Your Income means the world to your – are you protecting it?

The roof over your head, your car, your kid's education, the long-awaited holiday and that new pair of shoes all have one thing in common – your income and without it you wouldn't have any of it!

Most of us would like to believe that we'll never have an unplanned break in our income until our retirement, that is not always the case. You may get an illness or disability that leaves you unable to work for a period of time, even though it's not permanent. You still need to take care of your monthly expenses.

Your medical aid should foot the bill for your medical expenses but how will you survive without an income for the foreseeable future? There is light at the end of the tunnel! Temporary Income Disability is now available and was designed especially for these types of situations.

Temporary Income Disability will pay out a maximum of 24 months income in the event of a temporary or permanent disability that prevents you from working.

• The benefit will pay out multiple periods.
• It can be paired with any other disability benefits.
• Flexible waiting periods are available to choose from

You are in control of your life. Make the decision today to protect what you have and secure your future and that of the ones you love!

“Jy het nie versekering nodig omdat jy gaan sterf nie, maar omdat jy gaan lewe”

Statistieke oor gevreesde siektes is genoeg om jou naar te maak! Een uit elke vier mense kry ’n hartaanval, kanker word by een uit drie gediagnoseer en een uit elke 11 vroue kry borskanker.

Agt uit elke honderd mense sal ’n beroerte kry waarvan slegs 10 persent volkome sal herstel en 53 persent agterna volkome afhanklik van ander se sorg sal wees. Dan het mense dikwels oë skuldvlakke en hulle is veronderstel om nog baie jare geld te verdien.

Jou gesondheid en vermoë om ’n inkomste te verdien is jou grootse bate. Hoe beskerm jy jou inkomste tans?

Gevreesdesiekte dekking asook Ongeskiktheids Inkomste is die oplossing. Ongeskiktheids Inkomste bied beskerming teen tydelike of permanente gevalle waar jy weerhou word deur ’n siekte of ongeskiktheid om ’n inkomste te verdien. Die dekking sal geldig wees tot aftrede van 60 of 65.

Nou is daar ook Tydelike Ongeskiktheids Inkomste beskerming beskikbaar wat jou inkomste vir 24 maande beskerm.

“Jy het nie versekering nodig omdat jy gaan sterf nie, maar omdat jy gaan lewe”

Dr. Marius Barnard – Hartspesialis en pionier van gevreesdesiektedekking

Vroeër in die jaar het Dr. Barnard gedurende ’n seminaar met ons gedeel hoe van sy pasiënte finansieel sukkel nadat hulle ’n siekte of ongeval oorleef. Sommige verloor liggaam funksies, brein funksies of verkeer emosioneel onstabiel en kan nie langer ’n inkomste verdien nie.

Maandelikse uitgawes soos voedsel, water, ligte, verblyf en baie meer word nie deur jou mediese fondse gedek nie!

Kontak my onmiddellik om uit te vind hoe ons jou inkomste kan beskerm en of jy tans beskerming het?

For the English version please contact me.

What should I do?

Question: I resigned from the company where I have been working for 26 years. What I should do with my pension fund?

Answer: Employees staying with employers for such long periods are the exception rather than the rule these days and I am sure you are reaping the rewards with a substantial accumulated value in your pension fund. Before discussing the various options available to you, you need to consider a number of important questions:

• What are your goals in retirement and how will you fund these?
• Are your pension fund savings your only source of retirement provision or do you have other sources (e.g. retirement annuities, an investment portfolio, etc)?
• Do you have substantial outstanding debt that is placing pressure on your lifestyle?
• How long do you still have to save until you retire?

These are important issues to keep in mind when making decisions that may potentially impact your desired lifestyle now and after retirement.

You should be receiving or would already have received a withdrawal form from your current fund listing the options available to you. The following four options should be reflected:

1. Transfer to pension or provident fund

If your new employer has a pension or provident fund, you may transfer your pension benefit to your new employer’s fund. Transfer to a pension fund is entirely tax free. In the case of a transfer to a provident fund, a small portion of the benefit (around R1800) is tax-free and the balance will be taxed according to your average tax rate.

