South African financial markets are facing ongoing pressure, with signs indicating a move towards stagflation. Economic growth is nearly stagnant, flirting with recession, while inflation remains persistently high. This trend mirrors global patterns, where inflation levels are higher than anticipated, leading developed nations to maintain their nominal interest rates. The US Federal Reserve plans to keep its bank rate steady through March and May, with changes likely later in the year.

Global Economic Prospects forecasts slower growth for most economies in 2024 and 2025 compared to pre-COVID-19 levels. Growth is expected to reach 2.4 percent in 2024, rising slightly to 2.7 percent in 2025, significantly below the 3.1 percent average of the 2010s. Per-capita investment growth is forecasted at just 3.7 percent for 2023 and 2024, less than half the average of the previous two decades. Without intervention, global growth will likely remain below its potential throughout the rest of the 2020s.

South Africa

South Africa's economic growth outlook for 2024 and 2025 remains bleak, with low prospects. According to STATSSA's recent release of 2023 economic growth data, the quarter-on-quarter growth rate in Q4 2023 increased by 0.1%, contrasting with the previous quarter's 0.2% decline and falling short of the expected 0.3% growth. Six out of ten industries contributed to this growth, led by a 2.9% expansion in the transport sector. Mining activity rebounded by 2.4%, compared to a -1% decline in Q3, and manufacturing showed a slight improvement of 0.2%, partly due to reduced power cuts. However, agriculture (-9.7%) and trade (-2.9%) suffered significant declines. Overall, South Africa's economy expanded by only 0.6% in 2023, a notable drop from the 1.9% growth seen in the previous year.

Figure 1: South Africa’s economic growth rate remains under pressure.

In December 2023, retail trade in South Africa rose by 2.7% compared to the same period the previous year, surpassing market expectations of a 0.7% decline, and following a revised 1% decrease in the prior month. Meanwhile, manufacturing production saw a year-on-year increase of 0.7% in December, marking the slowest growth in three months, compared to a revised 2.5% rise in November, which was in line with forecasts.

USA

The US economy began 2024 on a strong note, with positive trends in business activity, job markets, sentiment, and inflation. Despite challenges like rising consumer debt and higher interest rates, GDP growth for Q4 surpassed expectations at 3.3%, the highest among G7 nations. Although interest rates remain elevated, a recession doesn't seem imminent. GDP growth is forecasted to hover around 2.0% until 2028.

Inflation in January 2024 slightly dipped to 3.1%, slightly higher than anticipated, with core inflation holding steady at 3.9%, defying expectations of a decrease. Though inflation is moderating, it hasn't yet hit the target level. Federal Reserve officials may consider tightening monetary policy further to achieve this. Meanwhile, unemployment held steady at 3.7%, with over 300,000 new jobs added in January.

Europe and the UK

In Europe, GDP growth is predicted to improve to 1.3% in 2024, which is still below its potential. This forecast marks a slight downward revision of 0.1 percentage point from previous estimates. It's anticipated to pick up further momentum, reaching 1.7% in 2025. For the euro area, GDP growth is expected to be slightly lower, at 1.2% in 2024 and 1.6% in 2025. In the UK, annual average growth of 1.9% is projected between 2024 and 2027, driven by lower inflation, a robust labour market, and the possibility of interest rate cuts, laying the groundwork for a return to historical growth levels.

Regarding inflation, headline CPI is forecasted to reach the European Central Bank's (ECB) and the Bank of England's 2% target during the year, though some volatility is expected. With GDP growth expected to remain stagnant, both the ECB and BoE are anticipated to cut interest rates starting from the second quarter of 2024, with each expected to reduce rates by 75 basis points, bringing them to 3.0% and 3.75%, respectively.

Emerging Markets (EM)

Global Economic Prospects predicts that growth in Emerging Market and Developing Economies (EMDEs) will hold steady at around 3.9% annually for the next three years. Although there will be a slowdown in China, other regions are expected to see improved domestic demand due to increased international trade. However, the recovery from the pandemic-induced recession of 2020 is anticipated to be sluggish compared to previous economic crises. In East Asia and the Pacific (EAP), economic activity is expected to decline due to issues in China's property sector and other structural challenges. Latin America and the Caribbean (LAC) will see only a slight growth increase, while the Middle East and North Africa (MNA) and Sub-Saharan Africa (SSA) are poised for stronger growth, particularly due to recoveries in oil-exporting nations.

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T&Cs apply. NMG Financial Planning (Pty) Ltd (Co Reg No. 1999/002506/07) is an Authorised Financial Services Provider – FSP6713  

This communication is not advice or tax advice and does not amount, under the Financial Advisory and Intermediary Services Act, to a proposal or personal recommendation or guidance, nor is it a recommendation regarding any financial product or service. The funds, and their administrators, and these entities’ officers do not take liability for any action you take or loss you suffer arising from this communication, as you will need to obtain advice from a registered financial advisor so that your own circumstances can be taken into account.

