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Balancing Business And Investment Risks

It is vital that entrepreneurs develop additional revenue streams and create wealth outside of their business to ensure their financial security. Sheldon Friedericksen unpacks the benefits of including Fedgroup’s Secured Investment offering in a diversified portfolio.

Fedgroup

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Entrepreneurs tend to have a natural affinity for risk-taking. While carefully calculated, they bet big on their businesses, often going all-in when investing financial resources to start and grow their companies.

“Given this commitment, many entrepreneurs view their business as their ultimate retirement plan. This can be a mistake, because it places all their proverbial financial eggs in one basket,” explains Sheldon Friedericksen, Chief Financial Officer at Fedgroup.

As an entrepreneur, it’s important that you consider how a diversified investment portfolio that spreads risk can offer greater financial security, while still delivering robust returns.

“Paradoxically, while most successful entrepreneurs excel at diversification – they often pursue multiple opportunities, or pivot their business to exploit new gaps in the market – their investment portfolios seldom follow suit,” continues Friedericksen.

Exposed to volatility

This inherent appetite for risk means entrepreneurs often also employ a different approach to investing. “Allocations tend to reflect this risk profile, with portfolios heavily skewed towards high risk, high return assets such as equities.”

Related: More Than Sun In Your Eyes: Fedgroup’s Impact Farming Solar Offering

However, entrepreneurs need to carefully consider their asset allocations, taking into account their business in relation to their other investments. “As the sole or majority shareholder in a business, an entrepreneur already has massive exposure to equity risk, whether the company is listed or not,” says Friedericksen.

It’s also important to insulate investment portfolios from the potential impact of stock market corrections. The recent slump in the value of shares in companies that were previously considered mainstays in the portfolios of astute investors and leading fund managers has highlighted the variability in risk inherent in a concentrated equity investment approach.

“Since the start of 2018 a range of blue-chip JSE-listed companies have shed significant value as equities shrugged off positive market sentiment and reacted to weak economic fundamentals and, in certain instances, corporate governance irregularities,” says Friedericksen.

In the face of these developments, he believes that entrepreneurs should ask if they can solely rely on stock investments, especially when the bottom drops out of heavily-weighted shares like Steinhoff?

“While investing in equities has long been considered one of the best ways to achieve above-average returns, in the context of an entrepreneur’s risk profile there is always a need to include lower-risk, secure investments in your portfolio to ensure a degree of security and certainty.”

Your capital secured

A suitable option is Fedgroup’s Secured Investment participation (part) bond offering, which combines fixed, high returns with capital security. “We created our Secured Investment product to help investors earn a higher level of income than that offered by money market funds, while protecting their capital value.”

Part bonds are a low-risk, high-yield fixed deposit investment fund backed by first mortgage bonds on a physical properties.

This type of secured investment offers predictability with a fixed, guaranteed interest rate for the full term of the investment, allowing for accurate calculations and projections on growth.

“It is also a type of collective investment, which is governed by the same strict regulations as unit trusts and is regulated by the Financial Sector Conduct Authority (formerly the FSB). This means invested capital is secure and protected by law.”

Income or growth

Entrepreneurs can choose to invest for income, as interest earned at the nominal rate of 8.75% p.a. can be paid out monthly.

“Alternatively, investors can choose to invest for growth. By reinvesting the income, investors benefit from the power of compound interest, earning an effective rate of 10.9% p.a. over the five-year investment period,” continues Friedericksen. Investors also have the flexibility to switch from the growth option to the income option without attracting penalties.

What’s more, Fedgroup charges no fees on the investment amount, or on the interest earned, so returns aren’t eroded. “Our income is earned from the properties we finance and the interest income generated.”

Since launching its Secured Investment offering in 1990, Fedgroup has experienced significant inflows from both institutional and private investors, particularly for lump-sum cash investments. “We are currently managing over R2 billion within our Secured Investment portfolio,” confirms Friedericksen.

Related: What Should I Know Before I Invest My Hard Earned Money?

“Investing in assets that are counter cyclical to the industry within which entrepreneurs operate, and including more conservative, stable investments like our Secured Investment in a portfolio, is a smart diversification strategy for any business owner. This investment approach mitigates risk and offers greater financial security, which ultimately enables entrepreneurs to pursue a more aggressive business strategy,” he says.

