INFLATION RISES TO 3.2% IN JULY, UP FROM 2.2% IN JUNE

STUDIES have shown women behave differently to men, particularly when it comes to their financial decision-making.

For years, assumptions were made around the “fight and flight” stress response discovered by Walter Canon in the 1930s, which was applied equally to men and women. But more recent research conducted by Dr Shelley Taylor spanning over 30 years clearly shows the female response is far more cerebral and aptly termed “tend and befriend”. Social bonding releases the neuropeptide or hormone oxytocin (commonly known as the “feel good” hormone), which significantly reduces and alleviates the stress response. So how does this affect how women invest?

Women tend to rely a lot more on their instinct. They are more likely to hold back for longer to ensure that they have sufficient money set aside, that the investment is sound, and that they can trust the provider whom they have appointed to manage their investment. They are also more likely to discuss their options with others and “socialise” these options prior to jumping in. This trust isn’t only about trust in others, but also trust in themselves.

The women that I speak to often hold back on investing early, as they spend too much time questioning themselves. Whether it’s doubting the size of the initial investment, the fees or the investment options, this often results in them getting into the market later than their male counterparts with similar investment amounts.

But once invested, they tend to stick to their goals and are less likely to disinvest due to short-term volatility.

Research conducted both globally and locally shows that people who use a financial adviser tend to have up to two-and-a-half times more savings than those who try to do it on their own. Financial advisers look at the facts and then put together a plan to help their clients on their journey to financial success. They provide the reality check in determining what is and isn’t achievable given the investment amount and time frame.

By taking the emotions out of investing, financial advisers remove the obstacles of fear-based investing that often result in poor financial outcomes for clients. Because trust is very important to women, they may spend more time doing due diligence before appointing a financial adviser, but once they have, women tend to trust the advice.

Whereas their male counterparts may be more tempted to compare the returns on their investments to those of their peers, women tend to be more focused on their personal goals than those of their friends. Their ability to stay away from timing the market results in lower trading fees and better financial outcomes.

In the absence of a crystal ball, we can’t accurately time the markets. But what we do know is that allocating to the correct asset classes is the biggest driver of performance over the long term.

So how do we select the appropriate investment for our personal needs? When is the right time to start? How much do I need to start saving and investing? The answer is as soon as possible (today if you can), and no amount is too small.

Budgeting is essential. It forces us to work out how much we earn and how much we need to cover our living costs. By writing it down, we can also easily see what nonessential expenditure we are incurring and re-evaluate whether this is money well spent.

Appointing a financial adviser who can evaluate your circumstances and advise you about all your investments will invariably keep you on track and help you to stick to your goals. And then make sure that you choose an investment partner that you can trust.

Last, share your story with others. Women in South Africa now make up a significant part of the workforce and are increasingly becoming the main breadwinners in their households. We encourage you to take the time to share your challenges and successes with other women. Own your success and share your journey.

PAYMENT holidays offered by credit providers during the three-month Covid-19 lockdown, from April to June, will cost an additional

R20.7 billion for the estimated

1.6 million South African consumers who took advantage of them.

This is the view of Benay

Sager, the chief operating officer of debt counselling firm DebtBusters.

Sager says although payment holidays were good news for people facing a short-term cash crunch, they came at a cost. This is as a result of interest accumulating on the debt owed, even though payments were put on hold for a while.

“We understand that for many consumers payment holidays were a lifeline. For people who were desperate to make ends meet during the hard lockdown, the additional interest may have seemed an inconsequential consideration, but on average a three-month payment holiday will have increased what they owe by 4.2%.

“That equates to R12 900 over and above the original debt for the average consumer who participated in the payment holidays for three months.”

DebtBusters’ analysis was conducted based on the profiles of typical consumers who applied for debt counselling over the past year. The analysis includes a breakdown of how a three-month payment holiday affected the consumers’ debt:

For those who deferred bond repayments, the debt on their mortgage has grown by R14 300.

A three-month payment holiday on vehicle finance came at an additional cost of R6 000.

The same three-month break from repaying a personal loan has cost consumers an average of R9 800.

People who took payment holidays on all three types of debt will, on average, have to repay

R30 100 on top of what they owed.

“In a country as over-indebted as South Africa, especially at a time when the economy is contracting, this is enough to push people who were just about making ends meet into a situation where their debt-to-income ratio is unsustainable,” says Sager.

BANK WOES

Meanwhile, South Africa’s banks are taking a hammering as consumers and small businesses struggle with debt repayments.

Last week, Absa reported a drop in half-year profits of 82%, with a four-fold increase in loan impairments to R14.7bn. Standard Bank reported a 72% drop in halfyear profits from its South African operations, with its provision for bad debt rising 2.7 times to R11.3bn.

Bloomberg reported last week on how impaired loans in the banking sector had risen from about R165bn in February to more than R220bn at the end of June.

The initial payment holiday offered by banks and credit providers was for the three months of hard lockdown.

However, if you’re still struggling, as many consumers are, your bank may try to assist you by extending payment relief on a client-by-client basis or restructuring your debt repayments. If you have no success with credit providers and feeling overwhelmed, you need to consider debt counselling.

Sager says that people who find themselves struggling to make repayments as a result of increased debt levels or constrained income should seek help sooner rather than later.

“Although some people are sceptical about debt counselling, the reality is that in South Africa it is highly regulated and generally very effective. By getting help from a reputable debt counsellor as soon as you realise you’re in trouble, you can avoid a situation where you could lose everything you’ve worked for.”

STATISTICS SA reported this week that consumer price inflation increased from 2.2% year on year in June to 3.2% year on year in July. This was higher than expectations and the highest figure since the start of the lockdown. Although the SA Reserve Bank may need to revise its inflation projections upwardly, says accounting firm PwC, in the context of the inflation target range of 3% to 6%, the latest figure is “still very favourable from a monetary policy perspective”. PwC says the major driver behind the increase was the end of transport cost deflation, which had occurred “due to a favourable global energy environment”. However, there have been recent local fuel price increases largely owing to the “notably weaker” rand exchange rate, which has pushed up the prices of imported goods.

MIWAY has launched MiSwitch, a quick and easy way to get an insurance quote. With MiSwitch, you can go to miway.co.za, upload your current insurance policy schedule, and a MiWay agent will call you back in minutes with a comparative quote. This removes going through a lengthy quoting process on the phone. MiWay chief executive René Otto says: “MiSwitch harnesses the power of technology and makes getting a comparative quote just a click away. We appreciate that life is busy and complicated enough as it is. We have to keep up with how people use their time – and this technology does exactly that.” Consumers still have the option of using the traditional method of obtaining a quote via phone, or buying a policy online.

| Freepik