The financial markets started the new year with nervousness, as they began to factor in the likelihood of decreasing global inflation rates following the Ukraine-Russia conflict. Despite a decline in the US core inflation rate from 4.1% to 3.9% since September, a dichotomy emerged in the country's economy. In Q4 2023, the US GDP grew by over 3.0%, generating over 700,000 new jobs in December 2023 and January 2024, with an unemployment rate of 3.7%. The US Federal Reserve (FED) maintained its bank rate in January, signalling no immediate plans to decrease it in the upcoming March meeting.

While there is reluctance from the FED to lower interest rates, the International Monetary Fund's (IMF) world economic outlook report, released at the end of the month, predicts a soft landing for the global economy in 2024. Titled "Moderating Inflation and Steady Growth Open Path to Soft Landing," the report forecasts global growth at 3.1% in 2024 and 3.2% in 2025, slightly higher than the October 2023 projection. The IMF attributes this to the resilience of the United States and several large emerging market economies, along with fiscal support in China.

The IMF anticipates that disinflation prospects will pave the way for a soft landing, allowing for a reduction in interest rates, improved financial conditions, and the possibility of a more relaxed fiscal policy. However, the report warns that the temporary boost in growth could pose a risk of a more costly adjustment later on.

South Africa

The economic growth outlook for South Africa in 2024 appears grim, with forecasts from the Treasury, Reserve Bank, and various research institutions indicating a sluggish trajectory. Initial predictions of a 1.5% growth in 2024 have been revised downwards to 0.6% for 2023, 1.0% for this year, and 1.3% for 2024 by the International Monetary Fund (IMF). The upcoming National budget announcement is expected to shed light on the government's perspective on growth and its plans to tackle challenges such as loadshedding, port disruptions, and the weakening Rand.

In January, the Reserve Bank's Monetary Policy Committee (MPC) maintained the repo rate at 8.5%, despite a decrease in the inflation rate to 5.0% in December. The MPC identifies the precarious and fluctuating rand exchange rate and the Federal Reserve's rate reduction pace as key risks.

Figure 1: South Africa’s inflation rate is coming down steadily.

The US experienced a notable surge in new job creation in January, leading to concerns about the Rand's vulnerability. Following the announcement, the currency briefly tested the R19.00/$ mark. In South Africa, retail trade contracted by 0.9% in November 2023 compared to the same month a year ago, aligning with market predictions. The manufacturing sector saw a 1.9% year-on-year growth in November 2023, and an anticipated increase of over 2.0% in December.

USA

The United States is expected to experience a decrease in economic growth, declining from 2.5% in 2023 to 2.1% in 2024 and further to 1.7% in 2025. This slowdown is attributed to the delayed impact of tighter monetary policy, gradual fiscal adjustments, and weakened labour markets affecting overall demand.

Despite a slight dip from 4.1% in September to 3.9% in December 2023, the annual core inflation rate in the US remains nearly twice the Federal Reserve's target of 2.0%.

US core inflation rate remains sticky downwards since September 2023. 

In December 2023, retail sales in the US rose by 0.6% compared to the previous month, surpassing expectations of a 0.4% increase. This marks the largest growth in three months, following a 0.3% uptick in November.

Europe

The Euro area is expected to rebound from a low rate of approximately 0.5% in 2023, largely attributed to the region's significant exposure to the conflict in Ukraine. Projections indicate a growth of 0.9% in 2024 and 1.7% in 2025. The recovery is anticipated to be driven by increased household consumption, as the impact of energy price shocks diminishes with a lower crude oil price of around $20 per barrel. This, coupled with a decrease in inflation and improved real income growth, is expected to contribute to the economic upturn.

Despite these positive prospects, the International Monetary Fund's (IMF) world economic outlook still revises the Euro area downward by 0.3 percentage points for 2024. In the United Kingdom, modest growth is projected, with an estimated 0.5% in 2023, increasing to 0.6% in 2024, and a sharper recovery of 1.6% in 2025. This rebound is attributed to easing financial conditions and a decline in disinflation.

In terms of inflation, the Euro area is anticipated to experience a gradual decrease over the next few years, albeit at a slower pace than observed recently. Factors such as diminishing cost pressures and the impact of the European Central Bank's (ECB) monetary policy are expected to contribute to a decline in headline inflation from 5.4% in 2023 to 2.7% in 2024 and further to 2.1% in 2025, eventually reaching 1.9% in 2026.

Emerging Markets

In 2024, it is anticipated that emerging markets and developing economies will experience a growth rate of 4.1%, with a gradual increase to 4.2% in 2025. China is expected to grow by 4.6% in 2024 and 4.1% in 2025. The IMF's global economic outlook predicts a decrease in growth for emerging and developing Asia, dropping from an estimated 5.4% in 2023 to 5.2% in 2024 and further to 4.8% in 2025, primarily influenced by China's economic trends. India is foreseen to maintain strong growth at 6.5% in both 2024 and 2025. In emerging and developing Europe, growth is projected to rise from an estimated 2.7% in 2023 to 2.8% in 2024 before decreasing to 2.5% in 2025. Meanwhile, in Latin America and the Caribbean, growth is expected to decrease from 2.5% in 2023 to 1.9% in 2024, primarily due to Argentina's negative growth resulting from significant policy adjustments for macroeconomic stability. The region is then predicted to rebound, reaching 2.5% growth in 2025.

