Do Life Assurance Products Provide Investment Returns?

Life assurance is often seen as a grudge purchase – much like disability cover, dreaded disease cover, and income protection cover. However, it is an important part of an overall financial portfolio as it assists loved ones and nominated beneficiaries if you pass on before the term of your cover has passed.

If you are looking to generate returns from your life assurance cover, you will need to choose carefully. It is an error to assume that assurance products provide exponential returns in the medium and long term: it is in the nature of these products to generate diminishing returns as time goes by.

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Expert financial advisors: 5 ways they can help your small business thrive

Are you thinking of opening a small business? Partnering with an expert financial advisor can set you on your way toward financial success. In the beginning, it is about being passionate about your products and services, gaining and retaining customers, ordering stock, and a plethora of other things seemingly more important than balancing the books.

Opening a new business, or trying to manage an existing one, presents a veritable minefield of challenges that you need to overcome. It can be an overwhelming conundrum, a feeling similar to going on an African safari without sorting out the logistics or retaining an experienced professional to guide you.

However, the advice of professional financial advisors will make the challenges less daunting and, through the services that they offer, you can implement practices to grow your business.

In this article, we will explain a few services that we offer and why you may need them for your business:

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Comparing Business-related vs. Personal Financial Services

Business-related vs. Personal Financial Services

For your business, Efficient Wealth’s business-related financial services involve managing your income revenue streams, cash management accounts for debts, assets and liabilities. Business  assurance and fiduciary services also ensure that your business can continue even if you are not there anymore. Personal financial services on the other hand involve your financial security and the financial security of your family and loved ones. This could entail everything from expert advice on immediate budgeting adjustments and short-term insurance, to planning for a baby, dread disease and medical cover, retirement planning, and life assurance.

Competent, expert financial services for your personal and business ventures can help you to get a head start on your and your family’s financial well-being. The right time to seek advice on these sometimes-complicated, ever-changing financial decisions is always now. So, whether you are just starting out, re-assessing your liquidity or simply reaching a stage where you would like your money to start working for you, it is time to consider partnering with the trusted financial experts at Efficient Wealth.

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The Value of Partnering with an Expert Financial Advisor

If dreaded disease cover is left disregarded and you or a loved one is diagnosed with a serious ailment, it could lead to financial distress or even bankruptcy.

The long-term effects of the tightening cycle

Dr Francois Stofberg
Managing Director: Efficient Private Clients.

The global economic landscape has been experiencing a tightening cycle for roughly a year, and it is becoming apparent that its effects are both spreading and deepening as disequilibrium becomes more apparent. Recently, we have also experienced that the banking system is likely to be a contributor to the damage being done. The flow of liquidity from cash and credit to assets and spending is critical to the success of economies, and the combination of central banks raising interest rates and draining reserves, coupled with banks experiencing more constrained deposit and capital conditions and tightening credit standards, is likely to constrain the flow of money and credit to markets and economies. This, in turn, is likely to have a detrimental impact on spending and income.

Three major equilibriums and two major policy levers interact to drive markets and economies. The first equilibrium in the rich world is spending and output in line with capacity, which roughly translates into approximately 2% real growth with 2% inflation, a nominal spending growth rate of 4% to 5%, and an average unemployment rate. The second equilibrium is that debt growth must be in line with income growth, meaning credit growth that is not too high or too low, with interest rates that act as neither a major incentive nor disincentive to borrow. The third equilibrium is a normal level of risk premiums in assets relative to cash, meaning that bonds provide an expected return above cash, and equities an expected return above bonds, commensurate with these assets’ risks. The two policy levers are monetary policy and fiscal policy. The economic and market swings that we see reflect the never-ending struggles of the marketplace and of policymakers to achieve equilibrium. In the West, we are far from equilibrium, while in the East, we are closer to it. The closer an economy is to equilibrium, the easier it is to fix problems and the lower market volatility.

In developed economies, high nominal spending, when compared with the ability of an economy to produce more, remains the greatest disruption to equilibrium today. This leads to inflation that is significantly above target, leading to big policy shifts and high market volatility. Despite aggressive policy action, the United States (US), Europe, and the United Kingdom (UK) have not moved much closer to equilibrium. On the margin, the nature of the disequilibrium has shifted from too much inflation to not enough growth, with the risk premiums on assets decreasing relative to cash.

The path from disequilibrium to equilibrium allows for big market swings. When looking at why the economy is in bearish disequilibrium, we see that inflation is too high. Nominal spending, in turn, is too high to bring inflation down and unemployment is too low to bring wages down, and despite nominal growth being too high, the real growth rate is lower than desired. In the end, a weaker real growth rate, that is, an earnings recession of sorts, is required to resolve the other imbalances.

In conclusion, the effects of the recent tightening cycle are spreading and deepening, and the damage to the banking system is a manifestation of this tightening. Markets are in disequilibrium and the high level of nominal spending remains the greatest disruption to equilibrium today. Despite aggressive policy action, the US, Europe, and the UK have not moved much closer to equilibrium. The path from disequilibrium to equilibrium allows for big market swings, which is a frame of reference for longer-term positioning. It is thus crucial for policymakers and market participants to remain vigilant and proactive when managing these risks and when taking steps towards a more stable and sustainable economic environment.

Business Cash Management

Business Cash Management: Investments for Liquidity

Business cash management is essential to ensure your business is ready for growth and to mitigate risks. A good investment strategy makes provision for a percentage of the funds to be liquid for usage on short notice. That said, shorter-term investments don’t deliver the optimal returns of long-term, well-planned investments. The secret is to strike the right balance and invest wisely to ensure your portfolio includes investments for short notice use that also deliver superb returns. Read more

Why You Need Succession Planning

Succession Planning: Why You Need It Now More than Ever

Succession planning refers to the practice of making provision for the day you need to step down from a leadership role. You’ll want your business to continue with strong leadership, ensuring income for you as well even when you’re no longer in the CEO seat. Read more