<!-- wp:paragraph --><p>Recent data by&nbsp;<a href="https://www.lightstoneproperty.co.za/" target="_blank" rel="noreferrer noopener">Lightstone Property</a>&nbsp;shows that nearly 15% of homeowners who sold and bought homes in the three years leading up to 2020 have moved from cities to smaller towns.</p><!-- /wp:paragraph --><!-- wp:paragraph --><p>Most of these purchases from the Western Cape and KZN show the appeal of opting for a quieter setting within their respective provinces, but Gautengers are moving all over the country.</p><!-- /wp:paragraph --><!-- wp:paragraph --><p>Hayley Ivins-Downes, Head of Digital at Lightstone Property, says, “Most homeowners move to and from the Big Three provinces. However, nearly 84,000 homeowners sold and bought elsewhere between 2018 and 2020 – with 76% moving from city to city, 14% relocating from a city to a smaller town while 10% headed the other way.”</p><!-- /wp:paragraph --><!-- wp:image {"id":145971,"sizeSlug":"large"} --><figure class="wp-block-image size-large"><img src="https://cover.co.za/wp-content/uploads/2021/05/2-4.jpg" alt="" class="wp-image-145971"/></figure><!-- /wp:image --><!-- wp:paragraph --><p>Lightstone’s data reveals that movements from metro/city to metro/city have been declining over the years, from 22,919 in 2018 to 21,861 in 2019 to 19,005 in 2020. This is a significant number given the disruptions caused by Covid-19 and the lockdowns which restricted movement by people across the country.</p><!-- /wp:paragraph --><!-- wp:image {"id":145970,"sizeSlug":"large"} --><figure class="wp-block-image size-large"><img src="https://cover.co.za/wp-content/uploads/2021/05/3.jpg" alt="" class="wp-image-145970"/></figure><!-- /wp:image --><!-- wp:paragraph --><p>Nearly 12,000 homeowners left cities for smaller towns over the three years documented, with a slight decline from 2018 to 2019 (4,297 to 4,080) and then a more significant drop in 2020 to 3,502. Approximately 44% of homeowners relocated to smaller towns from Gauteng, followed by the Western Cape (between 26% - 30%) and KZN (11%-12%).</p><!-- /wp:paragraph --><!-- wp:image {"id":145973,"sizeSlug":"large"} --><figure class="wp-block-image size-large"><img src="https://cover.co.za/wp-content/uploads/2021/05/2.2.jpg" alt="" class="wp-image-145973"/></figure><!-- /wp:image --><!-- wp:paragraph --><p>In contrast, the number of homeowners moving from smaller towns to cities has been dropping over the past three years, from 3,031 (2018) to 2,658 (2019) and then to 2,262 in 2020.</p><!-- /wp:paragraph --><!-- wp:image {"id":145974,"sizeSlug":"large"} --><figure class="wp-block-image size-large"><img src="https://cover.co.za/wp-content/uploads/2021/05/5.2.jpg" alt="" class="wp-image-145974"/></figure><!-- /wp:image --><!-- wp:paragraph --><p>Ivins-Downes&nbsp;says, “Movement within provinces show that more homeowners bought in small towns in the Western Cape and KZN over the past three years, than left the cities. While in Gauteng many more left the cities compared to those settling in small towns.” The movement out of the major cities and metros in the Western Cape and KZN is lower than movement to the desirable smaller towns in these provinces (60:40). Meanwhile in Gauteng, the majority of people moving from a city to a smaller town is a far higher ratio (80:20).</p><!-- /wp:paragraph --><!-- wp:paragraph --><p>Lightstone’s information also shows the provinces of choice for those moving to small towns. The majority of people in the Western Cape and KZN who left cities for smaller towns stayed within provincial borders (WC – 81% average; KZN – 77%). While those leaving Gauteng’s cities were more evenly spread across the provinces, with the Western Cape and KZN being the most popular destinations outside the province, while Mpumalanga, Eastern Cape and North West were also well-liked destinations.</p><!-- /wp:paragraph --><!-- wp:image {"id":145975,"sizeSlug":"large"} --><figure class="wp-block-image size-large"><img src="https://cover.co.za/wp-content/uploads/2021/05/6.1-1.jpg" alt="" class="wp-image-145975"/></figure><!-- /wp:image --><!-- wp:paragraph --><p>Data indicates that the city or province of origin for homeowners now in small towns who left their home in the city for a new life in a smaller town, mostly do so in the province in which they already live.</p><!-- /wp:paragraph --><!-- wp:image {"id":145976,"sizeSlug":"large"} --><figure class="wp-block-image size-large"><img src="https://cover.co.za/wp-content/uploads/2021/05/7.jpg" alt="" class="wp-image-145976"/></figure><!