Small changes you can make to ease the burden of fuel prices and load shedding

Load shedding hacks

What you can do right now:

Switch to energy efficient light bulbs. They may be more expensive, but they last a lot longer and use far less power.

Use electricity efficient options for cooking, such as microwaves, slow cookers, and air fryers. Try not to use tumble dryers, dish washers, air conditioners, and heaters. Only use your washing machine when you have a full load.

Switch off your geyser – you can probably get away with having it on for only a few hours a day. This can reduce your electricity bill by a third or more. You can also reduce the temperature of your geyser to 55-60ºC.

Switch off all appliances when they are not in use. Unplug them during load shedding, to prevent them from being damaged when the power surges. Check that your household insurance covers damage caused by power surges.

Shower for short time, instead of bathing. You will use less water and less electricity this way.

What you can do in the next few months:

Consider purchasing smart plugs. Smart plugs can be set to switch off your appliances.

Installing a timer on your geyser will help you only consume electricity at specific times.

Invest in surge protectors. Sensitive appliances such as computers, refrigerators, freezers, and televisions can be plugged in to surge protectors to prevent damage caused by power surges.

What you can plan to do in the future: If you need to replace an appliance, be sure to buy an energy efficient one. Grade A is the most efficient and Grade G is the least. You could also consider purchasing appliances that run on gas, rather than electricity, or start saving to put in solar panels, or to replace air conditioning with ceiling fans and fireplaces.

Transport hacks:

What you can do right now

Ensure that your car’s tyres are correctly inflated. Drive carefully and slowly and avoid accelerating harshly.

Reduce your number of trips by planning your shopping, working from home if you are allowed to, using public transport if possible (and if it will be cheaper), and organising lift clubs with neighbours and friends.

Find out if a nearby petrol station offers a rewards programme, or if your bank, medical aid, or another service provider offers loyalty points that can be used to pay for fuel.

What you can do in the next few months:

Get your car serviced to ensure that it performs optimally.

What you can plan to do in the future: Consider purchasing a hybrid, or fully electric, car.

General savings hacks:

Save water! Switch off taps while brushing teeth or shaving. Use grey water to water your garden if you can.

Plan your purchases and shop according to a list every two weeks or even once a month, if possible, and freeze whatever you can. This will stop you from buying things on impulse, and you are less likely to order takeaways if your fridge and freezer are fully stocked.

Look for special offers and deals before you go shopping and compare prices between brands and serving sizes. Buy in bulk and split with a neighbour, relative, or friend.

Make the most of loyalty programmes that give you cash back. Make sure you are aware of all the rewards that you are entitled to through your bank, pharmacy, grocery store, etc.

Call your insurance provider and ask them to consider reviewing your premiums on your car or household insurance. Similarly, make sure that your medical aid plan is still in line with your needs. If you are subscribed to services that you don’t use or really need, for example online streaming or a gym membership, consider cancelling these. Similarly, if there are valuable items in your house that you can live without, you could sell these. You could even consider downsizing your home.

Tips and tricks to make your tax return submission as painless as possible

Tax season is upon us!

If the thought of filing your tax return makes your head hurt or spin, here are a few suggestions to streamline the process:

If you have a complaint related to SARS, and you have already gone through the SARS complaint process, remember that you can lodge a complaint with the Office of the Tax Ombud.


T&Cs apply. The NMG SA Group of Companies are authorised financial services providers t/a NMG Benefits.

World Password Day

World Password Day is celebrated on the first Thursday of May each year and is a reminder of the importance of protecting ourselves through strong passwords.

Cybercrime is growing and at the current rate, it is expected to replace many traditional forms of financial crimes.

The first step in protecting yourself from cyber security is to choose strong passwords which can protect us from many cybercrimes on the rise.

