Tuesday, 14 August 2012 - 20:00
Let?s Save More Tomorrow
I have a friend that is addicted to TED Talks, with the better ones always managing to find their way to my inbox. The most recent one that piqued my interest was a talk by Shlomo Benartza: Saving for tomorrow, http://www.ted.com/talks/shlomo_benartzi_saving_more_tomorrow.html. It caught my eye as he tackles a problem that most of us face. We convince ourselves that we will save more in the future but never actually get around to it.
Shlomo Benartzi uses behavioural economics to study how and why we plan well for the future (or fail to), and uses that to develop new programs to encourage saving for retirement. He identified three key reasons why people make the promise to save, but fail to follow through.
We all make promises to exercise more, eat healthier, and save more in the future but when the day comes we generally succumb to instant gratification. Self control is only a problem in the present. We would rather spend today than save for tomorrow.
We like to continue in our current state of motion. We don’t like to get bogged down with doing boring stuff like filling in paperwork or reading up on funds. We would rather keep procrastinating and placing the problems off until a future date.
People hate losing stuff. People experience savings as a loss of spending, and this is painful to the average person. It is painful to save now, because I will need to cut back on my spending today.
Shlomo looked at the three resistances that we have against saving money and tried to find a solution and to get people start saving. The solution he found was the program Save More Tomorrow™ or SMarT.
The program is based on four principles:
1. The investor is approached to increase their contribution well in advance of their pay increase. By agreeing to the increase of contribution well in advance the present bias is overcome as you are not affected by this in the near term.
2. Your contribution to the plan is increased beginning with the first pay cheque after a raise. With the increased contribution happening on your first increased pay cheque the loss effect is minimised as you haven’t yet got accustomed to new disposable income.
3. The contribution percentage increases annually until the maximum preset percentage. Keeping your current inertia, the investor doesn’t need to do anything and requires no effort.
4. The investor can opt out of the process at any stage. The investor is more agreeable to join the investment plan if they know that they will be able to opt out in the future and there is no lock up.
You can take a couple things from the SMarT plan when implementing your own savings plan either through your company pension scheme or private savings plan. One is to schedule increased contributions that coincide with your salary increase way in advance. Another suggestion is to make sure that your debit order for the savings goes off as soon as possible after your salary is paid to minimise the “loss” you suffer. Ultimately getting into good saving habits now will assist us in our future retirement.
021 914 4966
Tue, 14 Aug 2012
Revenue for the interim period jumped to R2.9 billion (2011: R2.1 billion). Gross profit grew to R638.5 million (2011: R496.8 million), while profit for the period attributable to owners of Bell surged to R135.8 million (2011: R103.3 million). Furthermore, headline earnings per share rose to
South Africa's benchmark index hit a record close on Friday, rising 0.25 percent as Gold Fields and other bullion producers were helped by dim Chinese data and fading hopes that Europe will take resolute action on its economy.
President Bashar al-Assad
controls less than a third of Syria and his power is crumbling,
his former prime minister said on Tuesday, in his first public
appearance since he defected to the opposition this month.
World Markets (Spot Prices)
|JSE Top 40||17:00||31340.64||146.00||0.47%|
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|Euro / Dollar||19:55||0.8107||0.0001||0.01%|
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The JSE Today
* Includes all listed instruments on the JSE
|Index Name||RP||Move||% Move|
|Financial & Ind. 30||38,908.00||261.00||0.68%|
|Oil & Gas ||26,024.00||124.00||0.48%|
|Oil & Gas Producers ||13,992.00||66.00||0.48%|
|Basic Materials ||26,469.00||3.00||0.01%|
|Forestry & Paper ||13,637.00||8.00||0.06%|
|Industrial Metals ||27,968.00||446.00||1.62%|
|General Industrials ||100.00||1.00||1.35%|
|Consumer Goods ||35,736.00||43.00||0.12%|
|Automobiles & Parts ||6,071.00||16.00||0.26%|
|Health Care ||48,923.00||-225.00||-0.46%|
|Index Name||RP||Move||% Move|
|Food Producers ||64,465.00||-338.00||-0.52%|
|Personal Goods ||507.00||4.00||0.89%|
|Consumer Services ||72,977.00||490.00||0.68%|
|General Retailers ||63,727.00||450.00||0.71%|
|Travel & Leisure ||3,943.00||41.00||1.06%|
|Support Services ||2,184.00||.00||0.03%|
|Non-life Insurance ||44,919.00||-62.00||-0.14%|
|Life Insurance ||22,018.00||222.00||1.02%|
|General Financial ||2,475.00||8.00||0.35%|
|SHARIAH TOP40 ||3,064.00||9||0.32%|
|FTSE/JSE SHARIAH ALL||3,192.00||7||0.25%|
|FTSE JSE Fledgling ||5,567.00||23||0.43%|
|FTSE/JSE Alt X ||1,092.00||10||0.99%|
|SA LISTED PROPERTY ||489.00||0.56%|
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|JSE TABACO ||5,597.00||25||0.45%|
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Latest Consensus Changes**
|OML||OLD MUTUAL PLC||BUY||10 Aug|
|MST||MUSTEK LIMITED||BUY||09 Aug|
|IPL||IMPERIAL HOLDINGS LTD||HOLD||09 Aug|
|RLO||REUNERT LIMITED||SELL||09 Aug|
|ALT||ALLIED TECHNOLOGIES LIMIT...||HOLD||09 Aug||
|Expected||Company Name||Fin. Date|
|15 Aug 2012||CITYLDG||June 2012 (Final)|
|15 Aug 2012||FIUUNIT||June 2012 (Q)|
|15 Aug 2012||GB LD||June 2012 (Interim)|
|15 Aug 2012||GB LD OPT||June 2012 (Interim)|
|15 Aug 2012||ITLTILE||June 2012 (Final)|
|MTN GROUP||12-08-08||12-08-24||12-09-03||R 3.2100|
|IVT||Invicta Holdings Ltd.||14/08/2012||Confirmed|
|KEH||Keaton Energy Holdings Ltd.||17/08/2012||Confirmed|
|FGL||Finbond Group Ltd.||17/08/2012||Confirmed|
|LEW||Lewis Group Ltd.||17/08/2012||Confirmed||
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