Author: Hereford Group

We still have a long way to go in the fight against the dreaded COVID-19 pandemic. As we well know however, economically speaking at least, we can’t simply lie down indefinitely succumbing to its steely grip.

Let’s rather, particularly as we celebrate Nelson Mandela’s birthday this month, remember that our ‘rainbow nation’ is known for its resilience and ability to overcome even the worst that has been thrown at it.

As this storm passes and we gradually begin to normalise, another rainbow will emerge beckoning us all to rebuild – and let’s hope it will ultimately still yield the proverbial ‘pot of gold’ when all is said and done.

So how do we go about rebuilding? Well, it is a complicated process for many, and it will not be the same for everyone, but there are a few basic steps to consider.

Review

After any storm, the first thing to do is damage control. Assess the damage, include everything that may have been lost or compromised – i.e. – loss of staff, reduction of budgets – possibly really important budgets too, like acquiring stock or marketing. Ensure your financial statements and reports are fully updated so you can make an accurate accounting too.
Revisit your original Business plan. If you had astutely enlisted the help of a professional Financial Planner pre-COVID-19, hopefully you will have allowed for such emergencies and built in contingency plans. You should have had sufficient funds to at least see you through the worst of the storm.

Re-direct

Now you need to review your financial status. Will you need financial assistance or loans? We offered some guidance on that in our article on relief and advice for SMMEs weathering the storm. Also decide on where you will go from here from a structural point of view.
Will you be able to save on travel costs and office space of more people work from home from now on? If you lost staff will you replace them or go the route of outsourcing specific skills? You could save on this too, by paying only for what you need when you need it. Your options are numerous, so consider them carefully and let your Financial Planner help.

Re-build

Now you physically start to rebuild. Knowing exactly where you stand and armed with some cash to go the next round you can set some new goals and create clear timelines for how long you intend to take to get back to where you were pre-pandemic.

Start to work on new budgets and financial plans. You need to ensure new budgets account for the re-training of staff or hiring of new staff, new inventory and marketing etc. Possibly you can cut back on your own salary for a while, just to get things back on track.

This will of course depend on your own liquidity – again a good reason to consult your Financial Advisor – and especially to let him or her assist you to ensure you have good contingency in place for the next time this type of situation arises!

Rebuilding individual wealth planning follows the same principles

Wealth planning and the re-building of a wealth plan, follows pretty much the same three basic principles as the rebuilding of a business. Review the losses incurred to your portfolio within the slump period – reassess your portfolio and see where changes can be made to minimise that damage – and rebuild a solid plan to get you back on track and include contingency for future unexpected events.

This is something that we strongly advise you do with the assistance of a professional experienced Financial Planner. Remember they have dealt with similar situations on a number of occasions and in many different circumstances. Think of it like this. After a storm would you be happy to rebuild yourself – or would you rather be assisted by a rescue crew and construction experts?

You are unique

We at Hereford group have been successful for the last quarter century because we have based our philosophy on the simple principle that every business, organisation and individual is different. The rebuilding process will not be exactly the same for anyone and it is exactly for that reason that one should consult an expert in this field to guide you through the process.

Just as we have done our best to advise you through the storm, as the rainbow finally emerges it’s time to rebuild, so contact us and let us help you through this very important next phase too.

Stay positive and stay safe!

Some might say the COVID-19 pandemic would have put something of a damper on one of South Africa’s greatest celebrations – the Birthday of the late President Nelson Mandela. If anything however, the way we have, as a nation, resolutely and bravely tackled the pandemic is testament to much of what he taught and instilled in us.

Mandela became a global icon, seen by all the world as a champion of human rights and one who possessed that rarest of qualities – true forgiveness. He was one who preferred passive resistance, but we should never forget that he was a great activist too. In his own words “I learned that courage was not the absence of fear, but the triumph over it. The brave man is not who does feel afraid, but he who conquers that fear.”

