On to long term investments

Well, I chatted about life insurance more than anything else in the prevoius blog, and I'd like to move onto investments today.

What client's dont understand with long term investments is that the portfolio that is chosen is not guaranteed to perform at the rates which they are predicting. This is where financial planners come in. When you take out an investment, you will be assisted in chosing an investment portfolio, a vehicle made up of underlying assets which are baskets of investment in various elements of the market.

There are so many portfolio's ranging from high risk to low risk, low risk being more smoothed portfolio's which give an average growth, holding back high growth in times of good performance, and topping up in times of low performance, in essence smoothing it to have a balanced, but generally low performance, this is a safe option.

When you choose a portfolio at the start of your investment it may be one which is doing particularly well at the time, however these portfolios do not stay level, and can fluctuate even into negative percentages. This is why it is imperitive for you to visit your financial planner at least once a year, to evaluate your financial portfolio as a whole. Revisit your choice of fund selection and possibly switch to a different fund provided it is at the right time. What clients often do when thier investment policy takes a dip is cancel, this just chrystalises the losses and you end up losing instead of trying to recover.

People often just have a once off relationship with thier financial planners, but rather compare it to a doctor. You make an appointment with your doctor when you need to, or for your check up, the same goes with your financial planner. Make an appointment with them once a year, they are there to help, build a relationship and keep in touch.

Remember also that when your portfolio which you have chosen performs badly, it is not the insurer's error. Each fund which is designed and set up for investment is approved by all the necessary authorities and cannot be unitlaterally altered. There is a mandate to each fund in which the fund managers can make small changes but they cannot change the whole make up of the fund. Exactly the opposite can happen that if they do, people may be furious that the fund was changed compared to what they originally chose.

This is why it is important with the aid of your financial planner to keep tabs on your investments, dont take out a policy and forget about it until it matures. Monitor it, chat with your financial planner and make it work. Your financial planner is there to help you and advise you, but ultimately it is your own investment to manage.

Till next time.

Inside "gaff" on long term investment/life insurance

So it is said that insurance brokers are the biggest "sharks" in the world. Some maybe in the "olden days", but the FAIS Act of South Africa has seen to it that brokers, or better known now as Financial planners are more monitored and restricted in what they do. For instance, a financial planner is only allowed to market/sell insurance policies or investment plans for which he has been accredited. This means that the financial planner has to have the correct knowledge and ability to be able to do a full "needs analysis" on each client's financial portfolio and financial needs. Not just any financial planner can sell just any type of contract to just any client.

Since the implementation of the FAIS Act, and the increasing publications and transparency, hopefully the industry will start to maintain a name of trustworthiness and reliability.

What is also not usually known is that financial planners' commission is negotiable. There are various ways of paying the commission to the financial planner, firstly you can choose to pay them "up front" which means that they will take the full amount of commission at the inception of your policy and there will be a "loan" account or commission account on your policy. Each month when you pay your premium, a portion of your premium will go toward the commission loan account. This used to be the only way that commission was paid.

This is not a very common practice any longer, since the implementation of the FAIS Act, now you will find more and more that the commission is paid "as and when". This means that the commission is payable to the financial planner as and when a premium is received. The commission portion is then taken from the premium. This is more common on your life insurance contracts.

Life insurance: Very often mistaken for investment. This is understandable, because when these types of contracts first became popular they were designed to provide an investment account as well as life insurance. This does not mean that the investment account is there for dipping into when in need, these investment accounts were designed to buffer the risk so that the premium does not sky-rocket or the risk in carrying the life insurance was not unrealistic. These contracts better known as "universal" contracts were difficult to understand and because of this, they were marketed incorrectly.

Now, life insurance is just that: Life insurance. You pay a premium for life cover, if you die, they pay, if you live you pay. If you cancel you cancel, no cash back, no refunds. Its the same as vehicle insurance, if you don't need it, you pay, when you need it, they pay. It's a simple concept and with better understanding, people know what they are contribution premiums toward.

Remember to read your contract from start to finish when you receive it after taking out life insurance or long term investment. In actual fact at any time you are entering into a contract.


Until we chat again....

money-politics-crime

I have been following the Brett Kebble trial quite closely and even more so now that I'm on Twitter, I can follow MandyWiener and AmaBhungane for constant updates on twitter from the court house. Its amazing to hear it from thier perspective because they tweet about the attitude of the witnesses, the accused and the other witnesses in the court. Things like the "Classic awkward moment: Mikey Schultz asked Agliotti for his news paper to read the headline 'king rat trapped'"
Moments in the court house that you would never read about in the paper, like when Mikey Schultz told Mandy Wiener to tweet faster :-) I love to read the replies on twitter too, and get the vibe from them as to what they feel about the whole case. Clinton Nassif seems to be changing his view on the history of events that took place, and does not seem to implicate Agliotti as much as he did on the affidavits in the beginning? What will happen to his 204 Immunity and the State case if he does change his testimony so drastically? Court was adjourned at lunch time after the rather emotional Clinton Nassif had been asked to calm down a few times by the Presiding officer.

The funniest was the Zapiro cartoon of the "three stooges" ( quoted from Mail & Gaurdian) are standing in a queue for T-shirts with the phrase "I killed Brett Kebble and got off scott Free". What did it for me was that Mikey Schultz (MS) showed AmaBhungane that he's saved the pic on his cell phone as his screen saver. The arrogance, makes you wonder what the "three stooges" think of the NPA at this stage?

Looking forward to continuance of trial on Monday 2 August 2010 at 10am.