Principle 1: Start as young as possible
One of the greatest investors of our time,Warren Buffett is a shining example. At a young age of eleven years old, Warren buys his first stock. He purchases 6 shares of Cities Service preferred stock [3 shares for himself, 3 for his sister, Doris], at a cost of $38 per share. To set up meeting to discuss your Investment planning, please contact Kevin, email: invest@daberistic.com tel no: (011)658-1333
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Investing vs Saving It is important to understand the key difference between investing and saving. I use a table below to highlight the key differences.
To get insight to assist you in your Financial Planning, please contact Kevin , email: invest@daberistic.com tel no: (011 658-1333) Source: Kevin Yeh What is the fund’s objective? The Global Emerging Markets Fund aims to give investors access to the best opportunities in emerging equity markets. The fund actively seeks out undervalued shares to maximise long-term growth. Our intent is to outperform the emerging equity benchmark over all periods of five years and longer What does the fund invest in? The fund invests in the shares of companies which are either based in emerging countries, or earn a significant part of their revenue from emerging economies. It will be fully invested in shares at all times. The fund is mandated to use derivative instruments for efficient portfolio management purposes. Important portfolio characteristics and risks Global Emerging Markets will only invest in shares we view as being attractively valued and which may offer superior long-term investment growth. The fund’s share selection is the result of rigorous international research conducted by Coronation’s investment team. While we have a disciplined approach to reducing risk, shares can be volatile investments and there is a meaningful risk of capital loss over the short term. Emerging markets are generally viewed as more risky than developed markets. Global currency movements may intensify investment gains or declines. If you would like to invest in Coronation Fund, please contact Kevin or Thato, email: invest@daberistic.com tel no: (011 658-1333) Source: Coronation Moneyweb recently ran an article warning that many living annuity policyholders could be left destitute, the story sparked significant debate. Such was the level of engagement, that the comment section generated in excess of 4 500 words of feedback, more than six times the word count of the original article. Important points were raised and constructive criticism offered, but perhaps the central message – that many living annuity policyholders could run out of money in an environment of lower returns and increasing longevity by drawing too aggressively – got lost in translation. It highlights just how complex the retirement debate is. Choosing an appropriate savings or investment vehicle or strategy for one individual, may be completely unsuitable for the next South African. In an effort to add nuance to the discussion (and to keep the debate going!) it is perhaps prudent to consider the broader context. 1. The traditional retirement concept is outdated The days when retirement referred to the day people turned 65, stopped working altogether and enjoyed their leisurely time while their former employer provided a pension for life are long gone. Although employers may still officially require employees to “retire” at 65, a lot of South Africans haven’t saved enough to support themselves after this date. This will require individuals to reinvent themselves to earn additional income to supplement their pensions. While an old-school retirement savings vehicle may still provide a basic income, it is unlikely that this will be enough to make ends meet. Against this background, good health may be the pensioner’s most valuable asset. This may allow him to work well into his 70s or 80s (even if only intermittently or for a few hours a week) and to avoid significant medical costs that can quickly erode even a sizeable savings pot. 2. No investment vehicle can undo a lifetime of poor savings behaviour Greater longevity has significantly increased the pressure on the traditional retirement system, particularly in an environment of low returns. Think about it: If someone diligently saved 15% of her salary for 30 years until age 65, and died five years after retirement (assuming she carried the investment and longevity risk), there was not a lot to worry about. But what if she lived to 95? That same 15% of 360 pay cheques (12 x 30) would now have to grow to compensate her for 100% (or 75% depending on what percentage of her last salary before retirement she aimed to replace) for another 360 retirement income cheques (after returns, fees and inflation were taken into account). In an environment where people often cash out their retirement savings when changing jobs and may only have 15% of 120 pay cheques (or less) saved by the time they reach 65 the numbers just don’t add up. Almost three in four respondents in the 2017 Sanlam Benchmark Survey indicated that they would reduce their standard of living in retirement. One in five said they “were in trouble” as they didn’t make any provision for retirement. Against a background where the vast majority of South Africans have not saved enough one has to realise that no living or guaranteed or with-profits annuity or whatever combination thereof can rectify a lifetime of poor savings behaviour, whether by choice or because circumstances necessitated it. It is an unfortunate reality that it is often pensioners, who in an effort to make ends meet, fall victim to investment scams with seemingly attractive returns. 3. Policyholders need to take the return environment and longevity into account Statistics released by the Association for Savings and Investment South Africa (Asisa), show that living annuity policyholders withdrew on average 6.62% of their capital as income in 2016, slightly more than a year earlier. Although one should consider that an average only provides a partial picture, this drawdown rate puts retirees at a significant risk of running out of money (assuming they had no other assets to provide a retirement income). The drawdown is of particular concern in a low return environment and as people are living longer. One of South Africa’s largest balanced funds delivered a return of 17.6% since its inception 18 years ago. With inflation of 5.8% over the period, living annuity policyholders in this fund could draw more than 10% per annum without seeing their capital eroding! Over the last three years, the fund delivered 8.1%, while inflation was 5.4%. Thus, even investors drawing 4% were dipping into their capital over the period. Unfortunately, the current situation may well put more pressure on the “sandwich generation” – individuals providing financial support to parents as well as children, thereby limiting their ability to save for their own retirement. According to Old Mutual’s Savings and Investment Monitor 2017, 37% of respondents said their children would look after them in their old age, while 33% said they would depend on government. 