These word reflect the passion of a man who fought to conquer fear and are a great reminder to us all right now as we emerge from this global pandemic that we too need to conquer our fear of this scourge and start to look to opportunities that lie beyond it. So how exactly do we do that?

Take action

As frightening as this adversary may be, flight is not going to help us so the only other option – to fight – is definitely our only path. There is a great saying that “Life is not about waiting for the storm to pass.” Right now we need to start looking for any silver lining that this dark cloud may have presented to us.
As a nation, as business people, and individuals on a path to building a solid future, we need to take action right now to see what we can do to regroup and rebuild. Sometimes adversity offers the greatest opportunities – let’s get out there and start looking for them now.

Don’t let emotion affect reason

In so doing, let’s just utter a word of caution. Remember that you are probably highly emotionally charged right now and possibly even desperate. Be very careful not to let your emotions override your reasoning and start looking look into some ‘too good to be true’ solutions.

Let your Financial Advisor assist you with the choices you make. Remember they have been at the front line of the financial battle that has ensued from this huge economic disaster – and they are more likely to know exactly where to put those eggs if you are rebuilding the nest.

Focus on the long term

You may well also be inclined to look to quick fixes, selling off the wrong assets, or actually compromising your position because you aren’t able to see how you will be better off if you still take a longer term view.
Certainly you may have to make some sacrifices in the short term, but remember you are planning to return to your former glory, not just save the immediate situation.

See the opportunities that lay in front of you>/h3>

This adversity has certainly created some opportunities for us to take advantage of as we claw our way back to stability. Interest rates are at their lowest for as long as we can remember, so we should be able to capitalise on the savings we have made on our bonds.

We have been able to save on spending in restaurants, on travel and probably a few other business related expenses, because we have changed the way we have done business. All these savings can be used to cushion some of what we may have lost, or for some who have managed to keep earning, these are savings that can be used to great benefit as a part of our wealth portfolio.

There are great opportunities to buy too – Bargain basement shares prices, commodities from businesses that have folded and the businesses themselves are all up for grabs. All these are opportunities, but again it is important to be guided as to what are really good purchases.

Let your FA be your guide

We at Hereford Group have been offering such guidance for 25 years and are proud to say that we have been there for all our clients throughout the worst of the storm. We are there for you now too, to guide you as you regroup and rebuild your business and your wealth portfolio.

Contact a Financial Advisor to assist you to make the most of the opportunities that have arisen from this pandemic and ensure that you are always well equipped to withstand whatever life can throw at you and your family.

Mandela said “The chains on all of my people were the chains on me.” We are all in this together – so let’s fight it together and take what we can from it – to emerge victorious in the end. Stay safe.

Inflation is best understood in terms of its effect –i.e. a sustained rise in consumer prices or the decreasing purchasing power of our money. A moderate level of inflation is considered positive –what we don’t want is hyperinflation nor do we necessarily want large scale deflation, which can have all sorts of negative consequences for economies.

There are varying economic opinions as to the underlying causes of inflation. In general,I find the monetarist theory or quantity theory of inflation to carry the most merit.But no one theory always perfectly captures 21st Century economic complexity and in many respects the theory is often considered too simplistic.This then leads to other views such as “demand pull inflation”, “cost push inflation”and “supply shock inflation” etc.

Because there has been so much publicity around the extent of the fiscal and monetary response to the coronavirus pandemic, what continues to surprise many investors is that there have actually been remarkably few areas around the world where inflation is out of control.

If we consider the monetarist view, where economist, Milton Friedman famously said “Inflation is always and everywhere a monetary phenomenon”, why then are we not experiencing global hyperinflation?

Read the full article below:

Where is the Inflation?

As always, and especially in these trying times, our team is available to answer any questions that you may have. Please feel welcome to phone us on +27 21914 4966 or send an email to info@seedinvestments.co.za (general enquiries) or wealthadmin@seedinvestments.co.za (private client assistance).

