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Third Quarter 2021

arrival of spring
arrival of spring
Celebrating the arrival of Spring, Jurgens Finance Admin Team: Back row from left to right: Bonny Panayi, Lynne Ricardo and Andrea Collins. Front row from left to right: Simone Heyman, Lemeryn Olivier, Lynette Govender and Jordan Busch.

A message from Mark Jurgens

Spring is such an uplifting and positive time of the year as it starts to warm up and bring about colour and new life.

You may recall we covered an article on Environmental Social Governance (ESG) funds in our previous Newsletter.  Investec Bank will be launching a SA-Domiciled version of the Global Sustainable Equity (GSE) Fund, originally launched in Guernsey.  The fund should be available from this month.

I personally support the ESG initiatives globally and believe that these portfolios will outperform those companies who do not endorse this philosophy.  Consumers appear to be more committed than companies and businesses regarding the way in which they value and support ESG principles. How business views the importance of supporting ESG, needs to be addressed.

The world is increasingly embracing the goal of achieving net-zero carbon emissions by 2050 in line with the Paris Agreement on climate change. Investec will use its own screening methodology to decide which companies to include in its GSE fund, with capital to be allocated only to companies it believes are making a net-positive contribution to the achievement of the UN’s Sustainable Development Goals.

These goals target around 17 variables that include poverty alleviation, clean water, reduced inequality, education, gender equality and other sustainability-linked goals, with a deadline of 2030.

Investec’s GSE fund will hold 30 to 50 investments in growth-orientated global stocks across a variety of sectors provided they meet its environmental, social and governance standards, and sustainability requirements.

At present top holdings in the fund include Microsoft, Prudential, Apple, Thermo Fisher Scientific, Roche, Medtronic, Novartis, Unilever, and Nike.  About 85% of the stocks held in the fund are covered by Investec’s global equity research team with the bulk of the remaining allocations outsourced to third-party funds including the Schroders Global Energy Transition fund.  The Investec GSE fund will be benchmarked against the MSCI world index and will be overseen by a committee based largely in SA and the UK.

As a Fund Manager at Investec states, “ESG will soon no longer be nice-to-have for shareholders and asset owners and will ultimately become a default expectation in terms of any long-term asset managers fiduciary responsibility.”

Stay well and regards

Mark

Quote of the Day

“Successful investing is about managing risk, not avoiding it.”

Benjamin Graham Tweet

‘Psychology of Money” from Alan Botha

Investing is not the study of finance – it’s the study of human behaviour. That’s how award-winning columnist Morgan Housel framed it in his discussion at a recent Allan Gray investment Summit, with a talk on “The Psychology of Money.”

Housel used storytelling to explore how investors make decisions around risk, fear, greed, and uncertainty. His goal was to discover how we can think about risk in a more productive way.

The Wright Brothers: Timing is meaningless, but time is everything

In hindsight, it’s hard to overstate how important the first flight was to human history. Nothing was the same afterwards. You don’t need scientific expertise to hold a childlike wonder at the sight of a large metal machine soaring through the air.  Yet, in the moment, news of the Wright Brothers’ accomplishment was hardly news at all. The only newspaper that did eventually cover their endeavours did so out of sympathy for their “silly little flying machine” with the headline “Dayton Boys Solve Problem.”

Housel’s lesson: patience is a competitive advantage.

While most investors consider themselves to be in it for the long term, they often define that as only 3-5 years – sometimes as little as a single year.  Housel contrasted this to the fact that 99% of Warren Buffet’s net worth was earned after his 75th birthday. His secret has largely been time horizon.  When progress is measured generationally, results shouldn’t be measured quarterly. The central problem investors fall for is underestimating the amount of time needed to put the odds of long-term success in their favour.

Stephen Hawking: Stop moving the goalposts

Stephen Hawking was asked how he could remain so happy despite the extremely unfortunate circumstances of living with a disease that slowly paralyzed his body. His response was remarkable, as usual. “My expectations were reduced to zero. Everything since then has been a bonus.”

Housel’s lesson: expectations are more powerful than circumstances.

Many people identify the 1950s as America’s best economic time, even though it is very easy to prove that it was no better than today.  Now our incomes are doubled, but our expectations more than doubled. We’re never going to be satisfied with any amount of money if our expectations grow faster than our wealth.  “Enough” is most important word in managing money. It’s different for everyone, but you need to clearly define it for yourself.

