Author - Administrator

RooiZone Blog 1/6 – Die Wyse Belegger

“Monkey see, monkey do …” so gaan die spreekwoord. Dit is ook wat ons leer uit die Ash-Eksperiment uit die 70’er jare. Ons doen soos ander doen. Ons wil in wees by die groep. Daarom dat die verbruikerskultuur net sterker word. As my buurman ‘n nuwe Fortuner ry soek ek ook een. Dit is juis hierdie verskynsel wat ons finansieël kan kelder. ‘n Wyse belegger besluit waar hy wil wees oor 5, oor 10 en oor 2o jaar van nou. Dan werk hy om by daardie doelwitte uit te kom … maak nie saak wat sy buurman aanvang nie.

Making money … from the heart

As a youngster, struggling to make ends meet, I came upon a “get-quick-rich” book which said that when you want to make money you can follow basically one of three routes. You can 1. take over the family business; 2. find the gap in the market and fill it, or you can 3. find something you love to do and do it. I found that nr 3. is actually the only route to follow unless nr 1 and 2 are also “what you love to do”. But why is “finding what you love to do” so important? In live as in business we need to find what ignites our soul in order to feel alive. Doing what we love make us better human beings, leaves us healthier and gives us purpose. Having purpose or meaning is what makes us feel that we have a place on this earth. We count for something. The American author, James Hillman, calls this finding your “Soul’s code”. Therefore, admits all the uncertainties of live we actually have only one choice in live AND in business, that is to take the quote of Thoreau seriously: “Advance confidently in the direction of your dreams, and endeavor to live your life as you have imagined it and then you will meet success.” Success, then, will also have be defined differently. It is not about having lots of money. It is rather finding your soul’s code. Make your business soulful, meaningful and directed towards giving expression to your life as you have imagined it … that is the only way you should do business and life.

Tax Free Investment (TFI) vs Retirement Annuity (RA)

Tax Free Investment (TFI) vs Retirement Annuity (RA)

The end of the tax year is fast approaching – but there is still time to take advantage of some of the incentives the government has put in place to encourage savings. The introduction of the tax-free savings legislation last year has added an extra arrow to the quiver of tax-efficient options available to investors. Options are great, but having to choose often stops people from acting and can get in the way of our good intentions. If pressed to make a decision between a unit trust-based retirement annuity (RA) or a unit-trust based tax-free investment (TFI) product, which should you choose. These two investment vehicles both grow free of dividends tax, income tax on interest and capital gains tax and they are both long-term savings products. This means that because you are compounding all gains tax free, your investment value at the end of 30 years would end up roughly 45% higher than in a discretionary investment (assuming the investor saves R2 500 per month for 16 years and 8 months, at which point they have saved the R500 000 lifetime cap and can no longer contribute to their TFI; with a 13.3% total return).

The main difference between the two products is that an RA offers tax savings now, i.e. you pay less tax now because you make contributions with earnings on which you have not paid tax, but you will pay tax later, i.e. you defer paying tax. With TFI products, on the other hand, you use after-tax money to invest, but you pay no tax later; your withdrawals are completely tax free.

The benefit of using before-tax money in an investment such as in the case of the RA is that apart from deferring tax, the tax saving in a RA comes from paying a lower average tax rate on the benefits withdrawn from the RA at and after retirement, versus the tax saved on contributions. When comparing to a TFI product, the difference is that you have a future tax liability, whereas in a TFI your tax would already have been paid, but at a higher rate.

While the tax benefits of the RA and TFI are clear, it’s important to be aware of the restrictions before making a decision. RAs are governed by the retirement fund regulations, specifically Regulation 28 of the Pension Funds Act, which limits the exposure you can have to riskier asset classes, such as equities and offshore investments. In TFI products, there are no restrictions on asset classes but you can only invest in investments that charge fixed fees, which limits your selection.

Another critical point, is that you can only invest R30 000 per year in TFI products. This is the maximum limit for all TFI accounts in your name, across product providers. If your goal is to save for retirement, the maximum annual contribution of R30 000 in a tax-free savings account may not be enough to sustain your lifestyle, and if you over-contribute SARS will hit you with a hefty 40% tax penalty.

Access to cash may be another deal breaker: your investments in an RA cannot be accessed before the age of 55. You can access your TFI investment at any time. However, withdrawing from a TFI account impacts negatively on your lifetime investment limit of R500 000 – you cannot replace money that you have withdrawn.

Other important factors to consider is that the RA and are protected against the claims of creditors and do not form part of your insolvent estate. In the case of the TFI is could also be protected against the claims of creditors, depending if the insurance company offers the TFI as a life policy. In such a case it will be protected against the claims of creditors. The RAs are exempt from estate duty, whereas TFIs forms part of your estate and attract duty, although there are no executor fees if beneficiaries have been nominated.

Which product wins? From a retirement savings perspective, in most cases RAs offer the best tax deal. However, you need to be able to live with the restrictions described above. For long-term discretionary investments, it probably makes sense to put your first R30000 into a TFI product. Remember, however, that you will need to be disciplined and resist the temptation of withdrawing from your TFI account. You only get to enjoy the long-term compounding benefits if you don’t dip your hands into the cookie jar along the way.

