It’s time to invest in yourself!
The festive season is approaching, and before you start making lists of all the wonderful gifts to buy for the special people in your life, set some time aside to think about your gift to yourself.
Dr. Seuss says it so well: Today you are You. That is truer than true. There is no one alive, that is youer than you!
I want to remind you today how important you are. You bring something completely wonderful to the world, something unique, something only you can bring. Have you ever stopped to think what your special skill or talent is? What is it about you that has shaped your life so far? And will shape your dreams ahead?
We all have a unique contribution to make, the real question is how to get the most value from your special skill or talent.
While we do, of course, encourage investment in various retirement and annuity portfolios, one of the best investments you will ever make is in yourself. And the sooner you do this, the more valuable you as an asset will become.
I love this drawing by Carl Richards: it explains that the longer you wait to invest in yourself, the less valuable you as an asset will become. Put simply, with every year that passes, you have less time to earn money.
Here are my top three considerations to get the most value from yourself:
Invest time and money in your talent
It’s never too late to learn. If you are still in the Wealth Creation phase of your journey, it may be the perfect time to up-skill or even learn a new skill that could benefit you when you retire. Think about how your talent could add value to your life and consider new skills or qualifications that could support you.
I have some wonderful examples that Retiremeant™ clients have shared with me: learning social media skills to promote a new business venture; a bookkeeping course to support a hobby turned into a new career; or a coaching qualification to enhance consulting skills as a mentor coach.
- Make your money work for you
You have spent your whole life earning, and possibly still are. Now it’s time that your money works for you. It’s a good idea to keep investing and earning interest, or to use your assets to earn an income – perhaps renting out an extra property or flat on your property. This way your money grows while you are sleeping.
- Earn for as long as possible
Consider a parallel life as you near retirement age. Start thinking, and planning, how you can continue earning (even if it’s less than you’re used to) while doing something you love! Many Retiremeant™ clients have started new business ventures in retirement: cake decorating, knitting, building classic cars and even coaching cyclists.
I hope that the next time you look in the mirror, you see yourself through new eyes and remember: You are your greatest asset!
Most people find taxes very complicated. Albert Einstein said it himself: The hardest thing in the world to understand is the income tax.
Don’t be intimidated at all! Keep in mind that my team at Chartered Tax is here to help. We certainly don’t expect you to study all the tax implications, especially the new Tax laws relating to Estates, as we are here to support you through your journey.
We are, however, experiencing some delays in the process of winding up Deceased Estates, and wanted to share some of the most significant changes implemented in March 2016. These may help to guide your conversations with your Legacy & Trust Specialists during your Estate Planning meetings.
Here is a short summary of the new Tax laws on Deceased Estates:
Prior to the changes in legislation, post-death income was taxable in the hands of the beneficiary. The new legislation states that for deaths after 1 March 2016, income is taxable in a new entity referred to as a Deceased Estate. Put simply, after the date of death, the Deceased Estate comes into existence, and is liable for tax.
There are, however, exceptions to this rule: for example, the assets accrued to the surviving spouse on the death of the first dying spouse are not deemed to have been disposed of on the death of the deceased, and taxes are not payable at this point.
Value Added Tax (VAT)
If the deceased was registered as a VAT vendor, the Executor may have to register the estate for VAT purposes and there may be VAT implications.
With the Estate now seen as a separate Income Tax entity, any income accrued before death and additional income to the Estate, whether through acquisitions or disposal of assets, after the date of death, is now taxable.
Capital Gains Tax (CGT)
Capital Gains Tax is payable by the Estate. This payment is due before the inheritance is transferred to the beneficiaries. Beneficiaries only become liable for capital gain or loss once the asset inherited is sold or disposed of.
While all this may seem very complicated, remember that your Retiremeant™, Tax, and Legacy & Trust Specialists will guide you every step of the way. To assist us in winding up Estates more timeously, here are a few tips to keep in mind:
1.We are here to help. While we ensure that Estate taxes are taken care of and SARS requirements are met, we will also make you aware of what the Capital Gains Tax and Estate duties are likely to be. We plan to ensure that the Estate has enough liquidity.
2.Remember to file your Tax returns annually, and if you are married, this applies to both spouses.
3.Keep your Tax Clearance Certificates in a safe and accessible place. Having up-to-date Tax returns and Certificates speeds up the winding up Estate process.
4.Discuss any other entities that should be tax compliant with your Planning Specialist; for example, your business, a company that you may be a shareholder or director of, a Trust that you may be beneficiary or trustee of.
