..but is it ART? We share with you some of the least exciting to the most daring investments know to man.

Before you begin to invest you should spend a few minutes reading and understanding some basics but important aspects of investing.

Also contact us to find out how you can get 12.5% extra on your investment of R500 000 and more

Investment Types

Cash investments

These are short-term debt instruments, or IOUs, that you can convert to cash, with little or no penalty. Examples of these cash investments are: money market unit trusts, certificates of deposits (CDs), Treasury, bills and BA (Bankers acceptances).

These investments are viewed as safe investments but over time their returns have only slightly exceeded the rate of inflation.

Bonds

Bonds are loans that investors make to corporations and governments. The lenders earn interest and borrowers get the cash they need.

Public sector fixed-interest securities are known as “gilt-edged” securities (or “gilts”) when they refer to government stocks, and “semi gilts” when they refer to the stock of the lower ranking public bodies such as municipalities or public enterprises. The rate at which interest is paid and the amount of each payment is fixed at the time the bond is offered for sale.

A bonds coupon rate (interest rate) is competitive which means the rate it pays is comparable to what other bonds being issued at the same time are paying.

The coupon rate is one of the parameters used to determine the consideration (price) paid for the bond. Interest rates have a direct impact on the price paid for bonds. The value of a bond often increases as interest rates drop and decrease in value when they increase.

Shares

A company share is normally defined as any number of equal indivisible rights or interests in the management, profit and ultimate assets of a company constituting the property of those who own it and being evidenced by a certificate.

Shares are sometimes referred to as equities – hence the equity market as opposed to the fixed-interest market.

If the Company prospers, you as the investor will share in its profits and benefit from any rise in the market value of its stock. Conversely, if the company runs into problems the value of your stock will drop.

Shares are considered more risky than bonds or cash.

If you are investing for the long term, you ought to invest in shares as shares have historically outperformed other investments.

Property

Property probably has been an investment since the first rain. There are a variety of ways to invest in property. Listed property, commercial, domestic and various syndications is just a few ways of looking at property investments.

Like most investments there are advantages and disadvantages investing in different forms of property. So what should you consider when investing in property?

Liquidity – Listed property has the most liquidity and flexibility in down turns. Money in bonds is sometimes not accessible and could cause financial losses. Proper planning and cash flow are of importance.

Growth – In order to see the real return of property, one should look at measurements of the yield and not mere the valuation of an agent or the bank. In order to get the yield of an investment, all costs should be taken in account.

Management – All investment classes (even cash) have management costs including your own time and efforts invested in your buy to let property.

Business

Business is also a form of investment and is mostly class as higher risks measured against higher returns. If we look at equities on the markets, your money would be invested in large companies managed by directors. In this case liquidity is mostly available depending on the vehicle you use to invest in these funds.

Running your own business or investing in someone who have a business could be very profitable; however the skills and knowledge, risks and effort should be taken in consideration.

If you would like more investment advise click here

Retirement planning is the process of identifying your wants and needs, developing plans to achieve them, acting on those plans and continually reviewing and revising them as you gain new knowledge and experience.

In future good retirement planning will create the great dividing line in society, separating the “haves” from the “have-nots”.

Thanks to the advances in health care and nutrition, the life span of the average South Africa has increased dramatically. A longer life expectancy increases the likelihood that you will be able to work longer but you will also need to save more for your retirement. Putting money away for retirement is a postponement of gratification.

Your retirement plan will most probably be the largest investment you will ever make.

How much is enough?

The big question is how much money does a person have to amass for a comfortable retirement? This is difficult to answer as it depends on individual expectations on retirement, e.g. different lifestyles, age at retirement and life expectancy. In addition, there are unpredictable factors such as inflation and investment performance to consider. A possible indication of one’s needs can be predicted in relation to an individual’s final salary. 

Your expenses at retirement

• When planning you should also consider your expenses during retirement. Let’s take a careful look at these.
• Medical costs – these costs will escalate as you get older. It is estimated that eighty percent of your medical costs will be paid in the last eighteen months of your life.
• Travel – you now have the time to travel.
• Grandparent – you could end up helping your parents with medical bills and living expenses.
• Children – your children may need assistance.
• Utilities – as you will spend more time at home these costs could increase.
• Security – you would most probably need to spend more as you get older. It may force you to buy a townhouse that is far more secure.
• Sport and social clubs – membership to golf and bowling clubs.