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T&Cs apply. NMG Financial Planning (Pty) Ltd (Co Reg No. 1999/002506/07) is an Authorised Financial Services Provider – FSP6713  

This communication is not advice or tax advice and does not amount, under the Financial Advisory and Intermediary Services Act, to a proposal or personal recommendation or guidance, nor is it a recommendation regarding any financial product or service. The funds, and their administrators, and these entities’ officers do not take liability for any action you take or loss you suffer arising from this communication, as you will need to obtain advice from a registered financial advisor so that your own circumstances can be taken into account.

In the complex landscape of personal finance, managing debt has become a focal point for individuals seeking financial stability. We delve into providing practical insights into effective strategies to navigate this financial challenge. From understanding the various facets of debt to implementing strategic financial approaches, an individual can equip themselves with valuable knowledge to enhance their financial wellbeing.

Understanding debt

• Types of debt: Different debt categories have unique challenges, with high-interest credit creating strain and loans with lengthy repayment periods complicating financial responsibilities. Recognising these nuances enables individuals to tailor strategies for a more sustainable approach to debt management.
• Impact of interest rates: High interest rates significantly affect debt management, making borrowing more expensive and diverting funds from crucial objectives. To effectively manage debt, understanding and navigating the influence of interest rates is essential for making informed decisions.
• Psychological aspects of debt: Dealing with debt extends beyond financial concerns, impacting emotional wellbeing. Stress, anxiety, and worry often accompany financial obligations, affecting mental health and relationships. Practical steps, such as openly discussing financial struggles and adopting realistic budgeting, can alleviate stress. Combining financial literacy with mental health support empowers individuals to manage the emotional toll of debt.

Strategies for financial stability

1. Building a financial toolkit: Creating a strong financial toolkit is essential for effective personal finance management. This includes budgeting, emergency funds, and foundational investment knowledge. Careful budget allocation, an emergency fund as a safety net, and basic investment understanding establish a solid financial foundation.
2. Debt assessment and prioritisation: Managing debt involves assessing financial obligations, understanding balances, and considering interest rates. Prioritising higher interest debts and strategically planning repayment minimises the interest burden, optimising resources and showcasing smart decision-making.
3. Budgeting: Budgeting is crucial for responsible financial management, providing a structured approach to allocate resources wisely. It acts as a strategic tool, detailing income, and expenses to ensure alignment with financial goals.
4. Emergency fund: Recognising the vital importance of an emergency fund is like fortifying your financial defences against unexpected challenges. This fund acts as a safety net, providing a cushion against unforeseen expenses and reducing the reliance on credit during tough times.
5. Debt repayment strategies: Unchecked debt can impede financial progress. The debt snowball and avalanche are two repayment methods offering strategic options. The snowball prioritises smaller debts for tangible victories and motivation, while the avalanche targets high-interest debts for a cost-effective approach.
6. Negotiating with creditors: During tough financial times, talking to creditors about reduced interest rates or extended repayment plans can ease the burden and promote financial stability.
7. Financial education: Continuous financial education is vital in the dynamic realm of personal finance. Ongoing learning empowers individuals to make informed decisions and navigate financial complexities.
8. Credit score: Credit scores are crucial for financial opportunities, impacting interest rates and access to various financial options. Improving credit scores makes individuals more reliable, creating a positive cycle of improved financial terms and expanded opportunities.

Long-term strategies for stability

1. Adopting sustainable habits: Fiscal responsibility extends beyond budgetary constraints; it encompasses a holistic approach to sustainable living. Embracing lifestyle adjustments that promote responsible spending and saving contributes not only to individual financial health but also aligns with broader environmental and societal considerations.
2. Continual learning and adaptation: Personal finance is not static but a dynamic arena that necessitates continual learning and adaptation. Staying informed about emerging trends and evolving financial strategies is essential for personal growth in finance.

Debt amortisation tool

A debt amortisation tool, often available online, helps users manage loan repayments by illustrating how payments are divided between principal and interest. Users input loan details like amount, interest rate, term, and extra payments to see the debt reduction over time. The free NMG debt amortisation tool is a valuable resource for effective loan management. With an easy-to-use interface, it simplifies complex financial calculations, providing a clear picture of the repayment journey. You can input principal, interest rate, and loan term to generate precise amortisation schedules, aiding informed financial decisions. The tool's intuitive interface allows users to visualise debt reduction over time, with real-time updates ensuring access to the latest financial information. Utilising the amortisation tool helps optimise debt repayment, explore the impact of extra payments, and work towards financial goals efficiently. It is a prudent and cost-effective choice for taking control of financial commitments.

In the ongoing challenge of managing consumer debt, knowledge is a key asset. By understanding the various aspects of debt and implementing practical financial strategies, utilising tools like debt amortisation online tools, consumers can position themselves for stability. The journey toward financial wellbeing requires diligence and practicality, and with informed approaches, consumers can navigate debt, fortify their financial foundations, and progress steadily towards economic security.

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T&Cs apply. NMG Consultants and Actuaries (Pty) LTD is an authorised financial services provider FSP 12968

Financial markets both locally and globally showed a robust recovery during the fourth quarter of 2023, successfully erasing losses from the initial ten months of the year. The sustained rise in interest rates by central banks worldwide, coupled with significant increases in oil and food prices, along with ongoing military conflicts in Ukraine and the recent developments in the Gaza Strip, raised concerns reminiscent of the Black Swan events observed during the global sub-prime crisis and the impacts of the Covid-19 pandemic.