Kind regards,

Ian De Lange CA (SA)

Director & CIO

The disastrous impact of the COVID-19 pandemic has no doubt heralded an unprecedented panic amongst the public, businesses, and of course government Ministers and employees at the forefront of the battle.

It has brought out the best and the worst in people and organisations alike. It has produced heroes who risk their lives on a daily basis and villains set on taking advantage of the situation. Fortunately it has also seen some of the more fortunate come forward to extend a helping hand to those who are drowning!

How do SMMEs weather the storm?

Although some of the giants of industry and the corporate world have fallen, or are at least tottering badly, SMME’s will probably be the biggest casualties at the end of this whole mess. They are, for the most part, the most vulnerable in times of distress. Fortunately though there are some relief options available right now to them:

A word of caution

At the outset be warned that two stringent conditions are attached to the available relief funds, the first being that your business needs to be fully up to date with SARS and secondly, although they have great interest rates and easy repayment terms, these are loans and should not be mistaken as free grants.

Guaranteed Loan Scheme for SMMEs

This scheme is being rolled out by the banks and the initial phase is only available to companies with an annual turnover of less than R300, 000,000 and obviously in good standing with their bank. Some of the notable features are:

1. Funds borrowed through this scheme can be used only for operational expenses such as salaries, rent and lease agreements, contracts with suppliers, etc.
2. Individual businesses can accept only one COVID-19 loan.
3. Loans will cover only up to 3 months operational costs and drawn every month.

The Department of Trade and industry Small Business Relief Fund

There are a Business Growth/Resilience Facility and a Debt Relief Finance option. Only one of these can be applied for.

The SAFT (The South African Future Trust) – known as ‘the Oppenheimer family fund’

SAFT (an independent trust set up by the Oppenheimer family) have partnered with certain local banks – I.E. Absa, First National Bank, Investec, Nedbank, Mercantile and Standard Bank to extend financial support to SMMEs.

These 5 year, interest-free loans, administered by the Partner Banks on behalf of SAFT, will be paid out as concessionary loans – only to qualifying SMMEs.

In the case of all these relief funds we cannot set out the terms of what will qualify your business, but you need to apply to find out if you are eligible. If you don’t ask, you can’t receive!

It’s not too late for financial advice

The inclination, when many SMEs facing liquidation are advised to look for alternatives and seek advice, is to say “Well that ship has already sailed!” This is really not necessarily so and astute Financial Advisers can very possibly assist you to obtain relief, shift assets, consolidate debt, find alternative more cost effective ways of operating etc.

It ain’t over ‘till the fat lady sings’ and ‘weathering the storm’ means finding innovative ways to avoid just letting go and drowning. Hereford Group have for 25 years been finding solutions, not for the masses, but for individuals and individual companies, all unique and all facing different issues.

We are there for you – contact us and let us advise you before you throw in the towel. We are here to assist and ensure that when the next disaster comes along you will be far better prepared to meet it head on – and ride the tide of misfortune like a surfer who has just found the perfect wave!

Stay positive and stay safe.

The old adage ‘hindsight is 20/20 vision’ could not be more appropriate than when applied to the year 2020. The massive impact of COVID-19 on every aspect of society, and of course the global markets, has left us reeling and wondering how we could possibly have foreseen what was about to happen.

Well, although we now learn that there may have been some who warned of this type of pandemic sweeping across the globe, the average man in the street certainly could not have known. All we can do now is what we always need to do when faced with any major setback – try to maximise what we can learn from it and find ways to turn it around in the days to come.

Hindsight is looking at how 2020 has affected us so far – and how we may have been better prepared – and foresight is to look positively towards 2021 and do what we need to, to ensure that next time – we are!

2020 hindsight

So, talking purely from a financial planning point of view, what can we take out of the COVID-19 disaster?
There’s another old adage that says ’the rich get rich and the poor get poorer.’ This will ring very true as we look back at 2020. Let’s not take anything away from some of the great individuals, companies and organisations though that have very generously contributed cash, interest free loans and vital equipment to assist those who have been in dire need of help.

