Category: Chartered Blog


Small change for big change

I recently met with a client who retires in 13 months’ time. If you’ve read anything I’ve written, you’ll know I distinguish between the concepts of “retiring from” and “retiring to”. So, true to form, the discussion came up: “What is it that you are retiring to?” I asked.

My client is excited. He has an idea for a consulting business that will see him using what he’s learnt over the last 20 years, offering his skills and services to the private sector. It’s something inspiring for him to retire “to”. But it won’t be on a full-time basis – and it won’t give him the equivalent of his current income. This means that he’ll need to start drawing an income from his investments.

It’s about more than the money

This is the where the real acceptance needs to kick in. In my experience, there’s an emotional adjustment that has to be made. This sounds simple enough, right? Because we all know that the day finally does come. Isn’t that what we’ve been planning towards for the last 40 years?

Trust me when I say this: no matter how prepared you are, retirement still comes as a shock. Regardless of how much you save, you have to be up for the change. Or changes. There’s a mental adjustment: you’ve spent decades saving and now you need to start spending it.

Then there’s the emotional – and financial – reality around the probability of you never working again. And even if you do work, chances are you’ll earn far less in retirement than you did while formally employed.

Another emotional shift is our sense of worth and how we perceive the value we add to our families. If you’ve been the provider for many years, you might struggle with how you derive self-worth. If this is you, please be encouraged: you only have the money you have now because of your foresight and discipline. The value you add continues into the future because of this very fact.

But, the money is important

Another financial shift you’ll need to make? Realising that there is no point in drawing from your investments – only to put savings aside from that. It’s financially unwise, so just draw down less to start with.

My client admitted that some of these challenges are going to be real for him. He reminded me of his first money memory. It was something his dad taught him – that a fool and his money are soon parted – and it weighed heavily on him. What if he acted foolishly? Could he wisely manage drawing down from his investments?

This is why having an actual RetiremeantTM plan – and not just a string of investments – is essential. You need to know that you have enough so that the fear of running out doesn’t stop you from living.

But I promise you: this will not be enough to convince you – regardless of how disciplined about saving and investing you’ve been. You’ll still need to be open to change. But it takes time to accept a new reality, so be kind to yourself. It takes time to amend a mindset that has served you so well all these years. Remember, though, why you saved and invested in the first place – so that one day you could have the freedom to choose what you were going to do with your time, your money enabling that life. In the bigger scheme of life, your money is the “small change” that sets the tone for the big change – changes – you’ll need to embrace.

Change is hard. Not many people like change. But you are not alone as you face what’s ahead. If you don’t feel ready for the retirement road ahead, please book some time with me. Let’s talk small change – and big change – over a cappuccino.


Your quick guide to the toughest budget in years

We’re not even two months into the year and we’ve already seen some game-changing political events.

Our new President was sworn in on Thursday, 15 February – almost 18 months sooner than expected – and we wish Mr. Cyril Ramaphosa every success in returning South Africa to an all-important economic growth path. A growing economy makes our lives that much easier in that it improves the outlook for investment returns and reduces the pressure on government to raise income tax. And that brings me to the topic of today’s communication: the 2018 Budget Speech.

There has been so much political noise over the past two months that we were left wondering whether the Budget Speech would even take place today – and as recently as yesterday we weren’t even sure whether the current Minister of Finance, Mr. Malusi Gigaba, would take to the podium. But sanity prevailed, and the speech went ahead at 2pm as planned.

Budget day is an important ‘marker’ in the financial planning year. It is held near the tax year-end of 28 February and is a great time for you to focus on getting your tax planning right and to take advantage of any ‘tools’ to save tax efficiently, in line with your Retiremeant™ plan, of course.

What did we expect from the Budget?

Most analysts quoted in the media in the past two weeks predicted a tight budget. You need only look at some of the key issues to appreciate National Treasury’s problem … They are struggling with slow economic growth; a R50.8bn shortfall in revenue collection for the current tax year; and rising expenses due to the funding demands of free education and National Health Insurance. These projects are consistent with Government’s focus on socioeconomic transformation as they strive to overcome the inequalities and divisions so apparent in our society.

