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Winter 2012
Contents
1. Ed’s letter
2. The global economy and me
Make market fluctuations work for you
3. Crack the code
Discover your savings personality and
become a supersaver
4. Very, very interest-ing!
Compound interest – the ‘eighth wonder
of the world’ – decoded
5. Life learnings
Real-life lessons from a saving-savvy couple

Winter 2012
1. Ed’s letter
This issue is all about savings!
It’s time to bring out the woollen blankets and
light the fires – winter is here! Many of us go into
hibernation when the cold hits, but that doesn’t
mean your savings should, too. The latest findings
from the Old Mutual Savings Monitor (click here for
the full report) provide a fascinating glimpse into the
savings habits of South Africans. It highlights that as
many as 85% of South Africans want to learn more
about how to save. Which is why we’ve dedicated this
issue to showing you how to become a supersaver.
Most importantly, thank you for sending us all
your saving stories – they are inspirational and
they really help us get to know you better. If
you’d like to see yourself featured in Bold, email
us at bold@oldmutual.com about an investment
that has helped you through a tricky, unforeseen
event, and we might be giving you a call!
Don’t forget to complete our survey, where you stand
a chance to win an Old Mutual MAX Investment worth
R10 000. Congratulations to Mr CJ Truter from Cape
Town who won in our Bold Autumn survey competition!
Compound interest is a term we often hear, but
do you know how it really helps our savings grow?
Read all about it and how you can make this
miraculous principle work for you. Much like the
Le Rouxs from Ceres, who share with us the savings
lessons they’ve learnt. Our thought leader, Anil
Thakersee, explains how the Eurozone, oil price
and Rand-dollar relationship affect us – and our
pockets. We also have a quiz for you to identify
your savings personality.
Warm regards
Dashni Naidu
Retail Affluent Communications & Marketing Manager
PS. We love hearing from you. Email
bold@oldmutual.com if you have a great
savings story to share.

Winter 2012
2. Thought
leaders
As a Bold reader, you have access to
some of the finest financial minds in
South Africa, who can interpret how
the global financial picture affects
your personal financial planning.
Question:
Bold: For the past few months we’ve all been hearing
about the instability of the Eurozone. But we’re living
on the southern tip of Africa. Should we also be
concerned? How should my investment portfolio react
to an ongoing event like this?
Answer:
Anil Thakersee, Senior Portfolio Manager at
MacroSolutions, Old Mutual Investment Group
South Africa: The European Union is the largest
economic block in the world, so any slowdown there
will impact the global economy. It’s also South Africa’s
largest trading partner, which is why a European

Winter 2012
2. Thought leaders Continued
recession will directly affect our economy. Global
markets are jittery about the consequences of a
break-up in the Eurozone and this uncertainty adds
volatility to markets; evidence of this is seen in the
recent weakening in the Rand on the back of global
risk aversion.
Bold: What should I consider when it comes to
protecting my portfolio against fluctuations in
the market?
Anil: The first thing investors need to understand
is that we all fit into one of two categories. The first
is a younger group that is employed and should be
growing their capital. Here you need to increase your
capital by saving as much as you can to build a nest
egg for retirement. The second group consists of those
who have retired and need an income from the capital
they have accumulated.
Let’s use retirement as an example of a savings
goal: Kagiso is 40 years old and approaching his
peak earning years. He still has 25 years until
retirement, so needn’t concern himself with the
short-term moves in the markets. He also needs
to understand he has a longer investment horizon,
which means a greater ability to take risk. But for
Mike, who is 65 years old and retired, the focus is
on generating adequate income to pay for his monthly
expenses, while also diversifying his assets in order
to protect his life savings.
Taking risk is very important – equities typically
produce the highest returns of the major asset
classes but they’re also the most volatile.
Remember, if you have time on your side,
volatility is your friend.
Bold: So how can I make market fluctuations work
for me in my investment portfolio?
Anil: If you’re contributing regularly to a savings
vehicle, market fluctuations can work for you.
Think about this: when your local shop has a sale
with 30% off, people stream in for the bargains.
Yet if markets fall by 30%, most investors want to
pull out of their investments instead of seeing it as
an opportunity to profit/benefit from the bargains.
Market fluctuations actually mean you can purchase
more assets at lower prices.
Bold: When the oil price rises, we obviously pay more
for fuel. But other than spending roughly R200 - R300
more on petrol every month, what else is happening
(behind the scenes, so to speak) that affects the cost
of living? Also, how big a factor is oil-price fluctuation
in the performance of my investments?
Anil: A rising oil price is negative for global growth
as it acts as a tax, reducing consumers’ disposable
income. There has been strong growth in emerging
markets like India and China, which has created a
strong demand underpin for the oil price. China now
sells more cars than the US and this increased demand
has put upward pressure on oil prices. And with rising
urbanisation coupled with the rapidly developing
middle class in emerging markets, the outlook for
demand looks strong. If we look to the supply side,
there haven’t been many discoveries of major oil
reserves in recent years, so supply has been relatively
flat while demand has been rising, and this results in
upward pressure on oil prices.