2. Transfer to preservation fund

It is a good idea to explore the option of transferring your pension benefit to a pension preservation fund. A preservation fund can be considered as a ‘parking bay’ where you can leave your accumulated benefit until you are ready to retire. Upon your retirement, you may access the funds as a retirement benefit subject to its own taxation provisions. You will be allowed to make one withdrawal prior to retirement that will be taxed at your average tax rate.

3. Transfer to a retirement annuity fund

A retirement annuity is a voluntary retirement savings vehicle with tax benefits. This means that it is not linked to employment and you can choose the monthly or annual contributions. These contributions UP to certain limits are tax deductible. Any future career changes can be done with ease as the retirement annuity is in your personal capacity. You can transfer your pension benefit directly to you retirement annuity tax-free.

4. Cash

Should you choose this option, you will be taxed at your average tax rate. I cannot stress enough that this should be your absolute last resort and should not be considered. Even if you do have debts that you want to settle now, you should rather consider transferring your benefit to a preservation fund and withdrawing only the amount required to settle your debt. Taking the full amount in cash creates an unnecessary temptation to spend the left-over cash. If you are close to retirement, 15 years or less, it might not be possible to make up for time lost.

Do you know anyone that has resigned, been retrenched, retired or changed careers? Ensure they are able to make informed decisions by forwarding me their contact details.

Does your company offer retirement benefits such as a Pension Fund or Provident Fund? Now is the perfect time to review your current fund or implement a new fund, please contact me.

It is time to act...

The bear market in local and global equities intensified during the first quarter of this year and it is therefore time to review your financial plan, either because you don't have a financial plan or because your plan isn't up to date to suit our current environment.

For people without a financial plan, now is the best time to take responsibly. Just as people don't go to the dentist as regularly as they should but wait until they have a toothache they can't bear, so with financial planning the only time you feel the pain from failing to plan, is when it is too late.

If you do have a sound financial plan that incorporates well-diversified investments, you should still be ahead of you plan. It will be beneficial to complete a value for money analysis for the first quarter of this year. This analysis will confirm that your strategy is still on track and that you are receiving the maximum benefits that are available in the market today.

There is no need to panic if cash in any investments have suffered some losses until we have revised your plan and devised a strategy to move your investments slowly into a more diversified portfolio - and hopefully mitigate any negative growth.

If you still have a long way to go to retirement and have some spare cash, it may be time to start investing every month or review where you are investing to take advantage of the opportunity to invest in low priced shares.

If you don't need to access your savings in the short term, equities are the place to be. It is not hard to see that equities will do well within the next year or two.

Share prices are at very low levels, low interest rates are positive for companies and there is a lot of money in cash or cash-like investments ready to move into equities when market sentiment turns positive.

The economic downturn may continue, but equity markets tend to recover about nine months before the economy turns.

Please contact me today to complete your free Value for Money assesment!

Diversification is key!

Diversification is key to good long-term investment returns.
There are different asset classes in which to invest, for example, equities, bonds, cash or property. Each offers a different return and risk experience. If you invest carefully in each class, you will achieve the best overall outcome.

Investing is a methodical process that starts by identifying desired investment goals. The earlier you start, the greater the end reward.

There are many options along the investment continuum, each designed to meet different needs and with different degrees of flexibility and tax implications.
Investment options include bank deposits, money-market accounts, unit trusts, endowments and retirement investment products.

An endowment with a minimum five-year investment term is considered a medium-term investment yet is very flexible when it comes to accessing cash. It is a fine savings vehicle for an anticipated event like financing a university education.

Retirement annuities fulfil a completely different role. They are less flexible, long-term investments which enjoy tax benefits not available with other investments. Annuities are the ultimate safety net: you can’t get your hands on the cash until you retire and nor can your creditors.

Diversifying and isolating retirement investments is the best way to build a nest egg. Even if you start out saving only small amounts you can still build a substantial, diversified investment portfolio.

There is always a trade-off between risk and return, as seen in the diagram below. Staying with low-risk assets will affect future growth potential, as the lower risk assets are correlated to lower returns in the long run.