Many economists and market analysts predicted a looming recession for the US and other developed economies, marking the second within three years. However, the downward shift in oil prices and other energy and food costs in the last three months indicated that the tighter monetary policies were beginning to yield positive results. This not only resulted in a decrease in inflation rates across most countries but also hinted at a tangible economic recovery, potentially steering most economies away from another recession.

Nevertheless, projections indicate a significant slowdown in economic growth in the US for 2024. While a recession might be avoided, there is an anticipation of a contraction in consumer spending as disposable income diminishes over time.

South Africa

In Q4 2023, the Reserve Bank's Monetary Policy Committee (MPC) maintained the repo rate at 8.25%. The December inflation rate (CPI change) increased 5.1%, slightly below the MPC's upper target of 6.0%. STATSSA's CPI report highlighted notable increases in food prices (8.8%), electricity (15.2%), water (7.9%), and petrol (11.9%), all surpassing the 5.9% CPI index from October the previous year. The MPC, considering high interest rates and market uncertainty, expects financial markets and asset prices to remain volatile, dampening investor appetite and capital flows.

The SA Consumer Confidence index remained low, at -17 in Q4, down from -16 as of Q3. This is the lowest festive-season consumer confidence reading in more than 20 years. This indicates that consumers controlled their spending during festive season shopping. 2023 was a year plagued with consistent loadshedding for 335 days. This equates to around 6,947 hours of loadshedding in 2023. The cost of loadshedding continues to be counted by citizens and businesses alike. Private generation is on the rise, with the Department of Mineral Resources and Energy stating in December that they had issued three requests for proposals requesting 5,000 MW of renewable energy from independent power producers.

USA

The US economy measured by GDP, grew by3.3% in in the fourth quarter of 2023, reflecting robust consumer spending despite high inflation and rising interest rates. However, economic growth is expected to slow down in the first quarter of 2024 as real disposable income stagnates, pandemic savings have depleted, and household debt levels have risen. The national unemployment rate was unchanged at 3.7% in December 2023 and is expected to continue rising through 2024. The Federal Reserve maintained its benchmark interest rate at its December 2023 meeting, after aggressively hiking rates during 2022 and early 2023 in an effort to combat inflation. Overall, economic growth is slowing, and risks are tilted to the downside looking ahead to 2024 amid declining consumer strength, tightening financial conditions, and a weakening labour market.

In Q4 2023, the US annual inflation rate edged higher to 3.4%,  from 3.1% in November, coming ahead the market forecast of 3.1%. The pick-up fluctuations in inflation have added to the uncertainties as underscored in the minutes of the Fed meeting in December 2023. However, the shallow recession have been avoided which indicates a soft landing.

Europe

In Q4 2023, the European Commission revised down its real GDP growth forecast for the eurozone from 0.8% to 0.6%, citing factors such as high inflation, increasing interest rates, and weak external demand. The sluggish performance had a more significant impact on GDP growth than initially anticipated. The projections indicate a gradual improvement, with GDP expected to reach 1.3% in 2024, still below potential and a 0.1 percentage point reduction from the previous estimate. Further momentum is anticipated in 2025, with a forecasted growth of 1.7%. For the entire euro area, GDP growth is projected to be slightly lower at 1.2% in 2024 and 1.6% in 2025.

The Commission anticipates a recovery in economic activity driven by improving consumption, supported by a robust labour market, sustained wage growth, and ongoing inflation easing. Regarding inflation, the European Central Bank's target of 2.0% over the medium term is expected to see a decline to 3.2% in the following year (2024) from the 5.6% projected for 2023, further slowing to 2.2% by 2025.

Emerging Markets

In the fourth quarter of 2023, emerging market economies continued to face challenges from high inflation, currency devaluations, and tighter financial conditions. However, some positive signs emerged towards the end of the year, which might translate to opportunities in 2024

Inflationary pressures moderated in many emerging markets, albeit at a slower pace than earlier in 2023. Consumer price inflation remained above central bank targets in most countries, but the easing of supply constraints and weaker demand brought some relief. This enabled several central banks to slow the pace of interest rate hikes, though policy rates still stayed above neutral levels.

India proved resilient with the IMF revising its 2024 growth forecast upwards to 6.3% in October 2023. This reflects India's robust domestic demand and strong investment inflows. Meanwhile, China's growth projections were trimmed to 5% for 2023 and 4.2% for 2024, underscoring the strain from its zero-Covid policies and real estate sector weaknesses.

Overall, emerging economies faced significant headwinds in 2023 but showed some adaptation by year-end. With inflation proving stickier than hoped, policy normalization is set to continue in 2024. But resilience in major economies like India provides some offset to the global slowdown's impact.

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T&Cs apply. NMG Financial Planning (Pty) Ltd (Co Reg No. 1999/002506/07) is an Authorised Financial Services Provider – FSP6713  

This communication is not advice or tax advice and does not amount, under the Financial Advisory and Intermediary Services Act, to a proposal or personal recommendation or guidance, nor is it a recommendation regarding any financial product or service. The funds, and their administrators, and these entities’ officers do not take liability for any action you take or loss you suffer arising from this communication, as you will need to obtain advice from a registered financial advisor so that your own circumstances can be taken into account.

