The driving energy of economies is the stock market. It underpins our savings, investments, pensions, policies – in fact our very lifestyle, standard of living, achievements, aspirations and everyday experience. It is the engine of development, business, progress and the creation of wealth. It is the wheel of fortune, the genie jar and sometimes the deadly game of Russian roulette. But whichever way you look at it – it dictates our experience of life in one way or another. It is fundamental to how we have set up our monetary systems in the world. So why isn’t it taught at school? Basic banking, insurance and higher purchase is not taught either. We learn math, science, history, geography – all well and good. But the basic tool to real survival in the world is mostly ignored. The stock market doesn’t discriminate against poor or wealthy, race, creed or nationality…it operates indifferently and is only engaged in perception, sentiment and risk-tolerant minds ready to become versed in the volatility of sharp declines and heady success. THE BEAUTY OF COMPOUND INTEREST It is so important to explain to young people how this can work for them or against them. When interest is gathered on investments, reinvested to grow even higher interest, which is again reinvested – there is potential for enormous returns over time. However, too many people become familiar with compound interest on debt rather than its creative prospective in a unit trust account or share portfolio. They graduate with a desire to get stuff as soon as possible without understanding the importance of patience and budget planning. Once the positives of compound interest on savings are explained, students enter the working world with an understanding of what debt actually costs and the alternative effect of compound interest on long-term savings. If this basic distinction is taught, imagine how differently many of our young people might approach the start of their adult lives. THE LABYRINTH . . .
“Even though the number of dollars in the world are real and finite, the value we assign to those dollars is completely arbitrary. It changes all the time.” ~ Sean Edwards, author, speaker, political thinker. So the answer to the question is a quick no, it doesn’t exist. Money is something we made up in order to create a standard value for controlling barter and trade. And without it, life would become very complicated. If you’re a shoemaker and need clothing, then you might trade shoes with a shepherd for wool. However, if the shepherd doesn’t need shoes but dog whistles, then you have to find someone who makes dog whistles who is needing shoes – all before you can get the clothes you need. So because trading one product for another would became cumbersome, we invented a tool of exchange which could easily represent an agreed value, and be used as an acceptable leverage for moving goods around. THE VALUE OF MONEY Money used to have a definitive value when related to a specific weight of gold or silver – but since the world retreated from the gold standard after the first world war (see http://www.fosterwealth.co.za/2016/08/) money has come to have value only in our minds, in the way we believe it to be valuable. Money is merely numbers in a bank represented tangibly by pieces of paper. These numbers represent fluctuating values dependent on market mood swings, which are in turn dependent on perception, confidence, belief and agreement. And nothing much else. Most people think there is a certain amount of money in the world and that some people unfairly have a greater percentage of it than others. They espouse the view that if poorer persons could just wrestle some of that money from the wealthy, they would be better off. But this would not necessarily be helpful – because money is actually an infinite entity. In other words, if you spread a finite amount of money around instead of using it innovatively to create more money (as the wealthy very . . .
Buddhists say that material possessions get in the way of reaching greater understanding of ourselves. There are probably some psychiatrists who might agree. But despite philosophy and advice, possessive desire is deeply entrenched in our psyche; older than history and part of the very foundation of being human. Over a hundred thousand years ago, shells and stones became coveted and worked into objects of beauty. Ultimately these artifacts and their consequent trade value laid down the basis of all economies. Today, whether you buy property, art, collectibles or jewellery, you are investing in the security of physical objects as a steady alternative to the sometimes erratic performance of the stock market. Some people become master collectors, cannily purchasing objects of the past to shore up the future. Certainly, if you know what you’re doing, physical possessions may well enhance the security of your investment portfolio in uncertain times. BRICKS AND MORTAR Despite ups and downs, the property market has generally shown an upward growth over the years. Your house is usually your biggest and most expensive possession – but it’s not the house itself that necessarily increases in value, but the location it occupies. Any property is better than no property – but area is hugely significant. A house in the right location is always likely to increase value faster than one in a less sought-after position. Property always beats rental. It is the best kind of ownership for peace of mind, security and a sense of settled future. It provides you with a place to live while building a better looking portfolio year by year. As Mark Twain said: “Buy land…they ain’t making any more of it”. THE ART OF THE DEAL A thing of beauty is a joy forever – or so the saying goes. And very often it is forever because once a rare object has been attained, there is often little inclination to sell it unless the owner is forced to do so. For many, possession is still the prime . . .