What did the Budget Speech reveal?

At the outset I should say that the 2018 Budget Speech is one of the toughest that we’ve seen in many years, but this wasn’t unexpected. Chartered Wealth Solutions predicted that the 2018 Budget would be extremely tough on High Net Worth (HNW) clients, difficult for the middle class and largely neutral for the rest. And we had it spot on!

Our expectations were confirmed early in the speech. An additional R36 billion is being raised through a combination of tax increase, mainly through a higher VAT rate and below-inflation adjustments to personal income tax brackets. We summarise the main tax proposals as follows:

  • An increase in VAT from 14% to 15%;
  • A below inflation increase in the personal income tax rebates and brackets, with greater relief for those in the lower income tax brackets;
  • An increase in the ad-valorem (proportional) excise duty rate on luxury goods from 7% to 9%;
  • Estate Duty will be levied on the dutiable value of an estate at a rate of 20% on the first R30 million, and at a rate of 25% on the value above R30 million;
  • A 52c per litre increase in the levies on fuel (22c for the general fuel levy and 30c for the Road Accident Fund); and
  • Increases in the alcohol and tobacco excise duties of between 6% and 10%.

There were no changes to the marginal rates of individual income tax, the rate of tax on trusts (45%) or the rate of tax on companies (28%). Transfer duties on the sale of properties remained unchanged too, with a 13% tax on the portion of the transaction exceeding R10 million.

The feared removal of medical-schemes tax credits did not materialise either; but the increases were minimal – from R303.00 to R310.00 for the main member and first dependent, and from R204.00 to R209.00 for each additional beneficiary. Other good news is that there were no changes to the tax treatment of retirement fund lump sum benefits or severance benefits.

What does it mean for you, near retirement or in retirement?

We were a bit disappointed on two fronts: firstly, the R500,000 tax-free portion of the retirement lump-sum benefit was not increased; and, secondly, there was no increase in the maximum contribution in either Retirement Annuities or Tax-Free Savings, being 27.5% of Retirement Annuities contributions capped to R350,000 and R33,000 for Tax-Free Savings contributions per annum respectively.

The changes in Estate Duty apply to estates worth more than R30 million and will affect High Net Worth individuals who will have to review their financial plans and estate plans accordingly. We note that the basic deduction allowed under this tax heading was left unchanged, at R3.5 million. We will be communicating more on this in due course.

What happens next …

You should not make hasty financial decisions based on the changes announced in today’s Budget Speech. Your best approach is to stick to your RetiremeantTM plan and make considered changes to your portfolio over time based on the advice of your Retiremeant™ Specialist, thus continuing your journey towards a secure RetiremeantTM based on your lifetime goals and dreams.

We invite you to contact us if you have any concerns about the Budget Speech and what the various changes to taxation rates mean to you.

Warm regards
John Campbell


Good news to welcome us to 2018

I have so enjoyed the start of 2018 – it is so uplifting to read the papers, to listen to the news and, for the first time in many years, to feel that there has been a shift and things are starting to happen. We have a long road ahead, but certainly, with Cyril at the helm, there is progress.

I walk past our table in reception where our newspaper lies and see the headlines that the JSE has reached an all-time high and, in the next article, the rand is recorded to be the strongest it has been since 2015. Long may the good news continue to flow!

Our next big hurdle is the Budget Speech towards the end of February. The ratings agencies have put things on hold until this time to see what plans our Minister of Finance has for finding the R50 billion shortfall and the funds for President Zuma’s shock announcement of free tertiary education for low-income earners. I have heard many mixed opinions on this ranging from an increase in VAT to higher tax rates and possible increases to Capital Gains Tax. We shall be observing this carefully and informing you of any actions that may be necessary.

Bitcoin – time to take a bite?

I am sure many of you have heard more and more about Bitcoin recently; it certainly has been prominent in many conversations in the past few months. I have a number of close friends who have become Bitcoin millionaires in the past year. Sadly, I was not one of them. I have observed Bitcoin and tried to gain a greater understanding of it over the past 12 months, and even went so far as to bring it to one of our Financial planning team meetings in July last year.