Harry Houdini: Real risk is what you don’t see

Known for his daring escapes, Harry Houdini’s other trick was stomaching a gut punch from the largest man in his crowd without even flinching. When a skinny college kid hit him while he wasn’t expecting it, however, it injured him in a way that eventually resulted in his death.

Housel’s lesson: how risky something is, depends on whether you are prepared for it or not.  

Our biggest economic risk is what no one is talking about because if no one is talking about it, then no one is prepared for it. If no one is prepared for it, the damage will be amplified when it arrives.

We spent all our time talking about Obama and Trump, but it was COVID that ended up being the real risk. Unforeseen events such as September 11 and Pearl Harbour made similar impacts.

Earthquakes: Everyone has a different view of the world

When people think about risk, they don’t do it in an analytical way – they do it in a cultural way.

Californians can’t predict when their next major earthquake will come, but they are always prepared for one. The state is constantly reminded of this risk by frequent small earthquakes, which makes it easier for voters to approve safeguarding measures.

People in the state of Washington face the same threat of a major earthquake. However, they experience smaller earthquakes at a much lower frequency than California. Without that persistent reminder of the bigger risk, Washington has proven to be much less proactive in safeguarding against it.

Housel’s lesson:  nothing is more persuasive than what you’ve experienced in your own life. We become prisoners to our own past and personal experiences.

In closing, people who make different decisions than you are not always crazy, they are merely acting on different experiences. Therefore, personal finance and financial planning is more personal than it is finance, and this is a significant factor to overcome, in making good choices in securing your financial future.

With thanks to Morgan Housel and the Moneta Group.

5 year service award
Congratulations to Larissa Khourie on achieving her 5 Year Service Award - presented to her by Lorraine Else. We wish Larissa many more years as a valued member of the Jurgens Insurance Brokers’ team.

Short Term News Update from Greg Brits

During the past few months’, there has been an increase in claims being submitted where the risk profile applicable to a client’s premises has changed.  In cases where such claims have not been met, they are largely due to changes having been made without our offices being notified.

As a valued client, and to offer you protection against non-payment of claims, we urge you to please contact our office with all changes made to your premises.

Below are a few areas of concern where vitally important information needs to be disclosed to your Insurer:

  • Moving or relocating to new premises, suburb, or migration to a different province. This will allow us to update your address accordingly and advise you if any additional requirements may be imposed by your Insurer.
  • Please inform our offices should the security at your premises change, or if you have disconnected your linked alarm to an armed response company.  Your policy is based on your risk profile and your security system is a crucial change which could lead to a possible rejection when submitting a claim.
  • We have also noticed changes to the occupation criteria of a residence in some instances.  For example, this could be converting part of the home into a Bed & Breakfast or Air B&B. This would definitely be considered a risk profile change and warrants disclosure to Insurers.  This would also apply to any form of business activities taking place from your residential premises as opposed to elsewhere.
  • Fire extinguishers play a vital role in risk management, and it is therefore extremely important to have this equipment serviced each year. Commercial and Business policies are subject to this condition, as well as personal residences that have thatch roofs or thatch Lapa’s.  

Please do not hesitate to contact us should you have any questions regarding the above, or the required advice we can provide should you be planning to run a business from home.

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First Quarter 2021

first quarter 2021

A message from Mark Jurgens

Lockdown or not, time continues to fly by with Autumn and Easter already dawning upon us!

Currently, 2021 is certainly looking more positive than our more challenging 2020. Although vaccine rollouts may be slower than we would have liked, there is light at the end of the tunnel which promotes a positive mindset. There may well be a third wave affecting us in the months to come, but countries around the world are administering numerous vaccines. This bodes well for controlling the virus on an international scale.

With all the challenges faced over the last year, from a financial point of view, the investment portfolios are looking healthier than they have in a long time, particularly South African equities. After a fiveyear period of the JSE performing poorly, there are positive forecasts from Ninety One and Coronation, who believe that the JSE will have far more competitive returns over the next five to ten years. We have already seen a marked improvement in our local market over the past few months.

Coronation expected Asset Class Returns for next 10 years are highlighted below: Source : Coronation

As you are aware, interest rates in South Africa are at their lowest they have been in fifty years. Money Market rates are a mere 3.5%. However, this coupled with our low inflation rate of currently 3%, is providing relief for those carrying debt. This level will probably continue for the balance of the year. Bearing this in mind, in the South African context, historically an 8% return does not appear very competitive. However, this equates to inflation plus 5% which may mean that we need to adjust our expectations.

