Category: Chartered Blog

Jeremy Gardiner’s A to Z

Investec’s erudite Jeremy Gardiner accompanied the Chartered executives to their client functions in various parts of the country to update clients on both Chartered’s news and the economy.

Jeremy’s brilliant presentation shares Investec’s views on the global and domestic economies. We love the fact that Jeremy engages his audience through telling a story and using thought-provoking pictures rather than the usual technical graphs. Some key takeaways are in Jeremy’s article:

Anti-establishment vote
The silent majority. They don’t always know what they want, but they do know what they don’t, and what they don’t want is the status quo: more Clintons, Bushes…or Camerons for that matter. Americans and Brits aren’t alone – also watch France, Italy and Holland this year.

Brexit
Pound nearing 35-year lows, growth holding up so far. Full impact will only be felt over the next five to ten years when corporate leases are up for renewal. Will they stay or will they go? So far, UBS, Goldman Sachs and HSBC plan to move staff.

Cyril
Or Kgalema, or Zweli, or even Pravin. With candidates like these, hopefully we will get it right this time.

Drought
By no means over, but decent rains mean this year’s crops will be much better than last, and that’s reason to celebrate.

France
Three significant terror attacks in the last 18 months – far right led by Marine Le Pen on the rise, fuelled by Brexit and Trump.

Emerging markets
Out of favour since 2009, were just perking up last year when Trump was elected. Hopefully, the recovery can continue. Commodity demand, improved growth and fundamentals, a search for yield and increased developed market political risk should stimulate further recovery.

Germany
A year ago, with Obama, Cameron and European leaders behind her, Angela Merkel was one of the most powerful leaders in the world. A year on, post Brexit and Trump, she finds herself increasingly isolated. If Germany goes nationalist, where does that leave Europe?

Hlaudi
Outrageous. How do our parastatals get to this point? Would be funny if it wasn’t your money.

Italy
Italy’s banks remain a risk. As does its politics. George Soros described Italy as too big to fail but also too big to save. Hopefully, the government’s €20bn rescue fund will be sufficient to revive the ailing banking sector.

Junk
We came so close! Slightly improved growth this year might save us. The rating agencies like our finance minister and they trust him to do what he says he will do. Could those hell bent on removing him for personal gain, please stop?

Killed
Fifty-one South Africans were murdered every day in 2015. As were over a thousand rhino (up from 13 in 2007), totally unacceptable in a civilised society.

Load-shedding
None last year and none going forward. In fact we now have so much electricity, that we’re set to have a surplus by 2022. Indeed, we apparently don’t need the independent power producers, which would be a shame as the sector has attracted R200bn in investment over the past five years.

Malema and Maimane
Whether or not you’d like to see either of them as president is irrelevant. What is relevant is that our democracy is robust and strong, and now more than ever, capable of keeping government in check.

Nuclear
No load-shedding, an electricity surplus and no need for renewables all make the current rush for nuclear and the secrecy around it, seem suspicious/smell slightly. Bottom line is we don’t need it, can’t afford it, and whilst there is nothing wrong with nuclear per se, one can’t help feeling
that those pushing for it, don’t have the country’s energy needs at heart.

Oil
Up double from what it was, but still less than half of what it also once was. Improving growth and producing country cooperation should see firmer, yet still affordable prices.

Pravin Gordhan
Deserves a medal. Simply doing the right thing should not incur such harassment. Fortunately, good does seem to be triumphing over evil, although sometimes only just. What would we have done in 2016 without him?

Quantitative easing
Still going, after all these years. It’s eight years on from the global financial collapse, and so much of the world is still reliant on economic life support. Beware of the day the public loses faith in quantitative easing.

Rand
A stronger rand makes the price we pay for oil cheaper, which brings down the petrol price and therefore transport costs, which brings down food prices and therefore inflation, and therefore interest rates, which makes the newspaper headlines better, and generally consumers happier. Expect a slightly firmer currency this year thanks to commodities and improved growth, assuming our leaders don’t do anything stupid.

Standard & Poor’s, Fitch and Moody’s
Love them or hate them, but they’ll be back in June (around the ANC five-year policy conference) and in December (around the ANC leadership conference). We
survived last year and should survive this year as well – once again, assuming we don’t do anything stupid.

Trump
So far he’s successfully alienated America’s allies, and embraced their enemies and that’s before he even became president. We’ll miss Obama.

US dollar
Strong as an ox in anticipation of Trump driving growth and profits. Promises to be the currency of the year, although Trump’s complaining it’s too strong, which could induce some weakness.

Vladimir Putin
Traditional foe of the West, and unlikely friend of Trump. Not sure who’s playing who, but given the individuals involved, this relationship could still end in tears.