Consumers will soon be able to opt-out of unwanted SMS communication from insurance companies thanks to a draft replacement of the Policyholder Protection Rules (PPRs) by the Financial Services Board (FSB). Speaking in a recent interview, Lezanne Botha, a senior specialist for the Insurance Regulatory Framework department at the FSB said: “There is existing consumer-protection legislation in place in the form of the Consumer Protection Act. But it's important to bear in mind that the Consumer Protection Act does not apply to insurers. “It can be said that financial services industries should be held to a higher standard of consumer protection than other industries, because of the risks and the failures in that these products can actually impose considerable hardships for consumers.” When the new regulations come into effect, estimated to be June 2017, the South African insurance industry will be in-line with international standards. “This is fantastic news for consumers,” remarks SMSPortal MD, Charles Stretch. “The CPA protects consumers against unwanted SMS, currently there isn’t anything to stop insurance companies sending unwanted direct marketing.” The draft states: 13.10 Unwanted direct marketing 13.10.1 An insurer or any person acting on its behalf must afford a policyholder to whom it markets a policy through a mobile phone voice or text message the right to demand during or within a reasonable time after the message that the insurer or person acting on its behalf desist from initiating any such further messages or any other communication. 13.10.2 An insurer or any person acting on its behalf may not charge a policyholder a fee or allow a mobile phone service provider to charge a policyholder any fee for making a demand in terms of 13.10.1. Upon implementation, all insurers will need to send SMS communication from a reverse billed number. “This means when consumers reply STOP to an unwanted SMS the sender of the initial SMS, in this . . .
According to the National Treasury Budget Review, in 2016, South Africa experienced deteriorating GDP growth caused by various factors including the Rand’s depreciation of R15.51 against the Dollar, severe drought, water shortages, and the rising unemployment rate. GDP growth is however expected to improve moderately in 2017. Businesses, particularly start-ups and SMEs, can expect better growth and opportunity than in 2016. “Now more than ever small businesses need to safeguard themselves against the perils that could be harmful to their growing business,” says Derek Wilson, Head of online insurance and financial services comparison website, Hippo.co.za. Business Insurance is more than just protecting your business assets. Not having insurance could result in a negative impact to your bottom line, damage to your business’s reputation or even the loss of your business. Here’s what you need to know about Business Insurance (source: Forbes.com): Insure your nett worth If you have business property such as commercial offices, a house or any vehicles used for business or commercial purposes, you have nett worth. Ensure that your nett worth is adequately covered and that you do not put your business under unnecessary strain by having to pay for loss or damage to business assets yourself. Insurance for business assets usually includes cover for theft, accidental damage, fire, vandalism and, most importantly, cover for business interruption or loss of earnings if you are unable to operate following a claimable event. Your risk profile Understand how your business risk profile is calculated by the insurer as things such as your credit rating, type of business, area where you do business from, and where your business or commercial assets are kept, are taken into account. You are liable Liability cover is probably the most important cover you need. The loss or damage to another’s property or worse, injury or loss of life to a person, could not only . . .
What is KYC and How is Regtech making it less painful? Why KYC? No, KYC is not just another acronym that doesn’t deserve a mention. Yes, KYC is the ofttimes painstaking process that you go through when signing on for a new account or financial service. More importantly though, KYC (Know Your Customer) refers to the due-diligence processes of any regulated business to do exactly that - know us and our businesses - their customers, so that they can transact with us in a safer way. KYC is an especially important cog in the financial services machine, as it assists in the prevention of: Financial Fraud Identity Theft Terrorist Funding Money Laundering Simply put, without KYC, we’d be living in the equivalent of a financial services wild west. Gangsters would be able to get away with money laundering, terrorists would have far easier access to capital and countless more cases of identity theft and financial fraud would be prevalent. The KYC processes also allow our financial services providers (FSPs) to know us as customers better, which translates into them being able to provide more relevant services and solutions, as well as mitigate risks - for both parties. KYC, What? The KYC process can be broken up into two parts and covers both individuals and businesses. For the sake of simplicity, I’ll refer to the process used for individuals throughout this article. Customer Identification - This is where you’re asked for identifying information, generally in the form of your identity document (e.g passport) your proof of address (e.g your telephone bill) and a recent photograph. Customer Due-Diligence - This is where your risk profile gets assessed via various levels of questioning and supporting information and documentation requests - which may include your source of funds, purpose of your account, your occupation, your financial statements, banking references etc. The institution and type of account/transaction involved . . .