Celebrate #WorldPasswordDay by choosing a strong password

How to choose a strong password:

  1. Choose a complex password: Set a password consisting of at least 16 or more characters, using numbers, special characters, uppercase and lowercase letters
  2. Turn on two-factor authentication for your important accounts: This means you get an SMS or an email to confirm it’s you that has logged into a certain account.
  3. Have more than one password: Many of us struggle to keep track of our passwords and end up using the same one for everything which isn’t always safe. You can rely on technology to safely store your passwords, ensuring that only you have access to them.
  4. Keep your software up to date: We often see Software updates as providing new features, but they could also protect against cybercrime.
  5. Choose strong password recovery questions: Think out of the box when you create security questions that can be worked out easily.

The security and the privacy of your personal information is a priority. If you suspect irregular activity on your personal accounts, immediately report this to the relevant business.


T&Cs apply. The NMG SA Group of Companies are authorised financial services providers t/a NMG Benefits.

The content in this communication is for information purposes and is not intended to be detailed advice.

Fraud Alert

Being mindful of fraud and being extra cautious can save you time and money.

Here is more information to help you avoid fraud or manage fraud if you have fallen victim:

  1. How to avoid fraud

2. Some common scams, include:

3. Reporting fraud

If you have fallen victim to fraud, it’s important to report it. It’s not always possible to get your money back, but you might be able to reduce the damage and stop it from happening again to you or other people.

If you’ve been approached by an individual who has asked for payment so that they can get your benefit for you, immediately report this to your NMG consultant or administrator.

4. Getting in touch

If we are unable to get in touch with you, we will use a reputable tracing agent to try contact you to start the claims process.

Our reputable tracing agents:

If you’ve been a victim of fraud or have been approached by someone you don’t know who has requested payment so that they can get your benefit for you, please email NMG Benefits at fraud@nmg.co.za.

Don’t let negligence get the better of you - be mindful and keep your guard up against fraud.


Disclaimer: The information in this communication is for information purposes and is not intended to be detailed advice described in the Financial Advisory and Intermediary Services Act. The fund, administrator and trustees cannot be held liable for damage or loss suffered as a result of any action that you take based on the contents of this communication.

The implications of early retirement

 

It takes massive amounts of long-term discipline, planning and sacrifice throughout your working career to make early retirement possible. Very few of us can make it possible – especially if we want our retirement lifestyle to at least match our current lifestyle.

Here are a few things you need to consider very carefully before you make any firm decisions. The questions are tough ones, but they are crucial. As always, it is strongly recommended that you discuss your plans with your NMG financial planner before you take the next step towards planning your dream retirement.

Fewer years to save: If you retire at 55, how much less will you have saved than if you continued to work into your 60s? Are you maximising your retirement fund contributions in anticipation of this? Are you making the most of tax deductions by making additional voluntary contributions whenever you can? Have you created a realistic plan to pay off all your debt by the time you stop working?

More years to finance: Will you have enough money to see you through three or four or even five more decades of life – and potentially rising medical expenses, should your health deteriorate? Similarly, if you need to move into a retirement home or an assisted living facility, will you be able to afford this?

Mental health: Are you sure you will enjoy retirement? Will you have enough money to indulge your hobbies and travel dreams? If you grow bored or listless, do you have a plan to counteract this? Will you be able to take on a part-time job or ‘side hustle’ to keep your mind alert – and possibly supplement your retirement income as well?

Your loved ones: Will there be others who depend on you financially after you retire? If so, have you discussed your plans with them, and have you factored in the possibility that some of your family members may experience unexpected hardship, even if they are coping now? And even if none of this is the case, will you be able to leave a legacy for your dependants, or will your savings be depleted?

 


Disclaimer: The information in this communication is for information purposes and is not intended to be detailed advice described in the Financial Advisory and Intermediary Services Act. The fund, administrator and trustees cannot be held liable for damage or loss suffered as a result of any action that you take based on the contents of this communication.

Managing debt and stress post-pandemic: Downsizing to get through tough times

 

Downsizing means that you go for smaller, more affordable lifestyle choices. Your monthly expenses will reduce, allowing you to free up some cash to pay off debt. It offers you an opportunity to actually enjoy life without worrying about your future financial security. In fact, downsizing your life could be the best decision you ever make.

