Living the Good Life with Platinum Banking from Absa
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Platinum Banking Platinum e-Zine Issue #64 February 2015 Living the good life with Platinum Banking from Absa Inside this Issue Don't let your emotions Ntwala Island Lodge - Make healthy living a way of affect your financial future exclusive travel offer life – it could save yours Great reads - award- Lauren Beukes - exploring Superrugby - the annual winning books for 2014 the dark side of life clash of the titans Go to Platinum Banking Contact Us More Platinum News Don't let your emotions affect your financial future "We all have unique personalities and instinctive responses to choices we face, including financial choices. These intrinsic behavioural patterns can have a profound effect on our financial decision-making, and can ultimately determine whether or not we achieve our financial goals," says Paul Nixon, Head of Investment Specialist Support at Barclays Africa Wealth and Investment Management. According to research conducted by Barclays Wealth and Investment Management, the innate need for emotional comfort is estimated to cost the average investor around 3–4% in returns on an annual basis. Nixon explains that this loss of returns is partly due to what is known as ‘the behaviour gap.’ “The “Understanding your financial personality and behaviour gap explains the risk-tolerance is the first step in the process of difference in what our returns creating a financial strategy that will assist you would have been if we were to stick to sensible investment in reaching your financial goals.” rules and actual returns that are determined by our short- term decision-making, mostly based on fulfilling our emotional needs.” In times of market flux and uncertainty, irrespective of whether markets are rising or falling, we often make incorrect investment decisions, and end up buying high and selling low. The cycle of emotions that investors experience that can have an effect on their investment returns is illustrated by the graphic from Barclays below. These emotions often have no correlation to market movements, and can lead to trade-offs between short-term emotional comfort and long- term investment returns. Rising markets often lead to excitement, fear of 'losing out' and an emotional need to invest more, resulting in investors buying shares when prices are high. At the other end of the scale, falling markets can lead to fear of loss and panic, and can cause investors to sell their shares when prices are low. Craig Pheiffer, Head: Private Client Asset Management at Absa Wealth and Investment Management, explains that markets often overreact on both the upside and the downside. Whatever the market reaction though, Pheiffer says it is important that investors stick to their individual investment strategy, and not panic. “It is understandable that investors are concerned when markets fall and start to question their investments. What an investor doesn’t want to do, however, is to make rash short-term investment decisions that have negative long-term wealth consequences.” Source: Barclays It is clear from the representation above that the emotional reaction to investing begins and ends with a reluctance to invest, which Barclays Capital describes as “an emotional and costly base state experienced by most investors.” Your reactions to the different emotional investment cycles are determined by your financial personality. Barclays Wealth and Investment Management states that the average investor loses 4-5% in investment returns each year by leaving their capital in cash, rather than investing it in a diversified investment portfolio. “Fulfilling our emotional need to avoid loss by not risking our wealth by investing it is the most basic trade-off between comfort and wealth creation, and is potentially a very costly emotional response,” says Nixon. A reluctance to invest can lead to an investor only deciding to invest after a sustained period of market growth, leaving him open to the negative effects of buying when prices are high, i.e. lower returns and increased anxiety over the performance of his share portfolio. To facilitate the creation of the ideal investment strategy for an investor’s financial personality, a financial adviser should have a clear understanding of behavioural finance and how it affects investment decisions. Behavioural finance uses a combination of psychology and financial theory to understand the connection between markets, emotions, personality and reason. To determine the best combination of high-risk, high-reward and low-risk, low-reward investments suited to a specific investor, the first step would be to determine an investor’s tolerance to risk. Knowing the investor’s risk tolerance will enable a financial adviser to build an investment portfolio that achieves the best possible returns relative to the stress and anxiety, inherent to the investment process, with which an investor is comfortable. Higher risk tolerance indicates an ability to cope with a higher-risk, higher-return