-- /wp:image --><!-- wp:paragraph --><p>The majority – 85% in 2018, 91% in 2019 and 87% in 2020 – of homeowners who live in small towns in Gauteng moved there from a city in the province. Homeowners moving from the WC accounted for between 2-5%, while those from KZN accounted for between 1-3%.</p><!-- /wp:paragraph --><!-- wp:image {"id":145977,"sizeSlug":"large"} --><figure class="wp-block-image size-large"><img src="https://cover.co.za/wp-content/uploads/2021/05/8.jpg" alt="" class="wp-image-145977"/></figure><!-- /wp:image --><!-- wp:paragraph --><p>Almost 90% of homeowners who have settled in smaller towns in the WC have come from cities in that province or Gauteng. The remaining 10% is evenly spread among other provinces.</p><!-- /wp:paragraph --><!-- wp:image {"id":145978,"sizeSlug":"large"} --><figure class="wp-block-image size-large"><img src="https://cover.co.za/wp-content/uploads/2021/05/9.jpg" alt="" class="wp-image-145978"/></figure><!-- /wp:image --><!-- wp:paragraph --><p>Approximately 90% of homeowners who have settled in smaller towns in KZN have come from cities in that province or Gauteng, with 7% relocating from the WC and the balance spread across other provinces.</p><!-- /wp:paragraph --><!-- wp:paragraph --><p>The types of properties homeowners opted for when they relocated to a smaller town in KZN in 2019 was freehold, while in 2020 slightly more chose sectional title. Estate living came in third in both years. This is significantly different in the WC, where the vast majority of homeowners chose freehold, followed by estate living with limited numbers opting for sectional title.</p><!-- /wp:paragraph --><!-- wp:image {"id":145979,"sizeSlug":"large"} --><figure class="wp-block-image size-large"><img src="https://cover.co.za/wp-content/uploads/2021/05/10.jpg" alt="" class="wp-image-145979"/></figure><!-- /wp:image --><!-- wp:paragraph --><p>It is interesting to note that homeowners moving from Gauteng to smaller towns overwhelmingly preferred freehold and estate living over sectional title.</p><!-- /wp:paragraph --><!-- wp:image {"id":145980,"sizeSlug":"large"} --><figure class="wp-block-image size-large"><img src="https://cover.co.za/wp-content/uploads/2021/05/11.jpg" alt="" class="wp-image-145980"/></figure><!-- /wp:image --><!-- wp:paragraph --><p>Ivins-Downes adds, “Information on the preference variations boil down to availability and price. In KZN, the availability of housing in estates is on average more expensive than the other provinces, and so there is not the spread of price options that is available in the Western Cape and Gauteng. Interestingly, we see that there was almost no sectional title or estate stock available in Gauteng, while the Western Province had 10% availability in estate properties and KZN had 14% availability in sectional title properties.”</p><!-- /wp:paragraph --><!-- wp:image {"id":145981,"sizeSlug":"large"} --><figure class="wp-block-image size-large"><img src="https://cover.co.za/wp-content/uploads/2021/05/12.jpg" alt="" class="wp-image-145981"/></figure><!-- /wp:image --><!-- wp:paragraph --><p>If we take a look at who is moving, where and what are they buying, the majority of homeowners (63%) who moved in 2020 were between 45-65 years in age (2019: 62%), and most of those moving are buying mid-value (58%, 2019: 57%) and high-value homes (32%, 2019: 31%).</p><!-- /wp:paragraph --><!-- wp:image {"id":145982,"sizeSlug":"large"} --><figure class="wp-block-image size-large"><img src="https://cover.co.za/wp-content/uploads/2021/05/13.jpg" alt="" class="wp-image-145982"/></figure><!-- /wp:image --><!-- wp:paragraph --><p>If we take a look at the towns in favour, we see quite a different picture from the rest of the country compared to the WC,” says Ivins-Downes. “The top three choices for those moving from Gauteng to KZN were Margate, Port Shepstone and Ballito. &nbsp;While those relocating within KZN chose Howick, Ballito and Salt Rock. Interestingly, Port Edward and Southbroom were among the favourites for those coming from Gauteng but did not make the KZN relocation list, while Howick nor Hilton were not favoured by those moving from Gauteng.</p><!-- /wp:paragraph --><!-- wp:paragraph --><p>“Those relocating from within the province’s borders and those coming from Gauteng shared a liking for Groot Brakrivier, while the other top choices for the WC were Langebaan, Hermanus and St Helena Bay. The top four choices for those moving from Gauteng were as mentioned Groot Brakrivier, and then Hermanus, Plettenberg Bay and Knysna.</p><!-- /wp:paragraph -->

