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.