Taxes aren’t as intimidating as you think! It’s just a matter of incorporating these conversations into your Retiremeant™ planning process. Added to that, a good dash of administration and filing goes a long way!
We hope that you enjoy the new format of The Beacon, which will be appearing four times a year, and replaces the monthly Reporting from the Helm, and The Journey. Our in-house services – Invest, Tax, and Legacy & Trust – are represented, in addition to our RetiremeantTM and Wealth Creation teams.
Have you created your Living Will?
Let your wishes for your medical care live on through your Living Will
Planning for death can be like making that dreaded dentist’s appointment: you don’t want to do it, but you must, because you know it will save much pain going forward!
A Living Will guides your family and doctors in honouring your wishes for a dignified death when you are no longer able to express those wishes. It affords your family peace of mind during an extremely difficult time.
What is a Living Will?
A Living Will is a written statement detailing a person’s wishes regarding their future medical treatment, when they are unable to give their informed consent regarding such treatment.
A Living Will often stipulates that you not be kept alive through artificial life support should you have no reasonable chance of recovery from a general condition or vegetative state. An Advance Directive deals with the medical treatment a person would like (or not like) administered to them concerning a specific medical condition or ailment. So, the Living Will and Advance Directive deal with your end-of-life wishes while you are still alive. Don’t incorporate your Living Will into your Last Will and Testament – it is a separate document serving a different purpose.
Legal position in South Africa
In South Africa, all patients have a right to refuse treatment, but may not ask or expect a doctor to end their life. Doctors have taken an oath to save lives, so cannot be forced to abide by a Living Will where they feel that there is hope of recovery for a patient.
The Living Will is not a binding legal document; rather it communicates your wishes to guide your family when they have to take decisions about your medical treatment in the final stages of your life.
Why do I need one?
Despite medical advances extending life, the natural decline of health at life-end means you may find yourself with an irreversible medical condition severely restricting your quality of life. Many people do not want, for example, to be on permanent life support or in a permanent vegetative state. Then, a medical professional may look to your family for guidance. Here, a Living Will or Advance Directive, while not legally binding, can save your family from enormous emotional stress and even financial burden.
Your Living Will can also record your wishes about organ donation and cremation or burial.
What must your medical professional check?
1. The signatory to the Living Will or Advance Directive was over 18 years.
2.The patient had the mental capacity to make their own decisions when they signed their Living Will.
3. The patient was fully informed about their condition and proposed treatment.
4. The patient did not change their mind after signing the document.
How to get a Living Will in place
There are many standard Living Wills that can be downloaded from the internet and completed according to your wishes.
At Chartered Legacy & Trust, we can prepare your Living Will at no additional cost when we draft your Will. Speak to your RetiremeantTM Specialist today about getting your Last Will and Testament and Living Will updated or in place if not already done!
Once complete, you can send copies of your Living Will to your family and doctors, so that they are immediately aware of your wishes. Your treating doctor must have access to your Living Will in order to carry out its directives.
Dealing with death is never easy, but having your affairs in order through your Last Will and Testament and Living Will can ensure you receive dignified and humane medical treatment according to your wishes while facilitating a smooth transition for your family.
But can your budget bear the break?
The tagline of Mike Lewis’s book, When to Jump, is: “If the job you have isn’t the life you want”. Perhaps you have loved your job, but recognise it is time to ‘jump’ into a more challenging space. Maybe you want more life balance, with work currently too demanding. Or you are keen to find fresh career purpose, or to start your own enterprise.
Whether you have been working for one year or thirty, a career change has implications for your finances. How will it impact your cash flow and savings? Your family’s lifestyle? Will it be a temporary pay gap or permanent drop in salary? Lewis encourages readers to “Make a Plan”, and your Wealth Creation Specialist would certainly agree. So, if you want a career transition, here are four ways to plan for your money shift:
1. Check and challenge your budget
If you know that you will be living on less income for a time, or even permanently, give your estimated salary a test run. Live on that new amount for a few months – and get a picture of your new lifestyle … then decide if the professional change warrants the personal one!
Make sure your current budget is thorough: how is your salary being divided? Where are you spending?
Consider where you could shave your expenses. A similar income may require you to compromise only a little: do without Dstv, cut back on eating out, or join a carpool (given the price of petrol!). If you are facing a more substantial drop in income, try exploring more severe measures: delay expanding your family, change annual holiday plans, cut bond repayments by downsizing, or opt for more reasonable school fees.