Financial freedom: By downsizing material things like your home, car, or garden, you can significantly reduce expenses, which will increase your cash flow. Think about how much space you really need, what car you can live with in comfort, and how much time and money you could save with a smaller garden, or none at all.

Mental well-being: Downsizing brings less stress. With less material things cluttering every part of your life, you will sleep better, have a clear mind, manage your time better, and enjoy the mental health that comes from less bills to pay.

Time saving: Without a pool that needs cleaning or a massive garden that needs weeding or a huge house to clean, you will find that you have a lot more breathing space for just kicking back over weekends. And you might even find that you have the capacity to clean or garden for yourself, rather than having to outsource and pay for having someone else do these chores.

Expanded opportunities: There’s a reason young couples prefer a convenient ‘lock up and go’ environment. It gives them freedom of movement and therefore a hassle-free reason to travel more. After all, life should be about quality, rather than the quantity of material possessions that you accumulate.

 


Disclaimer: The information in this communication is for information purposes and is not intended to be detailed advice described in the Financial Advisory and Intermediary Services Act. The fund, administrator and trustees cannot be held liable for damage or loss suffered as a result of any action that you take based on the contents of this communication.

The antidote to lifestyle creep

 

Lifestyle creep is what happens when an increase in your income results in an ever-escalating increase in your spending on expenses rather than saving. Even if you are earning a generous income, lifestyle creep may result in you living from paycheck to paycheck or racking up unfordable debt.

If you have fallen into this trap, don’t worry, there is a solution.

Firstly, you need to prioritise budgeting. Creating a monthly budget puts you in control of your money and prevents you from overspending. This will help you to understand how you spend your money and discover where you need to control your expenses. You need to ensure that you prioritise savings and paying off debts: you can do this by either cutting costs or increasing your income.

Set yourself long-term goals and ensure that you frequently update your progress. You may want to save up an emergency fund, pay off significant debt, save for retirement or for a deposit for a house. Committing to written down financial goals, and actional plans on how to achieve them, will set you up for success. If this process seems overwhelming and you don’t know where to start – ask for professional help from your NMG financial planner.

Manage your debt. Review your debt accounts to understand how much you owe, what the minimum payments are and how much interest you are paying. Expensive, bad debt such as astronomical clothing accounts, overspent credit cards and unaffordable car loans are usually a sign that your lifestyle has run away from you. You’ll will be surprised how much income you will free up by paying off the accounts and removing the interest pressure from your budget.

Make saving your top priority: As famously advised by Warren Buffet: “Do not save what is left after spending; instead spend what is left after saving.”

Make savings and investing easy. You don’t have to rely on will power to achieve your goals; just a little admin in this department will go a long way. Automate your savings debit orders to go off first every month.

Create a plan. Increases in income are usually predictable. Before the money hits your account, have an actionable plan ready on how you plan to use the money. Allocate as much as possible to savings and long-term goals. However, if a windfall of money surprises you, make a promise to yourself not to spend it until you have an actionable plan in place. The rule of thumb is to save 75% of your annual increase amount, with the aim to contribute 20% of your salary to long term retirement savings.

Enjoy it! You need to plan enjoyment into your budget. You’ve worked hard for it, after all. Research indicates that people gain more happiness from experiences than products, which is something to consider when preparing. By planning and controlling this portion of your budget, you can remove potential spending remorse and appreciate the experience more.

Build a side hustle. 100% of this income can be saved towards your goals and reduce the pressure from your main salary. Consider aspiring to join the wealthy who have an average of 7 income sources. You don’t need to create extra pressure on yourself- discover what passive income sources you can create to earn you money while you sleep.

 


Disclaimer: The information in this communication is for information purposes and is not intended to be detailed advice described in the Financial Advisory and Intermediary Services Act. The fund, administrator and trustees cannot be held liable for damage or loss suffered as a result of any action that you take based on the contents of this communication.

