Your questions answered

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Nirdev Desai, Head of Sales at PSG Wealth, replies:

As an investor, you need to bear the following three tips in mind:

1. Holistic planning is key. Look at all aspects of your planning to be able to prepare realistically. A good example would be; that you need to consider your retirement planning alongside the option for liquidity - such as an emergency fund. Should you ever be retrenched or find yourself in an emergency, this would be problematic as your retirement funds and immediate emergency income needs will be at risk as that would be your only option as an emergency fund.

2. Always revisit your financial plan. Our circumstances are always changing, and our financial plan needs to be flexible enough to adapt to these changes. Regularly assessing your plan is crucial to ensure you’re on track. The best way to achieve this is to work with a financial adviser to ensure that your holistic financial plan delivers on all of your investment goals.

It’s vital to plan for unexpected events and setbacks such as retrenchments, loss of dual income in the household, or having to take on an extra dependant on in your household such as a parent or relative. We also need to include the positive use of dividends such as bonuses, inheritance, or tax rebates to be used to strengthen your financial goals.

3. Diversify your portfolio. Make sure you diversify your investment portfolio so that you are not exposed to the risk of having ‘all your eggs in one basket’. Working with a financial adviser will assist you in knowing which investment options and products are available to you, and they will help you tailor it to suit your financial goals.

ILLNESS HAS DISRUPTED MY PLANS

I may be required to retire eight years earlier than planned due to illness. As someone who has planned my later years down to a tee, I feel like everything is out of control, and I’m not sure if my savings will carry our family through this. I do have group benefits in place which I never paid much attention to and need guidance. Do you have any advice as to how I need to reset my path to adapt to this sudden change?

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Shreekanth Sing, Wealth Adviser at PSG Wealth, Northcliff, Johannesburg, replies:

As a start, we wish your strength during this time. Unplanned events arise and although we can never be fully prepared for the emotional and physical impact of these events on ourselves and our family, what we do have some control over is managing and mitigating the impact of this on your finances.

I am happy to hear that you do have benefits in place via your employer. Even though you never gave it much attention, hats off to your employer for providing this as it protects and provides employees who won’t necessarily take the steps to put this in place for themselves in their personal capacity.

You will need to speak to a qualified financial planner to assist you. Depending on how your benefits are structured you will have a portion allocated to retirement savings and a portion to risk cover. Considering your circumstances, you may have critical Illness cover in place. which can pay out a lump sum depending on the type and severity of the illness. Critical illness like cancer are increasing and this type of cover is becoming more vital for people. In addition, you may have income protection, which will pay you a portion of your income. Should you not be able to work, this benefit ensures you will continue to receive an income so that you don’t place any strain on your personal finances or your family. You may have some of the above benefits as well as life cover and a retirement fund.

There are many factors to consider, which include your retirement funds and estate planning. What’s most important is to get a holistic picture and then understand what’s in place currently and how you need to plan for and manage current circumstances as well as for the future.

INSURANCE FOR MY FIRST CAR

I am about to buy my first car and I know I’ll have to insure it, but I need some advice on what cover I need. Can you help?

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Bertus Visser, Chief Executive of Distribution at PSG Insure, replies:

Purchasing the right cover for your situation is very important, so it’s a good idea to investigate your options. Every insurer’s policies will differ slightly, but traditionally, car insurance falls into three broad categories: comprehensive, third-party only and third-party, fire and theft cover.

A comprehensive insurance policy provides cover against crime, weather damage or destruction, and will cover your car as well as any third-party vehicle(s) or objects if you’re involved in an accident (whether you were responsible for the accident or not). Third-party only policies provide cover in the event that you cause damage to or destroy someone else’s car. This type of cover does not include cover for your own car, so you will need to pay for your own repairs/ replacement vehicle. Third-party with fire and theft insurance covers everything that is included in a third-party only policy, but includes fire, theft and hijacking. With this type of policy, you will not be covered against accidental damage (to your car) with another vehicle or with a stationary object.

With so much to think about, it’s a good idea to speak to a financial adviser that can help ensure you have adequate cover for one of the most valuable assets you can own.

PERSONAL FINANCE