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Ok. Got itThe impact of Covid-19 will affect us for some time. Here are some practical tips to help you manage your finances.
By Mike Wilmot, Head of Advice and Solutions
08 October 2020
After the significant initial market sell-off in the first quarter, when the scope and severity of the Covid-19 pandemic truly hit the world, equity markets recovered in the second quarter. However, longer-term returns from risk assets have been anaemic for growth-orientated investors. In addition, the impact of the pandemic is still unravelling, as company closures and job losses mount. Despite this, there have been pockets of positive news. As one example, the technology sector has benefited from the drive to adopt digital capabilities across sectors.
Unfortunately, not. US-China geopolitical pressures, the knock-on and permanent effects of job losses on the real economy, fiscal pressures and the threat of second waves of infections in the northern hemisphere as winter approaches, will continue to thwart confidence and create volatility in markets.
It goes back to the basics of reviewing your objectives, assets and expenditure, optimising your budget and banking, and seeing where you should be reprioritising and restructuring your finances. Your wealth manager is best placed to provide a holistic view of your wealth and to help you revisit your goals and priorities so that your financial plans are appropriate to your needs.
We help you to stay informed and engage with us digitally. We have been investing in our digital capabilities and will continue to do so. Our digital capabilities support our advice process, without compromising on personalisation. Click here to learn more about our app and to download it. |
Estate and tax planning is vital to ensure that your wealth is structured optimally for during and after your lifetime. Consider whether you need to revisit your will, understand the impact of death, and have the appropriate protection in place – for your assets and your loved ones.
Over the past 10 years, global markets have been driven by central bank liquidity and, more recently, fiscal support, so they have been awash with support and seemingly at odds with the underlying strength of the global economy. At the time of writing, the variations in returns are extreme, with the Nasdaq up 26% while emerging markets are down 3% overall year to date in US dollars. In South Africa, we have had five anaemic years for investors, while the Top 40 was up 24% in rands in the second quarter alone during the height of lockdown. As always – but particularly now – having your eggs in different baskets in South Africa and internationally is a critical step to achieve your investment objectives.
It’s very easy to invest internationally using our app.
Investors around the world tend to have a ‘home bias’ in terms of the amount of money they invest in their domestic markets versus international markets, for various behavioural, knowledge, operational and cost reasons. For Nedbank Private Wealth clients, however, it has never been easier to send and invest money offshore. We provide advice and access to suitable international opportunities in the most convenient way possible.
Using your annual offshore allowance, you can invest up to R1 million per year digitally via our app.
With the app, gaining international exposure is convenient (enabling you to invest whenever from wherever you are), easy (no paperwork required), and secure (with the app meeting the highest security standards). Our international portfolios are designed to meet the requirements of South African investors to complement your local portfolio. For example, we carefully manage overall emerging-market exposure to contain risk and consider the asset ownership structure from a tax consequence, tax administration and estate planning perspective. This means that, when you invest in these international investment options (including investments from Nedbank and other leading global managers), you can protect your portfolio against adverse events and movements in the local economy and the rand, without the burden of extra tax, reporting and estate planning consequences.
Click here to learn more about how you can make international transfers to your Focus account.
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How is our investment team managing this challenging environment? Internationally, we are generating solid, dependable yields in pound sterling from renewables and infrastructure assets. We are using downside protection in the case of US equities, given the continued strong returns and how tech stocks have stretched these valuations. We are however cautious to add international emerging market exposure since it can lead to an even higher concentration risk for local investors who already have physical South African assets, and rand-denominated investments and rand earnings. Click here to read our monthly investment updates and stay informed. |
Having access to specialist wealth management expertise, locally and internationally, and state-of-the-art digital capabilities means you will benefit from a wealth management plan that is customised to your needs and makes the most of what is within your control. This is underpinned by personal relationships with the experts, which ensure the money decisions you make are connected to your specific life goals and circumstances. We are here to navigate the uncertainty with you.