RETIREMENT SIMPLICITY

Let the truth be told and let's not allow the devious marketing schemes of Insurance companies to determine your retirement.

Retirement in all its simplicity is – Will I have enough?

Our answer to that is, yes we all could.

We, in today’s society, fall victim to the never ending perception that; you will not be able to stop working and you will never have enough money, BUT, buy this policy and you will miraculously be in good standing to have an “early retirement".

Placing fear in the consumer is a tool that most companies have, at some point, used in order to push their “life changing” policy. Most still do.

This is a misconception.

All it comes down to is living by your means and not wanting more than what you actually need.

Sounds easy and we know that some of you are thinking that you don’t even earn enough money to “want.”

Refrain from conforming to what society wants and expects from you and soon enough you will realize that you could make your money last.

If each South African could fall into the habit of saving a small portion and instill these values in the generations to come, then retirement would no longer be just a far off dream, instead, become reality for all.

There are many other savings vehicles besides what you receive from your company.

Investments are often over looked and made to seem as if it is only for the “upper class” - another misconception of society.

Any one from, the minimum wage workers to the over paid lawyers can contribute to an investment vehicle; it’s about time companies started forwarding these opportunities to the masses. Stop pushing funeral policies of which most minimum wage employees own at least three and contributing over R100 per month to. 

The combination of your companies’ pension/provident fund, a retirement annuity and an Investment vehicle with minimal contributions and minimal fees is all that is needed to achieve a comfortable retirement, not the “Directo 2000 wishful thinking” insurance policy!

This is not something that you have to do all at once, gradually phase it into your life and at the same time rid your life of things you do not need.

Simplicity is a word we have forgotten and we get told that we can’t live without certain amenities that are being advertised.

Simplicity is where it all began and simplicity is where we need to take it back to.

CHARTS ON OUR FACEBOOK PAGE

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As a little incentive, the above chart and a few more can be found there.

BIGGEST CURRENT ACCOUNT DEFICIT SINCE '08

Pretoria - South Africa's current account deficit narrowed marginally but was still worse than expected in the fourth quarter of last year, hit by a weak currency as mining strikes repelled investment, Reserve Bank data showed on Tuesday.

The rand fell to a four-year low against the dollar after the figures, which revealed an economy struggling for growth in the face of subdued local and foreign demand for South African products.

The current account gap was at 6.5% gross domestic product in the fourth quarter of 2012 from a huge 6.8% in the third quarter, a revision from a previous estimate of 6.4%, the Reserve Bank said in its March quarterly bulletin.

While import volumes fell slightly in the quarter, the monetary value increased, largely due to a sharp fall in the rand.

"The nominal effective exchange rate of the rand on balance depreciated in the final quarter of 2012 as domestic constraints and labour unrest continued to weigh on international investor sentiment," the central bank said.

Investors dumped South African bonds and the local currency while credit agencies downgraded the country's sovereign rating in the wake of the often-violent strikes which began in August, hitting output in the key mining sector.

However, the fourth quarter current account gap was covered by financial inflows in the form of short-term loans to local banks and an increase in non-resident deposits.

"Net portfolio investment made a small positive contribution, whereas net direct investment registered an outflow of capital during the quarter concerned," the Reserve Bank said.

Economists polled by Reuters had expected a current account deficit of 6.3% in the fourth quarter relative to the previously stated 6.4% for Q3.

The rand hit a session low of R9.2125 against the dollar after the data - breaching the psychologically key R9.2 level - from R9.1047 before the data was released at 08:00 GMT.

"It is a huge deficit. It is disappointing but it's been financed relatively easily up to now and that's quite important. For investors the issue will be if the deficit can't be financed easily," Citadel economist Salomi Odendaal said.

ETM economist Jana Le Roux said: "It's a dual function of the increased import demand as well as the softer exports, which is keeping the deficit at these uncomfortably wide levels.

"Where the uncertainty comes in is the funding: we have seen portfolio inflows have remained rather strong into the beginning of the New Year, but there's a number of factors which are turning increasingly negative for the rand.

"Social unrest, the mining strikes that we've seen, these deficits that remain uncomfortably large, and we've seen the rand weaken quite sharply to levels previously seen about four year ago so whether or not these inflows will be sustained in coming months is uncertain."

Overall, the deficit on the current account widened sharply to 6.3% of GDP in 2012 from 3.4% the previous year, the Reserve Bank said.

The Treasury expects the wide shortfall to persist, averaging 6.2% over the next three years.

Spending growth in the fourth quarter contracted by an annualised 0.9% after growing by 4.1% in the third quarter, the first decline since 2009 when South Africa was in recession, the Reserve Bank said.

The drop was due to a fall in government spending and a sharp contraction in real inventories.

Growth in household spending, historically a key driver of economic growth, slowed to 2.4% in the quarter from 2.7% previously, constrained by a slow increase in disposable incomes and rising inflation.

Mar 12 2013 11:04 Reuters

NEW HIGHS LEAD TO MORE NEW HIGHS

I don't know how many people out there are acquainted with Jesse Livermore, although I do believe that everyone should be. Often I have conversations that go something along the lines of "hey, you might want to look at this stock, it's been doing really well and it's making new highs" and almost invariably the response I get is "I don't want to buy a stock that is trading at an all time high". 

Now, I don't understand why anyone would say that, or why people don't want to buy stocks that are continually getting more and more expensive. Look at something like Shoprite (SHP). At one point, it was also a penny stock, then later it started making new highs almost every week for, well, years really and now it is trading at R174.00 a share.  If you bought it at it's then all time high of say, R34.00 for example, would you have made a good trade? The answer is obviously yes.

Now what does any of that have to do with Jesse Livermore? I hear you pondering. Well, Jesse Livermore, somewhere in his book, says something along the lines of; he only buys stocks that keep making new record highs, because, record highs, tend to lead to more record highs. Look at Coronation Fund Managers (CML) as an example. 

So why is any of this relevant and what is my point? The point is, we here at Rock Capital are of the belief that it is probable for us to see the United States, and South African markets continue to make new highs for a little while yet. We have seen our correction, although only 6% - and by no means does it mean that we cannot go down further - it appears that for the next few months, possibly years, we will continue to be in a bullish market. Yes, there will be pullbacks, there always are and nothing ever moves in a straight line, however we believe that if we simply follow the market as we should, we will be following it up for some time yet. New highs lead to more new highs and the Dow Jones Industrial Average (DOW) just made a new high very recently. 

This does not change the rules of the game though, you need to make sure that you are in good strong stocks and that you buy them at the right time. In the words of Jesse Livermore "It isn't as important to buy as cheap as possible as it is to buy at the right time."