It all starts with careful planning and a firm commitment to ongoing, regular saving along the investment continuum.

henk.neuhoff@liblink.co.za

Investment Strategies

It is important to establish a strategy and investment plan with investors to achieve their objectives and understand their individual circumstances and needs.

Following these tried and trusted investment principles, will have you well on your way to achieving your investment goals:

Take a long-term view to create wealth
To create wealth, you need to take a long-term view to investing.
The longer funds are invested, the greater the benefit of compounding is on the ultimate value of the investment. This applies to both interest bearing and equity related investments.

You can benefit from investing regularly over time
Many investors do not want to invest when markets decline or are volatile, preferring to wait for more positive conditions. Unfortunately, the best time to invest can only be determined with hindsight, and the longer investors delay, the more they will need to invest to achieve their financial goals. Once you have determined your financial goals and plans to achieve these, volatile markets should not stop you from taking action. In fact, by investing on a regular basis, you may benefit from rand cost averaging. This means that if you invest steadily and regularly over a period of time, downward market trends are an opportunity to buy units or shares at a lower price, which may benefit you in the long term.

Use your risk profile to choose your investment and then stick to it
Whatever investment strategy is chosen, it has an expected risk (as measured by the volatility of returns from month to month) and return profile. When you choose an investment it is important that you understand:
• your tolerance for short-term volatility
• your investment time horizon
• the long-term return you hope to achieve.
Investing in different asset classes will reduce investment risk. It is important for you to select an asset mix appropriate to your investment objectives and risk profile. This will allow you to achieve the long-term investment returns you expect within acceptable levels of short-term volatility. Risk profiles range from conservative to aggressive.

Invest in a geographically diversified mix of assets
Just as different asset classes perform differently over time, so do different markets. By investing in a geographically diversified portfolio, investment risk is reduced, thereby enhancing the return per unit of risk.

Don’t chase the best performing asset classes
Different asset classes have different risk reward profiles. Investing purely in equities may produce better long-term returns than cash and bonds, but it also results in a greater probability of negative returns in the short term. If you try to chase the ‘flavour’ of the month or year, the chances are that you have already missed the best performance and your investment will probably under perform in the short term.
By investing in a balanced mix of asset classes and sectors, investment risk is reduced and you get exposure to asset classes and sectors before they become the ‘flavour of the month’.

Don’t try to time the market
All investors want to ‘time the market’ by investing when markets are low and disinvesting when they are high. Research has shown that very few people get this right. Rather than try and time the market, you should develop a long-term investment plan and stick to it.

henk.neuhoff@liblink.co.za

What are Shares?

Companies issue shares to raise the capital they need. Shares of most of the biggest companies in South Africa are "listed" on the JSE (the "stock market"). This means they are "public companies". Any member of the public has the right to own a part of a listed company. All you have to do is speak to your advisor and ask him to buy you shares in Company X. And there you are, you own a bit of that company!

A share that you buy on a stock market is exactly that! If you own shares, you own a small part of that company. It works like this ...A listed company issues shares to the public - usually many millions. These are then traded on the stock exchange. You decide the company is a good investment, so you buy, say, 1 000 shares. Because the company sometimes does well and sometimes not so well, the price of the shares can vary from one day to the next. Other factors, such as the overall economy, also affect share prices. As a result, next month or next year, the shares you bought may be worth more (or even less) than what you paid for them.

While you own the shares, you receive any dividends that the company declares. Dividends are the way companies reward shareholders by making distributions of a portion of profits.

Would you like to invest in shares?

When you invest in shares, you invest indirectly in the economy of the country.

Developing an investment strategy for each individual investor is utterly important, which will be discussed in greater detail next time...

Feel free to contact me with any queries: henk.neuhoff@liblink.co.za

Is your most valued asset protected?

Part 2...

As you gain experience and success over time, your income rises. You are the asset generating vehicle of your future!

Is your future protected?

What impact will a life changing event have on your retirement planning?

Even temporary loss of income can be difficult to recover from.




It is essential to protect your future potential income and your future potential retirement saving! Should you have had an increase/decrease in salary, acquired assets or had a change of heart, NOW is the perfect time to review your goals.




Please feel free to contact me.

henk.neuhoff@liblink.co.za

Is your most valued asset protected?