A historical fact for those of you who may find this interesting, the South African Rand turned sixty years in February this year. South Africa officially replaced the Pound Sterling to that of the South African Rand. At that time, the exchange rate was approximately R2 to £1. The change in currency happened just three months before South Africa declared itself a Republic and left the Commonwealth of Nations on 31 May 1961.

Jurgens Group team

Most members of the Jurgens Group team prefer to be in the office as opposed to working from home. At all times, strict COVID protocol is adhered to and our clients who feel comfortable with these measures in place, enjoy visiting our offices. Above from left to right are Lynette Govender, Sherry Mazamisa and Lemeryn Olivier (masks removed for photo only)

Crypto Assets in a diversified portfolio maybe just a “Bit” from Alan Botha

Who would have thought we would sit here, approximately one year on from the Wuhan outbreak, in a continued state of instability? Even though we were all hopeful that 2021 would start on a better footing, numerous countries are still in lockdown and fighting against the second, third or fourth surges of Covid-19 infections. Economies worldwide continue their struggle and government support remains rampant. For humanity, we gladly waved goodbye to 2020, but for markets, we have seen a period of surprising benefit and near-record highs.

Since the market bottomed in April last year, returns have been strong by historical standards—certainly for risk taking clients but even for the conservative minded. Investor sentiment has lifted across the board, with the rollout of a vaccine worldwide alongside the perception of greater political stability.

Policy intervention by central banks and governments have translated into a huge amount of being pumped into the financial system post the Covid-19 pandemic. With interest rates and yields around the world at historic lows, investors have been forced into other assets to achieve appropriate returns and combat the eroding effects of inflation.

One “investment”’ that has become very popular of late is Bitcoin and the price resurgence from $3 500 dollars a coin, at end of 2019 to close to $50 000 at the time of writing, has been mind-blowing. The question is, should I own Bitcoin as part of a diversified portfolio?

Firstly, it is important to note that buying cryptocurrencies has never been a one-way bet and movements or volatility in price can be very large and very swift, the reality is that Bitcoin has no intrinsic value based on fundamental analysis and is largely driven by sentiment, with massive demand pushing up the price to lofty levels in the past few months.

We can reason Bitcoin does not have intrinsic value because regardless of the underlying technology (Blockchain), it does not produce any income or cash flow that can be projected into the future and valued. One thing that Bitcoin is often referred to as “digital gold”, however physical gold is tangible and for centuries has been recognized as having value, and widely used as a hedge against inflation and other economic risks.

Therefore, Bitcoin is essentially driven by demand and supply principles and the value is what someone is willing to pay for it, hence the huge swings in price on a day-to-day basis. In saying this, Bitcoin has most recently received much more interest from larger investors like banks and investment managers, this obviously does not guarantee that the current price is sustainable or imply that Bitcoin price rise is still in its infancy, however it appears as if Bitcoin now is being considered more seriously as part of an overall portfolio allocation.

Overall, we are sceptical about the case for bitcoin as an investment asset. Its popularity with momentum investors and speculative buyers makes it prone to pricing bubbles that we think will eventually burst. It is also nearly impossible to pin down what its underlying value should be. As mainstream investors increasingly embrace bitcoin, its value as a diversification tool is diminishing; as a result, there is no guarantee that adding bitcoin will improve a portfolio’s risk-adjusted returns, especially to the same extent it did in the past.

It must also be mentioned that although Bitcoin is the most well know crypto currency, we estimate that there are over six thousand crypto currencies that have been launched, all looking for market share. With technological risks and governments around the world starting to extend regulatory oversight to these crypto assets, it is difficult to predict what the future holds. However, there are some compelling arguments in favour of bitcoin as an alternative currency and as a commodity that can help support new technologies, such as smart contracts and more-efficient financial transactions with built-in encryption (additional security).

For that reason, bitcoin is probably best used in (very) small doses as a hedge against weakness in the dollar and major disruptions in the global financial system.

Short Term News Update - Greg Brits

My Cylution – Online fraud, identify theft, and cyberbullying product From Banking App losses to cyberbullying and identity theft, our digitally integrated lives are becoming more vulnerable to personal cyber-attacks.

Through Jurgens Insurance Brokers and in association with Itoo and Hollard Insurance, our Cyber Experts are highly respected industry leaders who understand the intricate actions needed to protect and cover you and your family.

