Effective 1 September 2024, retirement fund legislation will introduce a new two-pot system. For the first time, retirement annuity investors will be allowed to access a portion of their retirement savings before reaching the age of 55 or retirement. Why has the two-pot system been introduced? During the economic challenges brought about by the Covid-19 pandemic and subsequent lockdowns, many individuals faced hardships and sought access to their retirement funds. The two-pot system aims to: Encourage investors to boost their retirement savings, with the flexibility to access up to one-third ..read more

The Cabinet and a New Dawn for South Africa The much-anticipated cabinet has been announced. While not perfect, it’s a relief that it appears reasonable. Negotiating and balancing these positions must have been tough, especially getting the ANC to relinquish power they’ve held for years. The new cabinet is large, with 32 ministers and 43 deputy ministers. This initial bloated cabinet is a compromise to include most parties in the Government of National Unity (GNU). While it leans towards the ANC, a more representative and less powerful ANC is preferable to the previous dysfunctional cabinet. O ..read more

The SA election was concluded peacefully and accepted by most, which in itself is a triumph, given the huge divide in the electorate and the large changes in party support. In our opinion, the result was near perfect, with the ANC garnering a lowly 40% and the weakening of the EFF to 9%, mostly thanks to the MK and Jacob Zuma. The DA maintained a respectable 21% and retained its majority in the Western Cape. The result was not what the investment market expected. In the three months leading up to the election, there was real concern that a low ANC result would lead to a probable alliance with ..read more

Our recent Living Annuities webinar generated great interest – unpacking how they work, their benefits, and the role they play in financial planning. The following topics were discussed in detail: How Living Annuities work How to invest Investment options Comparison to pre-retirement funds Drawing a sustainable income Tax and estate planning, and Financial Planning for Retirement. We provided an example of how future Living Annuity income is impacted when reaching the 17.5% income ceiling, which highlights the importance of appropriate retirement planning. Please see the recording of the we ..read more

According to the Financial Planning Institute of Southern Africa (FPISA), the number of Certified Financial Planning® professionals worldwide has more than doubled since 2004. This growth serves as evidence that consumers are recognizing the substantial benefits of professional financial planning and advice. A recent global study conducted by the Financial Planning Standards Board (FPSB) indicates that individuals who engage with qualified financial planning professionals experience a higher quality of life. They also enjoy greater financial confidence and resilience, ultimately leading to hig ..read more

Currently there are numerous political and geopolitical uncertainties naturally concerning investors. These include upcoming SA, US, and UK elections, as well as conflicts in the Middle East and Ukraine. Such reservations and concerns can heighten investor behavioural biases, resulting in emotional decision-making. We draw on a recent Allan Gray article looking at lessons on how to mitigate some irrational actions that could erode your wealth during periods of heightened risk. 1) No one can predict the future – Although this cannot be done with 100% certainty, attaching different levels of pro ..read more

Understanding the power of compounding can be crucial for the growth of your investments. Small savings on effective tax, estate planning and investment structuring can add significantly to your wealth over the long term. In this article, we highlight some simple, yet critical actions that, when compounded over time, can substantially bolster your financial health. Cash vs Equities With interest rates currently high and appearing attractive over the short term, many investors have opted to place their discretionary savings in cash or fixed deposits. However, income tax can reduce these interes ..read more

Last week we hosted a webinar on offshore investing and the benefits of using International Wrappers. The following topics were discussed in detail: The benefits and obstacles of investing offshore, Exchange control rules when taking your money offshore, Taxation and Estate Planning considerations, Different offshore investment account options, and Introducing International Wrappers and discussing their benefits. We provided an example where we compared a normal offshore investment to an Internationally Wrapped investment and how the Wrapper can outperform after-tax and estate costs. The net ..read more

Partnering with a qualified and experienced financial planner can add enormous value by helping you identify and achieve your financial goals, establish a financial plan, invest your savings appropriately and protect your capital against unnecessary risks. Where you may believe that you are saving costs by cutting out “the middleman” and managing your savings on your own, you may be losing more due to an inappropriate investment strategy and an inefficient tax structure. In this newsletter, we will explore key benefits of partnering with a financial planner and the pitfalls of managing your ow ..read more

Deciding where to invest your hard-earned cash can be challenging, especially when considering factors such as costs and taxes. In this article, we compare the outcomes of a 10-year investment in an investment property, a fixed deposit at the bank, or a diversified investment portfolio. 1. Investment Property We have calculated the estimated investment return if you purchased a R2million flat at the start of 2014 and sold the property 10 years later at end 2023, while renting the property out the entire time. We have used industry data to facilitate these calculations. Growth of Property Value ..read more