Belegging in ‘n beermark?

24 Januarie 2016

Hoe om te belê in ‘n beermark?

Om slim te belê in 2016 gaan beteken dat jy jou voetwerk moet ken.

Einde Desember 2015, na die Zuma debakel, en vroeg in Januarie, met die market wat maar baie droefgeestig geopen het, was dit interressant om almal se opinies te hoor. Die meeste se mening was: hou jou belegging in kontant en wag tot die markte weer draai. Ek is effens skepties oor die benadering want dit was nogal dieselfde benadering wat baie gevolg het in 2008 toe die markte pak gekry het, met die Amerikaanse huismark wat in duie gestort het.

Wat in die praktyk gebeur is, mense haal hulle geld uit beleggings uit en sit dit in geldmarkte in. Maar hulle doen dit op ‘n punt waar die markte alreeds laag is net om dit weer te belê as hulle seker is dat die markte weer sterk is. Wat in effek gebeur is, jy haal jou geld in die onderpunt van die kurwe uit, en as die markte weer bo is sit jy dit weer terug, wat beteken dat jy uitmis op die groei boontoe.

Wat nou gedoen? Gebruik hierdie eenvoudige vyf punt plan vir jou belegging in 2016:

1. Bepaal waar jy is:

Is jou geld reeds in die mark of moet jy nog belê? Hoe lank moet jy nog belê – langer as vyf jaar of korter? Dit is van die belangrike vrae wat jy vir jouself moet afvra.

2. Besluit op ‘n basiese “in-uit-strategie”:

Die vraag is wanneer moet ek in en wanneer moet ek uit? As jou geld reeds in die mark is, los dit daar. In 2008, met die val van die markte, sou jy na 3 jaar weer gelyk gebreek het as jy nie aan jou belegging geraak het nie. As jy nog in die mark moet inkom, plaas dit in iets soos ‘n geldmark belegging en fasseer dit stelselmatig (00r 12 mnde of so)  in soos die situasie in die land en wêreld verbeter. Beermarkte hou gewoonlik nie lank nie.

3. Besluit op Buiteland vs Binneland:

Baie wil nou net belê in die buiteland. Die waarheid is dat daar op die oomblik net ‘n handjie vol buitelandse maatskappye is wat sterk is. En om nou in hulle te belê beteken weereens dat jy aan die bo-punt van die kurwe inkom en dit terwyl die rand reeds teveel veld teen die dollar verloor het. Ekonome is dit eens dat die rand ver onder evalueer is wat beteken dat hy nog kan terugtrek. Belê eerder in Suid-Afrikaanse maatskappye met ‘n sterk buitelandse belang soos Richemond, Mediclinic, Old Mutual, SAB ens.

4. Neem ‘n besluit waarmee jy gemaklik is:

Toets jou besluite deur dit met ‘n kundige te deel wie jy vertrou, en neem dan ‘n besluit waarmee jy gemaklik is. ‘n Goeie beleggingsvraag is nie net om te vra: Hoeveel groei wil ek he nie? Soms moet ek ook vra: Met watter verliese sal ek mee kan saamleef?

5. Hersien jou besluit:

Om elke dag, of elke maand jou geld dop te hou en dan paniekerig te raak oor die skommelinge van die markte sal jou vreugde steel. Kyk darem ten minste elke 6 maande tot ‘n jaar na jou beleggings en besluit dan of jy nog op die regte koers is.

Ten slotte: Beleggings, veral as jou lewe daarvan afhang, kan ‘n mens bang maak. Daarom moet ‘n mens dit berekend en met ‘n duidelike doel voor oë beplan. Hou dan by jou plan en moenie toelaat dat jou emosies op hol raak nie. Die wiel draai altyd.

Onttrekking uit my aftree-fonds

Ek is van mening dat die aftree-bedryf in die meeste gevalle nie geslaagde is in sy doel om mense te help aftree nie. Een van die groot redes hiervoor is die opsie wat mense het om hulle aftree-geld by verwisseling van werk te kan neem as ’n onttrekking. Die rede waarom ek so sê lê op, 1. ’n belasting vlak en 2. ’n lewensstyl vlak.

1. Verstaan die belasting konsekwensies van ‘n onttrekking:

‘n Paar jaar gelede het die regering die vergunning gemaak dat indien iemand retrench word voor die ouderdom 55 dat hy wel sy aftree-voordele kan neem as ‘n aftree-voordeel en nie as ‘n onttrekkingvoordeel nie. Die verskil tussen die twee voordele is geweldig. Op ‘n onttrekking is net die eerste 25 000 belasting vry terwyl op ‘n aftree-voordeel die eerste 500 000 belasting vry is. Voorts word onttrekkings wat geneem is na 1 Maart 2009 weer in berekening gebring met die belasting berekening op aftrede. Om ’n onttrekking te neem wat meer is as 25 000 beteken dus dat jy uitmis op 500 000 belasting vrye deel van ’n aftree-voordeel EN jy word weer belas op die onttrekking wat jy geneem het op aftrede.