Designed by South Africa’s top cyber mitigation specialists, the personal cyber insurance offering called MY Cylution provides cover, that has been uniquely tailored to meet the South African market’s needs.

Life happens online 24/7. So does crime. Isn’t it time you were personally covered against cyber crime?

Examples what is covered:

  1. Identity theft: costs resulting from identity theft including: reporting the identity theft, re-filing rejected applications, notarising affidavits, credit and identity theft monitoring, re-issuing identity documents and lost wages.
  2. Data restoration / malware decontamination: costs to restore data and software resulting from a cyber incident.
  3. Cyberbullying: costs resulting from cyberbullying or stalking including: removal of content, lost wages, trauma benefit and experts to manage and protect your reputation.

Including R5000 cover for the following:

  1. Trauma Benefit: a financial payment to assist in alleviating the reasonable financial burden incurred for the treatment of emotional trauma by a licensed professional, as a direct result of cyberbullying, cyber stalking or the publication of harmful material.
  2. Additional School Costs: additional costs for school fees, school uniforms and educational material should it be established by a licensed physician or psychologist that an insured child needs to be placed in an alternate school as a direct result of cyberbullying, cyber stalking or the publication of harmful material.
  3. Cyber extortion: reimbursement of ransom payments resulting from an extortion demand.
  4. Network security Privacy & data breach liability: Please contact us to discuss this product further.

Staff News

Jurgens group Staff news

Congratulations to Andrea Collins who has been an integral member of the Jurgens Finance team for 5 years. She has grown from strength to strength and her commitment and loyalty is much appreciated. Award was proudly presented to Andrea by Mark and Alan. Other exciting news is to congratulate Andrea and Brendan on the birth of their second son on 9 March.

Quote of the day

"Procrastination is like a credit card; it's a lot of fun until you get the bill"

Christopher Parker Tweet
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Fourth Quarter 2019 – In Touch

jurgens group fourth quarter 2019

Memorable Year - Mark Jurgens

2019 will always be a memorable year for Jurgens Group, the year our company celebrated its 30th birthday. It is with thanks to all our clients for their appreciated support during these many years, that this remarkable milestone could be successfully achieved.

The financial services industry continues to prosper and has become more positively competitive for investors than ever before. Viable fee structures and added opportunities to invest in an extensive range of products such as private equity, property, Hedge Funds and an array of offshore products. Tighter regulations and controls have been implemented making such investments a safer, more secure and attractive option than in the past.

Some may already be aware that Investec Asset Management (IAM) will soon have a new name, branding and identity. On 21 November 2019, media announcements were made revealing IAM’s new name.

Investec Asset Management New Name and Identity

investec to ninety one

The new name is Ninety One

1991 saw the establishment of Investec Asset Management in South Africa. A decision was taken in 2018 by the Boards of Investec plc and Investec Limited (collectively “Investec Group”) that Investec Asset management (IAM) would become separately listed entity on the Johannesburg Stock Exchange and the London Stock Exchange.

The completion of the demerger and independent listing of IAM is expected to be by end of the first quarter of 2020. IAM being listed separately from Investec Group, ensures a fairer reflection of the IAM share price performance.

Please do not alarmed, beyond the name change, there will be no change to the team, which is assurance to clients that the culture, purpose and values remain in place for long-term stability and continuity. This to applies to the fee structure, service levels and product range we have become accustomed to.

A quick look-back at 2018, which was a year where all stock markets in the world performed negatively, with December 2018 having by far the worst performance. Fortunately, from January this year, the year to date figures for our SA unit trusts are looking so much better than previous years. This is most encouraging and positive to see.

Some further encouraging news is that the official consumer inflation rate dropped to 3,7% in October, from 4,1% in September – offering some relief for consumers. It’s the lowest since February 2011. The SA Reserve Bank’s decision to keep Interest rates unchanged was expected.

There was also the call by the Minister of Finance Tito Mboweni for a series of “deliberate and concerted actions” to raise SA’s GDP growth rate by up to 3% per year.

Recently many senior officials in government departments have been removed from their positions as well as an increase in prosecutions instituted by the National Prosecutor.  These are all encouraging signs in the fight against corruption. As for the appointment of the new CEO of Eskom, Andre de Ruyter, this can be seen as a refreshing apolitical choice.

As South Africans we can all help with the fight against corruption and embrace each other work together in creating the environment we are all striving for.

We would like to express our sincerest appreciation for your loyalty and for the trust you have places in us at Jurgens Finance. May the coming year bring you and your family peace, happiness and success.

