MyMoney Online

Black Monday … a dress rehearsal of things to come?

This week saw trillions wiped off global markets in a very short space of time as investors panicked over the developments in China. By the end of the week some stability was restored mainly in US but other markets, especially emerging ones, were left battered and bruised. South Africa was a victim of the carnage. Was this a dress rehearsal of things to come? Or are we through the worst? What we can learn from this week is how volatile things are around the world. So what are 3 concerns for South Africans in the face of this risk?

A weaker rand

The rand easily found R14 to the dollar in no time before settling back to its current range. This showed how vulnerable our currency is during a panic. This has a knock on effect on our imports which in turn impacts on our inflation resulting in more pressure on households.

Increase in interest rates

The Reserve Bank has been very hawkish over the rising inflation rate and we are already in an upward interest rate cycle. It is likely that interest rates will move upwards which again adds more pressure on households.

The risk of losing capital

The stock market has corrected during the week but by no means is the risk off. Valuations are still very high relative to the fundamentals and returns will be affected. In the short term you can expect big swings as markets navigate through the uncertainty.

So what can we do?

It is far easier to change your sails before the storm than during one.

This week sent out a strong signal to all of us. We need to get our personal finances in order, curb spending and get debt under control. Yes, it’s about tightening your already strained budget and squeezing out whatever you can, diverting the savings to pay off debt. In the short term the savings on high interest bearing debt will be a much better bet than the probable yield on the markets.


This article first appeared on 702 : Black Monday … a dress rehearsal of things to come?


Recommended

by NEWSROOM AI
Read More
3 best shares to buy right now (by 27Four)

3 best shares to buy right now (by 27Four)

Investment Analyst Nadir Thokan shares his stock picks of the week on Bruce Whitfield’s The Money Show.

How to retire (or stop working for money) by the age of 40

How to retire (or stop working for money) by the age of 40

Warren Ingram recaps the principles “supersaver” Julia, a young client of his well on her way to financial freedom, is following.

3 hottest shares on the JSE this week (by JM Busha Investment)

3 hottest shares on the JSE this week (by JM Busha Investment)

It’s “Stock Pick Monday” on The Money Show. Bruce Whitfield interviews Joseph Busha, Managing Director at JM Busha Investment.

5 dumbest things people in their 20s do with money

5 dumbest things people in their 20s do with money

Sam Beckbessinger, the author of “Manage Your Money like a F*cking Grownup,” has some tips, so you don’t have to live with regret.

Supersaver Julia is back! Is her (already substantial) nest egg still growing?

Supersaver Julia is back! Is her (already substantial) nest egg still growing?

The Money Show’s Bruce Whitfield interviews Julia and her financial advisor Warren Ingram.

Supersaver Julia, investing a third of her income (since 2013)

Supersaver Julia, investing a third of her income (since 2013)

She’s been inspiring The Money Show listeners since 2013. Is she’s still keeping it up?

Popular articles
ANC welcomes apppointment of Dr Silas Ramaite as acting NDPP

ANC welcomes apppointment of Dr Silas Ramaite as acting NDPP

ANC deputy secretary-general Jessie Duarte says the party is most concerned with the stability of the NPA.

The UAE is pumping billions into the Horn of Africa

The UAE is pumping billions into the Horn of Africa

The Money Show's Bruce Whitfield interviews Africa correspondent Lee Kasumba

'Minnie understood he might become a target'

'Minnie understood he might become a target'

Marianne Thamm wrote the forward to 'The Lost Boys of Bird Island' and worked with Mark Minnie in editing the controversial book.

'The Guernsey Literary & Potato Peel Pie Society film will leave you hooked'

'The Guernsey Literary & Potato Peel Pie Society film will leave you hooked'

Film reviewer Gayle Edmunds chats about 'The Guernsey Literary & Potato Peel Pie Society' film, and what movie-goers can expect.

'Black Tax'... working hard, earning well, but struggling financially

'Black Tax'... working hard, earning well, but struggling financially

Young(ish) South Africans tell stories of the mixed emotions they feel when supporting family members, and tips from an advisor.

Castro bodyguard shares tales of dictator’s double life and breath-taking wealth

Castro bodyguard shares tales of dictator’s double life and breath-taking wealth

Juan Sanchez shares stories of Fidel Castro that’ll make you re-examine everything you thought you knew about the Cuban dictator.

How Tracey Chambers is helping unemployed moms become entrepreneurs

How Tracey Chambers is helping unemployed moms become entrepreneurs

The Clothing Bank gives women access to discounted merchandise and 500 hours of training in money management and business skills.