As a financial planner, a rule I live by is that I would never advise a client to invest in anything that I don’t understand and this is something all of us at Chartered live by. Another rule is: if it sounds too good to be true, it probably is. So, where does this leave me when my 15 year old Son, Nic, came to me in September and asked, “Please, Dad, can I buy some Bitcoin with my savings?”

Having been curious for the past few years and living by my principles, when it came to this request I thought it was an opportunity to be open minded (given that it was not a client’s money … nor mine!).

My condition was that Nic had to put an equal amount of money in shares. So we took his R10 000 that he had in his bank account and bought R5 000 worth of Bitcoin. We chose five shares, investing R1 000 in each.

The next morning the Bitcoin was up 10%, and the shares had done very little and so it went … Two weeks later, Bitcoin was up 43% and I could see Nic thought shares were a total waste of time. I was relieved when, last week, he said that his shares had done quite well and Bitcoin was so bad: his money in Bitcoin had doubled and then halved in nine weeks, whilst his shares had slowly gone up.

I am grateful for my son to have experienced that there is no quick way to make money and returns come with patience and time.

In summary, the world of cryptocurrencies is dangerous. If you understand that you can lose your money and can afford to, then this may be something to invest in, but it is not recommended for most people.

RetiremeantTM Workshops for Chartered Wealth Solutions clients

Lastly, we enjoyed running our first RetiremeantTM Workshop at Chartered last week. About 40 people attended, 25 of which were clients and about 15 were guests. The feedback was amazing – we had clients of 15 years saying they had learnt so much. This is something we are going to do more often at Chartered, encouraging clients to bring friends to learn about RetiremeantTM the Chartered way. If you would like to attend an upcoming workshop, please email and she will send you details.

Wishing you all a successful 2018.

Warm regards
John Campbell


Mind over money over matter

We are living in uncertain times. Both globally and locally, our political and financial landscapes are shifting, leaving many people anxious about the returns on their investments. This type of anxiety can affect our emotions. And, making decisions based on how we feel is never a good recipe for financial planning, long term.

In the face of fear, many people are tempted to convert their investments into cash. But once you do that, how do you know when to re-enter the market? What if you shouldn’t have got out of it in the first place? A move like that brings a whole set of new questions, making us even more anxious than we were before.

So it is that we find ourselves by fear and living our worst – instead of our best – lives.

Something that can put our thinking back on track here is an illustration by Carl Richards, who produces a weekly sketch for the New York Times. It consists of two overlapping circles. The first circle represents things that matter, the second, things you can control. His advice is simple: the only place to focus your energy is where the circles intersect. In other words, what is it that matters to you that you also have control over? Carl’s view is that uncertainty equals reality. And he’s right. Unpredictability is the new norm. So, the best thing we can do is make peace with the inevitable risk of being alive.

In essence, we just cannot control everything. Something as simple as the Serenity Prayer can be your mental calm in a storm. Your soul is searching for the serenity to accept the things you just cannot change, the courage to change the things you can and the wisdom to be able to tell those things apart (my article on the Serenity Prayer can be found on our Retire Successfully website:

Here are some Top Tips for Uncertain Times:

  1. Don’t fight the fact that we live in an uncertain world. It’s a reality that we all need to accept.
  2. When you feel overwhelmed, try to cut out some of the negative noise. Choose carefully what news you follow and every now and then, take a break from it altogether.
  3. If your stress levels are affecting your health, get help. Stress is dangerous and too much of it compromises your body.
  4. Take some time out to reflect. Could your panic be a trigger from the past? A childhood memory sitting beneath the surface of your stress? Dig deeper into the belief you’re holding. Is it true? And is it serving you?
  5. Make a list of what matters to you that you can control. Keep your mental attention there.
  6. Your financial plan was designed for the long-term. Have a long-term approach to it and stick to your plan.
  7. Spend within the plan you’ve agreed on with your planner to make sure your money lasts.
  8. Make daily decisions to make sure you are living a meaningful life.