Funeral Insurance in South Africa: Market Review

1. Market Sizing

The last few years have seen unprecedented challenges for the South African insurance industry. Although most of the attention is usually on the underwritten life insurance industry, Funeral Insurance – a non-underwritten, event-based life product – has also experienced a unique set of pressures.

Figure 1 Sales and Inforce, Annualised Premium Equivalent as at Q2 2021. Source: NMG Funeral Distribution Monitor, NMG Risk Distribution Monitor.

 

The funeral and underwritten life markets are both very large, and of great importance to the South African insurance industry. They differ in some key areas.

In the 12 months to June 2021, the value of sales of new funeral insurance products was almost four times that of the underwritten life market, at R13.5bn against R3.9bn.

However, enforce premiums for underwritten life are R12.7bn, one-third greater than those in funeral insurance. The primary reason for this is much lower persistency of funeral insurance products, as explored below.

2. Persistency and Payment Dynamics

The funeral and underwritten life markets are both very large, and of great importance to the South African insurance industry. They differ in some key areas.

Figure 2 Funeral Insurance Persistency, Q2 2021. Source: NMG Funeral Distribution Monitor

 

As figure 2 illustrates, the majority of funeral policies sold will not persist beyond their first year, with nearly a quarter of them lapsing before the first premium is received (hence classified as “not taken up” or NTU).

Compare this to underwritten life, where 1st-year lapse rates average 13% and subsequent year lapsation is around 9% - both substantially below their funeral counterparts.

This results in a higher degree of customer turnover for funeral insurance and much greater acquisition costs. The wastage is substantial, and to no party’s benefit.

There are some interesting avenues to explore to improve customer persistency.

One approach appears to be around payment flexibility – e.g. despite affordability challenges, a majority of consumers (63%) expressed an interest in paying for multiple months of cover up front, even with no discount offered.

Figure 3 Likelihood of Paying Multiple Premiums Up Front. Source: NMG Funeral Consumer Study.

 

Furthermore, we know that the payment method through which policies are sold plays a huge role in persistency, with payroll deduction reducing lapse rates four-fold (and halving first-year lapses), as compared against debit-order and cash payments.

Figure 4 Funeral Insurance Lapse Rates by Payment Method, Q2 2021. Source: NMG Funeral Distribution Monitor.

 

Of course, a payroll deduction system is not always viable. Development often comes with high set-up costs and requires entrenched relationships, not to mention employer facilitation and support.

It is therefore only seen to work effectively within some distribution channels, such as through workplace tied agents.

3. Direct Channels and Barriers

Turning to distribution channels, the ‘direct’ channels (online and telephone direct-to-consumer, with limited intermediation) experienced substantial shifts throughout the last 18 months.

Figure 5 Funeral Insurance Sales, Q1 2020 to Q2 2021. Source: NMG Funeral Distribution Monitor.

 

Direct channels experienced their sales peak (relative to other channels) in 2020 Q2 as lockdown measures came into full force.

Accompanied by a severe drop in overall sales – primarily in face-to-face (or intermediated) channels – direct channels accounted for 24% of all sales.

This was a temporary blip, and the recovery of intermediated channels as a result of easing lockdown measures saw a return to normal distribution which continued into Q2 of 2021.

While direct sales seem to be on an upward trajectory, lockdowns do not appear to have been a key catalyst for largescale adoption or permanent rotation into these channels.

Figure 6 Average Lapse Rates by Channel, Q3 2020 to Q2 2021. Source: NMG Funeral Distribution Monitor.

 

Furthermore, as evidenced in figure 6, direct channels experience even worse persistency than the rest of the market (regardless of Covid).

The majority of consumers prefer engaging with providers and administrating policies through digital means.

However, as seen in figure 7, the lack of trust in purchasing through a ‘faceless’ digital proposition remains a stiff barrier to sales growth and translates into poor ongoing engagement and thus poor persistency.