The reality however is that many people with money have gotten a lot richer by being able to invest in a crashed market when stocks were at their lowest. Some in fact have already made millions.

From the point of view of the ordinary many in the street, one has to think, “had I just been better prepared with the 3 to 6 month savings cushion my Financial Advisor wanted to set up for me – and the income protector he advised – I too may have been in a position to ride the storm and even make that investment in bargain basement stocks!”

So, better preparation, cash fluidity, solid insurances – all part of a well-constructed financial plan, that’s the 20/20 vision we could have taken into 2020 to make it a far less painful experience than it has in fact been.

2021 foresight

You’ve probably heard it before, but looking ahead is the best advice we can give you. Don’t see only what you are facing right now, but look to ways to change it and move on. To do so includes heeding yet another old adage – ‘Adapt or die!’ Adaptability will be the key to the every businessman’s survival though this 2020 turmoil.

You may need to look to new technologies, new ways to do business, like for example have more people working from home, less employees and more outsourcing, changing products or services, learning to sell products successfully online – the list goes on and on – and they are all essentially about being adaptable.

Diversify and trust

It was heartening to note in research conducted in the CFA Institution Trust report, that South African’s have a high level of trust in local financial institutions. This is important because you need to trust your Financial Advisor to make important decisions about how you can diversify your assets and investments.

Having all your eggs in one basket can never be good, and would have seen you potentially in far more trouble during this pandemic than if your financial plan had been more versatile and balanced.

We at Hereford Group have been giving this kind of advice to individuals, SMMEs and the corporate world for over 25 years, and have earned their trust by understanding that they are all unique and all have bespoke financial requirements.

Look before you leap

An astute Financial Advisor can advise you now of the many ways you may be able to tackle what may seem like an impossible situation. Don’t leap into the abyss in despair until all your options have been explored. It often just takes an outside perspective from and expert in the financial field to find a way for you to move forward.’

Contact us for free advice and consultation – and let’s use the remainder of 2020 to look with 20/20 vision to 2021 – and beyond.

Stay positive and stay safe!

One thing that is for sure is that some valuable lessons are being learned from the Coronavirus crisis. As this dreaded virus continues to hold us in its grip many things are being realised about where we might have been going wrong, and what might be more important to us.

The environment has been given a great relief during the lockdown, as displayed in the blue skies in China and clear canals in Venice, telling us that perhaps we need to take a much closer look at carbon emissions caused through industry.

Many of us would have found our close family time rewarding in many ways and possibly some personal priorities have been shifted. Unquestionably from a financial point of view many of us will have been greatly tested and perhaps we need to be looking at what our financial structure was and whether more astute planning might have found us in a far better position right now.

‘What if’s’ are a very hard pill to swallow though at a time when some are really cash strapped, temporarily out of business, or who have taken a beating on the markets. As a company that always takes a long term view, we try to encourage our clients to do likewise and believe many of our clients can, if not entirely recover, at least cushion the blow before it is too late.
Here are a few important things you can review and seek astute financial advice on right now…

Risk benefits

These are financially challenging times, but they might have been a little less stressful if your risk had been lowered by astute financial planning and management. Ensuring that your risk benefits are all reviewed and well maintained now is important and not too late.

Income protection

If there is another thing to have learned from COVID-19 is that there will always be certain things that we are not in control of and could not have foreseen. Making sure you have sufficient cover and protection on your income in the event of an illness, injury or retrenchment is just one way you can try to make lemonade when life throws you lemons.