<!-- wp:paragraph --><p><strong>By: Just</strong></p><!-- /wp:paragraph --><!-- wp:paragraph --><p>If your retirement savings were invested in balanced funds through the market turmoil of 2020, there is some good news. You can currently secure a guaranteed income for life that is over 15% higher than it would have been had you invested on the 1^st&nbsp;of January last year&nbsp;before the market crash; an income that targets growth in line with inflation.</p><!-- /wp:paragraph --><!-- wp:paragraph --><p>“This demonstrates the value of establishing a robust retirement plan and sticking to it, especially through market turmoil,” says Deane Moore, CEO of retirement income specialist&nbsp;<a href="http://www.justsa.co.za/" target="_blank" rel="noreferrer noopener">Just.</a></p><!-- /wp:paragraph --><!-- wp:paragraph --><p>“By contrast, if you were one of the many investors who became unsettled and switched to more conservative options, you would have watched your portfolio lose about 15% during March/April last year.&nbsp; Furthermore, you would have locked in your losses and missed out on the subsequent market recovery,” says Moore.</p><!-- /wp:paragraph --><!-- wp:paragraph --><p>It is estimated that South Africans lost&nbsp;<a href="https://retail.momentum.co.za/documents/campaigns/effectofcovid/covid-19-investor-behaviour.pdf" target="_blank" rel="noreferrer noopener">R100 million</a>&nbsp;of their savings overall between April and December of 2020 by switching funds.&nbsp; After many investors moved their savings into cash, SA equities delivered a huge 54% return in the 12 months to March 2021, which many missed out on.</p><!-- /wp:paragraph --><!-- wp:paragraph --><p>If you switched to more conservative investments inside of a standard living annuity, you would have negatively impacted your retirement income, which would already have been affected by the five years of relatively poor market returns that preceded 2020.</p><!-- /wp:paragraph --><!-- wp:paragraph --><p>“This exposes the risks associated with standard living annuities where, because you can change investment decisions, you carry your own investment risk and your own longevity risk, which is the risk of your money running out of road before you do.”</p><!-- /wp:paragraph --><!-- wp:paragraph --><p>Unfortunately, according to Just’s 2020&nbsp;<a href="https://retirementinsights.co.za/lack-confidence-seek-security/" target="_blank" rel="noreferrer noopener">Retirement Insights</a>&nbsp;survey, many retirees fell into this camp.&nbsp; Only 40% of respondents said they were content that they have enough retirement savings to last for their whole retirement. The survey showed that many retirees realised that they can’t afford the effects of market volatility, and some shifted some of their capital to lock in what they could.&nbsp;&nbsp;&nbsp;<s></s></p><!-- /wp:paragraph --><!-- wp:paragraph --><p>So, if you are facing retirement, Moore offers some tips to consider: </p><!-- /wp:paragraph --><!-- wp:paragraph --><p><strong>1. Think about your retirement savings in two pots</strong></p><!-- /wp:paragraph --><!-- wp:list --><ul><li>A pot to ensure you have enough income to cover your essential expenses for life.</li><li>A second pot for discretionary spending or to leave a legacy.</li></ul><!-- /wp:list --><!-- wp:paragraph --><p><strong>2. Choose appropriate investments for each pot&nbsp;&nbsp;</strong></p><!-- /wp:paragraph --><!-- wp:list --><ul><li>An appropriate investment for the first pot is a life annuity, which you can access as a standalone product or as an investment choice within certain living annuities.</li><li>Once the first pot is secured, you can consider options that provide flexibility, growth, and a legacy for beneficiaries.</li></ul><!-- /wp:list --><!-- wp:paragraph --><p><strong>3. Choose the right life annuity</strong></p><!-- /wp:paragraph --><!-- wp:list --><ul><li>New-generation with-profit annuities are designed to withstand market conditions to guarantee your income for life, while providing&nbsp;annual increases&nbsp;linked to the performance of a balanced fund.</li><li>You can use your retirement savings or discretionary savings to invest in these annuities.</li><li>As mentioned above, you can also access a life annuity in certain living annuities through some of South Africa’s leading living annuity providers.</li></ul><!-- /wp:list --><!-- wp:paragraph --><p><strong>“</strong>Because long-term interest rates are high, it's a good time to lock-in a retirement income for life, particularly if your savings benefited from recovering markets because you stuck to a sound investment plan,” Moore concludes.</p><!-- /wp:paragraph -->

