In association with

Destiny

Personalwealthreport 2014

So sang BobMarley and we’ve taken a leaf out ofthis insightful phrase for our Personal Wealth Report,brought to you by Nedbank PrivateWealth. We’vepulled together targeted advice for women at differentstages of their careers – whether just starting out andthinking about taking out a home loan or “slashies”whose dynamic retirement needs keep them awake

at night or those looking to consolidate theirnest egg andmake that first million.Sit back and let the wisdom of an assortment

of financial experts and advisers guide you tosustainable and far-reaching riches – both interms of your relationship with “Madibas” andyour bank balance.

{ “Don’t gain the world and lose your soul, wisdom is better than silver or gold.” }

Saving for life’smajormilestones, working out a philanthropy plan and puttingyour cash into innovative investment opportunities – it’s all here!

In association with

Destiny

Personalwealthreport 2014

So sang BobMarley and we’ve taken a leaf out ofthis insightful phrase for our Personal Wealth Report,brought to you by Nedbank PrivateWealth. We’vepulled together targeted advice for women at differentstages of their careers – whether just starting out andthinking about taking out a home loan or “slashies”whose dynamic retirement needs keep them awake

at night or those looking to consolidate theirnest egg andmake that first million.Sit back and let the wisdom of an assortment

of financial experts and advisers guide you tosustainable and far-reaching riches – both interms of your relationship with “Madibas” andyour bank balance.

{ “Don’t gain the world and lose your soul, wisdom is better than silver or gold.” }

Saving for life’smajormilestones, working out a philanthropy plan and puttingyour cash into innovative investment opportunities – it’s all here!

page2 | NOVEMBER2013

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Credits:

In association with

YOUNGEXECUTIVELerato* (43) is the recently-appointedChief Executive Officer for a Pretoria-based mining firm. Her annual incomeis R1,5 million.

As a single mother of three children(aged 21, 15 and 13), Lerato says saving fortheir education is a key concern. She hasa bonded house (worth R1,7 million) andsavings of R100 000 and she’s looking fora balanced investment strategy that willattract reasonable medium-term returnswith relatively low risks over the nextfive years.

WEALTHEXPECTATIONLerato’s looking for an income with abalanced combination of investments thatwill lead to potential growth.

INVESTMENTRECOMMENDATIONSConveniently, one Nedbank Private Wealthclient relationship manager will manageall her legal entities and accounts (be theycompanies, trusts, endowments, RAs, livingannuities or simple discretionary unittrusts), while a private banker will tendto all her banking requirements. Thus herinvestment planning, portfolio construction

and management can be optimised on aholistic level, while taking advantage of thespecific benefits each investment structureor vehicle provides. The advice of seniorportfolio managers will guide Lerato andkeep her abreast of international macro-economic trends.

STAR PRODUCTS: SEGREGATEDFUNDPORTFOLIOORSTRATEGY SOLUTIONGiven Lerato’s age and career trajectory,it would make sense for her to create asegregated fund portfolio, whereby herinvestments will be allocated to various“best of breed” fund managers who webelieve have the highest level of expertisefor the relevant mandates they manage.In doing so, Lerato’s investments will beactively managed by highly respected fundmanagers, in a holistic structure that’soverseen by a client relationship manager.An alternative would be to invest in astrategy solution – namely, a tax-efficientblend of leading fund managers, rolledinto a single solution which has the closestalignment to the Nedbank Private Wealthhouse view assest allocation, fund selectionand security selection. Regardless of the

Promotion

GrowingGOLD

We may not all be at the level of multi-millionaires ( just yet), butit pays to have a wealth plan in place if you’d like to head in thatdirection. The experts at Nedbank Private Wealth and Nedbankprovide targeted advice for women at different stages of earnings

WILLS AND ESTATESLerato needs an estate plan which willinclude calculations to determine herliquidity, capital gains and estate dutyposition, while also addressingfuture growth.

Assuming she has a sizeable providentfund, her surplus cash and bonussituation can easily be mopped up inorder to grow by structuring a PersonalShare Portfolio Retirement Annuity. Thiswill reduce her income tax and estateduty tax, allowing for tax-free growth inthe annuity.

Similarly, she’ll have the opportunityto structure an endowment in SA andinternationally, which will create furtherestate and tax efficiencies.

She could also establish a SouthAfrican and/or international trustduring her lifetime to take transfer ofall investments currently held in herpersonal name. She’d then be offeredspecialist advice on structuring a will todeal with her estate after her death.

