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CityPress - - Business - COM­PILED BY NEESA MOODLEY

No end to lux­ury spend es­pite the fact that the cost of liv­ing and the repo rate have in­creased sig­nif­i­cantly over the past year, con­sumers con­tinue to spend the same amount in terms of lux­ury pur­chases, ac­cord­ing to re­cent re­search by the Absa Card An­a­lyt­ics team.

Jan Mo­ganwa, chief ex­ec­u­tive of cus­tomer so­lu­tions at Absa Re­tail and Busi­ness Bank­ing, says while the find­ings are based on an Absa cus­tomer view, they paint a rep­re­sen­ta­tive pic­ture of cur­rent mar­ket dy­nam­ics.

Data col­lected and an­a­lysed by the team be­tween April 2015 and March 2016 in­di­cate that de­spite low con­sumer con­fi­dence lev­els and tough eco­nomic times, some South Africans main­tain their liv­ing stan­dards by spend­ing in the lux­ury cat­e­gory, such as elec­tron­ics, jew­ellery, ho­tels/guest­houses, recre­ational ac­tiv­i­ties, travel and restau­rants on credit.

When com­par­ing the split of spend be­tween debit and credit, credit com­prises only 35% of all spend, but makes up the bulk of lux­ury items spend, which is about 60%.

This clearly in­di­cates that con­sumers are main­tain­ing their life­styles by pur­chas­ing lux­ury items on credit.

“South Africans have a his­tory of unhealthy spend­ing habits, with many liv­ing be­yond their means, driven by the no­tion of ‘keep­ing up ap­pear­ances’. The irony is that most of us are strug­gling with the ris­ing costs of liv­ing, and it’s our com­pet­i­tive na­ture of main­tain­ing, and in some in­stances even in­flat­ing, our cur­rent life­styles that of­ten gets us into hot wa­ter,” Mo­ganwa says.

DIn­vestec tar­gets re­turns nvestec Bank’s Struc­tured Prod­ucts team has launched an in­vest­ment prod­uct that of­fers you the op­por­tu­nity to po­ten­tially gen­er­ate dou­ble-digit rand re­turns linked to the growth of the S&P 500 In­dex.

An in­vest­ment in the In­vestec S&P 500 Rand Au­to­call pro­vides in­vestors with a high level of cap­i­tal pro­tec­tion and the op­por­tu­nity to earn up to 70% (14% per year) re­turn over the full five-year term, even if the in­dex has only shown a small gain.

Brian McMil­lan, head of re­tail sales at In­vestec Struc­tured Prod­ucts, ex­plains: “The S&P 500 is the largest in­dex in the world and gives a fair rep­re­sen­ta­tion of the US mar­ket.

“The US is also one of the few ma­jor economies in the world to have seen pos­i­tive stock mar­ket growth so far this year. The US econ­omy has again demon­strated its re­silience in re­cent years, and link­ing this prod­uct to the S&P 500 gives in­vestors the po­ten­tial to earn at­trac­tive re­turns.”

A built-in prod­uct fea­ture is an au­to­matic re­demp­tion – known as an “Au­to­call” – which acts as a cap­i­tal pro­tec­tion mech­a­nism as well as a coupon en­abler that can sig­nif­i­cantly am­plify re­turns in var­i­ous sce­nar­ios.

The In­vestec S&P 500 Rand Au­to­call is a five-year prod­uct. How­ever, it can ex­pire early (au­to­mat­i­cally called, or Au­to­call) if the in­dex level closes higher on any of the au­to­matic re­demp­tion dates (pay­ing 42% af­ter three, 56% af­ter four or 70% af­ter five years).

At the ear­li­est of th­ese points, the in­vest­ment will re­deem early, and will pay back the in­vestors’ ini­tial in­vest­ment, plus a re­turn of 14% per year.

In­vestors can in­vest a min­i­mum of R50 000 and de­nom­i­na­tions of R10 000 there­after.

In­vest­ments can be made through your in­de­pen­dent fi­nan­cial ad­viser or stock­bro­ker. In­vestors must have a stock­broking ac­count as this par­tic­u­lar prod­uct is listed on the JSE.

Daily liq­uid­ity is pro­vided on the JSE by In­vestec Bank Lim­ited, which un­der­takes to act as sole mar­ket maker.

The S&P 500 Rand Au­to­call is open for in­vest­ment and will close on Thurs­day, July 14 2016. For more info, visit in­vestec.co.za/au­to­call.


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