As the new year unfolds, it presents an excellent opportunity to reflect on your financial standing and set meaningful goals for the coming months. Whether you are aiming to build an emergency fund, pay off debt, or invest for the future, establishing clear financial objectives is crucial for achieving long-term stability and success. By exploring a comprehensive guide to set financial goals for the year, to ensure that you are on the path to financial success.

Reflect on the past year

Before embarking on setting new financial goals, take a moment to reflect on the previous year. Analyse your financial successes and challenges, identifying areas where you excelled and areas that may need improvement. Did you manage to stick to your budget, reduce unnecessary expenses, or increase your savings? Understanding your past financial behaviour can provide valuable insights for crafting realistic and achievable goals for the coming year.

Define your priorities

Consider your financial priorities and aspirations. Are you focused on building an emergency fund, paying off high-interest debt, saving for a major purchase, or investing for long-term goals like retirement? Clearly defining your priorities will help you allocate your resources and efforts effectively. It's essential to establish both short-term and long-term goals, ensuring a balanced approach to your financial planning.

Set goals

The specific, measurable, achievable, relevant, and time-bound (SMART) criteria provide a framework for setting goals that are clear, tangible, and attainable. Break down your financial objectives into specific actions with measurable outcomes. For example, instead of a vague goal like "save more money," set a specific target such as "save R500 per month for an emergency fund." Making your goals achievable and time-bound adds accountability, making it easier to track your progress and celebrate your successes along the way.

Create a budget

A budget is a fundamental tool for managing your finances and achieving your goals. Start by listing your sources of income and detailing your monthly expenses. Categorise your spending to identify areas where you can cut back and redirect funds toward your financial goals. Be realistic when creating your budget, ensuring that it aligns with your lifestyle and allows for both essential expenses and discretionary spending.

Build an emergency fund

Building an emergency fund is a critical component of financial stability. Aim to save three to six months' worth of living expenses in a liquid, easily accessible account. This fund serves as a financial safety net, providing peace of mind in the face of unexpected expenses or emergencies. Allocate a specific portion of your income each month to steadily grow your emergency fund until it reaches the desired level.

Pay off debt

If you have outstanding debts, prioritise creating a plan for repayment. Start by listing all your debts, including credit cards, loans, and other obligations. Determine the interest rates and outstanding balances for each. Devise a strategy to pay off high-interest debts first, allocating additional funds to accelerate the repayment process. Consistency is key, so commit to making regular payments and avoid accumulating further debt. 

Click on https://nmg-debt-amortisation.sctechnology.co.za for a complimentary tool to assist you in the process.

Savings and investments

Set goals for both short-term and long-term savings. Whether you're saving for a vacation, a down payment on a home, or your children's education, allocate funds specifically for these purposes. But before goals like this is looked at, first and foremost make sure your retirement is secure. Ask a Certified Financial Planner to analyse your Pension, Provident and/or Retirement Annuities into account and calculate your projected monthly income at your required retirement date.  This exercise should be done in conjunction with your risk tolerance and financial goals.

Regularly review and adjust

Financial goals are not set in stone. Life is dynamic, and your circumstances may change throughout the year. Regularly review your progress, adjusting your goals and strategies as needed. Celebrate achievements, no matter how small, and use setbacks as opportunities to learn and improve. Flexibility in your approach will help you stay on track and adapt to evolving financial situations.

Setting financial goals for the year is a proactive step toward achieving financial success and security. By reflecting on the past, defining priorities, and employing the SMART criteria, you can create a roadmap to guide your financial journey. Establishing a budget, building an emergency fund, tackling debt, and strategically saving and investing will contribute to a more stable and prosperous financial future. Remember, the key is consistency, discipline, and a willingness to adapt as you work towards your financial aspirations.

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T&Cs apply. NMG Consultants and Actuaries (Pty) LTD is an authorised financial services provider FSP 12968

As the year draws to a close, many individuals find themselves facing unexpected challenges, and for some, this includes navigating the difficult terrain of retrenchment. Individuals facing this unexpected challenge often find themselves at a crossroads, both professionally and financially. In this article, we’ll explore strategies for coping with job loss and maintaining financial stability. The process of thriving financially during retrenchment involves a strategic and holistic approach that goes beyond mere survival. This year-end reflection aims to shed light on key strategies for navigating this difficult terrain, emphasising the significance of maintaining financial health amidst the uncertainties. Additionally, we’ll look into the crucial roles that retirement benefit counsellors and financial planners can play in helping individuals weather these storms and plan for a secure future.

Facing retrenchment can be emotionally and financially taxing, especially during the holiday season. It's essential to start by acknowledging and processing the emotions that come with job loss.

