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The value of cash

03 November 2016 | General

The value of holding a significant cash amount in a unit trust portfolio is often questioned by various investors. However, cash is an integral part of a robust risk management process in portfolio construction, says Ian Scott, Head of Fixed Income at PSG Asset Management.

Looking for measured consolidation and faster growth

01 November 2016 | General

The message from Finance Minister Gordhan at this year’s Medium Term Budget Policy Statement (MTBPS) was one of “measured consolidation” and a call to tackle South Africa’s problems in a committed, coherent and coordinated way. Government will take steps to reduce its budget deficit (the difference between spending and revenue) over the next three years. Closing the deficit too quickly – through a combination of spending cuts and tax increases – risks tipping the economy into recession and worsening the debt-to-GDP ratio, instead of reducing it (ask Greece). Closing it too slowly, especially relative to promises made, risks a loss of credibility, ratings downgrades, and therefore higher borrowing costs that will end up increasing the debt ratio.

Helicopter money : Pulling a brick with a rubber band

31 October 2016 | General

The concept of distributing hard currency directly to the population to end deep recessions has been promoted in theory since the early 1930s. Influential British economist John Maynard Keynes suggested literally burying cash in abandoned coal mines, which could then be “excavated” by unemployed workers. American economist Milton Freidman talked metaphorically of dropping money out of helicopters for citizens to pick up, hence the colloquial term “helicopter money.” Even former US Federal Reserve (Fed) Chair Ben Bernanke discussed the idea in 2002—thus earning him the moniker “Helicopter Ben”—suggesting a more practical approach in the form of a tax rebate.

What South Africans need to do to avoid the debt trap and accumulate savings : Compound interest is the magic ingredient

27 October 2016 | General

It is no secret that debt is a big problem, it has become a fact of life. Most people have become more comfortable using credit as a way of life and putting off the pain of paying for things until later. Unless they are fortunate, most people will have debt in one form or another during their lives. The older one gets, the more complex finances can become. While credit may be the ticket to fast growth, it can also keep people awake at night if they are struggling to make repayments.

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The strongest deterrent against FSP compliance missteps is or should be:

Answer

A criminal conviction Debarment Fine or penalty Any of the above can work

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