Guiding Principle of Investing #8: Plan for taxes
Someone says there are two things certain in life: death and taxes. Any investor would do well by working with a trusted financial advisor or tax advisor, to plan his investments around his tax position, to maximise his after-tax returns. South African resident investors should take advantage of the following: 1. Use appropriate investment products to reduce or eliminate income tax and other forms of tax 2. Contributions to retirement funds are tax deductible up to 27.5% of taxable income, subject to an annual limit of R350,000. All the growth in retirement funds are tax free. 3. R23,800 interest exemption per year for individuals under 65 years of age; R34,500 for age 65 and above 4. 20% dividend withholding tax for individuals 5. Capital gains annual exclusion of R40,000 for individuals, and R300,000 in the year of death. 6. All growth in a Tax-free Savings Account, whether it's interest, dividends or capital gains, is tax free for life. This post concludes our 8 guiding principles of investing. To set up a meeting to discuss your Investment planning please contact Ray or Kevin, email:invest@daberistic.com tel no: (011 658-1333)
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Guiding Principle of Investing #7: Think long term
Let time and compound interest be your friend. When we talk long term, we are not talking about 1, 3, 5 years. We are talking about 10, 20, 40, 60 years. Think about this: If you invest R100,000 at 10% annual return for 5 years, your investment will grow to R161,051. If you invest the same for 20 years, your investment will grow to R672,750. If you invest the same for 40 years, your investment will grow to R4,525,926. To set up a meeting to discuss your Investment planning please contact Ray or Kevin, email:invest@daberistic.com tel no: (011 658-1333) Guiding Principle of Investing #6: Recognise and manage one's emotions
It is well studied and documented that investors are driven by their emotions, which lead to irrational decisions. It would serve any investor well by recognising his own and others' emotions, and learn to manage his emotions. Some of common emotions displayed by investors are: Fear and greed Hear mentality - want to do what others do The current craze about Bitcoin is a brilliant example of such human emotions. It may be more profitable for investors to do exactly the opposite of what others do. Warren Buffett says, "Be fearful when others are greedy and greedy when others are fearful." To set up a meeting to discuss your Investment planning please contact Ray or Kevin, email:invest@daberistic.com tel no: (011 658-1333) Guiding Principle of Investing #5: Diversify, but do not over-diversify.
Do not put all your eggs in one basket. On the other hand, putting all your eggs in too many baskets may not be a good thing either - you will lose focus, end up losing track of your investments. To set up a meeting to discuss your Investment planning please contact Ray or Kevin, email:invest@daberistic.com tel no: (011 658-1333) Guiding Principle of Investing #4: Do your homework Understand the investment markets and products you want to invest in. "Investing without research is like playing stud poker and never looking at the cards" - Peter Lynch "What an investor needs is the ability to correctly evaluate selected businesses. Note that word 'selected': You don't have to be an expert on every company, or even many. You only have to be able to evaluate companies within your circle of competence. The size of that circle is not very important; knowing its boundaries, however, is vital." - Warren Buffett To set up a meeting to discuss your Investment planning please contact Ray or Kevin, email:invest@daberistic.com tel no: (011 658-1333) Guiding Principle of Investing #3: Do not invest using borrowed money
Do not invest using borrowed money Investing using borrowed money will create burdens and stress, as you need to meet the obligations of borrowed money, to repay interest and capital. To set up a meeting to discuss your Investment planning please contact Ray or Kevin, email:invest@daberistic.com tel no: (011 658-1333) Principle 2: Persevere
Implement investments according to your financial plan. Avoid knee-jerk reactions. Implement investments according to your financial plan. Avoid knee-jerk reactions. Implement investments according to your financial plan. Avoid knee-jerk reactions. Implement investments according to your financial plan. Avoid knee-jerk reactions. To set up a meeting to discuss your Investment planning please contact Ray or Kevin, email:invest@daberistic.com tel no: (011 658-1333) |
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