1. Assess your financial landscape: Begin by taking stock of your current financial situation. Evaluate your savings, investments, and outstanding debts. Create a detailed budget that prioritizes essential expenses and identifies areas where adjustments can be made. Categorize your expenses into obligations, needs and wants. This assessment forms the foundation for crafting a resilient financial strategy.
2. Rethink and restructure: Retrenchment often requires a re-evaluation of financial priorities and goals. This may involve rethinking major expenses, such as housing and transportation, and finding ways to reduce or optimise costs. Consider restructuring debt payments and exploring refinancing options to alleviate immediate financial pressures.
3. Diversify income streams: Thriving financially after retrenchment often involves diversifying income streams. Explore freelance opportunities, part-time work, or temporary assignments that align with your skills and interests. Diversification not only enhances your financial stability but also opens doors to new possibilities.
4. Prioritise mental and emotional well-being: Financial health is closely intertwined with mental and emotional well-being. Acknowledge and address the emotional impact of retrenchment, seeking support from friends, family, or professional counsellors if needed. A clear and focused mind is better equipped to make sound financial decisions.
5. Invest in learning and upskilling: Take advantage of the transition period to invest in your skills and knowledge. This could involve online courses, workshops, or certifications that enhance your professional qualifications. Upskilling not only boosts your employability but can also lead to new and potentially more lucrative opportunities.
6. Build and maintain an emergency fund: An emergency fund serves as a financial safety net during challenging times. If possible, allocate a portion of your savings to an emergency fund, ensuring that you have a cushion to fall back on in case of unexpected expenses or prolonged unemployment.
7. Network and leverage connections: Networking remains a powerful tool for career advancement. Leverage professional connections, attend industry events, and engage in online communities related to your field. Networking can uncover job opportunities, provide mentorship, and offer emotional support during challenging times.
8. Set realistic financial goals: Establish realistic and achievable financial goals that align with your current circumstances. These goals may include debt reduction, building savings, or investing for the future. Breaking down larger objectives into manageable steps makes financial thriving more attainable.

Consult Retirement Benefit Counsellors

Retirement benefit counsellors specialise in helping individuals understand and navigate their retirement plans, including employer-sponsored retirement funds. This is a complimentary service that all companies should provide.  When experiencing retrenchment, it's crucial to consult with a retirement benefit counsellor to gain insights into your existing retirement accounts, understand the options available, and make informed decisions. They can guide you on whether to roll over your retirement benefit into a retirement annuity, leave it with your former employer, or explore other possibilities.

Retirement benefit counsellors also provide valuable information about potential tax implications, penalties, and the long-term impact of different choices. By engaging with a counsellor, you can optimise your retirement savings strategy during this transitional period.

The role of your financial planner

In addition to retirement benefit counsellors, financial planners play a vital role in crafting a comprehensive financial strategy. Ideally, sit with a Certified Financial Planner® (CFP). During retrenchment, a financial planner can help you reassess your overall financial goals, create a new budget, and develop a plan to navigate the current challenges.

Financial planners can assist in identifying alternative income sources, managing debt, and strategically reallocating assets. They provide personalised advice tailored to your unique circumstances, helping you make informed decisions that align with both short-term needs and long-term financial objectives. By collaborating with a financial planner, you gain a strategic partner in navigating the uncertainties that accompany job loss.

As we approach the end of the year, those facing retrenchment can find solace and support in proactive financial planning. Retirement benefit counsellors and financial planners serve as valuable resources, offering guidance and expertise to help individuals weather the storm and emerge with a solid financial foundation. By taking proactive steps, such as seeking professional advice and making informed decisions, individuals can navigate retrenchment with resilience and set the stage for a secure financial future.

As the festive season approaches, our hearts are filled with joy, gratitude, and a spirit of giving. It's a time when we reflect on the significance of family, tradition, and the values that define us. This article explores the profound concept of incorporating charitable giving into your estate plan, turning the season of celebration into an opportunity to leave a lasting and meaningful legacy.

Leaving a lasting legacy

One of the most compelling reasons to incorporate charitable giving into your estate plan is the opportunity to leave a lasting legacy. By supporting causes that align with your values and beliefs, you can make a meaningful impact on issues that matter to you. Whether it's education, healthcare, environmental conservation, or humanitarian efforts, your philanthropic contributions can continue to benefit society long after you're gone.

Fulfilment of personal values

Your estate plan is a reflection of your values and priorities. By including charitable giving, you can ensure that your financial legacy reflects the principles you hold dear. This not only provides a sense of fulfilment for you but also communicates your values to future generations, inspiring them to continue the tradition of giving back.

Tax advantages

Charitable giving in your estate plan can offer significant tax advantages. In many jurisdictions, donations to registered charities are eligible for tax deductions, reducing the overall tax burden on your estate. This can be a strategic way to optimise your financial legacy, ensuring that more of your assets go towards causes you care about rather than being allocated to taxes.

Family harmony

Incorporating charitable giving can also contribute to family harmony. While it's crucial to provide for your loved ones, philanthropy can be a unifying force for your family. Engaging your heirs in discussions about the charitable causes you support can foster a sense of shared purpose and instil the importance of giving back. This shared commitment to philanthropy can create a strong family legacy that extends beyond financial wealth.

Social impact

Charitable giving allows you to contribute to positive social change. By earmarking a portion of your estate for philanthropy, you become a catalyst for addressing societal issues. Whether it's supporting medical research, education programs, or poverty alleviation initiatives, your estate can play a role in building a better world.