4. The debate doesn’t have to be either/or Much like the debate around active and passive investments, a discussion about living and guaranteed annuities often descends into a “which-one-is-better argument”. Although it is highly unlikely that living annuities are the most appropriate vehicle for the 90% of retirees who are apparently choosing these vehicles, there are (a smaller group of) retirees for whom it is the right choice. But it doesn’t have to be an either/or debate. While the fee structures around some living annuities are arguably inappropriate in the current environment, the challenges facing many policyholders are not inherently the result of product design, but rather a consequence of behaviour and a changing investment environment.While initial levels of income as well as inflationary pressures are of particular concern for pensioners, hybrid living annuities may offer the best of both worlds. A new generation of with-profit annuities that target inflation-related increases may also be an appropriate solution for those looking for a guaranteed income. To get a quote for your living annuity, please contact Kevin or Thato, email: invest@daberistic.com tel no: (011 658-1333) Source: Moneyweb A will is a legal document that stipulates how the assets accumulated during your lifetime should be distributed when you die. It enables you to select your beneficiaries and also allows you to choose the executor of your estate. But, above all, a will represents financial peace of mind to those you leave behind. Why Do I Need a Will? Every competent person of 16 years and older who owns assets and is mentally able to understand the results of his or her actions, should have a will. Why? If a person dies without a will, it could lead to severe administrative, tax and legal problems and possibly also lead to financial losses. A will should comply with certain legal requirements to be valid. In your will, you determine how your assets should be divided, and nominate an executor and trustee to take care of the division of the estate's assets and to handle the administration of any trust assets. You have the right to name heirs as you wish in your will. If you don't, your assets will be divided according to the Intestate Succession Act, No 81 of 1987, after your death. This could mean that persons you would have preferred not inherit from you, could inherit. Your will therefore determines the future of everything that you've built up through the years – and your heirs can be directly disadvantaged if you don't plan correctly. Estate duty, income tax, VAT and capital gains tax (CGT) can take a big chunk out of your estate if your planning is wrong. It thus goes without saying that you should get the advice of a specialist or adviser for the drafting of your will. Nominating an Executor The executor of your estate must administer your estate in terms of the Administration of Estates Act 66 of 1965, and any other relevant Acts, and execute your estate in accordance with the stipulations of your will (or Intestate Succession Act, when applicable) under supervision of the Master of the High Court. The executor is the company, firm or person that you appointed in your will. If you would like us to to assist you to draw up or update your will, please contact Kevin or Thato, email: invest@daberistic.com tel no: (011 658-1333) Source: Sanlam The Health Plan Protector – ensuring your family’s healthcare costs are taken care of. The Health Plan Protector will cover your family’s monthly health plan contributions for a period of five or 10 years upon a valid claim. The benefit amount will increase each year in line with the medical scheme contribution increases, up to a maximum of 20% per year. You may choose to cover yourself for death, disability and severe illness, or disability and severe illness, or death only. You also have the option to cover both yourself and your spouse. Every year we will calculate your unused health risk contributions by considering your medical scheme risk contributions and medical scheme risk claims over the previous year. These savings will be accumulated and a portion will be paid back to you, through either the Health Dividends or the Health Fund mechanism – depending on which option you choose. Health Dividends Allows you to receive up to 20% of your unused health risk contributions back every year, depending on your Vitality status, the number of years you have been a member of Discovery Vitality and whether you have a Discovery Card. The Health Fund Each year, your unused health risk contributions will be transferred into the Health Fund. Every five years, you can get up to 30% of your Health Fund back through the PayBack benefit, depending on your Vitality status. When you turn 65 or experience a lifechanging event, we will pay you the balance of your Health Fund. Request for a quote for your Health Protector Plan, please contact Kevin or Thato in our Life Department, email life@daberistic.com tel (011)658-1333 Source: Discovery SARS has recently communicated that if you earn less than R350,000 in a year, and fulfil a series of complicated criteria, you may not have to file a tax return in 2017. However, we advise you to take GREAT CARE here, and understand your duties properly, because if you don't, you may suffer for it later on. Here are the top 5 reasons why not to skip filing your tax return this season: 1. You miss out on your refund. Why let SARS keep your money if you are due a refund? A refund is money you overpaid on your taxes and it belongs to you. You can only get a refund if you file a return. Something as simple as claiming Medical expenses or working two jobs can trigger a tax refund, depending on your situation. 2. You can't borrow money. If you wish to borrow money in the form of a mortgage for a home, or a long-term loan of any kind in future, you will need a Tax Clearance Certificate. This can only be obtained if all your returns are up to date and filed appropriately. 3. SARS might change their mind. If you normally submit, but this year you don't, SARS may administer administrative penalties later on down the line for not being compliant. 4. You can't access your retirement fund. Filing a tax return each and every year means that should you receive a payout from a fund at any stage, then you will not have any hassle in getting the money. If you retire or are retrenched, or just need to take money out of your fund early, you need to be tax compliant. 5. A complete record stands in your favour. Having an unbroken filing record leaves SARS officials with no reason to suspect that you are hiding information from them, thus triggering an audit next year. Filing a tax return means you are being a good citizen and contributing towards society! For advise on tax return submission please contact Su-Chin or Su-Lan, email finance@daberistic.com, tel 011 658 1333 . Source: Taxtim |
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