The ability to earn an income is often an individual’s most valuable asset.

One can never anticipate when tragedy will strike. Whether it is a car or household accident or diagnosis of a heart disease or cancer, unanticipated misfortune is the reason it makes sense to protect your income.

Without a regular monthly salary, would you and your family find it possible to cover your monthly expenses, bond & car repayments, food, medical bills, telephone accounts, school fees and day to day living cost?

Income Disability provides you with a monthly income when you are ill or injured and unable to work. This benefit pays you a temporary income if your illness or injury is transitory, a partial income if you suffer from a partial disability or an income until the end of the selected benefit term if the disability is permanent.

Benefits of Income Protection

• A monthly payment of as much as 75% of your income (Additional 20% with Top-Up)
  
• Total and partial disability benefits for temporary or permanent disability.
  
• Flexible Benefit Periods.
  
• Possible cover for rehabilitation expenses.
  
• The Opportunity to upgrade your cover over time.
  
• Optional inflation protection to help your cover keep up with the cost of living.
  
• Income Protection premiums are Tax-deductible.

Consider the following:

Can you afford to self fund you monthly income?

Can you live off your savings and is this what it was intended for?

Do you have emergency savings to see you through several months without a salary?

Should you have answered No to any of the questions above or had an increase or decrease in income, it is time to review your protection plan.

Please feel free to contact me.

henk.neuhoff@liblink.co.za

Welcome to 2009

I hope everyone enjoyed their rest and relaxation period.
Wishing you all the best of success to an action packed 2009!

Some good news...

If you haven't yet eFiled your income tax return, don't panic - the South African Revenue Service (SARS) this week granted you an extension to Thursday, February 5.

Looking ahead...

We have a lot to look forward to in 2009 and positive optimism will go a long way.
Barack Obama steps up to fulfill the dreams of millions of Americans. Expecting dramatic economic changes overnight might be somewhat unrealistic.
2010 Soccer World Cup is around the corner and that will definitely influence various industries in a very positive way.

The steep fall in oil prices and moderating inflation allowed the South African Reserve bank to cut its key lending rate in December 0.5% to 11.5%, down from a peak of 15.5%. That will enable the CPIX (consumer price inflation less mortgage costs) to decline from 10% in December, 7% in January and on down to 3%-6% in the second quarter in 2009.

None the less, I will keep you posted!

Rates cut by 50 basis points

Xmas cheer as SARB cuts rates

Pretoria - The South African Reserve Bank's monetary policy committee has cut the key repo rate by 50 basis points, bringing it down to 11.5%, with the prime lending rate dropping to 15%.
This is the first time in 14 meetings that the rate has been cut since June 2006; at the other meetings, the rate was thrice kept on hold, and raised by 50 basis points each time in the rest.

The decision was in line with the consensus forecast by economists surveyed by I-Net Bridge. Of the 16 economists polled, nine expected a 50 basis point reduction, while two are expected a cut of 100 basis points. Five economists spoken to expected rates to remain unchanged.

South African Reserve Bank Governor Tito Mboweni said in late November that the inflation outlook had improved and it was hoped that an easing since August was the start of a consistent downward trend.

The targeted CPIX inflation slowed to 12.4% year-on-year from 13.0% and factory gate inflation fell to 14.5% from 16.0% previously.

Inflation broke through the Reserve Bank's 3%-6% target range for CPIX - the consumer inflation rate excluding mortgage interest rates - in April 2007. Driven by high food, fuel and electricity prices, inflation hit a peak of 13.6% in August. Economists expect that CPIX inflation will return within its target range in the latter half of 2009.

Estate Planning - Part 2

Two more questions on Estate planning

Will my spouse have cash available?
Many people overlook the fact that their surviving spouse will need cash to live on after they die while the estate is being wound up and this can lead to serious problems and inconveniences. Once your bank gets wind of the fact that you are dead it will freeze your account. It takes time to finalize most insurance payouts. This is especially so when the circumstances surrounding a death need to be investigated. You should provide cash for your surviving spouse that will support him or her for two to three months. For this purpose, the spouse should have his or her own bank account. Alternatively, the surviving spouse should have a unit trust investment in his or her name that can be sold quickly to realise cash when this is needed.