Nedbank’s fiduciary specialistscan offer her tax advice relating to theestablishment of the trust.

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option selected, Lerato’s personal relationship with her clientrelationship manager will be seamlessly integrated with that of herprivate banker, whereby her transactional banking requirements(including her bond facility, income requirements for her children’seducation, as well as third-party payments) and her conventionalfinance requirements (including short-term finance and insurance)would be fully catered for.

STAR PRODUCT: STOCKBROKINGPORTFOLIOShould Lerato wish to have direct exposure to the markets, wecould look to create a direct share portfolio, managed by one of ourexperienced stockbroking portfolio managers. Blue-chip stocksare high earners’ bread and butter and perform reliably well. As astarting point, always look for quality companies with good cash flowand growing dividends. Our research team is exclusively dedicatedto our private clients, continuously looking for opportunities withinthis volatile and uncertain environment.

Depending on various factors, we could look to diversify herportfolio to international markets, where she can trade on mostrecognised exchanges around the world seamlessly via herstockbroking portfolio manager or international wealth manager.Lerato would have real-time online access to her stockbrokingaccount via the web or smartphone, which would allow her toaccess proprietary research and market information all thetime and place orders by phone or via the web. Importantly, allspecialists involved in managing Lerato’s account will have opencommunication channels, so as to ensure all aspects are beingadhered to, holistically.

RETIREMENTGiven her sizeable and probably growing bonus earnings, it wouldbe advisable for Lerato to invest in a retirement annuity, so shecould take full advantage of retirement saving contributions of 15%of taxable non-retirement funding income for the 2013/14 tax year.The Nedbank Private Wealth Personal Share Portfolio RetirementAnnuity would allow her to invest compulsory savings directly intothe stock market to create a bespoke portfolio in line with her needs,at a competitive rate. As her portfolio grows, Lerato could also makeuse of a stockbroking carry facility to borrow funds against thesecurity of her voluntary savings share portfolio to free up extra cashas her needs change. Upon retirement, her retirement annuity wouldthen be transferred seamlessly into a living annuity, without havingto sell out of the underlying vehicle and buy back into the marketagain, ultimately ensuring full market participation throughout thistransition process.

MATUREMOMTanya* (50), a divorced mother of two adult children, is planning toretire in 15 years’ time. She’s seeking a longer-term, moderate-riskinvestment strategy. Financially responsible for her 21-year-oldsecond-year student son and her elderly mother, Tanya earnsR331 740 per annum. She has unit trusts worth just over R50 000.

WEALTHEXPECTATIONSTanya wants to be able to retire comfortably through an incomewith a balanced combination of investments that will lead topotential growth.

INVESTMENTRECOMMENDATIONSAs a baseline factor, Tanya should never allow her expenses toexceed her income. All expenditure should be budgeted for, whetherregular monthly expenses such as rent, food and insurance, orsavings towards a goal such as an overseas holiday. In addition,her monthly regular savings should provide for an emergencycontingency fund for unforeseen events.

All expenditureshould be budgeted for,whether regularmonthly

expenses such as rent, food andinsurance, or savings towards agoal such as an overseas holiday.

In addition, hermonthly regular savings shouldprovide for an emergencycontingency fund forunforeseen events.

ENTREPRENEURIALWEALTHNicola* (40) is married with an eight-year-old child. She hasR1,7 million worth of listed shares, in addition to R400 000worthof unit trusts. Her annual income is R2,5 million. She runs a petcareexport business. She needs advice on how to gear her businessfor export growth.There are two avenues she could explore to fund both local and

global export growth:• A working capital requirement to fund growth in local salescould be arranged by way of an invoice discounting facility, whichgrows in relation to the growth in sales. This facility is basically ashort-term borrowing tool that helps strengthen a company’s cashflow position.• A documentary credit facility (ie export letters of credit) couldbe arranged for the export sales, which papers could then bediscounted by Nedbank – provided, of course, that the documentsare issued by and drawn on a reputable overseas bank. Letters ofcredit refer to bank guarantees that a buyer’s payment to a sellerwill be received on time. If it isn’t, the bank will cover these costs.* Not their real names

In association with

WEALTHREpoRT

Within an investment time-frameof up to five years, she requiresinvestment solutions that guaranteea return through favourable interestrates and capital security.

