Are you financially prepared for the inevitable? – On the Money with Jarryd Neves

Jarryd Neves
On the Money. Budding stock market investor Jarryd Neves, of BizNews, sends out an invitation to everyone who wants to ask questions about share investing – but is too embarrassed to ask. Write to [email protected] And tune in for his regular Monday column: On the Money

My grandmother died last week. As much as I am saddened by her departure, a sense of relief was what I felt the most. At 92, she was rather frail. The dementia she battled only made her situation more unpleasant. Over the years, it worsened. Pretty soon she had become a mere shadow of the loving, caring matriarch that I remember her as.

Everyone says their grandmother was the best cook, which is ridiculous – because mine was.

A simple cup of coffee, was transformed into a treat for the senses. So flavourful – so smooth it was, I’m convinced it moonlighted as a jazz musician at night. Her chocolate cake was known all over Cape Town. A decadent symphony of flavours to grace the palate of those lucky enough to eat it. Even a simple breakfast food – the humble scrambled egg – would cause your taste buds to shimmy and dance with glee.

I spent many a school holiday in her lounge, watching TV under a blanket she knitted, while nibbling on all sorts of treats – explains why my body shape resembles a discus, not a javelin.

No matter, I still have the memories.

Now, she was a fastidious woman. Rather amusingly, she once told me that she never goes to bed with a dirty kitchen, because heaven forbid something happens overnight. Her departing gift would be a dirty kitchen for all to see. Now, she was long past the stage of managing a kitchen – but that didn’t stop her from leaving her affairs in order.

In typical Rhoda fashion, she had prepared for this moment. Paying for a funeral policy so that no one would have to worry about those expenses. Having all her ducks in a row for when the chickens came home to roost. Twisted poultry metaphor aside, I like to think of this as her last act of love.

We don’t like to think about death – but it is very much a part of life. We all have an appointment with the Grim Reaper some time, so it’s best to have these things ready before he rings the door bell.

Not only do you make the grieving process easier for those you leave behind, but simplify an incredibly stressful time in the lives of  your loved ones.

You may not have R1 million in the bank, prized artworks or valuable jewellery that need divvying up, but it is essential that everyone over 18 have a will in place. Itemising your assets and possessions is a good place to start. This will make it easier for you to know where to begin and leave instructions for your wishes to be carried out.

Secondly, it’s important to create a comprehensive list of any debts that you may have. No one wants to talk about money or finances at a time such as this, but debts and poor money management could also cause resentment and animosity between family when you’re no longer around.

Perhaps most important, is selecting the right executor. Picking someone that is responsible, level-headed and trustworthy is essential.

Now, I must admit something. Appointing an executor, drawing up a will and determine my beneficiaries is something I have avoided. I’ve always thought, perhaps superstitiously, that dealing with that would invite negative incidents. However, I think it’s time I took my grandmother’s advice.

It’s time to clean my kitchen up. I suggest you do, too, if you haven’t already. She was almost always right.

Last week, I asked you to send me your finance and investment queries. Here, Johan Steyn, CFA* of Stellenbosch University, shares his expert advice by providing answers to your questions.

Dylan Beukes asked,

I have R40,000 that I would like to invest. However, I have no experience with investing. What do you suggest I do?

 The first thing I would suggest is to think about what your saving and investing goal is with the money. Once you have a clear idea of what it is you want to achieve, it will guide your investment decision making process. For example, if you want to save for a deposit on a new car in one year’s time, the decisions you make will look different from a goal where you want to save for retirement in 30 years’ time. Assuming you would not need access to the funds in the short term, my suggestion would be to consider investing in diversified exposure to growth assets, such as listed equities. These days it is quite easy to do via a platform like EasyEquities, where you do not need a lot of investing experience to take control of your own investments. It is relatively simple to obtain globally diversified exposure via a range of ETFs on the platform. Without giving any financial advice, I would suggest you look into ETFs that track broad international indexes such as the MSCI World, or MSCI Emerging Markets index. No one can tell you whether any specific time is a good time to invest, but history has shown us that it is time in the market that matters and not necessarily timing the market.

N. Kooverjee asked,

If someone gets into a cushy R30 000 per month position should they purchase or lease a car?

That is a difficult question, because cars are generally not considered appreciating assets (apart from certain rare or vintage cars). I think it comes down to whether you will need to use debt to purchase the car, in which case you’ll have to compare the monthly expense with the lease expense. You will need to crunch some numbers by making a few assumptions, such as how long do you expect to keep the car and how much do you think you will be able to sell it. Then you will be able to calculate the total expense related to the car over the time you had it for both scenarios. In my experience the lease option tends to work out more expensive. This makes sense as the company leasing the car needs to make a profit. However, there may be exceptions, so it is best to double check by running the numbers.

  • Johan Steyn, CFA is a lecturer in investment management, from the department of business management at Stellenbosch University. He holds a Masters in investment management and has a background in fund management.

Have a question about share investing? Write to me at [email protected].

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