It’s not just our financial plans that are long-term commitments. Life is a long-term business too. So, take the time you need for developing the mental fortitude to outfox your financial fears.

Article written by Head of life Planning at Chartered Wealth Solutions and CFP®, Kim Potgieter.


The focus, as always, is on sound advice

‘State Capture’ has emerged as the South African Word of the Year, and this should be no surprise, given the slew of revelations that have emanated from the Gupta leaks and the resultant disclosures or denials!

What is the upshot of this for the average South African investor? As I suggested in an earlier newsletter this year, the prevailing sentiment has become one of uncertainty, and this has persisted since Nenegate, the turning point in South Africa, both economically and politically. The continual exposure of a corrupt government has followed.

I am encouraged by the knowledge that this is a process that we as a country and citizens need to go through to forge a successful South Africa with leaders of integrity and people making a positive contribution. I also recognise that we are not alone – globally, we are witnessing historic shifts that add to the uncertainty, but are also evidence of a world of changing developments, perspectives and expectations.

Closer to home …

At Chartered, we have experienced a challenging, but good, year, and this largely as a result of the economic and political uncertainty. In a context of ambiguity, people (we are all emotional beings) seek assurance, and it has been our privilege to navigate our clients through these times … and this comes with its own challenges and joys.

Last week, at our fifth annual financial planner getaway, we discovered that 19 of us planners have been at Chartered for three or more years – no small reason for why we see ourselves and our clients as a family. Our focus for the getaway was to keep improving our advice to benefit our clients and ensure we continue to thrive to be the leading retirement planning business in South Africa.

At a client meeting in September, we shared investment reporting enhancements we were considering this year. We found that many clients don’t have a full understanding of the investment and product component of their retirement plan. We have learnt over the years that the deeper client understanding, the more successful our relationship.

This is why our process is a multi-faceted one. We start with a life planning meeting; it’s an opportunity for you to create a vision for your retirement. Once we know what we are planning for, the financial planning meeting follows: we assess your finances and play out a number of scenarios in search of a scenario which works for you. The outcome of this meeting is agreeing on a scenario and an investment strategy for your retirement.

The next step, as we have agreed is necessary, is to have a more detailed look at recommended products (investment vehicles), our investment process and advised solutions. We look forward to sharing this with you, our client, in your next review.

We are also refining our Retirement Plan, with a particular focus on the estate planning component. Chartered Legacy’s experience from winding up estates is guiding us in improving our planning to ensure that this process is more efficient.

Finally, a very exciting development is the opening of Chartered Tax, a business we registered four years ago following numerous requests from clients for tax advice … but we wanted just the right person to run it. Charmaine Prout has managed her own tax company for 30 years. She went through our financial planning process and decided she would love to be part of a bigger organisation. We welcome her and her team to Chartered.

We at Chartered thank all our clients for their continued support, and wish you and your families a happy festive season. Whatever it holds, 2018 can be a fulfilling year for all of us.


Financial planning gives you the freedom to dream

In a recent financial life planning meeting with a new client, I chatted with him about budgeting for overseas trips. He voiced his concerns about being able to afford expensive overseas trip once his salary comes to an end; he thought that, once he transitioned into retirement, he would be much more frugal when spending money.

I reminded him that this is the reason why the financial planning process is so important. While we plan for our retired clients to draw an income on a monthly basis from the monies that they have built up during their lifetime, we also plan separately for their holidays and other lump sum expenses. The planning process is critical to give them the confidence that they are not recklessly spending their retirement savings, and putting their retirement plan in jeopardy.

Don’t be frugal with living

I recalled the wisdom drawn from another client couple. They had been married for over 40 years, did not have children, and had sufficient monies to last their expected lifetime, plus some surplus.

I asked them what the point was in living a frugal life, just to leave money to nephews and nieces; I encouraged them rather to enjoy their savings themselves. I planned for two overseas trips in their budget, and urged them to consider where they would like to go.