Winter 2012
2. Thought leaders Continued
We also have to remember it’s not just the direct and
indirect impact of rising oil prices that consumers have
had to deal with, but commodity prices in general have
been rising over the decade, based on the demand
and supply fundamentals. Lastly, as a commodityproducing
nation, South Africa does benefit from rising
commodity prices, as the Rand is strongly linked to
commodity prices. We’ve seen a reasonably firm Rand
over the past decade and this has put downward
pressure on interest rates, which consumers feel
directly on their mortgage payments.
Bold: Finally, what impact does a weak Rand have
on me, the person in the street?
Anil: There are pros and cons to having a weak Rand.
A weak Rand erodes your buying power as it increases
the cost of goods –especially imported goods. So in some
cases a weak currency lowers your standard of living.
But let’s not forget the pros. A weaker currency makes
the economy more competitive and labour becomes
relatively cheap for foreign companies looking to
invest in South Africa. In addition, our exports become
cheaper for foreigners as they get more value for
their money, so exporters will be happy. And all this
should lead to growth in exports, which is good for
the overall economy.
Because investing is key to your future security,
access to the best information and practical
advice is essential. There is no substitute for
sound, objective financial advice and it is best
to make investment decisions in consultation
with an accredited financial adviser or your
broker, taking into account your individual
needs and goals. If you need financial advice,
call 0860 WISDOM (0860 947 366) or email
advice@oldmutual.com and we’ll gladly
assist you.
Disclaimer: The above information is merely a forecast
based on current economic data concerning the expected
economic climate for next year. This is subject to change
and is not regarded as advice.

Winter 2012
3. Crack the code
Do you tend to spend more than you save, or are your investments tailor-made
for a huge pay-off when you need it most? Figuring out what your savings
personality is can help you make wiser financial decisions in the long run.
So, what kind of saver are you? Let’s find out.
Quiz instructions:
Select either A, B, C or D when you decide which
answer best describes your saving habits.
1. Where does most of your income go, after
the normal bills like bond payments, rent
and other standard expenses?
a. Debt repayments.
b. I spoil myself with short holidays, new furniture,
brand-name clothing and eating out at trendy places.
c. Investing in business deals that can give me
the most return quickly, and perhaps in shares.
d. Savings and investments with low levels of risk.
d. I think I have my finances under control and invest
as much as possible.
3. Should you be retrenched and unable to find
work, what will your plan of action be?
a. I would need to depend on family and friends.
b. I’d spend whatever is left of my money to finance
the things I’ve always wanted, and trust I’ll find a
new job soon.
c. I would immediately invest available funds in a new
business venture.
d. I have enough savings to cover me for some time
while I look for other work.
2. How do you manage your money?
a. I don’t yet earn enough to meet all of my needs, so
I battle to make ends meet by the end of the month.
b. I am stable as I spend money throughout the month
with a little left over for emergencies.
c. I don’t buy something until I have enough money
to pay for it, so my cash flow is steady.
4. What is your relationship like with your
primary financial service institution?
a. I have been (or know someone who has been)
let down by financial services companies and
therefore I am cautious when dealing with them.
b. I make most of my financial decisions through
recommendations from friends and family.

