Look

South Africa has the highest unemployment rate in the world, but these figures may not fully capture the economic activities of a thriving informal market.  Informal economy expert GG Alcock believes the estimated worth to be at least R600bn. 

Traditional unemployment statistics often overlook those working in unregistered, informal businesses or “side hustles.” Consequently, these numbers may present an incomplete picture of economic participation. Measuring the informal sector can be challenging but can be approached through surveys, direct observations, and data analysis on informal business activities.  For example, African Response conducted a study and found that among people who classified themselves as unemployed and looking for work, 41% earned up to R15 000 per month through income-generating activities. 

 

 

 

In another example, Capitec CEO Gerrie Fourie said that they found many Capitec customers making deposits of more than R3 000 five times a month. The number had increased from about 200,000 in 2018 to more than a million in 2022. These deposits were into personal accounts, not business accounts. 

In countries like ours, where formal statistics may underestimate the informal sector, it's crucial to recognize its significant contribution to GDP, employment, and income. This awareness can help policymakers create effective strategies that address the true needs of the population, improve social protection for vulnerable workers, and enhance overall economic stability. It's a call to action for all of us to be more engaged and proactive in understanding and addressing these issues.

 

Listen

Retirement, a significant life change, can profoundly affect one's sense of self and identity. Many individuals derive a substantial part of their identity from their careers. As a financial advisor, I often witness how retirement creates a void in our clients’ lives, leading to feelings of loss and uncertainty. It's a deeply personal journey that we must all understand, empathize with, and be more aware of.

In this podcast, Shane Parrish and Maya Shankar explore the complexities of identity and personal transformation. They discuss identity's psychological and philosophical aspects and offer practical advice on goal-setting and personal growth.

This is a fascinating discussion about how we view ourselves and how it sometimes holds us back.  Your ability to recognise this and embrace changes in your life can allow you to explore new facets of yourself and the important things to you; which can lead to a balanced and fulfilling life.

 

Learn

Today’s young adults are finding it harder and harder to become financially independent compared to earlier generations. 

An exciting study by Merrill, in partnership with Age Wave, highlights that financial independence is now considered the primary marker of adulthood, more so than traditional milestones such as employment, homeownership, or starting a family. Despite this, their study shows that up to 80% of today’s young adults (ages 18-34) find it harder to achieve financial independence.  Why is this?

The study’s key findings include:

  • Financial stress is the main barrier to achieving life goals, like buying a home or starting a family.
  • 60% of young adults define financial success as being debt-free. However, they seem more indebted than previous generations, and the costs of servicing their debts are high.
  • 72% crave more financial guidance, and 70% have received financial support from their parents in the past year.
  • There is significant pressure from social media, with many young adults feeling compelled to keep up with their peers financially.
  • Many young adults are dissatisfied with their current jobs and seeking better opportunities.

One of the interesting and exciting takeouts is that young women are progressing through early adulthood quicker and more successfully than men despite these financial challenges. 

This can have significant implications for the financial planning we do for our clients. It may mean that parents need to support their children for longer, affecting their ability to retire. It also highlights the increasing need for intergenerational financial planning and education for our client’s children and young adults.

 

Ponder

In this section, I invite you to think about a question I may pose or a thought I may share.

“Understanding both the power of compound interest and the difficulty of getting it is the heart and soul of understanding many things.”  Charlie Munger

 

Oenophilia

“Oenophilia simply refers to enjoying wine, often by laymen.”

I’m relatively new to Scions of Sinai wines, but everything I’ve tried has been exceptional.  Bernhard Bredell grew up on his family farm in the Lower Helderberg, southeast of Stellenbosch, where his family has been farming grapes for seven generations. He set up Scions of Sinai in 2016 after studying oenology, viticulture and soil sciences at the University of Stellenbosch and working on vineyards in France and Spain. The name reflects their commitment to having land and family, a scion with the dual meaning of a young vine shoot and a generational descendant. 

I relate strongly to what this winemaker stands for as I also have two commitments in my life: my clients and their well-being and, secondly, and most importantly, my family.

Given the cold weather, I recommend trying their wonderfully fruity and peppery Scions of Sinai ‘Swanesang’ Syrah.

 

 

 

I hope you enjoyed this month’s edition.  

Stay curious,

Elke Zeki