The Optimist Curse from Alan Botha

financial optimisation

Oh my, where has 2019 gone and what a year it has been, filled with drama, excitement and politics across the globe that defy belief. Who would have thought a couple of years ago that we would have Donal Trump and Boris Johnson running two of the most powerful democracies in the world? In SA , we continue to be bombarded with “negative news” and newsmakers are never short of stories to make us all rescind in horror, wondering why we haven’t  packed for Perth yet.

Even the springbok triumph at the Rugby World Cup and the #imstaying campaign don’t seem to be enough to lift our spirits, with our pension plans, house prices and other investments in SA underperforming over the past 5 years, relative to some of our global developed market counterparts. The below is an extract from Morgan Housel article published in January 2016 in the Motley Fool which puts our human traits of pessimism in perspective.

“For reasons I have never understood, people like to hear that the world is going to hell,” says historian Deirdre N. McCloskey. It’s hard to argue. Despite the record of tings getting better for most people most of the time, pessimism isn’t just more attention to than the optimism who is often viewed as an oblivious sucker”

In investing, a bull sounds like a reckless cheerleader, while a bear sounds like a sharp mind who has dug past the headlines – despite the record of the S&P 500 rising 18,000-fold over the last century. Wharton Professor Jeremy Siegel is often chided as a perma-stock-bull, blindly cheering for a higher market every time he goes on TV. But he’s done it since the early 1980s, a period in which the market increased in value 40 times over. Alas, few cares about past results when someone else is warning about The Next Great Depression.

 Here are a few other reasons Housel observed for why pessimism gets so much attention.

  • Optimism appears oblivious to risks, so by default pessimism looks more intelligent.

But that’s a wrong way to view optimism. Most optimism will tell you things will get ugly, that we’ll have recessions, bear markets, wars, panics and pandemics. But they remain optimistic because they set themselves up in portfolio, career, and disposition to ensure those downsides. To the pessimist a bad event is the end of the story. To the optimist it’s a slow chapter in an otherwise excellent book. The difference between an optimist and a pessimist often comes down to endurance and time frame.

  • Pessimism shows that not everything is moving in the right direction, which helps you rationalize the personal shortcomings we all have. Misery loves company, as they say. Realizing that things outside your control could be the cause of your own problems is a comforting feeling, so we’re attracted to it.
  • Pessimism requires action, whereas optimism means staying the course. Pessimism is “SELL, GET OUT, RUN,” which grabs your attention because its an action you need to take right now. You don’t want to read the article later or skim over the details, because you might get hurt. Optimism is mostly, “Don’t worry, stay the course, we’ll be alright,” which is easy to ignore since it doesn’t require doing anything.
  • Optimism sounds like a sales pitch, while pessimism sounds like someone trying to help you. And that’s often the truth. But in general, most of the time, optimism is the correct default setting, and pessimism can be as big a sales pitch as anything – especially if it’s around emotional topics like money and politics.
  • Pessimists extrapolate present trends without accounting for how reliably markets adapt. That’s important, because pessimistic views often start with a foundation of rational analysis, so the warning appears as reasonable as it is scary.

In short, the more we exude positivity, the better our chances of staying the course and sticking to a proven investment strategy. No market cycle lasts forever and let’s hope 2020 is the catalyst for better things to come in SA going forward.

Short Term News Update – Greg Brits

Sadly, we recently lost a valued member of our team, Patience Mashinini. Our heart-felt sympathy goes out to her family at this difficult time. We will all remember the great human being Patience was.

It’s that time of the year when many are able to take a deserved break from a what has proved to be a tough year. With this, unfortunately, crime seems to increase as advantage is taken of many homes and premises being unoccupied.

If you are planning on going on holiday, please bear the following in mind:

  • Test your alarm and ensure that your armed response company gets the signal. (You should do this at least every two months or after a storm, to ensure that signals are received by the relevant control room).
  • Arrange with neighbours or friends to be watchful of any suspicious activity while you are away. Providing a set of keys in case of an emergency to access the premises is important, as well as leaving our office contact details. Our offices do not close over the festive season.
  • Before setting out on a long journey, have your vehicle checked thoroughly.
  • Buying new appliances and TV’s and leaving the packaging on your verge with other general garbage, is a sure sign for interested thieves.
  • Needing Travel Insurance? Please contact us.