Water restrictions
Get used to them. In force and here to stay, in some form or another. Nasa says 2016 was the hottest year on record. Isn’t this what global warming experts predicted
would start happening?

Xchange controls
Surely it’s time to put this Apartheid relic behind us? Way too many resources spent on enforcing it, plus sends a very negative investment message. If South Africans can’t be trusted to keep their money in the country, why should anyone else invest here?

Yellen
Chair of the US Federal Reserve – the market anticipates two US rate hikes in 2017, not good news for emerging markets like South Africa.

Zuma
Nkandla, Nenegate, Guptas, 783 charges, spy charges – all bets off the table. Anything is possible – impossible to predict.

Some of the Chartered Wealth Solutions clients who joined us for lunch with Jeremy.

The 2017 Budget Speech – the lion speaks today

Finance Minister, Pravin Gordhan, has won respect, locally and globally, for his courage and resilience in the face of tremendous pressure. Today’s Budget Speech was arguably his most challenging to date …

His assertion: “If lions work as a team, they will bring down even a buffalo” makes it clear that our FinMin intends South Africans to work together to bring about the economic transformation that will, in the words of Oliver Tambo: “create a united democratic and non-racial society … to remake our part of the world into a corner of the globe of which all of humanity can be proud.”

Here follows a summary of the main points of the Speech:

Personal income tax
A new tax rate of 45% has been introduced for those who earn above R1.5 million per year.

Tax threshold
This refers to the amount of income you earn before you need to pay tax. The new thresholds are as follows:

  • if you are under age 65, your yearly tax threshold is R75,750;
  • if you are between 65 and 75, the threshold is R117,300; and
  • if you are 75 or older, the threshold is R131,150.

Interest exemption
The interest exemption amounts remain the same. If you are under age 65, the annual interest exemption is R23,800, and if you are 65 and older, the exemption is R34,500.

How will the tax threshold and interest exemption changes affect you?
If you are between the ages of 65 and 75, you can earn a yearly income of R117,300 plus R34,500 interest before you have to pay tax. If you are 75 or older, you can earn an annual income of R131,150 plus R34,500 interest before you have to pay tax.

Tax-free savings account contribution increased
From 1 March 2017, you can contribute R33,000 per year toward these investments, in which all returns are tax-free.

Dividends Withholding Tax
A surprise in this Budget Speech is that Dividends Withholding Tax will increase from 15% to 20%.

Retirement Fund contribution deductions
Retirement Fund contribution deductions are standardised across all types of Retirement Funds. A significant benefit for those earning up to R1,27 million a year is that they can deduct up to R350,000 on their Retirement Fund contributions. The deduction is, however, capped at R350,000 (even if you are contributing more than this!).

Capital Gains Tax (CGT)
The effective tax you’ll pay on capital gains may increase if your tax rate goes up to 45%.

If this is the case, the maximum effective tax will be as follows:

  • Individuals and special trusts: 18% (inclusion rate of 40%)
  • Companies: 22.4% (inclusion rate of 80%)
  • Trusts: 36% (inclusion rate of 80%).

The capital gains exemption thresholds remain the same:

  • The annual exclusion stays at R40,000
  • The exclusion amount on death stays at R300,000
  • The primary residence exclusion stays at R2 million.

Adjustments to medical aid tax credits
Medical tax credits have been adjusted for inflation as follows:

  • R303 per month for the main member and the first dependant on a medical scheme; and
  • R204 per month for each additional dependant.

An important factor to bear in mind is that Treasury is considering a possible reduction to medical tax credits in future. This will be to finance National Health Insurance (NHI).

Estate Duty
Estate Duty tax remains unchanged at 20%. You are allowed a basic deduction of R3.5 million on your estate when you die. You do not pay Estate Duty on the value of your Retirement Funds or on the value of the assets you leave to your surviving spouse.

The Davis Tax Committee has submitted its proposals on the Estate Duty system, and we will keep you abreast of developments.

Loans to Trusts
From 1 March 2017, existing and future loans to Trusts will attract 8% interest per year. This is taxable in the lender’s hands. The 8% interest will be deemed a donation, and will attract donations tax of 20% each year. Please speak to your financial planner to discuss how this affects you.

Offshore Special Voluntary Disclosure Programme
SARS will start receiving offshore third party financial data from other tax authorities this year. If you have undeclared offshore assets and income, Government has offered a Special Voluntary Disclosure Programme. This has been extended to 31 August 2017 to enable you to regularise your affairs.

Changes to transfer duty
There has been only one change here: if you buy a property up to the value of R900,000 (previously R750,000), you will pay no transfer duty.