Figure 7 Barriers to Digital Purchase. Source: NMG Funeral Consumer Study. (Note that graph does not sum to 100% as question was multiple choice).

 

The digital channel faces the challenge of improving consumer belief and trust, and the model is currently quite low-engagement; developing a human-digital omnichannel proposition within an online ‘ecosystem’ could go a long way to solving this, and certain providers are starting to see some success here.

Furthermore, it stands to reason that a well-designed digital ecosystem would increase customer engagement and improve persistency.

There should be a huge opportunity for a funeral insurance provider that can fully establish this financial ecosystem, where funeral plays a role as one piece of a holistic suite of financial products, and the provider has access to customers with a pre-existing relationship and engrained trust in the brand.

The aforementioned preference for online administration already lends credence to such a strategy.

4. Covid: Reasons for Optimism

Of course, the biggest factor impacting the funeral insurance market over the last two years (as indeed has been the case for all life insurance products) has been the Coronavirus pandemic.

Sales clearly suffered during the pandemic, with the falls in intermediated channel sales and rotation into (and out of) direct channels discussed previously occurring across the market.

However, despite an initial sharp spike in NTUs (26% to 40% in Q2 and Q3 of 2020, respectively), lapses slowly improved, from a high of 23% in 2020 Q1 to a 2-year low of 20% in 2021 Q2.

This improved persistency could be due to an increased appreciation of the importance of cover, and this is corroborated by consumer responses – 79% of consumers stated that funeral insurance has become more important as a result of Covid.

Figure 8 Change in Perceived Importance of Funeral Insurance after Covid. Source: NMG Funeral Consumer Study.
5. Opportunities

One consistent theme is the need to resolve the glaring issue of persistency. Various strategies are already playing out as outlined earlier in this article.

Despite an initial drop in sales, Covid has lifted consumer awareness and demand for cover.

There also appears to be a gap in the market between funeral and underwritten insurance, where we’re starting to see the emergence of ‘semi-underwritten’ or non-underwritten life products. The topic deserves its own article, but there will be key questions such as:

  1. Which group of providers are best placed for this? Those already in funeral or mass market, or those already in the underwritten space?
  2. Which dynamics (e.g. sales channels) will be similar to the funeral market and which will look more like the underwritten market?

We believe funeral insurance will continue to be an exciting and dynamic sector going forward, and opportunities such as those we’ve outlined will result in improvements for customers and insurers alike.


The information in this communication is for information purposes and is not intended to be detailed advice described in the Financial Advisory and Intermediary Services Act. The fund, administrator and trustees cannot be held liable for damage or loss suffered as a result of any action that you take based on the contents of this communication.

YOUR INVESTMENTS IN Q4 OF 2021

 

Markets struggled in November on news of the Omicron variant, which was initially thought to be a more dangerous variant with more mutations. This was on the back of a fourth Covid wave racing through Europe, which had already led to lockdowns.

Globally, supply chain pressures are easing, both China and Japan have announced additional policy stimuli, whilst the US household saving rate continues to drop, supporting consumption. Continued uncertainty around Covid has allowed monetary policy to stay more accommodative for longer. This should allow economies to continue to grow, albeit at a slower, more sustainable rate.

From a South African perspective, some performance has been hampered by a series of poorly timed unfortunate events. Eskom’s ability to supply power rapidly decreased over the course of 2021, bringing the highest amount of load shedding within a single year. This has battered the local economy, as load shedding reached level 4 across the country. Talks of Renewable Energy through the REIPPP Programme remain in the far future, with no real short-term fixes in sight.

The main economic factors impacting the fourth quarter include:

Identification and Panic of Omicron South Africa’s virologists were the first to identify the new strand, but this brilliant discovery had a dire backlash. Countries throughout the world immediately shut borders to South Africa, causing immediate travel restrictions into the county. This dealt the South African tourism sector a massive blow over its most crucial months of the year. What has since transpired is that the Omicron variant appears to be less severe, but more contagious than Delta. Countries have since slowly backtracked on these restrictions.
Global Inflation pressures continues to increase The cost of growth has been high inflation. Developed markets have reached year on year inflation numbers far above comfortable levels, with the United States reaching 7%, the highest since 1982. We expect interest rate increases early in 2022 to help curb these values.