STARPRODUCTS:EasyAccess DepositNedbank EasyAccess Deposit offersthe guaranteed returns of a fixeddeposit combined with free accessto up to 50% of your funds at aminimum of 24 hours’ notice. A greatinterest rate is guaranteed for aninvestment term of three, six, 12 or 18months. You can withdraw 50% of theoriginal capital with at least 24 hours’notice.

JustInvest (short-term)Nedbank JustInvest is a moneymarket investment account thatoffers you extremely competitiveinterest rates and short-termaccessibility (at least 24 hours’notice). No transactional facilitiesare available. The minimum depositis R5 000 and extremely competitiveinterest rates are paid, tieredaccording to your balance.

MoneyTrader (short-term)Nedbank MoneyTrader is a moneymarket investment account thatoffers you extremely competitiveinterest rates and short-termaccessibility (at least 24 hours’notice). Get great rates linked tomoney market conditions with aminimum deposit of R50 000.No transactional facilitiesare available.

Green Savings Bond(long-term)Nedbank Green Savings Bond enablesyou to save while contributingtowards a greener future. The capitalraised from this innovative bondis earmarked for investment invarious renewable-energy projects,such as wind farms and solar fieldsthroughout SA, at no risk or cost toyou. The minimum investment is justR1 000 and you can invest for18, 24, 36 or 60 months.

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Investments withADIFFERENCE

Before investigating unique investment opportunities and pledging your lifesavings, “consider where the investment fits into your greater financial plan andhow it relates to your short- and long-term goals”, advises Jason Bernic, FinancialPlanning Coach at Acsis. “Budget accordingly and ensure that an investment’saffordable and that you’re comfortable committing to it. Investment success takestime and patience and getting professional advice is always agood idea.”

We offer three innovative investment ideas:

TAKE ITOFFSHOREMany people are unsure of the intricacies involved in offshore investing. However,it’s a sound strategy, since amassing numerous assets and investments in onecountry is no guarantee of lasting wealth.

Says Clayton Stewart, International Wealth Manager at Nedbank Private Wealth:“SA’s GDP contribution to the rest of the world is, optimistically, about 1%. TheJohannesburg Stock Exchange’s net asset value contribution to world markets isin similar territory. We’re an exceptionally small minority which is valued on acurrency that was especially volatile in 2013. For diversification reasons alone, weshould all have a percentage of our funds offshore.”

That’s especially true if you’re looking to create a lasting legacy for your family,he continues. “In this case, you should be investigating using your discretionaryallowance. This allows you to transfer R1 million offshore annually and a furtherforeign investment allowance that you can apply for, up to R4 million. As SouthAfricans, we have the opportunity to invest in hard currency around the world likenever before. This will not only protect and grow your asset base, but also exposeyour balance sheet to interesting opportunities globally.”

“Stick to simple investment principles: spread your money, take the requiredrisk, invest with reputable companies and in markets, jurisdictions and assetclasses that help you achieve your investment goals,” advises Bernic. “As with localinvestments, you can invest in shares, unit trusts, property and bonds, and you canstructure them to be tax-beneficial, depending on your personal circumstances.Some advisers advocate exposing up to 25% of your money offshore, whichprovides a nest egg.”

“Entrusting experts to manage this money prudently and compound the growthis critical,” says Stewart. He adds that it’s wise to look carefully at which countriesand markets to invest in. “With the UK’s equivalent of the South African repo ratepriced at 0,5%, lending is attractive. That’s not to say there aren’t threats looming

Fromcalculated offshore investing to urbanproperty, we suggest ways to diversify and

stabilise your portfolio

in international markets, but history shows thatthose markets move in cycles. Given enough time,equity markets provide great inflation-bustinggrowth, especially when not limited to a singlecountry or economy.”

According to Damian Hamp-Adams, Sales andMarketing Director of the Indian Ocean Real EstateCompany (Iorec), Mauritius – which is seen as thegateway connecting Africa and Asia – offers the idealinvestment opportunity for South Africans. RecentCentral Bank statistics reveal that foreign directinvestment in Mauritius rose by 16,1% in the first halfof 2013, with SA being the second-biggest investmentsource. Investments were primarily in the real estatesector, where Hamp-Adams operates. “As a SouthAfrican, you can automatically reside in Mauritius,as long as you hold property in an integrated resortscheme [IRS, which enables development and saleof luxury residential units to foreigners]. There’s nocapital gains or real estate tax in Mauritius. You’ll onlybe subject to 15% income tax.