<!-- wp:paragraph --><p>In a world where a financial disparity between men and women still exists, women have some distinct advantages when it comes to investment, writes <strong>Deputy CEO of Momentum Metropolitan and CEO of Momentum Investments, Jeanette Marais.</strong></p><!-- /wp:paragraph --><!-- wp:paragraph --><p>We cannot deny that there is still a financial earnings gap between men and women, especially when it comes to money. Yet, when it comes to investing, women have inherent advantages over their male counterparts.&nbsp;&nbsp;</p><!-- /wp:paragraph --><!-- wp:paragraph --><p>In the latest episode of money show Geldhelde on VIA (DStv channel 147), we addressed this topic – looking at some of the traits women have that make us good investors and, importantly, how to harness them.&nbsp;</p><!-- /wp:paragraph --><!-- wp:paragraph --><p>As a woman who has built her career in this field, I can confidently say that women should use their natural born talent for investment.</p><!-- /wp:paragraph --><!-- wp:paragraph --><p>A 2019 study by the Warwick Business School found that women outperform men by 1.8% on investment returns. They did this by analysing the behaviour and returns of 2800 investors over three years by looking at a range of differences between the genders and investment behaviour.</p><!-- /wp:paragraph --><!-- wp:paragraph --><p>The study shows that, generally, women tend to take a longer-view perspective and trade less frequently. This reveals a more considered approach by women, with greater focus being placed on the realisation of a financial goal, rather than the thrill of investing.</p><!-- /wp:paragraph --><!-- wp:paragraph --><p>If women opt to play to their strengths, they would soon realise that these qualities have resulted in our superior investment prowess and form the basis of Momentum Investments’ underlying philosophy of outcome-based investing. Staying invested over the long-term produces superior returns, which is why we follow an outcomes-based investment philosophy that aims to shift investors’ focus away from tracking performance and towards their personal investment objectives.</p><!-- /wp:paragraph --><!-- wp:paragraph --><p>And when we consider the fact that we’re already on the financial back foot in terms of earnings, that we tend to outlive our male friends (so our money needs to last longer) and that we often need to juggle work, children, and other household responsibilities – the need for us to harness these inherent investment traits is even more evident.</p><!-- /wp:paragraph --><!-- wp:paragraph --><p>So, for all the women out there who want to seize their natural investment power, here are seven quick tips to kick off your investment journey:</p><!-- /wp:paragraph --><!-- wp:list {"ordered":true,"type":"1"} --><ol type="1"><li><strong>Advice should come first</strong></li></ol><!-- /wp:list --><!-- wp:paragraph --><p>Momentum’s Household Financial Wealth Index indicates that only two in ten women are likely to obtain professional financial advice. It is important for women to partner with a professional financial adviser or mentor that understands, respects, and takes their unique needs into consideration.</p><!-- /wp:paragraph --><!-- wp:paragraph --><p>This is the fastest and most reliable way to get on your journey to success.</p><!-- /wp:paragraph --><!-- wp:list {"ordered":true,"type":"1","start":2} --><ol type="1" start="2"><li><strong>Make bold choices</strong></li></ol><!-- /wp:list --><!-- wp:paragraph --><p>Historically there has been no better way to grow your money than through investing. There is no denying that investing comes with its share of risks – but, choosing not to invest is even riskier. If you are just starting to invest, the best thing to do is to talk to your financial adviser to help you kick start your investing journey. Chat to your adviser about the importance building a diversified investment portfolio that includes investing a portion of your money offshore.</p><!-- /wp:paragraph --><!-- wp:list {"ordered":true,"type":"1","start":3} --><ol type="1" start="3"><li><strong>Compound your interest</strong></li></ol><!-- /wp:list --><!