Winter 2012
3. Crack the code Continued
c. I get financial advice from more than one source
and I have accounts with different institutions.
d. I know my financial institution has my best needs at
heart and I trust them completely. I know a lot about
their products and can make solid decisions on my own.
5. If you were forced to save a certain amount
every month, how would you choose to do it?
a. A simple savings account each month, with little
financial risk.
b. I’d put a little away each month and leave the rest
to spend.
c. I’m willing to take high risks in an investment with
potentially high returns.
d. I would do thorough research and choose a product
with the best potential returns over a long-term
investment period (such as five to 10 years).
6. In terms of your finances, which one most
sounds like you?
a. I’m just getting by.
b. I’m living for today.
c. I’m being the best I can.
d. I’m planning for the future.
7. A business opportunity is presented to you,
but you need to immediately invest a large
sum of money. What do you do?
a. It sounds good, but I would need to find out if I
could get a loan.
b. If I had enough money available, I might consider it.
c. If it were legitimate, I’d definitely go for it.
d. Financial gain needs to be well thought out and
planned – no get rich quick scheme works.
If you selected mostly A’s that would make you
a fragile provider.
If you selected mostly B’s that would make you
a comfortable spender.
If you selected mostly C’s that would make you
a get rich quick.
If you selected mostly D’s that would make you
a clean-cut planner.
Read on for a more detailed summary of
your personality.
A. Fragile provider
You have a strong desire to take care of your family, but
most months you struggle to make ends meet and tend
to spend more than you save, usually on credit. You’re
a bit cautious when it comes to financial products and
investments because they can be confusing, and if you’re
honest, you actually hate dealing with your finances at all.
Your three tips:
1. Find a financial adviser who will partner with you
in your planning. Lizl Budhram, Advice Manager at
Old Mutual says, ‘This person should listen to your
needs and be understanding, explaining products in a
way that you can relate to. If he/she is intimidating,

Winter 2012
3. Crack the code continued
uses confusing language or tries to impress you with
jargon, find someone else.’
2. Lizl also suggests you draw up a budget to
determine why you are battling to make it through
each month. With assistance from your financial
adviser, figure out which expenses are really
necessary or important and which ones can be
eliminated (such as unnecessary luxuries). This will
open up some funds for saving and make provision
for your future financial needs. You are able to
generate a good income, and putting this to good
use is an advantage you can’t afford to miss.
3. Remember that most financial difficulties cannot
be solved overnight. You will need lots of discipline
and patience, which is where an adviser will help
keep you on track. Let him/her help you create
realistic financial expectations and make sure
that he/she is transparent about costs and risks.
B. Comfortable spender
You cover all your expenses really easily and aren’t
too concerned about your cash flow. You have spare

Winter 2012
3. Crack the code Continued
cash to pay for unplanned events, but you aren’t very
interested in saving for the future. You tend to go
to family and friends for advice about your finances
because you find the topic extremely boring otherwise.
You tend to spend a lot more than you save and, for
you, living in the present and enjoying life now is what
matters most.
Your three tips:
1. Understanding the importance and value of
a competent, reputable financial adviser is half
the battle won. Partner with someone who can
explain the ‘boring’ financial detail clearly and
make it more interesting for you.
2. Become an active participant in your financial
plans. Create a vision of how these plans, which
are put in place now, will impact on your material
future (or that of your loved ones). Lizl Budhram,
Advice Manager at Old Mutual says, ‘Generating
an income that supports a comfortable lifestyle
puts you in an enviable situation – saving is
affordable. In order to motivate yourself to save,
you need to overcome the perception that saving
and financial planning is boring, and that you will
get to it “one day”. A savings plan will never
be as sexy or impressive as a new 3D flat-screen
TV, but it’s much more of a necessity.’
3. You tend to live as if you’ll be generating an
ever-increasing income forever. This is never
the case, and provision always needs to be
made for the future, whether it is for education
for your children or for retirement, or any other
future need. Ensure that the savings plan is not
cashed in for some immediate unnecessary
material need like an appliance upgrade or a new
car. Appropriate savings products can assist you
by not allowing you access to the money to spend
on unnecessary luxuries.
C. Get rich quick
You enjoy taking risks financially, especially if there
is a possibility of high returns on your investments.
You provide well for your family and set financial
goals, but your focus isn’t on saving. You have enough
money to pay your bills and all the extras, but going
the ‘safe route’ of saving, when you could be making
more money on the stock exchange, doesn’t make
sense to you.
Your three tips:
1. A strong appetite for risk is a great strength, but
can also create significant challenges. ‘You may love
taking a chance on higher-risk investments such as
equities or foreign investments, but then you also
take a big risk by not planning carefully and making
adequate financial provision for the future,’ says
Lizl Budhram, Advice Manager at Old Mutual. ‘It’s
important to find a suitable investment product that
suits your personality. You can combine some more
risky investment funds with some stable return
funds to create the appropriate balance of risk and
stability in your investment portfolio.’
2. Because you are good at doing your research,
budgeting and planning will come naturally.
Use a budget and the services of a skilled
financial adviser to help balance your need
for risk and spending with the need to save
and make adequate financial provision for
the future.
3. ‘Being goal-orientated is very important when
it comes to successful saving – this is already
a characteristic of risk-taking savers,’ says Lizl.
Put this trait to good use: Set a savings goal,

