Advice worth its weight in gold

Advice worth its weight in gold

Private Property South Africa
Kerry Dimmer

Wynand de Winnaar, Head of Financial Planning and Advice at Absa Wealth Investment Management & Insurance offers practical, sensible, professional, and crucial advice around investments.

Absa Investments and Advisory Options:

What are the best ways to protect and grow individual wealth in today's environment, through Absa services?

Whether you want to grow your money, generate an income from it, or simply protect it, the best way to achieve your financial goals is to exercise discipline. In today’s environment where there is much uncertainty, the tenacity of even the most resilient investors may be tested. However, when you understand the risks that are inherent in any type of investment, it is easy to trust in the investment process and thus take advantage of opportunities when they arise.

In addition, while it might be tempting to invest in a fund or company that previously performed well, investors should always bear in mind that past performance is not a guarantee of future performance, thus to achieve investment goals, a long-term strategy should be considered. At Absa, we have experts that assist our clients with risk management, to ensure that investments chosen provide the right kind of balance and asset allocation.

What is meant by 'Relationship Banking' in a world where so much technology prevents us from accessing individual services?

At its core, Relationship Banking is a consultative approach between the bank and its customers, where the bank has an opportunity to study the individual needs of each client and cater to their specific circumstances. The advent of technological innovations should only serve to aid this process. When utilised effectively, technology has the potential to assist in realising efficiencies and will benefit both the customer and the financial services provider, and thereby strengthening Relationship Banking.

What services are provided by Absa Investment and Advisory Services?

Absa Group Limited is a truly African banking brand with global capabilities. However, it is more than just a bank. We believe in bringing our clients’ possibilities to life by providing end-to-end financial services that include banking, investment, and advisory services such as estate planning as well as long- and short-term insurance.

When the Absa brand was revitalised by changing its look and feel, a new word, “Africanacity”, emerged and a new culture was born. It describes where we are and where we want to go as a leading financial services company. Part of our financial service offering is the Distribution Channel of Absa, which follows a proprietary advice philosophy developed specifically to address client needs around wealth management, estate planning, and insurance.

The advice philosophy is based on generating high probabilities of meeting client goals throughout each stage of their life journey and is supported by fourth-generation planning tools to ensure fit-for-purpose financial plans. Online will-drafting, specialist support for complex estate planning and trusts, and company administration complement the advisory model. Tailor-made investment solutions and insurance solutions are backed by comprehensive financial needs analysis. This results in a lifelong relationship based on a structured engagement process and needs-specific service.

What type of investment products does Absa offer, and what is the advisory process behind Absa service offerings?

Absa has developed, through internal product providers, a range of investment products for discretionary, contractual, and retirement savings. Clients have the option to invest either locally or offshore through our multi-manager funds, single manager funds, share portfolios, structured products, or guarantees.

Through Absa Life, clients are offered comprehensive life insurance products that cover life, disability, and dread disease cover.

Absa Trust is the largest trust administrator in South Africa and offers face-to-face support in developing estate plans and drafting complex wills.

Life is about moments, whether is it the first job, starting a new business, or buying a family home. Each of these significant moments changes the course of your life’s journey. No matter how big or small, Absa solutions exist to help you make the most of each milestone.

Absa follows an advisory process whereby a professional relationship is established by analysing and evaluating your financial status, the presentation of recommendations and alternatives to your existing financial planning, and implementing and monitoring these recommendations.

If you are looking for high-quality and holistic financial planning advice that is flexible enough to meet your changing life moments, then, Absa, through its advisory option can assist you every step of the way to achieving your financial goals.

How little is required to make an investment and the ideal time to start investing?

The best time to start investing is always now. The sooner one starts, the greater the likelihood to fully reap the benefits of compound interest. The longer funds remain invested, the more interest accrued. Renowned investor Warren Buffet bought his first share at the age of 11 and he later stated that his only regret was that he did not start earlier.

For investors to stay the course and exercise discipline in order to remain invested for the long term, they should always invest what they can afford. No amount is ever too small. That however does not mean when conditions allow, the amount being invested should not be adjusted higher, until you have enough money saved to open an investment that may require a specific minimum investment amount. From that point onwards, additional minimum investment amounts are usually smaller and in this way, you can start building your investment portfolio.

How impactful are economic factors - macro and micro - on investment returns?

On a macroeconomic level, property prices are correlated to economic growth (which influences confidence and spending levels); corporate profitability (which has an effect on wage growth, property demand, and rental income); and interest rates. Therefore, low economic growth and corporate profitability will have a negative effect on property investment returns, however, a low-interest-rate environment will reduce the debt service costs of the debt-financed property while improving valuations, as expected future rental income is discounted at lower interest rates, improving their present value.

What fear factors impact on investment decisions?

It’s true that many investment decisions depend on a person living a long, happy, and healthy life. However, what if life throws you a curve ball or two along the way? Severe illness, disability, retrenchment, or even death. As scary as this seems, it is part of life. In the unfortunate event of any of these outcomes, having a comprehensive life insurance policy that also offers income protection, could go a long way in safeguarding your financial future and that of your family.

Given life’s unpredictability, the need for adequate life cover and income protection should not be underestimated, especially when also thinking about creating generational wealth for your loved ones.

Top 10 tips when looking to invest and grow wealth?

  1. Invest what you can afford.
  2. Remove emotions from your investment thinking process to avoid panic.
  3. Look to invest for the long-term.
  4. Have a goal-driven investment approach to help you with what you want to achieve with your money.
  5. Understand your tolerance to risk and invest accordingly to avoid disappointment.
  6. Always bear in mind that risk is an inherent part of the investment and wealth growth process.
  7. Invest with an institution you trust.
  8. Ensure that you accumulate and maintain an emergency fund of about six times your monthly income. This fund can be kept in a savings account or money market fund and should be easily accessible and only utilised for unforeseen emergency expenses.
  9. Do not underestimate the value of professional advice. Just as you would consult a doctor to take care of your physical health, it is similarly important to seek professional assistance to ensure that you stay financially healthy.
  10. It is critically important to carefully manage any debt you may have or would consider acquiring - for example, a house or a vehicle. Debt can be a great tool to help you buy a home but always ensure that you have some “fat” built into your ability to repay your bond. If interest rates increase, resulting in an increase in your monthly installments, you should have enough room to adjust your budget without taking too much strain. Absa has some great tools and calculators on to help you with rates calculations to plan your budget accordingly.
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