-- wp:paragraph --><p>The magic of compound interest will grow your investment exponentially over time. Bear in mind that you need a lot of time to achieve meaningful growth.&nbsp;</p><!-- /wp:paragraph --><!-- wp:list {"ordered":true,"type":"1","start":4} --><ol type="1" start="4"><li><strong>Avoid the switch itch</strong></li></ol><!-- /wp:list --><!-- wp:paragraph --><p>Investors are 2.5 times more likely to switch funds as a result of their current fund performing poorly, than as a result of another fund performing exceptionally well. Even when the markets get rocky, try stick with your investment strategy and portfolio choice. There will be times when you have the urge to switch investment funds, but don’t chop and change – research says that in almost every case you’ll be worse off financially.</p><!-- /wp:paragraph --><!-- wp:list {"ordered":true,"type":"1","start":5} --><ol type="1" start="5"><li><strong>Pay off your bond</strong></li></ol><!-- /wp:list --><!-- wp:paragraph --><p>Owning the house that you live in is the best risk-adjusted investment you will ever make. So, paying a little bit extra on your bond every month is the right choice, but taking extra money out of your bond and spending it on consumer goods is a poor financial decision.</p><!-- /wp:paragraph -->

<!-- wp:paragraph --><p><strong>By Reza Hendrickse, PPS Investments Portfolio Manager</strong></p><!-- /wp:paragraph --><!-- wp:heading {"level":3} --><h3><strong>Investment Perspectives:  Q1 2021</strong></h3><!-- /wp:heading --><!-- wp:paragraph --><p>Since the equity markets bottomed a year ago after one of the sharpest sell-offs in history, life and the economy have yet to return to normal. However, financial markets continue to look beyond the current reality, toward a rosier future. </p><!-- /wp:paragraph --><!-- wp:paragraph --><p>This quarter equity markets once again showed impressive strength, with SA growth assets performing particularly well. Last year global growth was non-existent, but where we currently stand, there are concerns that growth might be too strong, causing market participants to reflect on what this could mean for the future. Even South Africa is rebounding at a reasonable pace (albeit from a depressed base) while, beneath the surface, the National Budget was positive this quarter. The relative performance of developed versus emerging markets, value versus growth stocks and cyclicals versus defensives, were all among topics which were passionately debated by market participants this quarter. Other topics of interest also included the growing prevalence of speculative forces in the markets and how to protect against inflation inevitably materialising.</p><!-- /wp:paragraph --><!-- wp:paragraph --><p>There was a continuation of the bullish undertone which has been a feature of markets over the last few quarters. South African equity, as measured by the FTSE/JSE Capped SWIX, was the best performing asset class (+12.6%), driven primarily by resource and industrial shares, while financials posted low single digit performance overall. Among financials, SA listed property counters were some of the best performers, with the sector rebounding (+8.1%) off its low base. Strong appetite for local risk assets led to these asset classes significantly outperforming bonds, with the All-Bond Index declining for the quarter (-1.7%). SA asset classes have delivered handsomely over the past 12 months (i.e., roughly since the depths of the COVID-19 sell-off), with SA equity up 54.2%, SA property up 34.2%, and SA nominal bonds up 17.0%.</p><!-- /wp:paragraph --><!-- wp:paragraph --><p>Global equity (+5.1%) also delivered a respectable gain this quarter, but underperformed the South African equity. This was contrary to the broader outperformance of developed markets (+5.5%) over emerging markets (+2.8%) globally, all in rand terms. Global listed real estate (+6.0%) also participated in the rally, with growth assets in generally outperforming defensives, such as global bonds (-5.2%). The rand was largely steady, contributing less than a percent to offshore returns when translated into Rands. Over 12 months, global equity (+27.8%) and global property (+11.4%) have far outpaced global bonds (-15.8%). At an index level, global equity returns in Rands have not matched JSE returns over the past year, impacted significantly by the almost 20% strengthening of the rand. Despite this, given the rich opportunity set within global equity, we are pleased that our global equity managers managed to eke out outstanding absolute and relative performance, outperforming both the global and local equity markets this past year.