portfolio, while low risk tolerance would lend itself to a lower-risk, lower-return solution. “Understanding your financial personality and risk-tolerance is the first step in the process of creating a financial strategy that will assist you in reaching your financial goals. Once you understand your natural responses to financial decisions and their possible impact on your financial well-being, you and your financial adviser can start building your investment portfolio in a way that reflects your personal comfort levels and maximises your potential for achieving financial success,” concludes Nixon. Photos - iStock Ntwala Island Lodge - exclusive travel offer Situated 70 kilometres upriver from the Victoria Falls, Ntwala Island Lodge is a wonderfully secluded Chobe destination. Ensuring personalised service and culinary expertise, Ntwala offers privately guided activities (big game, fishing and birding) and exclusivity and intimacy within a complete holistic African experience. The lodge is situated among lush and pristine vegetation on an untouched Namibian cluster of islands linked by floating walkways, near the confluence of the Chobe and Zambezi rivers – where Namibia, Botswana, Zambia and Zimbabwe meet – in the heart of the Mambova Rapids. White sand beaches and palm trees give the islands a romantic ambience and the Chobe National Park and Victoria Falls are in close proximity. The lodge comprises four ultra-luxury styled suites, each inclusive of a private plunge pool and viewing deck, annex bath feature, indoor and outdoor shower, a private sala extending enticingly out over the water, a coffee station and complimentary minibar and a safe. The large spacious rooms are airy and full of light, absorbing the sounds of water, birds and river wildlife. The lodge’s main complex comprises an indoor/outdoor lounge, a bar, a walk-in wine cellar, a dining area with individual tables, a small reference library, a curio shop and an elevated river-facing viewing deck. You can meander between the multiple waterways with your personal guide and private boat, cruise the quiet backwaters, revel in an exclusive Chobe sunset cruise while viewing a plethora of game, or pursue the famed Tigerfish. The eastern tip of the Caprivi Strip is a veritable bird watchers’ paradise and few guests fail to be impressed by the variety of bird life that greets one from dawn to dusk. Birdlife endemic to the area include Rock pratincole, Pels fishing owl, Pygmy geese, African skimmers and Schalows turaco. Activities included in your accommodation comprise private guided game cruises along the Chobe National Park on the Chobe River, private guided sundowner boat cruises, birdwatching walks and boat cruises, fishing with spinning tackle as well as fly fishing. Guided walks can also be arranged on Impalila Island, including afro-botanical walks, cultural village walks and a walk to a 2 000-year-old baobab tree. There are also numerous activities in the area that can be arranged, such as chartered day trips to Victoria Falls, including a “Flight of the Angels” plane excursion, day trips to Victoria Falls by road, a charter flight over the Chobe and Zambezi Rivers and Impalila Island, and game drives into the Chobe National Park. Offer details: • R13 694 per person sharing for 3 nights • Valid for travel until 30 June 2015 • Please call Good Taste Travel on 087 285 3601 for bookings Included in the offer: • Return economy airfare with SA Airlink from Johannesburg to Kasane Airport, including airport taxes • Road transfer from Kasane Airport to immigration (Chobe River) • Boat transfer from Kasane immigration (Chobe River) to Ntwala Island Lodge • 3 nights’ accommodation at Ntwala Island Lodge in a suite • Breakfast, lunch & dinner • Laundry • Private guided game cruises along the Chobe National Park on the Chobe River • Private guided sundowner boat cruises • Birdwatching walks and boat cruises • Fishing with spinning tackle as well as fly fishing • Guided walks can also be arranged on Impalila Island • Government taxes and park fees • Road transfer from immigration (Chobe River) to Kasane Airport • Free postage of documents • Travel information pack Photos - www.ntwalaislandlodge.com Make healthy living a way of life – it could save yours February is Healthy Lifestyle Awareness Month, an important initiative to not only get people thinking about their lifestyle choices and the effects of these on their longevity, but also the quality of life they experience. The good news is that, with minimal effort, healthy living can become a way of life for all of us. The Mayo Foundation for Medical Education and Research has an easy-to-remember formula: ‘Eat 5, Move 10, Sleep 8.’ Add to that ‘Drink 9 or 13’ and you’re on your way to improved health, more energy and a drop in health risks like heart disease, high blood pressure and diabetes. Eat: 5 servings of fruit and vegetables in a balanced diet “You just need to take that first small, yet “Don't worry so much about sustainable step to start enjoying the long-term foods you shouldn't eat.