Tobacco, alcohol and fuel
You will pay between 6% and 10% more for your favourite tipple and smoke. Should you wish to add a Coke to your Klippies, await Treasury’s pronouncement on sugar tax.

Tax on fuel will increase by 39c per litre from 5 April.

Conclusion
Ever optimistic, our Finance Minister ended with the following sentiment:

“If we make the right choices, and do the right things, we will achieve a just and fair society, founded on human dignity and equality. We will indeed transform our economy and country so that we all live in dignity, peace and wellbeing.”

Warm regards
John Campbell

Alzheimer’s: what not to forget

In her fifties, my gran developed Alzheimer’s. I remember visiting her as a child. One of my first experiences of her illness was when she began to lose her ability to filter what she said to those around her. On one occasion, I took a friend along with me to see her. It turns out my gran didn’t like my friend. So what did she do? She told my friend to leave! This is not something she would normally have done – not the gran that I knew.

Health changes people – for better or worse

And we had no idea at the time how my gran’s health, or lack of it, was changing her. We even thought that she had been drinking secretly, so unpredictable was her behaviour. But of course, this wasn’t the case at all and it was just a few months later that she was diagnosed with early-stage Alzheimer’s. I had always understood that this disease is genetic and somewhere at the back of my mind, I’ve worried that I might fall prey to it too. Watching her deteriorating was devastating.

But a recent Carte Blanche episode shed some light on the subject. It’s estimated that 9.9 million new cases of Alzheimer’s are reported annually – and while nothing can cure this disease, some simple lifestyle choices can help prevent it.

The three pillars of health

What we eat, how we move and how we sleep – research and the experts tell us that, done well, they can help push back this disease. That’s because the cell loss process begins 20 years before the disease presents. Plus, the role of genetics is less than researchers first thought. It’s actually environmental factors that determine if it develops. That’s encouraging for me – because it means there is less left to fate and more that I can manage.

Take action as early as you can
Physical fitness is all-important. Did you know that all it takes is brisk walking to reverse brain-size decreasing, something that happens in old age? And eating well is essential; when it comes to keeping Alzheimer’s at bay, a Mediterranean diet is encouraged. Did you know that olive-growing regions rich in fish, vegetables (especially leafy, green ones), fruit and seeds benefit us cognitively and reduce our risks? Sleep, that third – and one of my favourite things – pillar (or is it pillow?) is important for brain function. The slow wave sleep phase is when your brain development increases.

Will these three pillars eliminate your risk of Alzheimer’s? No. But apparently, they can more than halve it! That’s a statistic I’m happy to work with.

So, to the three pillars then! And to a cruise on the Med – purely for health purposes, of course!

Warm regards

It’s time to #MakeThisTheYear

Our Retire Successfully theme for 2017 is #MakeThisTheYear.

Yes, why not make 2017 the year? And don’t allow the usual objections to hold you back … I am not sure if it is the right time. What will others say? What if I fail? Doesn’t that seem a bit selfish?

So often, regret happens because we put many of our dreams on hold, waiting for the perfect time. Ask yourself: when is the perfect time? Will it ever come? Let’s not miss doing the things we have always wished we had. The time I share with clients in life planning meetings is always extremely special, as clients express verbally, often for the first time, those dreams they have cherished, but buried deep. They may never have even acknowledged the desire clearly to themselves, but quietly waited for the perfect time for this nascent desire to come to light.

Often, just verbalising and sharing the idea, knowing that someone else recognises that desire, makes it more possible to realise.

The NOW is what is important. Today, look at January 2017 and say: I am going to #MakeThisTheYear.

Whether it is having a difficult conversation, going on that trip, joining a dance group, or just having some fun, what is important is having the courage and the willingness to make it a reality.

So, today is the perfect day to start.

A Chartered couple in a recent life planning meeting shared with me that when they give friends who need encouragement a copy of Dr Seusss book: Oh The Places You’ll Go. The book opens with these inspirational words:

Congratulations

Today is your day

You’re off to Great Places!

You’re off and away!

And ends

So … Be your name Buxhaum or Bixby or Bray

Or Mordecai Ali Van Allen O ‘Shea,

You’re off to great places!

Today is your Day!

Your Mountain is waiting

So…..get on your way!

So whatever your mountain, #NoMoreExcuses #JustGoForIt #Make this the year.

I look forward to hearing from you what you are going to do in 2017.

Best Wishes

  • 1
  • 3
  • 4
Connect with Chartered

Telephone: +27 11 502 2800
Fax: +27 11 502 2812

Email: info@charteredwealth.co.za

Chartered Wealth Solutions is an authorised financial services provider

Chartered House, 2 North Road, Dunkeld West, Johannesburg