</p><!-- /wp:paragraph --><!-- wp:heading {"level":3} --><h3><strong>How are the portfolios positioned?</strong></h3><!-- /wp:heading --><!-- wp:paragraph --><p>Global equity valuations are high, distorted by the US equity market which is now as expensive as it was at the peak of the Dotcom mania. This does not bode well for future returns, which are inversely correlated to starting valuations. What complicates matters however, is that if we look at valuations from the perspective of the equity risk premium (the difference between the earnings yield from equities and the long-term bond yield), then global equities are still quite cheap in relation to bonds, because bond yields are very depressed. Regardless of which way one prefers to look at valuations though, the fact is that valuations alone are a poor timing tool. For now, it matters more that the global economy is in an upswing, and that monetary policy is highly accommodative, because stocks usually tend to outperform under these conditions.</p><!-- /wp:paragraph --><!-- wp:paragraph --><p>As a result, we remain overweight global equities, having increased exposure last quarter to within the maximum band dictated by the various portfolios’ unique tactical asset allocation ranges. As always, we leave it to the managers we’ve selected to decide where to invest regionally, and to what extent they should be exposed to either growth or value opportunities. We have stayed neutral on South African equities, after having upweighted them last quarter. Although we are no less circumspect regarding the long-term prospects, the cyclical backdrop is positive given that our market is closely linked to the commodity cycle and that SA, as well as other emerging markets, have a larger valuation underpin than developed markets at present. There is therefore scope to tactically upweight SA equity should the opportunity arise.</p><!-- /wp:paragraph --><!-- wp:paragraph --><p>Outside of equity, the only other attractive opportunity we see is in South African bonds, which offer the prospect of strong returns going forward. These higher-than-normal returns reflect the higher embedded sovereign risk, which is born from our tenuous long-term debt sustainability position. We feel one is being adequately compensated for these risks, while the potential for a positive surprise exists, given the incremental improvements we are seeing, which might be underappreciated by the market. We therefore maintain our full weight in SA government bonds, which are significantly more attractive than SA cash. SA Listed property, given the sector’s downfall, is cheap and there are some opportunities within, but overall, it remains exposed to some of the weakest parts of the SA economy, which potentially still face the enduring effects of the post-pandemic world.&nbsp;&nbsp;</p><!-- /wp:paragraph --><!-- wp:paragraph --><p>Looking ahead, we expect the investment environment to remain challenging. The economic rebound means that less global fiscal and monetary stimulus is potentially needed going forward but weaning off from the support will probably create some tension in the markets in the process. Although less stimulus being needed is a good thing in theory, in reality, asset prices have to some extent been supported by these ultra-accommodative conditions. The gradual transition to a less “managed” economy, and the risk of a policy error potentially leading to over-restrictive financial conditions, are therefore key issues to monitor over time. In the meantime, and as always, investors should maintain a diversified approach and position for a range of potential outcomes, bearing in mind that in order to reap the benefits of long-term investing, one needs to remain materially invested over time, rather than be underinvested for fear of near-term volatility.</p><!-- /wp:paragraph -->

