What is the effect of the first 100 days of the GNU on your investment portfolio?

Riaan Botha • October 23, 2024

The Government of National Unity (GNU) was formed between the African National Congress (ANC) and nine other political parties. The GNU governance structure was established after the 27 May 2024 national and provincial elections during which no political party obtained a 50% plus vote. In his inauguration address on 19 June 2024, President Ramaphosa describe the GNU as the beginning of a new era in South African politics.


The previous GNU was formed in 1994 and dissolved in 1999. The aim of the previous GNU was to govern through consensus seeking and not governed by the winner take all approach. The vision of this GNU is to set South Africa on a path towards social cohesion and nation-building.  

This political shift has fostered optimism around the country’s economic future. The collective effort from politicians to participate in GNU was welcomed by business and the relationship between the private sector and government has been improved. A positive vibe was created on the local financial markets and the South African Rand broke R18 to the US Dollar. The performance of the local asset classes from 1 June 2024 to 30 September 2024 were:


  • The JSE All Share Index rose with 12.83%
  • SA All Bond Index increased with 16.29%.
  • Listed Property Index Tracker Funds increased 25.77%
  • Money market rates saw a 0.25% decline.


The GNU was not the only factor that influenced the prices of asset classes and other economic indicators, like interest rates, also played a role. It is however the positive economic sentiment that GNU has created through the collective decision-making process from different political parties that played a positive role in the minds of investors.

 

The way forward?

In the short term we could expect that investment portfolios will perform above average depending on that the economy performed well, and that earnings of listed companies increases.

 What is the lifespan of this GNU? The previous political collective decision-making structure survived for 5 years. In the nineties South Africa had a dominant political party in Parlement as well as a better performing economy. However, this time is different, and a performing economy with prosper financial markets could create a scenario that it is better for political parties to be part of GNU than to be left out.

 

Dr AP Botha

21 October 2024

Should you withdraw your Pension and pay off your home?

By Francois Le Clus • May 28, 2025
Should you withdraw your Pension and pay off your home? It's perfectly normal to ask whether you should use your pension to pay off your home when leaving an employer. This decision involves weighing the tax on the withdrawal, the interest saved on your bond, the future growth of your pension fund, and the contributions needed to catch up. Example: Anne is 40 years old with a pension fund worth R3,500,000. She bought a home 10 years ago for R3,000,000 and bonded it over 20 years at an 11% interest rate, with monthly repayments of R30,965. After 10 years, her outstanding bond is R2,258,225. If she withdraws her pension, she’ll receive R2,408,300 after tax—enough to settle the bond and have some cash left over. By paying off the bond early: She saves R1,467,919 in interest. She frees up R30,965 in monthly cash flow. However, if she keeps the money invested, her pension could grow to R37,921,470 by age 65 (assuming 10% annual growth). To match this value after using her pension to pay off the bond, she’d need to invest R28,580 per month for the next 25 years. That’s R2,385 less than her current bond repayment, so she does save monthly—but only for the next 10 years. After that, she’s committed to investing R28,580/month for 25 years to break even.  Not everyone’s calculation is the same and there are endless amounts of permutations to this calculation, but it’s important to note that you need to consider all of these factors when making these crucial decisions.

GEWOONTES VIR GELUKKIGE AFTREDE

By Riaan Botha • May 28, 2025
Ons ontleed watter gewoontes meewerk om ’n gelukkige aftrede te verseker. Hierdie maand bespreek ons hoe om gesond te lewe tydens aftrede. Mediese kostes verhoog hoe ouer ons word. Die koste van ’n mediese fonds verhoog jaarliks met meer as die inflasiekoers en mediese uitgawes sal in die toekoms ’n al groter persentasie van ons persoonlike uitgawes vereis. Dit is daarom belangrik om so gesond as moontlik te leef. Hier is verskillende stappe wat gevolg kan word om gesond oud te word: Eet gesond. Moenie oorgewig wees nie. Word sterker deur oefeninge te doen wat jou spiermassa behou. Doen jaarliks mediese ondersoeke om te bepaal hoe gesond jy is. Beskerm jou gewrigte en beenstruktuur deur krag- en rek-oefeninge te doen. Verminder rook en alkohol-inname om jou kanse van kanker en ander siektes te beperk. Indien jy ’n familie-geskiedenis het van siektes soos kanker en hart-toestande. moet jy vir gereelde mediese toetse gaan om vroegtydig te bepaal of jy nie die siektes onder lede het nie. Verbeter jou liggaamsbalans deur oefeninge te doen soos om op een been te staan terwyl jy jou tande borsel. Hierdeur verseker jy dat jy nie gereeld jou liggaamsbalans verloor en val nie. Studies het bewys dat dit help om jou fisieke en geestelike gesondheid te behou deur sewe tot agt ure per nag te slaap. Hou jou brein-funksie of kognitiewe vermoë in ’n goeie toestand deur brein-oefeninge te doen, soos om nuwe stokperdjies te beoefen of memoriseringsoefeninge te doen. Volg ’n aktiewe sosiale lewe. Studies het getoon dat mense met ’n aktiewe sosiale lewe minder geheue-probleme ontwikkel. Hulle het ’n verminderde kans om eensaam te voel en depressief te word (Health Connection, Cooper, University Health Care, 9 September 2024).