“It’s also easily accessible to South Africans, withfrequent flights and massive holiday appeal. ManySouth African entrepreneurs also have their corporateheadquarters there. The island’s experiencing

“As South Africans, wehave the opportunity toinvest in hard currencyaround theworld like

never before. This will notonly protect and grow

your asset base, but alsoexpose your balancesheet to interesting

opportunities globally.”

WEALTHREpoRTWRITTEN BY GILLIAN KLAWANSKY

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astronomical growth with a new airport, new highways andconstant development.”• For information on Iorec’s Azuri IRS, email:damian@azuri.mu

STAMPSOFAPPROVALStamps probably aren’t top of mind when you’re contemplatinghow you’ll ever afford that private jet, but they’re actually a stableand lucrative – if somewhat quirky – investment to make. “Intheir own way, fine stamps constitute a near-perfect investmentopportunity due to a finite supply and an increasingly activeand ever-growing international demand,” says Doreen Royan,Chair of professional philatelists Doreen Royan & Associates inJohannesburg. “We’ve never seen rare stamps in their original,perfect condition lose their value.”“There won’t be any more fine and rare stamps from a particular

period coming out; you’re primarily looking at stamps from 1840-1970, as the printing process was different in those days and onlya specific quantity was ever produced,” explains Kris Fawcett,Director of Doreen Royan & Associates (www.doreenroyan.com).Interestingly stamps with printing errors are some of the mostvaluable ones, as they’re incredibly rare.While stamps have a steady value, don’t expect overnight returns

once you build your portfolio, caution Royan and Fawcett. “We lookat trying to achieve 10% interest per annum.That might not happenimmediately, though,” says Royan. “It’s like owning a house [but

without the market fluctuations]. Your capital’s growing.”While stamp trading is huge overseas, especially in the UK,

in SA the market’s relatively small. “It’s a very under-the-radarinvestment,” explains Royan. “There’s no capital gains tax on stampinvestment as it is considered a hobby.”“That’s because it’s too complicated to police,” explains Fawcett.

“Stock markets are traded daily and their prices fluctuate, accordingto supply and demand. With stamps, there’s a limit to the supply.Their value is tracked in annual Stanley Gibbons catalogues, not ona daily platform.”Doreen Royan & Associates also runs a Rarities, Errors and

Varieties Club which encourages members to make small, monthlyinvestments (with no interest charged) to pay off stamps. “Stampinvestments aren’t limited to the wealthy; anybody can invest, aslong as they ensure they’re investing in the right stamps, in the rightcondition, with a respected dealer,” says Fawcett. Rare stamps aretraded internationally and dealers can help you decide when thetime’s right to sell privately or through a public auction.“Ensure your dealer is a member of one of the professional

stamp regulatory trade bodies,” advises Fawcett. The South AfricanPhilatelic Dealers’ Association is the local regulatory body.• For a full list of dealers, visit: www.sapda.co.za

FUNDURBANRENEWALThere are ample opportunities and tax incentives in local property.“Look for value when purchasing your first investment property,”

“Inner-city rejuvenation hasbeen very successful in CapeTown, with an increasingnumber of people using thecity for purposes other thanbusiness, such as residential,leisure and tourism. In ourrecent online survey, 72%of businesses said urbanrenewal efforts result directlyin renewed interest in the CBDas a business destination. Thisshows that the idea of makingthe CBD a great place forpeople is just as important foreconomic growth as anythingelse,” says Fleming.“Cape Town’s UDZ is

situated across the entiremetro, so it can be seen asa strategic tool to link upvarious nodal economies.

The UDZ extension – whichwill continue until 2020 –creates new opportunitiesfor property owners/developers to activate the taxincentive. Ideas here couldbe to convert empty C-gradeoffice space in the CBD intoresidential properties, or toretrofit existing buildingswith more cost-effectiveand environmentally friendlyequipment, thus savingtenants and owners a greatdeal of money. It’s a longer-term investment, as taxsavings are repaid over alonger period, However,they’re quite substantial,so they make a significantdifference to the overall costof projects.”

“Mauritiusoffers the idealinvestment

opportunity forSouth Africans.”

AndrewFleming, SeniorResearcher at theCapeTownPartnership, a non-profit organisation focusedon fuelling theurban regeneration ofCapeTown’sCentral City, discusses

the success of theUDZ tax incentive

THE ABCOF THEUDZ

PASSPORTS ...SO LAST MILLENNIUM.

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WITH OFFICES IN SOUTH AFRICA AND ABROAD, WE OFFER INTERNATIONAL

PORTFOLIO MANAGEMENT FOR YOUR WEALTH.