 

Looking back on 2021, the SA Equity Market had stellar performance across all sectors, as economic growth continued to recover. Value stocks outperformed growth stocks for the first time in 5 years.

SA Bonds ended the year at expected performance. South African cash performed below historical expectations due to Interest rates remaining low to allow for more stimulus for economic growth.

International equities provided great returns for the year, driven mainly by the Developed markets. International and Domestic Property clawed back some of its major losses of 2020. The Rand ended the year negatively but performed well relative to other Emerging Market currencies.

Over 2021 the main topics of economic relevance included:

 

Covid-19 Vaccinations COVID-19 Vaccines were rolled out across the globe and provided some much needed (but not complete) stability to markets.
Impact of loadshedding Eskom provided the highest number of hours of loadshedding within a single year since the phenomenon began. This consistently hindered  growth within the economy at untimely moments within the year.
Commodities boom The mining sector contributed R128bn to government revenue in 2021/2022 as mineral sales increased 57% year on year.
Global Inflation Year on year global inflation gradually increased throughout the year, with the expected “transitory” inflation of 2020’s stimulus becoming a far more prevalent and worrisome issue as the year unfolded. Continued stimulus at the beginning of the year, combined with supply chain pressures, drove inflation to decade highs by the end of the year.

 


The information in this communication is for information purposes and is not intended to be detailed advice described in the Financial Advisory and Intermediary Services Act. The fund, administrator and trustees cannot be held liable for damage or loss suffered as a result of any action that you take based on the contents of this communication.

RETURN TO OFFICE TIPS

 

The collaboration and socialisation that we have missed out on when working from home is one of the leading attractors to being back at your desk. Global studies indicate that the busiest days in the office are Tuesday through Thursday, as many try to extend the weekend experience. However, the most productive days are said to be Monday and Tuesday.

So how does one decide when to return?

  1. When is senior leadership in the office? Planning your schedule to coincide with the strategic planners in your company can provide you with the opportunity to interact and build valuable career defining relationships.
  2. Where do I focus better? Ensure that your most productive days are spent somewhere you can focus.
  3. When is the team in the office? There is nothing that builds team relationships better than spending everyday together, so consider when your team is in so you can collaborate with them.
  4. When do you have the most meetings? There is little more frustrating than poor connectivity on video calls. Ensure that on those meeting packed days you have the most stable connection at your disposal.
  5. Social distance: don’t forget to consider that offices no longer run at full capacity due to pandemic restrictions. Ensure you clearly communicate and discuss your plans to the team and leadership to ensure a safe return to office.

Remember to look after your health

Settling into a new schedule can be stressful and exhausting, making it important to prepare and manage your stress. Plan a healthy meal and snacks for the day ahead. Bring in a reusable water bottle and stay hydrated.

Sitting at a desk 5 days a week, 8 hours a day, can cause a significant amount of strain on your body. One of the most important things you can do during the day is exercise. Consider walking and stretching as part of your lunch break. It will not only burn calories, but it can help you destress and refresh.

Be safe

Remember to bring your mask and keep a spare one in the car or bag (just in case).

Take note of your companies return to office health and safety procedures, although many of your colleagues, if not all, may have been vaccinated, contracting COVID-19 is still a risk. It is important to ensure that you continue to social distance, take precautionary measures and to not go to the office if you have tested positive for the virus. It goes without saying that we need to be conscious and understanding of all co-workers who may be dealing with childcare issues, illness, loss of loved ones, or financial insecurity.


Disclaimer: The information in this communication is for information purposes and is not intended to be detailed advice described in the Financial Advisory and Intermediary Services Act. The fund, administrator and trustees cannot be held liable for damage or loss suffered as a result of any action that you take based on the contents of this communication.