<!-- wp:paragraph --><p><strong>By:</strong> <strong>Lulalend</strong></p><!-- /wp:paragraph --><!-- wp:paragraph --><p>Regardless of the size of your company or how great your product may be, at some point every business will need more finance than they have immediately available. When this happens, accessing additional funding will help to give your company the fuel it needs to grow.</p><!-- /wp:paragraph --><!-- wp:paragraph --><p>It may seem counterintuitive, but Trevor Gosling, Co-founder and CEO of&nbsp;Lulalend – financing partner to South Africa’s small- to medium-enterprises (SMEs) - explains that fast access to capital plays an important part of any business growth strategy.</p><!-- /wp:paragraph --><!-- wp:paragraph --><p>Gosling says that there is often a misconception that all debt is bad or that it is only used by struggling companies.</p><!-- /wp:paragraph --><!-- wp:paragraph --><p>“In fact, the opposite is often the reason why some of the world’s largest companies, including the likes of Apple and Coca-Cola, routinely seek capital infusions to keep profits within the company, maximize their tax savings, and assist with short-term financial obligations."</p><!-- /wp:paragraph --><!-- wp:paragraph --><p>When raising funds, selecting the right type of business financing plays a very important role in determining how a business accesses capital and long-term profits.</p><!-- /wp:paragraph --><!-- wp:paragraph --><p>“For business owners, debt can also help to improve the bottom line of a company because it makes expansion possible, and can enable increased marketing efforts or the purchasing of new equipment and products,” he adds.</p><!-- /wp:paragraph --><!-- wp:paragraph --><p>Loans can also support seasonally driven companies that are often extremely profitable during peak season trading but need the extra cash to buy inventory and supplies during the quieter months. This is where debt can help to bridge the gap and balance out uneven cash flows throughout the year.</p><!-- /wp:paragraph --><!-- wp:paragraph --><p>Generally, the two most common ways in which this is done is through selling equity of the business or with debt financing.</p><!-- /wp:paragraph --><!-- wp:paragraph --><p>For many of South Africa’s burgeoning SMEs, what matters most is the overall cost of business funding and the speed at which it can be acquired. While both financing options can help to give access to capital, using debt to support growth rather than equity is generally preferred.</p><!-- /wp:paragraph --><!-- wp:paragraph --><p>“While you will owe interest on debt, unlike equity, the funding that it provides doesn’t mean you will have to lose a stake in your business. Any profits that are made after paying debt and interest will be yours to keep. It is also now possible to acquire a business loan in as little as 24 hours,” Gosling explains.</p><!-- /wp:paragraph --><!-- wp:paragraph --><p>Additionally, if you choose to take on a partner to increase capital, it will also mean that you lose full control of your business and be asked to share profits made going forward – which for many fast-growing start-ups is not always the most attractive option.</p><!-- /wp:paragraph --><!-- wp:paragraph --><p>While loans are a great tool to finance inventory or equipment purchases, an increasingly popular debt instrument is a business line of credit, or Credit Facility. Gosling says that a Credit Facility is one of the best ways to manage cash flow – especially if a business needs immediate access to funds to cover short-term expenses while waiting for customer payments.</p><!-- /wp:paragraph --><!-- wp:paragraph --><p>If you are responsible with your debt by making on-time payments, this can also help to improve a business’ creditworthiness. In turn, these smart credit habits can help to increase your overall spending limit, lower future costs, and help you to obtain better terms for future loans.&nbsp;</p><!-- /wp:paragraph --><!-- wp:paragraph --><p>“The critical step that business owners need to consider before taking on any form of debt is to ensure that they have a plan on how to use any additional funding to generate a return and &nbsp;and improve profits,” Gosling explains.</p><!-- /wp:paragraph --><!-- wp:paragraph --><p>“If you don’t have a plan, or if you feel that you’re the company is struggling financially, taking on debt for the wrong reasons can cripple your business,” he adds.</p><!-- /wp:paragraph --><!-- wp:paragraph --><p>To assist businesses to recover and grow during these difficult times, Lulalend is offering it’s first time customers the opportunity to take out funding but only start repaying after 60 days, which gives them two months of cost-free capital.</p><!-- /wp:paragraph --><!-- wp:paragraph --><p>“It is not just about your bottom line. If done correctly, responsible debt can grow your company and give it the strategic advantage needed for a profitable future,” says Gosling.</p><!-- /wp:paragraph -->

If you fail to consider price inflation in your investment strategy and your returns don’t outperform inflation, your...