Nedgroup Pr ivate Weal th (Pty) Ltd (Reg No 1997/009637/07) , t rad ing as Nedbank Pr ivate Weal th , i s an author i sed f inanc ia l se rv ices prov ider, a regi s te red cred i t p rov ider throughNedbank Ltd , and a member of JSE Ltd through Nedgroup Pr ivate Weal th Stockbrokers (Pty) Ltd .

Acces s in te rna t iona l marke t s . Sp read your po r t fo l i o ac ros s the bourse s . Get in s i gh t in to the ups ,

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advises Ricardo Teixeira, Management Consultant at Acsis.“Understand the type of property you’re buying, the area it’s in andthe potential growth and income you could realise. Weigh thesefactors against the risks before making a decision.”

A unique way of making money through property is by investingin urban development zones (UDZs), demarcated in 2003, whichoffer tax incentives aimed at encouraging private investment inand rejuvenation of inner cities. “The UDZs of SA’s inner cities havebeen taken up by private enterprise and private-public partnershipsand there are numerous successful projects currently underway,”says Teixeira. One such project is Propertuity’s thriving MabonengPrecinct, which has revitalised Jo’burg’s city centre with cutting-edge residential property, exciting office spaces and premier inner-city markets and entertainment hubs.

“UDZs give you a tax deduction that’s substantial enoughto significantly affect the investment,” says Jonathan Liebman,Propertuity’s founder and CEO. “Thirty percent of the purchaseprice of a sectional title unit can be written off as a formof accelerated depreciation over five years. UDZs have beenextended to 2020 to allow for future tax savings.” It’s importantto note that in order to benefit, investors must use property forbusiness (trade or rental) purposes.

“There are opportunities for investors across the board,” saysTeixeira. “Property developers and those able to purchase entirebuildings are best positioned to profit, but smaller investors may

find a jewel worth renting out. If you can find a corporate tenant, allthe better.”

In addition to UDZ tax benefits, urban renewal is attractive toinvestors. “The best returns lie in taking a view of a whole area,so that you don’t just upgrade the building itself, but the entireneighbourhood,” says Liebman. “Look for property that hashigh rental demand and is very central.” Investing in a small unit inthe Maboneng Precinct would require a deposit of about R10 000,he says. “The bank would finance the rest, provided you had a goodcredit record and a job. Rental returns in the first year for investorsare currently 10%. Capital gains have proven to be, on average, 13%annually over the past five years. Maboneng’s a long-term plan, aswe have 35 buildings to develop.”

UDZs are demarcated in 16 South African cities. Durban has asignificant one of 771ha in the CBD, yet despite the success of placeslike uShaka Marine World and Point Development, widespreadurban renewal has been slower there than in Jo’burg, accordingto Stephanie Miller of Urbanize Properties & Letting. “There areno rate incentives for existing owners in the area, so many arereluctant to sell,” she says. Yet there are numerous opportunities forinvestors and significant spaces in the inner city have been, or arebeing, revamped. Consider that you need to keep the property for atleast five years to benefit from the UDZ tax incentive.• Email: stephmiller@telkomsa.net or visit:www.mabonengprecinct.com

Where can you enjoy a uniquely South African ‘summer Christmas’ which will remain etched in your memories forever?

A province with infinite reasons to spend the festive season... a place so majestic and magical with its myriad of magnificent and colourful experiences, thata white Christmas will seem easily dull and forgettable.

KwaZulu-Natal is the place to be for an unforgettable coastal Christmas. Delight in the pure joy of its laid-back lifestyle, warm people and pulsating cultures,exhilarating adventure or irresistible nightlife. The Zulu Kingdom has it all! Come and feel the spirit of Christmas… Take in the charming city of Durban, as itcomes alive with festivities during the holiday season. Where better to celebrate, rejuvenate, recharge and resolve - moving forward towards an exciting yearahead - than in the Zulu Kingdom. Exceptional.

Tourist Junction Building: +27 (0) 31 366 7500, Fax: +27 (0) 31 305 6693, Airport Office: +27 (0) 32 436 0013, V&A Cape Town Office: +27 (0) 21 418 1684Gauteng Info Office: +27 (0) 11 883 7640, Customer Care: 0860 101 099, uShaka Marine World: +27 (0) 31 337 8099, Email: info@zulu.org.za

www.zulu.org.za

A Blessed Festive Season in the Exceptional Zulu Kingdom

Where can you enjoy a uniquely South African ‘summer Christmas’ which will remain etched in your memories forever?Where can you enjoy a uniquely South African ‘summer Christmas’ which will remain etched in your memories forever?

