Thinking Back, Planning Forward

This reflection will help you take an emotional, professional, personal, and financial account of how your experiences in the last 365 days has shaped you. It will help you to step more confidently into 2016.

We have some ideas to ensure that you make informed and wise financial decisions not only at year end but also for 2016 and beyond.

Get the most out of your bonus

For those of you who are fortunate enough to receive a bonus at this time of the year and don’t need to pay off debt or pay for a holiday, invest it wisely for the future. As an investor, you have multiple options and we wish to provide you with a few investment ideas to consider:

  • Make a contribution to your Retirement Annuity if you have not utilised your maximum of 15% tax deductibility for the year ended 28 February 2016 and get the tax benefit. Even if you make more than the 15% contribution, it will be carried over to the next tax year. Most importantly, this is the last year that you can make a contribution of more than R350,000 so make use of it; or
  • Make a once-off contribution to your Provident- or Pension Fund (if your Employer Fund makes provision for such); or
  • Invest in a Tax Free Savings Account (TFSA) for you and your children – a maximum of R30,000 per person per annum applies. The capital growth, interest and dividends received thereon, are completely tax free;
  • Invest in Unit Trusts or
  • Open a Share Trading Account and start to buy shares for the long term; or
  • Diversify your portfolio by investing offshore (this takes careful consideration though and various options are available).

We mention this time and time again, but you have to take your personal financial circumstances into account as there is no such thing as a one solution fits all. Speak to one of our financial advisors to ensure that your investment choice is in the best interest of you and your family.

Get ready for 2016

National Treasury released a press statement on the 3rd of December 2015 on the implementation of tax harmonisation of Retirement Fund contributions and benefits. A detailed summary as provided by Investec is attached hereto for your perusal.

The most important points to take from this summary are as follows:

  • The attached changes are going ahead on 1 March 2016 (referred to as T-day).
  • From 1 March 2016 members of all Retirement Funds (i.e. Pension Funds, Provident Funds and Retirement Annuity Funds) will be entitled to a single tax deduction for the total contributions made to Retirement Funds.
  • The maximum deduction members will be entitled to for contributions to all Retirement Funds (employee contributions plus employer contributions) is 27.5% of the greater of remuneration or taxable income, capped at R350 000 a year.
  • The de minimus amount will be R247 500.
  • The Taxation Laws Amendment Act containing all the T-day changes will be published later this month or early next year.
  • The vested rights of Provident Fund members over 55 years will be protected for as long as they remain in the Provident Fund of which they were a member on 1 March 2016.
  • Preservation will only be introduced later.

Make use of this tax benefit and increase your Retirement Fund Contributions from 1 March 2016 if possible. Speak to one of our financial advisers to review your retirement planning and ensure that you are on the right track to retire comfortably.

Education savings and cover

Many parents experience headaches and increased stress levels when faced with the question of whether they have an adequate savings plan in place to cater for their children’s education. Parents are also faced with the risk that should a spouse pass away unexpectedly, if the surviving spouse will be able to afford the school and tertiary educational fees.

We can offer you solutions and assist you in managing these risks.

  • We can do a calculation to provide you with an indication of how much you should be saving on a monthly basis to ensure that you do not put unnecessary financial strain on yourself to cover your child/children’s pre-primary, primary, secondary or tertiary educational fees.
  • School fees are usually payable in advance and most schools offer a discount for full payment of the year’s fees upfront. You can do a simple calculation to see if it makes sense to pay school fees upfront or on a monthly basis.
  • We can also assist you with educational risk cover to protect your spouse and children in the event of your death or disability.

Contact one of our financial advisers for educational savings plans and / or educational cover quotes.

Update insurance cover and beneficiaries on your policies

This is also a good time to review your insurance and ensure that you are properly covered for death, disability, critical illness or other life altering events. It is also recommended that you review the beneficiaries on all of your policies to ensure that the correct beneficiaries and their contact details are listed on each of them.

We can review your existing cover and provide you with comparative quotes from various service providers. We can also assist you with an estate duty calculation to consider if any additional cover might be required to address possible liquidity shortages in your estate.

Review your medical aid and gap cover

If you want to upgrade to a more comprehensive plan, ensure that you do so before your medical aid’s cut-off date. Most medical aids require you to upgrade before the end of December, contact your medical aid to ensure that you exercise your option before the cut-off date. Also ensure that your gap cover is in place or update your gap cover plan if necessary.

Although GraySwan do not provide advice on medical aid, we can put you in touch with a trusted medical aid consultant to assist you.

Set up / review your will

If you do not have a will or it is outdated, we can assist you to get it in place or have it reviewed. If you already have a will, ensure that you and a trusted family member know where the original is stored and that it is updated with your latest information. Remember to update your assets and liabilities annually and file it along with your will.

Ensure that a trusted family member knows who to contact regarding your investments and policies in case of an emergency. The simplest way is to have a list with your financial adviser’s contact details along with a summary of your policies and investments.

Do you have a Trust?

You may have complied with all the requirements of creating a valid Trust but have you considered how effective, practical and up to date the Trust Deed is? If you are not sure about the validity of your Trust or if any additional clauses need to be amended or added, we can assist you with the review of your Trust Deed. Contact one of our financial advisers for more information.

Short and long term banking product

We have access to the Investec Cash Manager System and can open an Investec call or notice bank account in your, your Trust’s or company’s name with the benefit of the most competitive interest rates. Contact us for interest rates.

Food for thought

Life is wonderful but unpredictable. At GraySwan we do not intend to predict the unpredictable. We can protect against what we know, but not against what we do not know. “Black Swan” events are therefore random and unexpected. They are the unpredictable unknowns. “GraySwans”, as we coined the term, however, are risks that can be identified. We can assist you to define the identified risks and our investment and risk advisory services empower our clients to avoid GraySwan risks. Robust portfolio design eliminates GraySwan risks and thereby maximizes expected returns at a predefined level of risk.