A week later, a very excited Thomas phoned me to say that they would like to go on a cruise in the Mediterranean: was I absolutely sure that they could afford it? I reassured them, and they booked their cruise for three months hence. I had such pleasure in watching the excitement on their faces and in their voices, as the date for departure drew nearer. Thomas, prone to worrying, began to be concerned about how best to arrange his foreign exchange, and started watching the exchange rates. As the deadline got closer, Thomas and Felicity were uncertain about what wardrobe to pack as there was a certain number of dress-up dinners on the cruise, and they wanted to make sure they had suitable attire.

On their return we met to chat about their trip. I saw photographs of them sitting at the Captain’s table, beautifully attired, and of the various destinations they had visited. Their next question? “Can we afford a second trip?” I assured them they could, and the planning and excitement started all over again: where to go, which cruise line to choose, and so on.

Felicity is no longer with us, but I am so glad that she and John took these trips and that they had such fun in planning them. Whilst Thomas misses Felicity terribly, he at least has the memories of these fun times they had.

Article shared by Pat Blamire CFP® and Retirement Specialist at Chartered Wealth Solutions


Retirement Planning for women – the different concerns and considerations

Bronwyn Seaborne of Business Day TV hosts Kim Potgieter, Director and Retirement Life Planner at Chartered Wealth Solutions as they tackle the issue of retirement planning specifically zoning into women and the different considerations you should take into account as women planning for retirement.

Access part two of the discussion here.


When a loved one can no longer manage their financial affairs

When Sue’s planner noticed that Sue was becoming increasingly forgetful and tended to repeat herself in meetings, she realised that she would need to discuss this with Sue’s daughter, Elaine. Both Sue and Elaine had been clients at their financial planning company for some time.

‘How will I break it to my mother that she has to be certified as mentally incapable of managing her own affairs?” was Elaine’s response. She was devastated and felt overwhelmed by the weight of it all. Where to start?

Elaine decided to take over the administration of her mother’s affairs as her other sisters do not live nearby. Her already busy life became even more busy. Managing her own affairs and that of her mother’s proved to be extremely stressful. Paying bills, organising and managing carers and drivers, arranging meals, booking and attending doctor visits became the norm.

Elaine also had to take responsibility for Sue’s investment portfolio in addition to her own. Her planner encouraged her to consider handing the administration of Sue’s matters over to a professional administrator and made the necessary introductions. Elaine was reluctant at first, feeling that she was somehow letting her mother down; however, following her first meeting with the administrators, she realised that it would be in everyone’s best interest to engage their services.

Since then Sue has been moved to a retirement facility. Sadly, but not wholly unexpectedly, her mental state has deteriorated, so she requires full-time carers. Elaine takes comfort in the additional support offered by the administrator.

Sue is very fortunate in having a daughter nearby who is able to come to her aid. This is not always the case and having a conversation with your planner sooner rather than later is a critical part of your financial plan.

Prepare before the crisis

Penny is a client who has taken it on herself to look after her disabled mother’s affairs. “This handover of responsibility was organic, but I think, if personalities permit, it would be better to discuss these things with ageing parents before the necessity arises. Once there is a crisis, emotions run high, and you don’t know if the person will be in a fit mental or physical state to make such decisions.”

Perhaps open the discussion in this way: “As you are getting older, the possibility exists that you could have a stroke and not be able to talk or manage your affairs. It may be a good idea to sign a Power of Attorney together. Then, should the need arise, that would enable me to pay your bills and get what you need, without you having to fret about it.”

Encourage your children to attend at least one or two planner meetings with you to discuss plans whilst you are still mentally healthy and alert. It is an onerous and traumatic process for all parties concerned. Says Penny, “Considering increasing longevity and older people’s seeming denial about their stage of life and what lies ahead, with hindsight, I would have raised the subject much earlier about what would happen when my parents got older. I think it would have been helpful to introduce the idea of possible reduced independence and what strategies should be adopted if that were to occur. Perhaps even trying to get them to agree to go to look at different options at that time, so that they could see what they thought might work form them.’

Why not have this discussion, difficult as it may be, with your financial planner, so that you are equipped with the necessary information well before you may need it.