A province with infi nite reasons to spend the festive season... a place so majestic and magical with its myriad of magnifi cent and colourful experiences, that A province with infi nite reasons to spend the festive season... a place so majestic and magical with its myriad of magnifi cent and colourful experiences, that

KwaZulu-Natal is the place to be for an unforgettable coastal Christmas. Delight in the pure joy of its laid-back lifestyle, warm people and pulsating cultures, KwaZulu-Natal is the place to be for an unforgettable coastal Christmas. Delight in the pure joy of its laid-back lifestyle, warm people and pulsating cultures, exhilarating adventure or irresistible nightlife. The Zulu Kingdom has it all! Come and feel the spirit of Christmas… Take in the charming city of Durban, as it exhilarating adventure or irresistible nightlife. The Zulu Kingdom has it all! Come and feel the spirit of Christmas… Take in the charming city of Durban, as it

in the Exceptional Zulu Kingdom

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DEMYSTIFYING DEBT

With total consumer debt soaring over R1,44 trillion, according to Statistics SA, sustaining a business or managing personal finances is a challenge. We speak to a woman who’s

learnt from her setbacks and is rebuilding her personal wealth

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According to the findings of four major reports, the number of South Africans in crippling debt is set to rise. Neil Roets, CEO of leading debt counselling firm Debt Rescue, says reports by the International Monetary Fund (IMF), the World Bank, the South African Reserve Bank and credit information company TransUnion indicate that consumer debt levels are increasing exponentially.

The TransUnion Consumer Credit Index found a 5,6% increase in the number of civil summonses for debt and a rise in consumer loan defaults, while the South African Reserve Bank’s quarterly bulletin concluded that consumers owed up to 75,6% of their income.

Roets says one in four South Africans is out of work and the number of borrowers with over three payments in arrears has increased by almost 50%. “We’re already seeing a dramatic growth in the number

of people seeking protection from their creditors by going under debt review,” he says.

In light of these facts, it’s never been more important for consumers to tighten their belts and make every effort to secure their financial future.

THE ROAD TO DEBT RECOVERYBefore the National Credit Act took effect in 2007, consumers’ access to credit wasn’t reined in and many South Africans were taking on debt that was beyond their means – with far-reaching consequences.

According to Pretoria-based Cawood Attorneys: “Consumers tend to wait until they’re in dire straits before they confront their debt problems and are usually needlessly ashamed of their predicament. They should rather seek the help of a debt counsellor as soon as they fall behind with their monthly payments.”

The firm explains debt counselling as “a simple process of working with a registered debt counsellor to restructure your monthly debt repayments to an amount you can reasonably afford”.

HOW DEBT REVIEW WORKS According to Cawood Attorneys, a client’s total debt and necessary monthly living expenses are calculated. If approved, based on those figures, a new repayment structure is formed to avoid an income deficit each month and improve your cash flow.

Creditors can’t repossess your assets or take legal action against you while your debt review application’s being assessed. By working with a debt counsellor, you’re proving to creditors that you’re putting a plan in place to pay your debts off, even though it will take longer. Current interest rate increases won’t apply to you and are even lowered, in extreme cases.

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WEALTHREpoRT

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WRITTEN BY ATLEHANG RAMATHESELE

The National Credit Regulator prescribes debtcounselling fees and process costs, which arededucted from the monthly repayment structurein order to avoid incurring extra expenses forthe client.

When you’re undergoing debt counselling,you’re not permitted to enter into any new creditagreements. You’re also registered at the country’scredit bureaux as being under debt review, soif you incur any more debt, the process will beterminated and creditors can take legal actionagainst you immediately.

ONTHEMENDWhen actress Pamela Nomvete, who portrayedsuper-bitch Ntsiki Lukhele in SABC1’sGenerations, was so financially beleagured bydebt that she was reduced to living out of hercar in the city streets, she knew she’d hit rockbottom. Clawing her way back up into solvencywas gruelling, but she managed to come out ontop again.

She readily admits that she’s never had agood relationship with money, which she findsa constant source of anxiety. “I’m not a goodbudgeter and tend not to respect money, so Ifind it hard leading a financially sustainable life,”she says. The fact that her profession involvedcontractual work made it even more difficultto save.