Community engagement

Many individuals have strong ties to their communities, and incorporating charitable giving into your estate plan is a powerful way to support local causes. Community-focused philanthropy can enhance the wellbeing of those in your immediate surroundings, creating a positive ripple effect that fosters a sense of interconnectedness and solidarity.

Flexibility and control

Charitable giving in your estate plan allows you to maintain control and flexibility over your assets. You can designate specific amounts or a percentage of your estate to charitable organisations, ensuring that your contributions align with your financial goals and the needs of the charitable sector. This flexibility enables you to adapt your philanthropic priorities over time.

A legacy of values, not just wealth

Ultimately, the gift of legacy through charitable giving is about leaving behind a testament to the values that guided your life. It's an expression of the belief that wealth, when used purposefully, can be a force for positive change. By intertwining your financial legacy with your philanthropic aspirations, you create a legacy that transcends material wealth, leaving an indelible mark on the world.

Give with your heart and your head

Unfortunately, some charities are not as reliable to ensure that as much as possible money go to the cause and not to salaries or overheads.  It is best to nominate a cause run of a charity than just nominating the charity and letting them do with the money that they want to.  This way you ensure that the utilisation of funds happens responsibly.

The festive season is more than just a time for exchanging gifts and indulging in feasts; it's a season of reflection. As you gather with loved ones, take a moment to contemplate the values that have shaped your life. Charitable giving, when integrated into your estate plan, allows you to weave these values into the fabric of your legacy.

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T&Cs apply. NMG Consultants and Actuaries (Pty) LTD is an authorised financial services provider FSP 12968

Global and South African stock prices faced continued pressure throughout October. However, a shift in sentiment occurred in the first week of November due to the Federal Reserve maintaining a more cautious stance on its bank rate and positive results from the US Non-Farm Payrolls report. The combination of lower international oil prices and a resilient US economy is now contributing to expectations of lower inflation and the potential end of the current interest rate increase.

In October 2023, the UN's Department of Economic and Social Affairs reported diverging economic activities among major economies. The United States defied predictions of a contraction, experiencing higher-than-expected growth in the first two quarters of 2023 despite active tightening of monetary policy since 2022. On the other hand, Germany entered a mild recession in the first quarter of 2023, and the overall growth performance of the euro area and the United Kingdom was weak. Economic growth prospects for China also remain subdued.

South Africa

The South African economy is slowly recovering, with the Minister of Finance stating in the Medium-Term Budget Policy Statement (MTBPS) that the treasury expects a 0.8% growth this year, aligning with the IMF's forecast of 0.9%. However, concerning aspects were highlighted in the MTBPS, indicating an increase in the budget deficit by R54.7 billion compared to February 2023 estimates. This results in a total deficit of almost 5.0% of GDP, higher than the budgeted 4.1% in February. Factors contributing to this include lower revenue from primary sectors, a rise in wage bill costs, and increased debt-service costs, now comprising 22.0% of total expenditure. As a consequence, total debt is projected to reach 77.0% of GDP, exceeding the 72% budgeted in February.

Inflation in South Africa reached 5.4% in September 2023, up from 4.8% in August. The Consumer Price Index (CPI) rose by 0.6% month-on-month in September. The main contributors to the annual inflation rate were food and non-alcoholic beverages, with an 8.1% year-on-year increase contributing 1.4 percentage points. Retail trade experienced a 0.5% decline in August 2023 compared to the previous year, marking the 9th consecutive month of decreases. On the other hand, manufacturing production in South Africa increased by 1.6% year-on-year in August 2023, marking the fifth consecutive month of growth in industrial activity.

USA

The US economy, despite concerns about a contraction due to active monetary policy tightening since 2022, not only avoided a downturn but also exceeded growth projections in the first two quarters of 2023. The latest non-farm payrolls report for October, released on November 3, revealed a softer stance on interest rates from the Federal Reserve. The report showed that the US economy created 150,000 jobs, falling short of the expected 160,000, and the unemployment rate increased from 3.7% to 3.9% in September.

Despite the failure of two major US banks in the second quarter of 2023, there was no significant impact on the overall economy. The robust job market contributed to a 2.5% increase in real personal disposable income at the aggregate level, particularly benefiting low-wage earners. While the US labour market appears resilient, there are potential risks on the horizon. Household savings are decreasing, and elevated debt levels could eventually exert pressure on private consumption.

Europe

In contrast to the US, economic activity in European countries has generally been slow. Employment remains high, with the EU's employment rate for individuals aged 20 to 64 at 75.3% in the first quarter, exceeding 80% in Germany. Despite stagnation in the Czech Republic and a technical recession in Germany in the first quarter of 2023, their summer unemployment rates dropped to 3.4% and 3.0%, respectively. Even in traditionally high-unemployment countries like Greece, Italy, and Spain, there were short-term improvements.

However, there is a growing concern among investors that Europe may face a significant economic downturn, contrasting with the belief in financial markets that the US is headed for a "soft landing." Analysts attribute Europe's challenges in reducing inflation to the substantial impact of Russia's invasion of Ukraine on food and energy supplies.