The benefits of investing in a Secured Investment:

  • A high-yield, no cost fixed deposit investment
  • A low-risk investment that is secured by first mortgage bonds on physical properties and is highly regulated
  • Every property investment opportunity is objectively analysed and evaluated against a strict set of criteria, with a maximum of 75% of the asset value loaned for the mortgage
  • The fund has close on double the ratio of security (value of the properties) to outstanding loans (value of mortgage bonds), ensuring that investors are well protected
  • Offers predictability with a fixed, guaranteed interest rate for the full term of the investment
  • Offers flexibility to invest for income or growth to meet specific investor requirements

Established in 1990, Fedgroup has grown into South Africa’s leading independent financial services group. Our independence has allowed us to develop our own point of view on the business of insurance and investment. We put people before profit. We believe in old-fashioned ideas like honesty, integrity and dignity. And we place a lot of value in our dedicated and committed staff.

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How Lexus Is Emphasising Quality And Taking Craftsmanship To New Heights

The seventh generation Lexus ES is crafted to the last millimetre and is the essence of comfort​.

Lexus

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The seventh generation Lexus ES ushers in an era of performance, mirrored by design that stirs the soul. The exceptional body rigidity allows for incredible design freedom, resulting in design that has the confidence to stand out. The brave new design that is lower, wider and sleeker, giving this sedan a coupé-like silhouette.

The 2018 Lexus ES range has no space for mediocrity – every vehicle excels and provokes. The petrol ES 250 EX and hybrid ES 300H SE set a standard of excellence with unparalleled levels of sophistication, elegance and performance. The Lexus ES range places all available performance in the driver’s hands for an intimate experience. It is performance that can be heard and felt.

The new Lexus ES has a profile that is impossible to ignore. The striking signature spindle grille is a significant feature, a sculpted form that speaks of inherited architecture and meticulous craftsmanship. It is the embodiment of provocative elegance, of finesse and sophistication.

Every curve builds from the grille. Athletic headlights flow from the spindle grille, emphasising the sleek lines of the three-dimensional front-end while tracing the outline of the lowered roofline.

The Lexus Takumi craftsmen embody the quest for perfection by carefully refining design elements. Boldness is balanced with elegance, and innovative design characteristics are made possible by the new chassis platform that allows the New Generation ES to be longer, wider and more spacious than ever before, but with a sleeker and lower silhouette. The fastback roofline captures the glamour of a coupé and emphasises the low stance, while the interior roominess is all premium sedan.

Related: 10 SA Entrepreneurs Who Built Their Businesses From Nothing

lexus-car-interior

The meticulous attention to detail of the Lexus Takumi craftsmen is evident in every inch of the Lexus ES interior. In a physical manifestation of Omotenashi, the Japanese philosophy of warm hospitality where your every need is anticipated and catered for, the Lexus ES offers a personal comfort zone, an escape from the ordinary.

The ES seduces you with details such as embossed stitching on semi-aniline leather-trimmed* seating and real wood trim*. The door panels flow into the instrument console, creating a sense of spaciousness, and at the same time placing all controls of the navigation*, Multi-information and entertainment systems within your grasp, while all driving related functions, as well as those for communication, are controlled from the leather-trimmed steering wheel.

Define your own personal climate with automatic dual zone climate control. The innovative nanoe air-purifiers cleanse the air and moisturise your skin, which is why stepping out of the new Lexus ES, is just as invigorating as stepping into it.

For further individual comfort, the front seats of all ES models have adjustable lumbar support, with standard heated and ventilated seats.

At Lexus safety is of paramount importance, which is why the new Lexus ES features the most advanced passive and active safety and driver support systems available. This is the most technologically advanced Lexus ES ever, with traditional measures of comfort merged with cutting-edge technology for all-encompassing driving pleasure.

* Available on ES 300H only

Read next: 10 Dynamic Black Entrepreneurs

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Rethinking Learning In The 21st Century

The changing world of work has disrupted the three elements of the traditional ‘career’: Expertise, duration, and rewards.