She credits the role Donovan Marsh created forher in SABC1’s Castle Lite Crossroads as a majorlifeline. She used the money earned from theshow to return to London and try to piece her lifetogether, a move that posed numerous challenges.

“During my first year there, I was pennilessand living with an old friend and her husband.I was now a black actress in my 40s and none ofthe old acquaintances I’d had were around anymore, so my work prospects weren’t very good,”she recalls. However, she eventually became aregular on the theatre circuit and then landeda role in the immensely popular British soapie,Coronation Street, in 2012. She also penned anautobiography, Dancing to the Beat of the Drum(AuthorHouseUK).

She says the hardest part of turning herlife around was re-establishing her self-belief.However, her faith as a Nichiren Buddhistencouraged her to keep moving forward.She concedes that she’s still learning aboutresponsible budgeting, but her attitude towardsmoney has changed. “At least I’m beginning torecognise its main purpose in my life, whichis enabling me to create work that will make adifference and empower others,” she says.

DRAWUP A REALISTICMONTHLY BUDGETPrioritise your spending and differentiate between wants and needs. However,factor in a fewmodest “nice-to-have” expenses, as you’ll be likely to stray froman overly strict budgetGet used to saving and develop a nest egg for unforeseen expenses such ascar repairs, homemaintenance andmedical emergencies. Start with as little asR200 per month

PAY EXPENSIVE DEBT FIRSTIf the interest rate on your debt is high, paying it off is more expensive. Creditcard, store card and personal loan debts can involve up to 20% interest, so paythese off first, but don’t ignore what you owe other creditors either.

BE A FINANCIALWISEGUYSpend smart. Look for good deals and shop around for better prices.Avoid a big spending spree after payday so that you’re not forced into youroverdraft by mid-month.

LIVEWITHIN YOURMEANSIf you can’t pay cash for something, it’s unlikely you can afford it. Avoid buyingexpensive brands or items.Don’t over-reach when buying a car. Go for an affordable, previously-ownedvehicle and finance it over the shortest period possible

USE CASH INSTEADOFCREDITStay out of trouble by drawing cash or paying with a debit card, wheneverpossible. This way, you’re spending money that’s actually yours. If you do useyour credit card, pay it off in total at the end of each month to avoid incurringinterest charges.

NEGOTIATE TO PAYOFF DEBT SLOWERIf a situation like retrenchment makes paying off your debts impossible,don’t panic. Ask your creditors to work out more realistic payments. This willprotect your credit record and reduce stress. And never avoid taking calls orresponding to letters of demand from creditors: honesty is always the bestpolicy. If you’re upfront about your situation, most creditors will be willing tonegotiate a new arrangement with you.

• For more information from Cawood Attorneys, visit: www.cawoodlaw.co.za

6 PRACTICAL STEPS TO AVOID DEBTReneRouxof SanlamPersonal Finance shares tips on how toget short-termdebt relief, pay offwhat youoweandwork towards living debt free.However, partneringwith a financial adviser is the bestway to create

longer-termfinancial strategies

“Prioritise your spending and differentiatebetween wants and needs. However,factor in a fewmodest ‘nice-to-have’

expenses, as you’ll be likely to stray froman overly strict budget.”

page2 | NOVEMBER2013

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WEALTHREpoRT

Picture-perfect weddings, holidays in exotic locations,homes in secure communities and sending our childrento top-performing, private schools are common dreams.The right investment choices – mapped out here – will help

bring these to fruition

In association with

WRITTEN BY AURELIA MBOKAZI

ou’ve worked hard to get aheadsocially and in your career. And youbelieve your resourcefulness should

equal a life without financial anxieties.Sound familiar? However, financial expertssay many South Africans are living beyondtheir means and until there’s commitmentto financial planning and adjusting ofspending habits, only a few will realisefinancial freedom. Find your focus on thefollowing important milestones.

LoboLaandweddingsIn ideal circumstances, the parents ofthe bride pay for a white wedding, whilethe groom’s parents pay for the couple’straditional wedding. Nowadays, however,

most couples have to foot the bill for theseceremonies themselves.

According to wedding planning websitewww.greatoccasions.co.za, an averageSouth African wedding costs R70 000-R80 000, while the luxury ones screened onTV programmes can cost as much asR100 000 (or even R1 million for the wealthyand celebs). Once a couple has agreed howmuch they want to spend on their nuptials,they’re advised to set aside an additional10-15% of their total budget for unforeseencosts, such as the relatives needing last-minute accommodation and transport, atthe newly-weds’ expense.

