Last week there were yet again rumours about junk status. Let’s review the current status:
There have been quite a few shifts in the markets and when viewing the South African economy as a puzzle, there are a number of puzzle pieces need to be strategically managed by the government as well as the treasury. These are things like employment unrest- we have noticed that quite a few companies are busy revising their salary increases. The average rate is 7.8%, therefore count yourself lucky if you get an increase bigger than this.
The recent accusations against Pravin Gordhan play a significant role and should he be found guilty, the rand will most definitely be affected negatively and junk status could become a reality.
Internationally, announcements by Janet Yellen for a very possible interest rate hike will also lead to further pressure on the rand.
Amid economic uncertainty, it is still important to save and invest. Ecsponent offers products that give great security and peace of mind.
Preference shares are always a good option in times of uncertainty- it offers security, a five year fixed term, you are able to invest directly into the revenue of a company and these profits can be paid out monthly. It is an after-tax product and will be paid out in the form of dividends.
Important factors to consider when investing
Cost is the number one priority- look at cost strategies applied to your portfolio as well as the diversification thereof. Preference shares gives you the opportunity to not only choose and secure a fixed rate, but also gives you the option of a prime linked rate- this gives you a bigger variety and your specific goal would be better achieved.
At Ecsponent we provide clients with a 100% cost allocation and disclose the net effect from the start.
How to ensure that an advisor is able to provide these products
It is important that the advice given is reviewed by the Financial Services Board (FSB) and any listed company would make use of accredited, registered advisors with a code given to them by the FSB. An accredited financial advisor would also be able to provide you with documentation proving they are authorised to sell listed preference shares.