Please bear in mind, should any changes have been made to your security system/contracts, building alterations, vehicle modifications etc, that insurance policies are written according to specific criteria being met. Should this change, for example, but not limited to, adding a door without a security gate or building a thatch lapa, please inform our office so that we can negotiate new terms with your insurer.

At the close of another year, we gratefully pause to wish you a warm and happy Holiday Season and to thank you for your on-going support.

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Fourth Quarter 2018 – In Touch

Fourth Quarter 2018

Jurgens Group wishes you a blessed festive season and thank you for your on-going support

Seasons Greetings to you all

Welcome to our fourth and last newsletter for this year, all of which we trust kept you updated on our latest news and useful savings and investment guidelines.

This past year has been an eventful one in the political arena – both at home and abroad. The Rhamaphoria earlier on in the year was a welcome reprieve from the erratic Zuma era and slowly we are seeing progress in identifying those involved in state capture. With on- going appointments of non-corrupt leaders in key government positions, we should be heading in a more positive and stable direction.

Our poor economy has unfortunately, had a negative effect on the JSE and rising living costs have placed further financial pressures on the consumer. The petrol price has been one of the only reasons affecting inflation – food has been almost zero.

With the elections fast approaching in 2019, the focus of our nation should be on political parties being held accountable on issues of corruption and fiscal discipline.

The Investment Summit held recently, proved very successful in attracting foreign investment which in turn will provide a much-needed boost to the economy going forward. South African corporates need to regain confidence to allow for expansion and investing further in our economy.

On a global scale, there has been much instability amongst the Super Powers, which has led to volatile international markets. Uncertainty in Trade conditions and Brexit have amplified this situation. Most asset managers believe this volatility will continue into 2019

Within Jurgens Group, our staff are constantly keeping themselves informed and up to date in their area of expertise. We believe that the personal value of dealing with a Financial Advisor should not be underestimated – our commitment to you is not only concerning your investment returns, it is also about ensuring all-inclusive, guided, financial stability.

  • Ensuring your Will and Estate planning are current.
  • Behavioural management – preventing spontaneous financial decisions.
  • Appropriate risk management.
  • Maximising tax efficiency
  • Diversification.

On this note, I thank you all for your continued support and wish you and your families a happy and safe Festive Season.

Best Regards

Mark

The Enemy Within – Alan Botha

In almost all areas of life whether its dating, marriage, the workplace or taking care of our health we are often our own worst enemies, and the realm of personal finance is no different. We are undoubtedly all aware that fear and greed drive the markets – for example, bias, greed or overconfidence may see investors holding a position for too long, while the fear of loss may cause them to sell at too low a price or exit the market too soon.

In their eagerness to make money (or not lose money), they ignore some of the red flags they would pay attention to if they followed a more analytical approach, and took time to understand their longer-term investment strategies, in line with their risk tolerance and propensity to take on risk.

Increased market volatility leads to emotional responses like fear or jubilation, leading us to make mistakes and acting when we frankly shouldn’t. Many of the decisions we make daily are informed by intuition and we may not always realise this or allow the realisation to inform our behaviour.

Risk is never a one-sided situation. When you avoid one risk, you are accepting another. The media exaggerates the negative news and overemphasizes only certain risks. This lack of perspective drives less informed investors to avoid opportunities that beat inflation in favour of investments that lose purchasing power over time like money market investments.

It is perfectly normal for any individual to avoid risks. Any sane and responsible person who worked hard for their money should avoid the risk of losing their capital. But that is only one part of the story. The investor who respects his capital, should also fear the destructive power of inflation over time.

Therefore, What’s the biggest threat to achieving financial independence? As Tony Robbins suggests in his book titled ”Unshakeable” – It’s our own brains! You can invest in all the right things, minimize fees and taxes and diversify your holdings, BUT, if you fail to master your own psychology, it’s still possible to fall victim to financial self-sabotage.

Our brains are wired to avoid pain and to seek pleasure and while these natural instincts are powerful and served us well when we were hunter gatherers, they can be extremely troublesome in making financial decisions. We tend to seek confirmation of our own beliefs, our minds love proof as to how clever we are, and this is magnified by social media and unsubstantiated rumours which can run unchecked, if they reinforce our existing points of view.

Another one of the most common and dangerous investment mistakes is to believe that the current trend of the time will continue indefinitely, and recent events tend to carry more weight in our minds when evaluating the odds of something happening in the future. This is the case with many sellers in the market who have been spooked by recent market volatility, instead of riding this period of underperformance out, cognitive biases and emotion has relegated them to the market side lines with no opportunity to make up any losses which may have been incurred.

