size of the giving market increased in 2021, there was a significant decline in the amount of volunteering,” she explains, “which is understandable given the national lockdowns that continued into this period, and associated social distancing protocols.”

Lansdell says the restrictions resulted in the majority of giving during the period taking the form of cash donations, which are a safer and more convenient way of providing support. Despite this, the total value of cash donations declined by roughly R2 billion from 2018, when the last Giving Report survey was undertaken.

“It’s likely that this drop in the overall value of cash giving is a direct result of the economic challenges created by the pandemic, which resulted in a declining income levels for many South

Africans, including affluent individuals,” she says. Her assumption is borne out by the report finding that around 21% of survey respondents felt less financially secure than they did before the pandemic.

However, on balance, the positive findings of the 2022 report far outweigh the negatives. In previous years, givers were skewed towards predominantly white, older HNWIs. The latest report shows a more even distribution of givers across the 36 to 50- and 50 to 65-year-old sub-segments. Importantly, the number of givers in the 18 to 35 age group is at an all-time high, pointing to a growing new generation of HNWIs with a commitment to giving.

And the latest findings reinforce the racial and gender transformation trends observed in previous reports.

“We are increasingly seeing the impact of South Africa’s transformation filter through into the giving landscape,” Lansdell says, “with women now making up more than 50% of givers, and roughly one in four givers being black South Africans.”

Supplied by Nedbank

MONEY BASICS

with MARTIN HESSE

SIX OMBUDS YOU CAN TURN TO FOR HELP

Because we tend to spend more over the summer holiday period and because it’s a good time of year to review our investments and insurance policies, I thought to devote this Money Basics feature to the recourse you have through the various ombuds if you have problems with product and service providers.

Some ombuds and complaints mechanisms have been established by law and apply to specific Acts of Parliament. Examples are the Ombud for Financial Services Providers, the Consumer Goods and Services Ombud, the Tax Ombud and the Pension Funds Adjudicator.

These are known as statutory ombuds.

But there are also ombuds established by the financial services industry, as a way of the industry governing itself. These include the Insurance Ombud (a single ombud now controls two offices, that for short-term insurance and that for long-term insurance) and the Ombudsman for Banking Services.

Both statutory and industry ombuds fall under the recently established Ombud Council, overseen by the Chief Ombud. This council was established because, according to National Treasury, the low number of

complaints received by both statutory and voluntary schemes relative to the number of financial transactions pointed to poor consumer awareness and possibly poor accessibility. There was also concern about gaps in what the ombuds covered and differences in approach.

The Ombud Council operates as the regulator of both statutory and voluntary schemes, with the authority to standardise best practices and promote and coordinate cooperation.

Complaint-resolution services provided by the ombuds are free of charge to the consumer, but the ombuds do have limits

regarding the value of the claim. Note that you should only go to the ombud after trying to resolve the complaint with the provider. Below are six ombuds you need to know about, to whom you can complain about a financial service or product. The contact details of all ombuds (including those not mentioned here) are on page 16.

1. Ombud for Financial Services Providers

Commonly referred to as the FAIS Ombud, because of its association with the Financial Advisory and Intermediary Services Act, this active and well-resourced office deals mainly with complaints against financial advisers, be they independent or tied to a big financial institution. “Advice” in this context refers to advice around the sale of financial products: these may be investment or insurance products or even cryptocurrencies. Note that the ombud deals with whether or not the advice you received when buying the product took your personal circumstances into account and whether the product was suitable for you.

2. Insurance Ombud

As mentioned above, there are two offices under this ombud: one deals with short-term insurance (the insurance of things) and the other with longterm insurance (life and disability cover, as well as other products life insurers offer, such as certain types of investment policies). Most complaints concern the rejection of claims by the insurer, and the ombud makes determinations on what is fair and equitable, not necessarily according to the letter of the law. In other words, if the ombud believes the small print in a

policy has disadvantaged you unfairly, the decision may go in your favour.

3. Tax Ombud

This ombud, which is independent of the South African Revenue Service (SARS), protects the rights of taxpayers against possible abuses by SARS and has made a significant impact in promoting consumer awareness about those rights. The mandate of the ombud is to review and address any complaint by a taxpayer regarding a service matter or a procedural or administrative matter arising from the application of the tax laws by SARS, and to bring to the government’s attention any systemic and emerging issues related to tax collection.

4. Pension Funds Adjudicator

The office of the Pension Funds Adjudicator was established through amendments to the Pension Funds Act. The office deals with complaints related to pension funds, such as problems with the distribution of pension fund payouts, the collection

and investment of pension fund contributions, and the governance of pension funds. The types of funds governed by the Act are: stand-alone pension and provident funds, umbrella funds, preservation funds and retirement annuity funds.

5. Ombudsman for Banking Services

This body was established by the banking industry and governs members of the Banking Association of South Africa (in other words, all South Africa’s major banks). The ombud ensures that banks comply with the association’s code of conduct, and deals with complaints relating to products and services provided by your bank. It won’t, however, deal with your bank’s commercial decisions on lending or credit, interest rates or bank charges, unless there has been maladministration on the part of the bank. The ombud has been active in promoting awareness of security issues, especially regarding online transactions.

6. Consumer Goods and Services Ombud

Established under the Consumer Protection Act (CPA), the mission of this ombud is to maintain fair play in the consumer industry by guiding and improving compliance with the CPA and promoting fair business practices, educating consumers as to their rights and redress available to them should a company breach the Act or the code of conduct, and provide for a scheme of alternative dispute resolution as described in the Act. All participants and entities involved in supply chains that market and supply goods and services to consumers must register with the ombud and abide by the code of conduct.