On the positive side the following costs should decrease:

• Insurance – car insurance and public transport costs.
• Pensioners will pay lower transport costs and entrance fees into certain places, e.g. Botanical gardens and movies.
• Retirement investments – you will now no longer be saving for retirement.
• Bond – your bond should be paid up.
• Car – your car should be paid for.
• Daily expenses – you will tend to stay at home and not spend as much time travelling to and from work. Your need for suits, work clothes, lunches and other work-related expenses will come to an end.

If you would like more Retirement advise click here

Risk planning could take part of many forms and many people are sometimes penny wise and pound foolish when they act hastily in setting up structures.

Risk planning started when ships travelled from Europe to other countries, losing fingers, arms, legs and their lives. These sailors could pay a small fee to cover each body part and is known today as functional impairment. Insurance has developed into better cover across the globe.

Keyman Insurance

Keyman insurance is an arrangement whereby an employer insures the life of a key employee for the purpose of compensating for the loss of income that the employer would suffer in the event of the employees death or disability thereby ensuring the successful continued business operation.

Keyman insurance guarantees that cash will be able to absorb any disruptions to the business protecting existing credit facilities and provide the necessary funds for the recruitment and training of a replacement.

The employer will be able to deduct the premiums for income tax purposes if the policy conforms to section II(w) of the Income Tax Act. No income tax implications are incurred by the employee. The proceeds will be taxable in the hands of the employer if the premiums were deductible in terms of section II(w).

Buy and Sell

Buy and sell insurance should be taken out by the co-owners of the business to ensure that there will be funds available to purchase deceased or disabled co-owners interest.

Each co-owner will consequently own a policy on the life of the other and pay the premiums under the policy of which they are the owners. When more than one co-owner is involved, the policy on the life of each co-owner will be co-owned by the other co-owners, proportionate to their interest in the company.

The premiums are not tax deductible by the co-owners as the proceeds will be tax-free.

Contingency Liability

A contingent liability arises when one or more co-owners sign surety for the loans or other credit facilities of the business. The co-owner/s will therefore be bound jointly and severally for payment of the debt incurred by the business.

The policy should preferably include disability cover and the amount of life and disability cover should be equal to the loan amount. The business pays the premiums and an agreement is entered into between the business and the member / co-owner in terms of which the business undertakes to apply the proceeds of the policy to the repayment of the loan giving rise to the personal guarantees given by the member / co-owner.

If the policy is conforming the proceeds will be taxable in the hands of the employer.

There has been dramatic development on this subject in 2011 and many business owners do not have the correct documentation which has put themselves, partners and workers at risk.

Contact us to update your business documents

Also see My Business for more business related articles

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Markets vary,  Integrity does not.

Selecting a Financial Advisor and Risk Manager is one of the most important decisions you will ever make.

• Our financial service is established on the principles of honesty, objectivity and an unwavering commitment to clients.
• Our priority is helping our clients achieve their financial goals, based on their individual values.
• As a Registered Investment Advisory firm, we maintain a strict Fiduciary relationship with each client.
• We do not only sell products, we provide independent solutions.

Why is “Fiduciary Duty” so Important?

…because it requires financial advisors to put their clients’ interests ahead of their own

Not all those who call themselves “financial advisors” are fiduciaries. This includes most registered representatives that earn commission revenues and sell proprietary products.  If your financial advisor profits from his or her recommendations on only one company's product, it’s not advice.  It’s sales.

This is a major difference between our firm and the well-known national brokerage firms. Brokers or reps for these firms are not fiduciaries, because their first duty is to their employer, not to you.  An advisor who is compensated by sales quotas and performance bonuses is ill-equipped to offer advice that’s purely in your own best interest.

What we believe:

• All financial advice and recommendations should be based on unbiased research.
• Transparency in financial matters is essential to building and maintaining trust.
• Courtesy, exemplary service and mutual respect are the seeds that allow our relationships to prosper.

What we offer:

• Financial Planning
• Retirement Planning
• Investment Management
• Trust & Endowment Management
• Financial Seminars
• Tax Strategies
• Estate Planning
• Risk management: Insurance & Annuities
• Employee benefits
• Rewards Program

Our mission is to educate, counsel, and guide our clients toward their maximum personal wealth.
And to provide knowledge in order that they may better understand their financial situation
and act in accordance with their values. We pledge to act in good faith and in our clients’ best interests at all times.