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Reviewing 2018. Tough times. Valuable lessons.

By Hennie de Villiers, 22 November 2018

Given the economic slump we’ve experienced in South Africa this year, the volatile markets and the possibility of additional credit-rating downgrades, we’re ending 2018 on an uncertain note. In this article, Hennie de Villiers, Deputy CEO of Sanlam Personal Finance, reviews the challenges experienced during 2018 and the lessons learned that we can take forward into 2019.

It has been a tough year for our clients and all who live in South Africa. The turbulent rand, rising fuel prices, increasing electricity costs and other factors have put a dampener on people’s disposable income. There has also been significant volatility in the domestic and international investment markets, shaking investor confidence and putting further pressure on people’s financial positions.

From a business perspective, these economic and market conditions have also been challenging for Sanlam during 2018 – confirming our understanding that it’s not always easy operating in South Africa. Like our clients’ money, substantial amounts of our reserves are also invested in this market.

Still going strong

However, on a positive note, it’s important for our clients to understand that Sanlam is a diversified player across many segments and product lines and we’re operating and expanding into many more countries beyond South Africa. The fact that we have such a well-diversified profile means that our business has remained resilient over this past year, despite the trying conditions.

We are also well-prepared financially to weather years like this. Thanks to our prudent and disciplined approach to governance and fiscal management over the past 100 years, Sanlam has sufficient capital reserves to steer the business through the bad times and into the good times.

Going forward: thoughts on 2019

October’s mid-term budget policy statement described South Africa as “an economy at a crossroads”.1 In this context, as we look towards 2019, it’s impossible to say whether next year will necessarily be any easier. One key lesson that we as a business, and you as our client, can learn from our experiences during this volatile year, is that it’s important to stick to our financial planning and be prudent with our money.

If you want to get the most value from every rand you earn, spend wisely and don’t make any rash decisions when choosing which expenses to prioritise – and which ones to cut back on. At times like these, it’s worthwhile staying the course with your financial plan, whether it is a savings plan, retirement policy or risk management strategy.

While it’s necessary to manage your spending carefully today, you also need to think about protecting your spending power in the future, or about a time when you are no longer able to earn a salary or support your family. During financial difficulty, it’s important to remember that your long-term financial well-being is a priority – and one that is worth investing in. Don’t let dramatic movements in the market or economy unnerve you and lead you to make any rash decisions. Stay focused on your long-term goals, whether you want to achieve a comfortable retirement, cushion your family from the impact of unplanned events, or realise other life goals over time. As the saying goes – time in the market is much more important than timing the market.

Seek advice if you need it

As we prepare for the new year, we hope that you are in a position where you fully understand the features and benefits of the products that you’re invested in. If you are unsure or really struggling to prioritise your financial obligations, it may be a good idea to consult with a professional financial adviser who can help you to determine your needs and draw up a comprehensive financial plan for your life. This can focus on short-term, medium-term and long-term goals based on your unique circumstances. Sanlam has a broad range of products available to ensure that you are well-prepared for any financially impactful events that happen along the way.

Most importantly, however, remember that now is not the time to make any rash decisions. Keep your sights firmly on your goal of greater financial security and freedom for yourself and your family, come what may.

1 http://www.treasury.gov.za/documents/mtbps/2018/speech/speech.pdf

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