How does my marriage affect my will?
If you are married in community of property, all assets acquired before the marriage and during the marriage belong to both of you equally. In this case, when you draw up a will, you can generally only deal with half the assets of the marriage. If you are married out of community of property, any assets you acquired before your marriage remain your own, but assets acquired during the marriage belong to you both – unless you specifically state that assets acquired during the marriage belong to the spouse who acquired them. If you leave assets to your children, the law includes:
· Children born of your marriage or any previous marriage;
· Children born out of marriage; and
· Legally adopted children.

Last Will & Testament

Estate planning

We all plan for retirement, although we are not assured of living long enough to reach retirement. But, despite knowing that we are all going to die, many people still fail to draw up an estate plan.

Another reason you need an estate plan is to ensure that your estate has the most beneficial tax structure. Although it is not possible for your estate to pay no tax, you can minimise the tax your estate pays.

Who receives your life policy and retirement fund benefits?
You need to decide whom you want to benefit from your assets or for whom you wish to provide financially. You should be clear on how you want your beneficiaries to benefit - do you want them to inherit an asset, an income or cash?
Your will cannot dictate who inherits the benefits from your life assurance policy. Many people think they can revoke the beneficiaries they have nominated on a life assurance policy by simply nominating other beneficiaries in their will. However, this is not the case. The life assurer has a contractual relationship with you, the policyholder, and will pay out the benefits to the beneficiaries nominated in your assurance contract, regardless of whether your will states otherwise.
If you want to change your life policy beneficiaries, you should do this directly with your life assurance company.

Check list for ensuring your will is in order:
It requires expertise to draft a will, and you should not even consider buying a standard will from a stationery shop. If you die without a will, your assets will be distributed in terms of the law of intestate succession. This will also happen if your will is invalid. You should check the following to make sure your will is in order:

· Is your will valid? Check that your will is signed and witnessed in all the correct places. Also check that your witnesses are valid. A valid witness is someone who is over the age of 14 and not at all benefiting from your will.

· Is your will current? You may find that your circumstances and/or your wishes have changed since you drafted your will. Legislation that affects your estate plan may have changed since you drafted your will, and these changes need to be taken into account. You should review your will and your estate plan annually. Your planner should also review your will after any changes to legislation or if your personal circumstances change, such as through marriage, the birth of a child or divorce.

· Where is your original will? You may know where your original will is kept, but you need to tell someone close to you so that when you die, your family can find your original will.If your original will cannot be found, a High Court order will have to be obtained before the Master of the Court can accept a copy of your will. This will lead to additional costs and delays in finalising your estate.

· Have you appointed a guardian for your minor child (under 18 years), and do you want that guardian to manage money on behalf of your child? If you want the guardian to receive and manage funds on behalf of your child, you must stipulate as much to prevent money or proceeds being paid into the Guardian's Fund, which is managed by the Master of the High Court.If this happens, every time the guardian wants money for your child's expenses, he or she will have to apply to the court for the money.

Year end Bonus - What will you do?

The end of the year looms around the corner. Along with festive music and sugar cookies, for some lucky people the holiday bonus is an end-of-year staple.

Bonuses are often spent before they are received as employees anticipate payment.
With every indication that South Africans are feeling the credit crunch, however, this year may be a good o­ne to practice bonus restraint.

Since this is the season of giving, your first temptation will undoubtedly be to give yourself a little something. We all deserve some spoiling, particularly when we have worked hard during the year. But wouldn’t it be more sensible and create more value if you use your bonus to pay off debt and to save a little nest egg before you spoil yourself?

Start by paying off the most expensive debt first such as your credit cards and shop cards that charge the highest interest rates. Also consider keeping some money from your bonus cheque for the holiday period, as this is generally an expensive time of the year.

Using a debit card for purchases instead of a credit card will ensure that you don’t spend money that you don’t have.

These days you simply have to re-assess your priorities. Importantly, you should not lose sight of vital aspects such as making provision for retirement; healthcare needs, saving for your children’s education and protection against the financial impact of catastrophic health events.