Article by Christina Forman, Certified Financial Planner and Retirement Specialist at Chartered Wealth Solutions. Read the first article in the series from both Christina: Plan for when you can no longer plan and her client who shares the implications of being a parents’ tax consultant and having power of attorney.


Effects of the proposed wealth tax in South Africa

Wealth tax is a hotly debated topic, especially since South Africa’s taxpayers are already overburdened. So, the invitation from the Davis Tax Committee (DTC) for public submissions on the desirability and feasibility of such a tax has placed the issue squarely in the limelight once again.

The Government is understandably keen on this idea as it needs more revenue to fund the bloated civil service, sustain high levels of other wasteful (and often corrupt) spending, and avoid the policy reforms required to stimulate growth.

Globally, wealth taxes have steadily declined in recent decades. By 2010 wealth taxes only existed, on an ongoing basis, in three member countries of the Organisation of Economic Cooperation and Development (OECD). South Africa has a tiny tax base, and is heavily dependent on a small group of individuals and companies that pay around 60% of the personal and corporate income taxes collected each year. It is feared that imposing a wealth tax on this small group could encourage a flight of capital and skills which would further weaken the economy.

Leeching land-owners

The proposed forms of such a tax in South Africa may include a land tax, and an annual wealth tax. It is assumed that by a land tax is meant an annual tax on the value of land.

It is hoped that at least primary residences should be exempt from a land tax. This would be in line with the way primary residences are treated differently from other fixed property for purposes of Capital Gains Tax (CGT). The justification for such an exemption is rooted in the fact that private ownership of residential property is an enabler for wealth creation, something which is desperately needed in South Africa.

There is the question of what other land should be excluded? Normal exceptions of land for recreational, educational, religious and charitable purposes, should be considered. Agricultural land should also be considered in order to avoid a further burden on already thin profit margins. Famers in some areas, for example, the Karoo, are notably asset rich and cash poor. An annual tax on land will place them in an even more serious cash squeeze.

If an annual land tax is levied on rented residential property, this sector will experience upward pressure as landlords will pass such a land tax on to the tenant, which will increase pressure on already stretched middle class citizens.

If there is to be a threshold value on such property, what should this threshold be? There is the possibility that an extremely wealth person with several pieces of land valued at below the threshold will effectively escape the tax.

Many elderly people hold onto their family homes. These homes can have quite a high value due to market movement, but their elderly occupants can be quite cash poor. This reality is recognised by many local authorities with special discounts on municipal rates for the elderly. If such a tax were levied, it would force elderly people of out of their homes. In addition, quality accommodation in retirement villages has increased by far more than the average increase in property values. Imposing this tax with too low a threshold will prejudice this already financially vulnerable sector of the population.

Are you one of the few?

The complexities of an annual wealth tax are daunting. To qualify as a tax on wealth, the net worth of the taxpayer will have to be determined on an annual basis. This will become an enforcement nightmare from a SARS point of view.

A further question is at what net worth does a person qualify as wealthy? This question has different answers depending on the life stage and circumstances of the individual. A 35 year old with R15m may be regarded as wealthy. However if the 35 year old is disabled, this is not a large amount of money. At age 65, upon retirement, if the R15m is the sole source from which income must be produced, it is similarly not a large amount of money. If an annual inflation-linked income of R850,000 per annum is being drawn, it is expected to last less than 25 years.

Very few developing countries have an annual tax on wealth. Developing countries, by their nature, need foreign direct investment to grow and develop their economies. They need to be attractive to investors to bring that desired level of foreign investment to grow and develop their economies. Extra taxes are always a deterrent to capital inflows.

Currently in South Africa, taxpayers with a taxable income in excess of R1m make up only 3.5% of the taxpayers, while contributing 38.5% of the income tax revenue. Ultimately, South Africa, like all developing countries, needs more growth and not more taxes.

The words of Winston Churchill are a sober reminder: “I contend that for a nation to try to tax itself into prosperity is like a man standing in a bucket and trying to lift himself up by the handle”.


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