Winter 2012
3. Crack the code Continued
monitor progress and make adjustments to the
savings plan to ensure that it remains on track
to achieve the goal at the end.
D. Clean-cut planner
You are extremely organised and conscientious,
and this shows not only in your finances, but also
in how you take care of your home and family.
You enjoy learning and improving your knowledge,
are constantly planning for the future and are
extremely successful. You have at least a five-year
plan, are very careful with your finances and have
made some very wise decisions about saving.
Your three tips:
1. You have all the habits and skills to support proper
financial planning as well as disciplined execution
and maintenance of the financial plan. Make sure
you have a financial adviser on your side who can
ensure you get maximum benefit from all your
investments.
2. Continue educating yourself in the area of finance
so that you can fully understand any advice or
financial plans provided by your adviser.
3. Lizl Budhram, Advice Manager at Old Mutual,
says you should be careful of playing it too safe
(i.e investing too conservatively by having
insufficient exposure to higher risk assets,
such as equities). If your saving and investment
time frame is long enough, you can afford to take
on a bit of risk. In fact, if your investment is not
exposed to sufficient levels of risk, the growth
will not be sufficiently optimised. This means
there could be a danger of the growth not being
higher than the inflation rate, which means you
will effectively be losing money.
Because investing is key to your future security,
access to the best information and practical advice
is essential. There is no substitute for sound,
objective financial advice and it is best to make
investment decisions in consultation with an
accredited financial adviser or your broker, taking
into account your individual needs and goals.
If you need financial advice, call 0860 WISDOM
(0860 947 366) or email advice@oldmutual.com
and we’ll gladly assist you.

Winter 2012
4. Very, very interest-ing!
Imagine your money as an employee, working for you. Then imagine it out-earning
you over time. It’s no daydream, it’s the magic of compound interest.
‘Compound interest is getting the benefit of interest
on interest as your investment grows,’ clarifies Lizl
Budhram, Advice Manager at Old Mutual. But time
is of the essence. ‘The longer you invest, the better
your return will be as you are receiving the benefit of
interest on interest,’ she says. So the earlier you start,
the longer you give this magical principle time to work
for you. This is especially important for young families
still starting on the savings journey.
Time is on your side
‘If you saved R1 000 per month for 10 years from
the age of 24 and then stopped investing completely,
never saving a cent again, with an assumed growth
rate of 10%, you would have R2,5 million at the age
of 60. However, if you did exactly the same but started
at the age of 35, you would only have R1,4 million at
retirement. The period of saving is longer (36 years vs
25 years), but the effect of compound interest gets more
powerful the longer the total term,’ Lizl explains. Click
here for a more detailed comparison of three investors.
It’s okay to start small
Anyone who thinks they don’t have enough money
for this should think again. Lizl says the size of a lump
sum makes very little difference, and what’s more, the
principle remains the same with recurring monthly or
annual investments. This makes it ideal for someone
with plenty of time ahead of them, and especially as
your budget needn’t suffer a knock in the process.
Keep an eye on inflation
And while your money’s working, you shouldn’t
rest entirely on your laurels. The smart thing is
to keep track of the inflation rate and make sure
your investment at least keeps up with it. ‘Inflation
erodes the value of money, which means the value
of R1 000 today will not be the same in 20 years
time. In 20 years time your R1 000 will buy you
a lot less,’ Lizl points out. ‘Because at a stable rate
of 5% inflation, the buying power of money will halve
every 15 years, so you actually need much more at
retirement than what you require today based on the