Unwise trade-offs, such as cancelling your car insurance or life cover, can leave you or your family in debt. Before you shift, decide what level of income would just
be too low for you to manage – even with budget cuts. How much uncertainty would simply result in too many sleepless nights? What sacrifices would make your lives too colourless?
2. That rainy day fund
Making provision for unforeseen events or for an extended period of no or little income, can alleviate some of your anxiety. Financial Planners generally recommend
saving at least three months’ salary or expenses (six months is better!).
Save any discretionary money available from your budget cuts. Save your bonus, or your SARS refund. Declutter and cultivate an approach to life that savours implicity rather than consumerism. Consider the WHY in all your changes – living truer to your values in your career – with personal benefits.
3. Plan B
Transitions are a great time to give yourself permission for some out-of-the box thinking. Allow your creativity to flow and give thought to what other options exist
for you to create meaningful work. Don’t neglect your physical exercise at this time in order to give your right brain capacity to express itself. And don’t forget the value of tapping into the wisdom, expertise and experience of your friend and colleague networks.
4. Those tough talks
A career change has implications for the whole family, or your dependents. I encourage you communicate honestly and regularly, as you will need the support and
understanding of your loved ones, especially when there is a potential for disappointment. Agree on where you could save money; be creative together in keeping family values alive without feeling you have lost out if you have to curtail some activities.
If a career change will mean greater contentment and the fulfilment of a dream for you, explore all your options and be optimistic about the outcome. A plan for your finances may give you the courage and confidence you need to make a move. Chat to your Wealth Creation Planner to guide you as you plan.
2018: a good year that changed gear
Last week, I reviewed my first newsletter of 2018: Zuma out, Ramaphosa to be inaugurated, the rand strengthening 11.65 to the dollar (the best in four years) and our stock market at an all-time high. Sentiment was positive, and it looked like 2018 was going to be a good year.
Now, looking back, we wonder what went wrong …. Clearly, the rot caused by the Zuma era runs deeper than we imagined. Our economic challenges were already set to make a 2018 a tough year, but our local corporate issues have magnified the negative impact on our markets: Steinhoff’s share down more than 90%; Tiger Brands’ Listeriosis crisis; irregularities at Resilient and NEPI with a huge share price drop and impact on the Property Index; debt and sale of a division of Aspen Pharmaceuticals; MTN’s Nigeria woes;
and, more recently, the drop in Naspers share price on the JSE, amounting to 6% of the 10% loss we have suffered to date. (Naspers is the largest share on the JSE and it has lost
23% this year.)
Fortunately, our commodities have softened this blow, without which we would be close to 15% down for the year. The Global markets and South Africa have enjoyed the longest run of positive returns in the history of share markets, so a correction was expected – though it is never well received and timing is uncertain.
Where Financial Planning fits in
I attended the annual Financial Planning Association Convention in Chicago, the largest gathering of Financial Planners from around the globe with 35 countries represented … and one South African delegate! It’s my fourth global conference in a decade, and I apply the insights, practical strategies and knowledge in our business. I noted a digital billboard stating that 837 lives had been
lost in road carnage since 2011, as a warning to drive carefully. I arrived at the Hyatt to find a large group of employees striking, playing drums and making a racket (we are definitely more vibrant!). I was reminded that every nation has its problems – often we think we have it much harder in South Africa. To top it, my hotel room faced a Trump hotel, so I was greeted by the word TRUMP in massive lights as I opened my morning curtains.
I thoroughly enjoyed the conference, listening to the most incredible speakers, many of whom are very highly qualified specialists in their fields – I met my first Doctor of Financial Planning! I learned from the Global Head of HSBC that their planners write over a million plans a year.
The Americans have the most interesting organisations; I met the founder of the Financial Psychology Institute, a researcher from the Stanford Centre of Longevity, and so it went. My takeaways are that our business, strategy and planning techniques are right up there with global standards and we shall continue to ensure that our Retiremeant™ Specialists and our business exceed this benchmark.
At Chartered House
I am excited to say that, on 1 November, Chartered Invest went live. This is a business we have formed to implement and consolidate your investments. For years, we struggled with clients having investments spread across various businesses like Old Mutual and Investec, with perhaps a few unit trusts at Allan Gray and Coronation. Every month they would receive from each business a different statement, difficult to read and understand.
We can now accommodate all your investments on one platform and give you one statement reflecting everything you have. This not only simplifies your life and removes clutter and confusion, but also allows us to access all your information on our system – no more dealings with numerous inefficient call centres.
So, you can receive one statement with your Living Annuity invested through Old Mutual and your tailored portfolio invested with PMX – all on one report. You will learn more about this in your next review meeting.