2. Op ‘n lewensstyl vlak beteken ‘n vroeë onttrekking dat jy uitmis op ‘n belegging wat in rente-op-rente groei. Dit is ’n belegging wat veronderstel is om vir jou te sorg na aftrede. In my ervaring is dit minder as 1% mense wat hulle aftree-geld herbelê as hulle uit die werkgewer se diens uittree. Gewoonlik word die onttrekking gemaak ter wille van kort termyn behoeftes soos om geld op ‘n huis te sit, ‘n kar te koop en dikwels sommer net om van te leef. Sodoende word huidige leefstyl behoeftes bevredig ten koste van lewensnoodsaaklike versorging na aftrede.

Die slotsom: jy verloor al die pad as jy jou geld onttrek as jy die maatskappy se diens verloor. Al voel dit asof jy min geld in jou aftree-fonds het; spaar dit eerder. Dit is makliker, terwyl jy nog ander planne kan maak, om nou sonder die onttrekking-geldjie te leef, as om op jou ou dag waar jou opsies, kragte en gesondheid minder is sonder aftree-geld te moet leef.

 

Belê slim

Dikwels weet werknemers nie dat addisionele bydraes tot aftrede in hulle voorsorg– en pensioenfonds kan maak nie. Jy hoef dus nie ‘n addisionele annuiteit uit te neem as jy ekstra wil belê nie.

‘n Addisionele annuiteit maak net sin as jy ‘n ander inkomste buiten jou salaris het. Dit sal jou ‘n addisionele belasting-aftrekking gee.

As jy meer wil belê, maak seker van die volgende:

  • Beleggingsgroei – jy het ‘n opsie waar jy jou geld binne jou voorsorg– en pensioenfonds wil belê. Dalk het jy nodig om na ‘n ander beleggings-portefeulje te skuif;
  • Beleggingskostes – nie al die beleggingsopsies se kostes is dieselfde nie. Onthou, hoe meer kostes hoe minder gaan vir aftrede.

 

Om slim te belê, neem ten minste jaarliks kennis van die koste en die groei op jou belegging. Maak dan ook, naas jou aftree-beplanning, voorsiening vir korttermyn beleggings vir jou lewensdoelwitte. Jy moet nou ook leef….

(Vierde Kwartaal 2014)

 

Succession Planning the Formosa Way

The Formosa Advantage

Prof Joseph Fan, of the Chinese University of Hong Kong, and his team, conducted research on more than 200 Chinese family owned businesses in Taiwan, Hong Kong and Singapore. They found that in a five year succession period, succession performance declined by 60%. That is to say that for every 100 dollars owners’ value or investors’ value, by the time the succession is complete, the business is now only worth 40 dollars.

However, they found an exception to this occurrence; Formosa Plastics in Taiwan. Formosa is the largest manufacturing group in Taiwan. Their founder Wang Yung-ching passed away in 2008 at the age of 92. Just before and after his death the stock price did not decrease but actually increased. This went against all their  findings of a 60% decline in value at the succession stage of a family business.

What did Wang Yung-ching do different? According to Prof Fan it is because Wang Yung-ching did not focus on passing down tangible assets. In fact he decided not to leave any shares of his business to his children. Instead he transferred all the controlling shares of Formosa Plastics to a charitable foundation. That meant that none of the children were able to own shares and were not entitled to the dividends. On the surface he left his children with nothing. However, while alive, he spent a lot of time trying to educate and coach his children in entrepreneurship. It was more important for him leave his children intangible wealth than tangible assets.

How did his children turn-out? Off course it was not without its family feuds but in the end it turned out for the best. Wang Yung-ching’s daughter, Wang Xuehong, is the wealthiest businesswoman in Taiwan today. She is also the president of VIA Technologies and High Tech Computer Cooperation.

Sometimes nothing…. can mean everything.

Business like Van Gogh

Many business consultants have tried to encourage business owners to become the Van Gogh’s and the Rembrandt’s within their businesses. The challenge however is to translate that which is primary linear and logical in business into art-like concepts. What often happens is that business guru’s try to find the logical system within the world of art in order to create an art-like management system for business. This fails precisely because the mere search for logic within the world of art is trying to force the non-business force of the arts into a world which is obsessed with numbers, graphs and measurement. The question is whether the unpredictable world of the arts has anything to say to the way in which we conduct business.
I recon it does, but then not to develop yet another yard stick to carry on with business as usual. That value which the arts has to offer lies on a different… on a deeper level.
The arts invites us to put our logic for a moment aside and as the artist does, be taken up with passion and beauty and yearn for the unreachable. Doing business like Van Gogh is not to take advantage of yet another sales technique or client but rather enjoying the business for the business sake. It is when we enjoy what we are doing which invites our clients to join us with our art. This is the most honest way of doing business… just by loving what we are doing.