Wits Plus

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Vital Stats

Traditionally the concept of a ‘career’ was considered to include three elements:

  1. A career represented our expertise, our profession, and ultimately our identity.
  2. A career was something that built over time and endured. It gave us the opportunity to progress and advance.
  3. A career gave us financial and psychological rewards. It made life meaningful and paid us enough to live well.

The changing world of work has disrupted all three elements: Expertise, duration, and rewards.

A career can now be as long as 60 years; at the same time, due to rapid advancements in technology and the changes that bring about in the workplace, skill sets can become obsolete in as little as five years.

Increasingly, companies need to rethink the way in which careers are managed and learning opportunities are delivered, and many have already begun to overhaul their career models and L&D (Learning and Development) infrastructure in line with the digital age.

Related: Your Investment In Knowledge

Employees’ learning behaviour is also changing. In the past, employees were able to obtain the skills required for their career early on and as a once-off; now, the career itself is a journey of learning, up-skilling, re-skilling and continuous reinvention to remain relevant and to thrive in the changing world of work.

Older employees who studied at a time where most of one’s learning occurred prior to entering the workplace, find themselves working alongside millennials who place greater value on learning and progression rather than on earning potential as a first priority.

Eighty-three percent of the respondents surveyed in Deloitte’s 2017 Global Human Capital Trends survey say their organisations are shifting to flexible, open career models that offer enriching assignments, projects, and experiences rather than a static career progression.

However, in today’s fast-paced business world, even if companies are restructuring L&D delivery, no one is going to make you engage in a strategy that is essential to your future success – continuous learning. You will have to take the initiative yourself.

Noted self-help expert W. Clement Stone, in his many writings on this topic, recommended that one spends anywhere from a half-hour to two hours a day in study and thinking time. This tireless dedication, combined with an insatiable curiosity, will equip you to excel in the future world of work. What’s more, learning new skills and knowledge can be fun!

The good news for both companies and for employees is that an explosion of high-quality content and digital delivery models offers employees ready access to continuous learning. The Wits DigitalCampus offers a range of accredited and fully online short courses to support your continuous learning.

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Company Posts

Your Investment In Knowledge

When you understand the value of knowledge, in this world where technology is rendering previously expensive products or services much cheaper (and even free), it’s just a matter of getting more of it. Dedicate yourself to constant learning!

Wits Plus

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Vital Stats

Most people spend their lives collecting, spending, and worrying about money — so much so, in fact, that they say they “don’t have time” to learn something new.

However, some of smartest and busiest people in the world — Barack Obama, Warren Buffet and Bill Gates — all spend at least one hour a day on deliberate learning. They see what others don’t: That learning is the single best investment of our time that we can make. As Benjamin Franklin said long ago, “An investment in knowledge pays the best interest.”

When you understand the value of knowledge, in this world where technology is rendering previously expensive products or services much cheaper (and even free), it’s just a matter of getting more of it. Dedicate yourself to constant learning!

One of the very benefits of ongoing technological advances is that it empowers an accelerated and personalised learning experience that puts the learner in the driver’s seat. Modern learning harnesses the speed, power and ubiquity of digital capability. Online platforms, software and mobile devices means that the traditional hurdles to learning — such as income, status and location — have just about disappeared. Knowledge can now be gained by anyone with the passion to pursue it and the commitment to stick with it.

Related: Building Customer Relationships

We are only at the tipping point of what future learning technology can deliver. Artificial intelligence (AI) will transform all aspects of human capital management, including learning. Technology-enabled learning will be immediate and directly relevant to the task, for example:

  • personally tailored learning content and experiences delivered to you as and when you want or need them
  • chatbots and virtual assistants can source and categorise the information that you need for optimal decision-making
  • augmented and virtual reality simulations can provide a multi-sensory experience to speed up and embed learning.

Additionally, social connectivity already enables user-generated content to outpace and outstrip what traditional education and learning institutions can deliver.

Knowledge may be the new money but, unlike money, you don’t lose it when you use knowledge or give it away. Transferring knowledge anywhere in the world is free and instant. It’s fun to acquire and it makes your brain work better. It helps you think bigger and beyond your circumstances. It puts your life in perspective by essentially helping you live many lives in one life through other people’s experiences and wisdom.

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