Johannesburg - Major retail and online payment technology companies are expected to attend the technology event directed at the payment ecosystems and gateways. The Payment Ecosystems & Gateways Conference 2017 will be held on 22 & 23 February 2017 at the Indaba Hotel, Fourways, Johannesburg. The conference theme that will be addresses includes overview of payment ecosystems landscape, payment innovation- fast, open and disruptive, emerging online payment processing trends & technologies, payment gateways for secure eCommerce & mCommerce, mobile commerce driving mobile payments and security, fraud prevention and risk management. Professionals dealing with online payments, eCommerce, mCommerce, mobile payments, payment gateways, payment ecosystems, technology, innovation, processing, API’s, blockchain, risk management, customer relationship management, information technology, digital banking, technology enablement, business development eChannels, corporate and investment banking as well as security and fraud will benefit from attending the event. Ryno van Ellewee - MD of Trade Conferences International - said Trade Conferences International has organised more than 300 events in the last fourteen years. Since we hosted the first Payment Conference in 2010 TCI payments events have attracted over a 1000 registered delegates and over 500 exhibiting company such as Paycorp, ACI Worldwide, CFS Rica, Enterprise Electronic Commerce, Octagon just to name a few. Next years’ conference is expected to attract over a 150 delegates. “TCI is your technology event organiser of choice and we believe that the event will be a success. We understand technology and have the ability to identify the right audience to showcase the latest technology developments in different industries. The event will allow both exhibitors and delegates an opportunity to network and explore new developments in the payment industry.” The normal fee per delegate is R 8 700.00 . . .
Accountants control the floodgates of prosperity in Africa, but it is by our integrity and effort that we earn the right to open them. With the Chinese economy slowing, commodity prices falling and the global economy stagnating, worldwide investment opportunities are scarce. But the last decade has seen a rising wave of optimism over Africa’s growth potential, and global investors are keen to uncover its riches. To realise its prosperity, Africa must first confront the obstacles that prevent investors from committing themselves. Accountants have a central role to play in confronting these obstacles and ensuring the development of African. The International Monetary Fund (IMF) suggests that although medium term growth prospects in Africa remains favourable, substantial improvement is required in the recalibration of fiscal policy (including the efficient use of national budgets), better domestic revenue mobilisation, and improving and prioritising the quality and efficiency of public investment. South Africa is in the green because our fiscal policy is sound. We just need to keep our budget in check to ensure government debt remains a low percentage of GDP. Our revenue is also being judiciously invested in infrastructure, with the top five government priorities being healthcare for all, better education, enhanced crime prevention, rural development, and job creation. In South Africa, public investment is lively, with the government spending a fair amount of its budget on social services and public infrastructure. However, we also face growth challenges. Corruption – real or perceived – is a threat to the continent’s development. Additionally, in South Africa, unemployment continues to be unacceptably high, not for lack of jobs but rather a skills shortage in specific sectors from which the field of accounting is not exempt. As for poverty and inequality, financial and human resources must be effectively deployed to address the following . . .
Starting a business is an exciting venture, but one that requires careful planning and expert financial accounting advice in order to give it the best chance of success. Beyond the conception of your product or service, the most important step in starting a business is drawing up a business strategy. This is essentially a blueprint that outlines the product or service you want to put in the market, and how you envision achieving your goals. And yes, you can find professional accounting in Nelspruit! If you plan to approach a financial institution or investor for start-up capital, you will most certainly need to present them with a detailed blueprint. This is to show you have done your research and understand the position of your product or service in the marketplace. The uniqueness of your product or service and its success when compared with the products or services offered by your competitors must be evident. CLICK HERE to submit your press release to MyPR.co.za. . . .
Reports that Standard Bank has filed an affidavit seeking protection from political interference has been met with concern. Legal expert David Loxton, Partner at Dentons law firm in Johannesburg, specialising in corporate investigations and compliance, is concerned. "Does the Standard Bank affidavit give the lie to accusations of collusive activity by the banks? Does it prove corruption? If officials were abusing their positions of authority to assist others to further their business interests by obtaining an unfair advantage, my answer would be ' arguably, yes on both counts," says Loxton. The affidavit sets out information of extensive interference in a business by various senior government officials. “Why would government do this? Is it politics? Is it the role of government to involve itself in what is essentially risk management by the bank? Viewed holistically in the context of the Public Protector report, and other public information, I would say not.” “The whole saga should concern all South Africans: to what extent has this country’s institutions been captured and abused?” CLICK HERE to submit your press release to MyPR.co.za. . . .