Cash is not king when the court is crumbling all around him

Over the last 5 years, Cash has been one of the best performing assets, so if you were ‘in Cash’ you would have done pretty well. Right now however, and in the short term, it is not wise to hold too much cash as an investor, as interest rates are tracking downwards. We have already seen a significant drop in the repo rate and who knows where it may still go to.
Bargain hunting for the bold

One of the silver linings of this dark cloud is that for those investors who may be holding onto cash this is ‘bargain hunting’ time! Even with the slight upturn in the markets in the last few weeks, some investors buying at the bottom of the downturn have already made millions!

Our advice is not to shy away from investing due to the market downturn, but rather use the opportunity to invest in “discounted” stock. Something to be noted and certainly not ignored is that despite two major crashes over 15 years, local equity is still the best performing asset class – so it seems that equities always come through.

Serving the individual for over 25 years

Nobody likes ‘I told you so’s, but it is a fact that due to astute financial planning many of our Hereford Group Financial Advisors prior to, and even at the outset of the recent financial slump, saved their clients thousands, if not hundreds of thousands, of Rands. This was achieved through creating the right portfolios in keeping with their client’s own financial objectives and capabilities.

Our Financial Advisors are feeling the pinch as much as anyone, but ‘lockdown’ definitely does not mean ‘shutdown’ and we are there for you, as we have always been, ready to give all the advice you need.

Contact us whenever you need us – and remember valuable lessons can be learned from every crisis situation, so take cover, take action and most importantly – take care!

The COVID-19 pandemic has held the world to ransom, locked up in their homes seeking new and different ways to conduct their businesses – and their lives. The choice of continuing to work in a different way has, however, been a privilege mostly only the affluent have been able to entertain, as many South African’s have been jobless and without a lot of hope.

The Government have reacted swiftly and decisively to contain the virus and support those who will have suffered most from the pandemic. For that we can be grateful, but what will the country and the world look like post COVID-19?

Essentially there are three main scenarios that could play out…

Victory and recovery

Firstly we could find the vaccine (and recent reports are very positive in this respect) and begin a gradual, but definite financial recovery. This is the best case scenario and would mean that COVID-19 will soon become a thing of the past and we can get on with our lives.

Even in this case we are most likely in for a pretty long term recovery, the timeline of which will depend on the business we are in. Some companies will even have prospered in this period, some like the travel industry and events companies, as just 2 examples, will probably need to take a fairly long term recovery view.

Resurgence and longer recovery

Secondly we could begin to emerge from our cocoons in the belief that with improved numbers we need to get back to work, ignoring the fact that the virus is not yet beaten. As Ricardo Hausmann from the Harvard Kennedy School put it: “At the limit, people will have to decide between a 10% chance of dying from the virus and a 100% chance of starving to death”.
Then if the virus has a resurgence we’ll be right back to square one. This will obviously mean a much longer term recovery and astute businesses and investors will not be too easily coerced into a false sense of security. We all need to be prepared for this eventuality.

Defeat and little or no recovery

Thirdly – and the worst case scenario, is that COVID-19 will continue for a very long time, unchecked and undefeated with numbers simply continuing to grow. In this case Governments and commerce will be forced into providing support of such huge proportions that we could be facing a world economy that will never recover to where it was prior to the advent of the pandemic.

Gauging the ingenuity and determination of the human population however, this is unlikely. Realistically though, whichever scenario does play out, the damage to the economy has been significant and there will be an extensive period of recovery.

Hindsight is 20-20 vision

The real upside of COVID-19, if it can be said that there is one, is that we should have at least learned some valuable lessons as people, businesses and investors.

As people – we should now understand more than ever that certain things in life are simply bigger than us and beyond our control. There is a very real need to protect one’s self and one’s family from unexpected events like serious illness and the sudden disability to earn an income.

We do believe that when, as Financial Advisors, we advise our clients to include income protection, life insurance and disability cover in their finance plan, it is not just to sell policies, but really in their best interests.

As Businesses – we need to have learned that regardless of the nature of our businesses I.T advancements and social media mean we have created a different world and a different way to operate. We need to keep up with the times and, as this pandemic has shown us, have a decent income protection plan for the business too. A good Financial Advisor will also tell you that any business must start out with sufficient reserves to cover lean times.

