This week I would like to look at the financial trends of the past few years. With the onset of the recession unemployment has risen to 6.5% in the United States. As the old adage goes, “When Wall Street sneezes; the rest of the world catches a cold.” So what happens in the US invariably affects us in South Africa and it’s important to keep abreast of the trends in North America. Unemployment during a recession is par for the course, but how has this affected employed people? According to Steve Watson of Investec, people employed in the U S are earning the same after inflation, yet working more hours. They are not getting richer or increasing their personal wealth yet are having to work longer hours and as a result having less family and free time.
Another threat to the work force is the rise of a reliance on technology. As our world evolves, fewer people are needed in certain jobs as robots and technology are relied upon more and more. Every recession cuts out waste and streamlines business. Businesses will reorganize their processes to be more competitive and use technology to do so. Some things are done better by robots than by humans, for example any repetitive work or that which requires the processing of large volumes of information. Technology cuts out the human error element.
In spite of the relative financial doom and gloom, investments have done well, particularly, diversified asset investments. The JSE did 21% last year and those who were invested, had growth. It’s the age old phenomenon of 20% of people getting wealthier and the 80% are no better off. The 80% who are working and may even be working harder, have had no real wealth growth, whereas those who invested, have had wealth growth.
Those of us who are employed are fortunate to have work and it’s about learning to work smarter and letting our investments work for us. By saving and investing we can grow our personal wealth. If we just work and do not save or invest, we are no better off and might even be moving backwards! As the pressures of work demand more hours and our family sees less of us we are sacrificing work life balance in order to keep our jobs. If we invest however, the growth of which far outstrips inflation, we are in a better position to negotiate the lifestyle we want for our family.
Think smart, work smart and let your money work for you.
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