Welcome to our March 2025 edition of FC Viewpoint.

IN THE NEWS:

• The JSE All Share Index is on 87 910 on 10 March 2025.
• 1 US Dollar will cost you R18.30; 1 Pound = R23.65 and 1 Euro = R19.87.
• Annual consumer inflation (CPI) is at 3,2%.
• The prime lending rate in SA finally currently is 11,00% per annum.
• The price of Oil is $70 per barrel.
• The RMB/BER business confidence index in South Africa remained unchanged at 45 in Q1 2025, the highest level in nearly three years.

An unwieldy lifestyle creep can result in our expenses outpacing our income. At first we may find ourselves living from payday to payday, but left unabated, many of us then fall into a debt spiral to sustain our ongoing lifestyle costs. The compounded cost of expensive debt further fuels lifestyle creep and is one of the reasons many investors never meet their long-term financial goals.

Luckily, there are a number of things we can do to help keep the lid on lifestyle creep:

Manage overheads

Good financial planning should balance present needs with future wants. By tracking expenditure, interrogating expenses on a monthly basis and comparing costs from month to month, we can monitor how significantly our expenses are escalating. Armed with this information, we can make better spending decisions. A monthly budget is a great tool.

Resist the urge to splurge when times are good

We are inclined to spend more when money seems more freely available. For example, when interest rates are low and home loan repayments therefore lower, we have a little more wiggle room to spend more exuberantly. During these periods, our lifestyle creep rate can skyrocket. By keeping a handle on our costs during good times, we can move through more challenging times – like when interest rates and home loan repayments are higher – with greater ease and avoid feeling as though we are constantly moving between periods of feast and periods of famine.

Use windfalls wisely

Additional sums of money have the power to help us accelerate the pace at which we achieve our financial goals. That said, windfalls can trigger lifestyle creep when they are used to make purchases that increase our base costs. For example, getting a new car when receiving a bonus may seem like a once-off expense, but a new car may significantly increase ongoing fuel, maintenance and insurance costs.

Consider using a windfall to improve your financial position by saving and investing: Build an emergency fund, make an additional contribution to a retirement product, such as a retirement annuity, or contribute to a tax-free investment.

Revisit retirement savings targets

As part of our ongoing financial planning, we should regularly recalculate how much we need to save for retirement. This exercise ensures that we remain on track to draw a retirement income that can support a comfortable lifestyle.

Increase savings rates

Reframing the way we see increases in our income can meaningfully impact our investment outcome. Income increases can be used to keep pace with inflation and increase investment contributions.

Invest in a portfolio that beats inflation

Retirement investments need to target and keep pace with inflation. Investors should select a portfolio that has a proven track record, takes on sufficient risk to generate above-inflation returns, and manages this risk appropriately across a range of asset classes and regions. (www.allangray.co.za).

Wealth regards,

Fanie Jansen Van Vuuren CA (SA), CFP®

Director: FC Wealth and Investments (Pty) Ltd

E: [email protected]  |  T: 083 384 5868

W: www.fcfin.co.za