In the UK, after modest growth in the second quarter, the economy likely stalled in the third quarter due to interest rate hikes and strikes. Based on available data, GDP grew 0.2% month on month in August, following a 0.6% decline in July. Inflation remained stable at 6.7% in September, slightly above market expectations and well above the Bank of England's 2.0% target rate.

Emerging Markets

The most recent economic analysis from Deloitte Global Economics Research Center reveals that emerging market economies are performing better than their developed counterparts. In August, the composite purchasing managers' index for emerging markets was at 52.7, indicating expansion, while the index for developed markets fell below the critical 50 threshold. In the first half of 2023, most emerging markets benefited from robust global demand and higher commodity prices. Some countries also gained from shifts in global supply chains as businesses sought to move manufacturing away from China. Notably, emerging market central banks have been more successful in controlling inflation compared to developed markets.

Looking ahead to 2023, the OECD predicts a 6% growth for India, 5.4% for China, and 4.7% for Indonesia, outpacing the global economy's expected growth of 2.7%. The positive outlook is attributed to factors such as declining energy prices, easing supply bottlenecks, the reopening of China's economy, robust employment, and resilient household finances, according to OECD Chief Economist Clare Lombardelli.

As Black Friday approaches, the excitement for incredible deals and discounts builds up. While the allure of slashed prices and limited time offers can be hard to resist, it's crucial to approach Black Friday with a conscientious mindset to ensure that your spending aligns with your financial goals. The annual shopping extravaganza is renowned for its enticing deals and discounts. However, amid the excitement of potential savings, it's crucial to navigate this shopping frenzy with caution to avoid falling into common pitfalls and money traps. We explore the significance of financial planning over Black Friday and provide practical tips for making conscientious spending choices.

Understand the temptation

Black Friday is synonymous with bargains and savings, but it's essential to recognise the potential pitfalls. Retailers often use clever marketing tactics to create a sense of urgency, pushing consumers to make impulse purchases. Before diving into the shopping extravaganza, take a moment to reflect on your financial situation and set realistic spending limits.

Create a budget and stick to it

The adrenaline rush of Black Friday can lead to impulsive spending. To avoid overspending, establish a clear budget for your Black Friday shopping. Determine how much you can comfortably allocate to this event without compromising your overall financial stability. Consider factoring in essential expenses, savings goals, and any upcoming financial commitments. Having a budget will act as a guide, helping you prioritise your spending and avoid unnecessary purchases.

Differentiate between wants and needs

Retailers strategically market products to create a sense of urgency and desire. Before succumbing to the temptation of a "must-have" deal, pause and assess whether the item is a genuine need or merely a want. Focusing on essential purchases helps prevent unnecessary expenses and ensures your spending aligns with your priorities.

Research and price comparison

Just because an item is labelled as a Black Friday deal doesn't guarantee it's the best price available. Conduct thorough research and price comparisons before making a purchase. Utilise online tools and apps to track prices over time and ensure you are getting a genuine discount. This diligence can save you from falling prey to misleading promotions.

Before making any purchases, conduct thorough research on the products you intend to buy. Compare prices across different retailers to ensure you are getting the best deal. With numerous online tools and apps available, it's easier than ever to track prices and identify genuine discounts. Remember that not all deals are created equal, and being an informed shopper will contribute to a more conscientious spending experience.

Beware of impulse buys

The fast-paced nature of Black Friday, coupled with limited-time offers, can lead to impulsive decisions. Retailers strategically place low-cost items near checkout counters, enticing customers to add them to their carts. Stay focused on your predetermined list and resist the urge to make last-minute impulse buys.

Evaluate the true value of deals

Not all Black Friday deals are created equal. Some discounts may seem significant on the surface, but it's essential to evaluate the true value of the offer. Check product reviews, compare features, and assess whether the discounted item meets your quality standards. A seemingly attractive deal may not be worthwhile if the product doesn't align with your expectations. A question to ask: “will it fast track or hold back my journey to financial freedom?”

Avoid opening store credit cards on impulse

Retailers often promote store credit cards with exclusive discounts for Black Friday shoppers. While these offers may seem appealing, opening new credit accounts on impulse can have long-term consequences. High-interest rates and potential debt accumulation outweigh the immediate savings. If you're considering a store credit card, research its terms and make an informed decision.

Set realistic expectations

Black Friday can foster unrealistic expectations of extravagant savings. While discounts are prevalent, not every purchase will result in massive savings. Be realistic about the deals available, and don't let the fear of missing out drive your spending. Prioritise quality over quantity to ensure your purchases align with your long-term needs.

Utilise technology for additional savings

Leverage technology to maximise your savings. Many retailers offer exclusive online deals, and cashback apps or browser extensions can provide additional discounts or rewards. Utilising these tools can enhance your overall savings without succumbing to the pressure of in-store promotions.

Black Friday can be an opportunity to make significant savings, but it's crucial to approach it with a strategic mindset. By creating a budget, differentiating between wants and needs, researching deals, and staying disciplined, you can navigate Black Friday without falling into common pitfalls and money traps, ensuring a financially sound holiday shopping experience. Remember, the key is to strike a balance between enjoying the thrill of a good deal and making thoughtful, intentional purchases.

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T&Cs apply. NMG Consultants and Actuaries (Pty) LTD is an authorised financial services provider FSP 12968