In the end it comes down to identifying and understanding all the risks you are exposed to. Decide which of those risks you fear most and avoid them. Embrace the productive risks that you get remunerated for over the longer term and devise a strategy to manage and control them. We cannot avoid risk. We can only select certain risks over others and commit to a well devised investment strategy. As Warren Buffett said ”the stock market is a device for transferring money from the impatient to the patient”, we look forward to guiding our clients to achieving superior returns in the medium to longer term considering the opportunities being presented by current market volatility.

Short Term News Update – Greg Brits

As we come to the end of what has been an eventful year, on the weather front, we believe El Nino is on its way again. This inevitably means that we can expect later than usual rainfall and less rain altogether.

So far, we have experienced severe heat with very little sporadic rains – our vegetation showing drought-like signs already.   This in itself is rather concerning as potentially, the outbreak of wild fires become a frightening prospect.  This said, while writing this article, a sudden and significant thunderstorm on the Highveld has already wreaked some havoc, certain areas experiencing sudden flooding, hail and lightning strike damage. This, as you can imagine, creates challenges for the insurance industry.

Ways in which to prepare for events as mentioned above, is to ensure gutters are not blocked, drainage surrounding your property is effective, waterproofing of buildings and roofing in order. Over the holiday season, while on a well-deserved break, a reminder of a few worth- while precautions to put in place:

  • Test your burglar alarm.
  • Get someone to check on the property if possible and give them a set of keys in case you want them to check on your premises.
  • Close water supplies where possible in case a geyser or pipe bursts, to prevent further damage.
  • Switch off geyser to save electricity.

Please keep our contact details handy as we do not close over the December period and will have our offices manned to assist you with claims or queries that could arise.

We thank you for your continued and appreciated support and wish you a blessed Christmas and a happy and successful 2019.

Staff News

Genevieve le Roux joined Jurgens Group in April 2016 in her role as Bookkeeper and Human Resources administrator.  She is married and a proud mother of 4 boys who keep her very busy! For fun, she loves reading and enjoys the outdoors, especially visiting her family’s farm.

QUOTE OF THE DAY

“Christmas is not just a day, an event to be observed and speedily forgotten.

It is a spirit which should permeate every part of our lives.”

William Parks

FSP Number: 732 and 7980 Reg. No. 2012/138938/07

Tel: (011) 622-2061/2/3 Fax: (011) 616-6673                   www.jurgensgroup.co.za

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First Quarter 2017 – in Touch

jurgens group

jurgens group first quarter 2017

Jurgens Group at their Annual Staff Conference in Sedgefield

Estelle Susanna receiving the “Achiever of the Year Award         

presented by Mark and Greg                                                              

jurgens group awards

Nela Pereira receiving her 10 Year Long Service Award from Mark Jurgens

Good day to you all!

At our recent annual staff conference in Sedgefield, our theme for discussions and activities related to, amongst others, improving our levels of service, advancement in technology and upcoming legislative changes in our industry. The team building activity took place at a community and job creation centre, Masithandane which means, ‘let us love one another’. We enjoyed working alongside the mosaic crafters, mosaicing pavers which will form part of a colourful hopscotch court in the Sedgefield Mosaic Interactive Park.

The economic forecast for this year is expected to improve compared to last year – with the Rand /Dollar exchange rate likely to remain fairly stable, however, political stability is required. There are still some global economic issues on the horizon, which we need to keep in mind.

Elections in the Netherlands and in France could bring more surprises, in that the front-runners are wanting to exit the European Union. These events, with the unfolding of Bexit, could have serious repercussions to financial markets.

Time Magazine recently noted that the No. 1 risk of 2017, is having an “unpredictable America” under President Trump.

Having attended a number of investment presentations this year already, the sentiment of most portfolio managers is far more positive than seen in recent years.

Volatility in global markets can create opportunities, for example, the recent dramatic growth in American equities.

Moving back home, we have been blessed with significant rainfall over most of the country. Crop yields have increased and food inflation is expected to decrease. With overall inflation on a downward trend, we are hopeful of a possible decrease in interest rates in the latter part of the year.

As we head into Autumn, enjoy the burst of colours of the changing leaves and the crisp breeze – transformation and hope is in the air.

