Financially Speaking April 2007

Following the rules will not get the job done.

Dear Client,

In February this year, I woke up one Saturday morning and decided to go to Durban for a swim in the sea. Now although there’s a perfectly good highway from here to there, I decided to join 100-odd other silly people and went there by canoe via the Duzi Non-Stop canoe race. So off we set at 5.30am and went along the Tourde-Valley-of-1000-Hills in KZN. My partner and I arrived at in Durban at about 4pm, just in time for tea. What was the first thing I wanted to do? Hug my children.

Now here’s the thing: each and every time we say goodbye to these or other special people in our lives, know that it might be the last time. Even though my family was possibly in more danger than I was that day by driving down to Durban via the highway, I was acutely aware of the task and challenge and environment that I had put myself into. Where am I going with this?

Three clients have, over the last 10 days or so, experienced realities which we don’t want to experience. The first has had a group of friends experience a horrific vehicle accident in Mozambique. One death, one flown out by medical rescue helicopter because he had medical aid, another left at the side of the road for hours because he didn’t – the mates had to come up with the hundred’s of thousands of Rands to evacuate him, another now aware that his disability protection is virtually non-existent, but it’s now too late for that. The next client was held at gun point, tied up and left in the fields of his farm while his bakkie was stolen and the third, a client and very old and best friend of mine was also held up at gun point in his place of work in Johannesburg, while their offices were robbed and his vehicle stolen.

It is with huge relief that my clients are all OK. But it is with a bump that I realize how much of my job is about ensuring that our lives are ready. Ready for loss: loss of life, loss of ability, loss of income, loss of things. I have spent, and it has been necessary, a huge amount of time over the past year focusing on the understanding and selection of asset management techniques both locally and internationally. But maybe I need to ensure that I’ve remembered the essentials of risk and estate planning every so often and ensure that I’ve been forthright in highlighting areas of this need where I see them, and not making only token mention of them. Starting with myself and also doing the same for you. And when they’re understood and necessary, they need to be urgent.

Investment thoughts…

My thoughts here are not linked to the above in any way and neither is this supposed to be a sensationalism letter this month.

As time goes by and I watch local and global lifestyles and trends, both politically and economically, I am more and more convinced that it is only prudent, if not logical, to ensure that some of a person’s wealth is based outside of the restrictions of their country of residence. To be specific; you need to have some of your investments outside of South Africa. In the cash and unit trust type investment world, this means that you have maybe made use of your exchange allowance and invested abroad, with these funds being able to be deposited into a foreign bank account. In other words not done via what is known as asset swapping, where the money has to come back to a local bank account. I think that if you have the wealth, you need to make this a goal, so that you are more globally invested and some of your wealth is globally accessible.

Until next time

Please note that all the views expressed in this publication are based on my opinion and no action or advice is implied or intended.