Finally as Investors – we will have been clearly reminded that if our investment portfolios are in good hands, our collateral damage in such a time can be greatly minimised. Also, if you have the reserves to buy in ‘lean times’ you can make some hefty returns giving you a far more rapid recovery!

For over 25 years Hereford Group have, through our excellent, experienced and knowledgeable Financial Advisors, been helping many clients weather the kind of storm that COVID-19 has unleashed.

Contact us to be amongst those who will be facing a far better life after this pandemic, or at least to ensure that you will in the future be able to rise above the worst that life can throw at you. Stay positive, stay in touch and stay safe out there!

The alarming spread of Coronavirus, regardless of how it will all play out has at least been a reminder to us all of our own vulnerability when measured against the forces of nature and a clear reminder that hygienic practices should never be ignored and should be a part of our everyday lives.

It was not only COVID-19 either that sparked a massive market slump, putting South Africa and much of the globe back into a recession similar to that of 2008, but it certainly was a major factor, reminding us that our global financial stability is always precarious and also very much subject to the unexpected.

The one thing that is inevitable is that our lives will always be disrupted by the unexpected and it is exactly why we urge our clients to be prepared for it by factoring it into a holistic short and long term financial plan.

As it stands right now, whilst we are shaken by the recent turn of events we can only remind ourselves of the famous ’Doors’ pop group of the seventies song ‘Riders on the storm’ and the opening stanza that said:

Riders on the storm
into this house we’re born
into this world we’re thrown….

When it comes to COVID-19 and market slumps – we must be ‘riders on the storm’ and here’s a few ways that ‘riders on the storm’ get though a financial crisis and get their ‘stock’ back in one piece…

Expect it to happen

‘Riders of the storm’ are always prepared for the unexpected. This should never come as a shock to you as you know that investing in the markets is not a one day game.

Don’t panic or get emotional

Your cattle and your horses may be getting ‘Spooked’ when lightning strikes, but as an investor you know that lightening seldom strikes twice in the same places. Work with your Financial Advisor to see where there may have been some chinks in your armour and adjust your portfolio in preparation for the next time.

Don’t sell off assets

One of the main things to be aware of is not to sell the herd! These are assets you have worked for and in time they will recover. If you want to sell off some unwanted stock, or see any tax gain from taking a loss, then you can look into it with your Financial Advisor. ’Riders of the storm’ don’t go it alone and neither do you need to.

View the long term and buy if possible

If anything take a long term view. Assess which stock has held its own even through the storm and if possible think of it as a time for bargain hunting! Buy now from panic sellers if you have the cash.

History has shown that market slumps, regardless of their source, have always eventually passed, stocks have recovered and those who were brave enough to ride above the storm have always scored in the long run.

Correct preparation makes for less impact and better recovery

As every athlete can tell you, the correct preparation for any event will greatly reduce your chances of injury and enhance your chances of good recovery. Think of astute financial planning in that way too.

Had you worked with an experienced, qualified Financial Advisor prior to the downturn the chances are that your portfolio would have been varied and designed in such a way as to have built in some cushioning during a time of market crisis.

Expect the unexpected

To reiterate a point made in our last article “Given the alarming extent that the Coronavirus has spread in such a short time just reminds us that the only thing that can always be expected is the unexpected.

Be prepared for any extended period that you may not have an income. If you aren’t, this could have the most devastating effect on any wealth planning you may have been doing prior to when it happens.”

Let the Hereford Group difference make the difference

The Hereford Group don’t just advise on and sell financial packages, because we know we are dealing with people, their hopes their fears, the crises they may face and in particular their differences.

Why not get together with one of our Financial Advisors and ensure that your preparation for your life’s journey, whatever it throws at you, is well enough planned to ensure that you will be getting that big pay out after you have ‘ridden the storm’ and got your herd safely to market.