Winter 2012
4. Very, very interest-ing! Continued
inflation rate. It’s therefore crucial to ensure that your
return on investment (growth or interest rate) is higher
than the current inflation rate.’
Both earn 7% compound interest. At age 65, Investor
A’s investments would amount to R1 350 438, while
Investor B’s investments would total R1 035 473.
This is why an investment option like an endowment
policy (fixed-term investment) is a particularly good way
for someone to benefit from compound interest. And the
contract term of your investment helps to instil a savings
discipline. Old Mutual offers an option to have your debit
order amount automatically increased every year, keeping
your money ahead of the inflation rate so that compound
interest can work even harder for you.
• See how your money grows: click through to the
investment savings calculator.
But why does Investor A outpace Investor B despite
investing only half as much? Because he started
earlier. The compounding of returns over time is very
powerful, and one of the greatest tools known to the
world of investing.
But let’s consider Investor C: he starts with Investor A
at age 25, also an amount R12 000 a year, but invests
for 30 years instead. Total contributions: R360 000. Also
earning 7% compound interest, Investor C would start his
retirement at the age of 65 with savings of R2 385 912.
The magic of compound interest
Investor A invests R12 000 a year for 10 years starting
at age 25, and then doesn’t add any more after he
turns 35. Total contributions: R120 000.
Investor B waits until age 35, then invests R12 000 a
year for the next 20 years, until retirement at age 55.
Total contributions: R240 000.
Moral of the story? Start today (and then don’t stop!)
Because saving is key to your future security,
access to the best information and practical
advice is essential. Speak to your financial adviser
or broker, or call 0860 WISDOM (0860 947 366)
or email advice@oldmutual.com and we’ll gladly
assist you.

Winter 2012
5. Life savers
Social work and teaching are two professional and academic disciplines that are
critical to society, but it’s well known that these aren’t the best-paid jobs around.
We chatted to Mariette and Johann le Roux about how their lifelong dedication to
saving made all the difference.
‘If you take into account our income and expenses
(we’re currently putting two sons through university),
I believe it is our savings and investment consciousness
that got us through the difficult years – and gives me
confidence that we’ll one day retire with relative peace
of mind,’ says Mariette, who now works in human
resources in the picturesque Western Cape town
of Ceres.
Read on for Mariette’s top four financial
life lessons.
1. ‘My parents were both born during the Great
Depression in the 1930s, and instilled in me an
early awareness of the need to save. So, from my
very first salary (a whopping R254!), I put away
a percentage of my earnings monthly and have
tried to do so ever since, although life sometimes
interferes with our savings plan! Johann is equally
prudent, having been raised in post-WW2 austerity.
We also invested money for our two sons Jaco and
Burger from birth – something we’re grateful
for now that they’re at university!’
2.‘Circumstances beyond our control resulted in
Johann’s early retirement at the age of 52, and
we had to determine what to do with the resultant
payout, so I started reading books and articles on
finance. It was around this time that Old Mutual
demutualised, and the shares we received sparked
my interest and eventual involvement in the stock
market. I’m now pretty clued up on what’s happening
in the markets, which also means we’re able to ask
our financial adviser pertinent questions – and call
him on investments that don’t show good returns.
It’s a good feeling to know exactly where we stand.’
3. ‘Part of Johann’s payout went into a business
venture that failed. That was tough, but our properly
diversified portfolio meant we could recover from
that setback. And, like so many others, we lost
money in the stock market crash in 2008. We held

Winter 2012
5. Life savers Continued
on to what we had as it makes no sense to
sell during a dip, and only re-evaluated our
portfolio after everything had stabilised.
Thankfully, the markets have improved since
then. Of course I would want our money to
grow faster, who wouldn’t? But I’ve also realised
the value of steadfastness and the importance
of not panicking.’
significantly less worrying about the financial
impact of a potential misfortune.’
Click here for more information on GREENLIGHT
and how it can give you peace of mind.
Would you like to educate yourself more? Start
by reading about the seven sound investment
principles here.
4. ‘When I became the sole breadwinner, I realised
that savings and investments weren’t enough to
safeguard my family. What would happen to them
if I lost my ability to earn a salary, if I became
ill or disabled or couldn’t work for any reason?
And so I took out a GREENLIGHT policy, and with
that has come further peace of mind about the
future. Nobody knows what the future holds, but
it’s good to know that we’ll still enjoy a measure
of financial security if anything happens to me
and I’m no longer able to earn. Now we live with