Regards,

Mark

Budget Highlights 2017 from Alan Botha

The SA economy finds itself in a protracted period for global trade, lower commodity prices and a higher risk of external volatility. The 2017 Budget proposals aim to tighten fiscal policy, drive radical transformation of economic models, with the aim of inclusive growth. The proposals below were put in place to fill a R28bn in SA’s current budget deficit.

Highlights of the budget include the following:

  • A new top Personal Income Tax rate of 45% (previously 41%) for taxable incomes above R1.5m
  • Increase in dividend withholding tax rate from 15% to 20%
  • The highest effective capital gains tax (CGT) rate for individuals will increase from 16.4% to 18%.
  • Tax threshold increase from R75 000 to R75 750
  • Property transfer duty threshold increased from R750 000 to R900 000
  • Tax free savings annual allowance increased to R33 000 per tax year (previously R30 000)
  • Increase of 30 cents per litre in general fuel levy and 9 cents per litre in the road accident fund levy
  • Increase of excise duties for alcohol and tobacco of between 6% to 10%
  • Sugar tax proposal will be implemented later in 2017
  • Proposed carbon tax and its implementation to be considered further

The jump to the new tax tier of 45% as an alternative to introducing a wealth tax, which our current financial systems and infrastructure are not geared for. The next significant contributor to the R28bn under collection problem is a huge 33% increase in the dividend withholding tax, which is expected to bring in R6.8bn in additional revenue. This represents an easy collection method for government, as tax is withheld by corporates when dividends are paid out, they are then obliged to pay this over to SARS within 30 days. This increase was effective immediately negating any quick decisions to declare dividends before month end (28 February 2017). This increase also keeps the top individual marginal tax rate in line with the combined effect of the company tax rate including withholding tax at 42.4% (previously 38.8%). Regarding the taxation of interest free loans to trusts, a deemed interest rate of 8% will now be applied from 1st of March 2017. This interest component will then attract donations tax of 20%.

Taxpayers are however, able to utilize their annual individual donations tax exemption of R100 000 to offset this liability. In theory, only loans of more than R1 250 000 would attract tax, once the exemption described above has been catered for. A further proposal is aimed at extending anti-avoidance measures regarding interest free loans made to companies that are owned by trusts.

Further proposals in the future relating to retirement reform, refer to current legislation whereby persons of retirement age (age 55) are prohibited from transferring their funds to another approved retirement vehicle without being taxed. SARS is now looking to change this to ensure a person would only be taxed at the time of ‘’real’’ withdrawal. People are living and working longer, therefore a retiree should not be forced to retire from a fund, but able to elect to transfer tax free to another approved pension or provident fund.

Common consensus is that overall this was a sensible budget, and we emphasize that this article merely highlights some of the most pertinent points applicable to financial and business planning outcomes. Please contact our office directly, should you wish to discuss any of the proposals and how they may relate to your financial planning needs and objectives.

Short Term News Update from Greg Brits  

With all the recent wet weather we have had country-wide, we trust you are keeping dry and driving with caution. Its seems La Nina is in full swing as predicted by some analysts.  Its great news for our dams though as the Vaal Dam level is at 82% and increasing at the time of writing this article.

We have been looking at our stats on recoveries and thought it would be good to mention why some excesses are not recovered or why third party claims are abandoned. Unfortunately, the law is not being enforced by government for third party motor insurance, the cost factor being the reason given. If it were enforced, it would cost between R50 and R100 a month and would grow the risk pool of clients that are insured. It costs about R636 to fill up a vehicle with a 50 litre petrol tank, of which R239 is tax. Makes one think! One of the main reasons for non-recovery of accident related costs and excess payments, is that most people do not have insurance cover, some of whom, have no attachable assets to re-coup costs.

 

Other reasons for non-recovery is that information at the scene of an accident is often falsified. It is important to take photos of the licence disks, the drivers’ Licence, vehicle damage etc. This information is important as it enables Insurers to trace the third party.  At times in the event of an accident, the blame for the accident is shared and each party then covers their own claim / costs.  Some friendly reminders:

  • For driving safety purposes, it is important to ensure that your tyres’ tread is within the legal limit. The legal minimum tread depth of tyres in South Africa is 1.6 mm across the central three-quarter width, and around the entire circumference.
  • Please check that your Fire extinguishers are serviced annually.
  • Should the outstanding balance owed to the bank for your vehicle be greater than the retail insured value, then a top up policy is recommended to cover the shortfall. This can either be done via your insurance policy or the car-finance provider.