Pension Funds Adjudicator Muvhango Lukhaimane

DON’T GET STRANDED – CHECK OUT YOUR INSURER’S TOWING POLICY

Getting stranded at the side of a road when your car breaks down due to mechanical failure or an accident can be both a stressful and unpleasant experience, according to Ernest North, co-founder of Naked.

It's important for your physical safety to get assistance on-site or arrange for your car to be moved to a safe location until it can be fixed.

North says: “If you’re insured, there’s a good chance your insurance company will offer a free towing service from a selection of authorised providers as part of your cover.”

Here is what you should do if your car needs to be towed: If your car has a mechanical or electrical breakdown

It's crucial that you check

what your insurer’s policy is when it comes to breakdowns due to mechanical faults. Most insurance policies will have a limit on what they will cover – the policies will cover either the cost of the tow (for example, R500) or the number of kilometres per tow (for example, 25km).

You can contact your car manufacturer if your car is under warranty, and they should send a tow truck driver

It’s crucial that you check what your insurer’s policy is when it comes to breakdowns due to mechanical faults

to you. It's important to note that insurers typically don’t cover the costs of repairs or replacements when it comes to mechanical issues.

After an accident

Following an accident, you should contact your insurer to arrange a tow truck to collect your car.

North says: “Even if you can start your car, it’s usually wise to avoid additional damage and to rather arrange for a tow if you can pick up any internal or external damage after a crash.”

If your car is towed without your consent

If your car has been towed without your permission, then you should not pay any tow truck services directly. Instead, you should contact your insurer and let them handle the situation.

If the tow truck driver

demands payment for the tow, you need to request an invoice showing the cost of the tow and the location of the car and then pass it to your insurer to sort out.

You need to remember that there may be a limit to what your insurer pays if you don’t use the appointed service provider.

Do I arrange towing for others

involved in the accident?

North says that third parties should take care of their own towing arrangement.

“Before you leave the scene of the accident, be sure to get the details (names, car registration, contact details, insurance information) from other drivers involved in the accident as well as contact details of any eyewitnesses,” North says.

“Do not offer to pay for the third party’s tow since it could

be interpreted as accepting liability. That will make it harder for your insurer to fight in your corner.”

Dealing with tow truck companies

To avoid your car landing in the wrong hands, you should contact your insurer directly and to arrange the tow with them.

Tow truck drivers are not allowed to tow your car without your permission, generally given by the signing of a form. Before you sign the form, make sure that the tow truck driver is approved by your insurer.

North says: “However, if you are badly hurt in the accident, there’s a good chance your car will be removed by the first tow truck driver that arrives on the scene. For that reason, it’s a good idea to put a sticker from your insurance provider on your car.”

click on the links to visit the website

Here are sources that can help you with financial education, give you more information on savings and investments, and afford you recourse if you have a consumer complaint or a complaint against a financial services provider

FINANCIAL EDUCATION

Financial Sector Conduct Authority MyMoney Learning Series https://www.fscamymoney.co.za

South African Savings Institute #WaysToSave https://waystosave.co.za/

BANKING

Ombudsman for Banking Services

ShareCall: 0860 800 900 or phone: 011 712 1800 Email: info@obssa.co.za www.obssa.co.za

CONSUMER ISSUES

National Consumer Commission Toll-free: 0860 003 600 or phone: 012 428 7000 Email: complaints@thencc.org.za www.thencc.gov.za

Consumer Goods and Services Ombud ShareCall: 0860 000 272 Email: info@cgso.org.za www.cgso.org.za

Credit Ombud

MaxiCall: 0861 662 837 or phone: 011 781 6431 Email: ombud@creditombud.org.za www.creditombud.org.za

National Credit Regulator

ShareCall: 0860 627 627 or phone: 011 554 2600 Email: complaints@ncr.org.za or (debt counselling) dccomplaints@ncr.org.za www.ncr.org.za

FINANCIAL ADVICE

Ombud for Financial Services Providers phone: 012 470 9080 or 012 762 5000 Email: info@faisombud.co.za www.faisombud.co.za

INVESTMENTS

Financial Sector Conduct Authority ShareCall 0800 110 443 or 0800 202 087 info@fsca.co.za www.fsca.co.za

LIFE INSURANCE

Ombudsman for Long-term Insurance ShareCall 0860 103 236 or phone: 021 657 5000 Email: info@ombud.co.za www.ombud.co.za

MEDICAL SCHEMES

Council for Medical Schemes MaxiCall: 0861 123 267 Email: complaints@medicalschemes.com or information@medicalschemes.com www.medicalschemes.com

RETIREMENT FUNDS

Pension Funds Adjudicator

ShareCall: 0860 662 837 or phone: 012 346 1738 Email: enquiries@pfa.org.za www.pfa.org.za

SHORT-TERM INSURANCE

Ombudsman for Short-term Insurance ShareCall 0860 726 890 or phone: 011 726 8900 Email: info@osti.co.za www.osti.co.za

TAX

Tax Ombud

ShareCall: 0800 662 837 or phone: 012 431 9105 Email: complaints@taxombud.gov.za www.taxombud.gov.za

PROFESSIONAL ORGANISATIONS

Fiduciary Institute of Southern Africa (FISA) phone: 082 449 2569 Email: secretariat@fisa.net.za www.fisa.net.za

Financial Planning Institute of South Africa (FPI) Phone: 011 470 6000 Email: info@fpi.co.za www.fpi.co.za

South African Institute of Tax Professionals (SAIT) Phone: 012 941 0400 Email: info@thesait.org.za www.thesait.org.za

FINANCIAL DATA

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For the latest financial market indicators, go to https://www.iol.co.za/businessreport/market-indicators

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For the latest quarterly unit trust performance, go to https://www.iol.co.za/ personal-finance/collective-investments

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To look up performance of a particular unit trust fund go to https://www.iol.co.za/ personal-finance/fund-look-up