Most brides don’t have to worry muchabout lobola, besides whispering to their

uncles not to overcharge their fiancés sothat they’ll have enough left over for thewedding. However, if you have the kindof parents who expect R60 000 for lobolabecause you hold an MBA (a not uncommonscenario), you may have to rethink theCarolina Herrera wedding gown, unless youand your man have already been saving forthree to five years ahead of the big day.

Tshepo Ditshego, Stanlib Retail’s Head ofProject Management, says: “It’s importantto map out how your wedding will impactyour finances in both the short and longterm. For example, if you’re planning to getmarried in three years’ time in a weddingthat costs about R100 000 in current randterms, expect that figure to have increased

ONEDAYAT A TIME

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by about 6% then, due to inflation. The need to save is even more important for those who have to pay lobola, in addition to the costs of the actual wedding. As a first step, couples should shop around for advice and a savings vehicle that’s aligned with their goal. South African banks and investment houses have various products that can be used to save for short-, medium- and long-term goals, such as unit trusts, savings accounts, fixed-deposit accounts and money market accounts.”

HOT TIP: SHARESWhile there’s a wide variety of investment options to raise money for your big day, according to the Johannesburg Stock Exchange, investing in shares still trumps bank deposits and property and affords the investor a good chance of beating inflation. However, there are risks involved, so it’s crucial to do thorough research and scrutinise the published share prices before choosing a company to invest in. For more information, visit: www.satrix.co.za

BUYING A HOMEA home is one of the biggest and most expensive purchases you’ll ever make, so a lot of thought needs to go into it. Before planning the decor and garden of your dream home, find out whether you qualify for a home loan.

Rhys Dyer, CEO of bond originator Ooba, recommends that first-time buyers save up enough to put down a considerable deposit before visiting show houses.

“The more money you put upfront as a deposit, the less you’ll owe on the full cost of the house and the more inclined a bank will be to take a risk on you,” he explains.

“However, don’t just snap up the first bond offer you receive from the first bank to which you apply. Another bank might offer you a better deal. A reputable bond originator will apply to multiple banks for your home loan simultaneously, ensuring you get the best deal with the least hassles and paperwork,” he adds.

HOT TIP: HOmE lOAnSSouth Africa’s four major banks – Absa,FNB, Nedbank and Standard Bank – offer home loans that range from 20 years upwards, depending on an individual’s financial needs. First make sure that you can afford the monthly repayments using

the online home loan calculator offered by the banks and bond originators. Also find out about any hidden costs. For more information, visit www.ooba.co.za

EDUCATIONGiven the poor state of public education in SA, private schools have become a necessity, rather than a luxury. However, first-class education costs a fortune. Wanita Isaacs, Production Development Analyst at Allan Gray, estimates that educating a child from nursery school to university today could cost as much as R2,4 million. She urges parents to investigate appropriate savings vehicles and commit to them as soon as their first child’s born.

“Comfortably affording your children’s school and tertiary education fees requires

careful budgeting. As with any investment plan, the sooner you start putting money aside, the longer it will work for you. Even if you start investing late, the money you put aside can still ease the burden of the more expensive later years of education,” she explains.

Instead of paying school fees from your salary or taking out a loan, Isaacs suggests you make a sacrifice early and reap the rewards at a later stage, when your investments adequately cover the overall costs of education.

HOT TIP: UnIT TRUSTSThere are various good traditional education policies available, but Isaacs recommends unit trusts as a compelling investment vehicle. These comprise the pooled resources of thousands of people

who invest in blue-chip shares, with the assistance of management companies. Banks and other financial service providers offer a wide variety of unit trusts. Before you commit to any investment, though, explore the other options available to you and compare costs, restrictions, expected returns and product features, as well as benefits, cautions Isaacs. For more information, visit: www.allangray.co.za

HOLIDAYSAfter a long working year, a family holiday is not only a chance to unwind, but an opportunity to spend quality time and reconnect with loved ones. However, it comes with a hefty price tag – especially if you want a luxury break in an upmarket establishment or an overseas trip. When saving for a holiday, you need to have immediate access to your finances if a great special deal comes up. Saving for a dream holiday requires a great deal of discipline and commitment, or you could end up in a two-star lodge and return home even more exhausted and dispirited than you were when you left.

HOT TIP: mOnEY mARKET ACCOUnTS

When saving for holidays and other short-term goals, money market accounts are highly recommended. Available at most banks, they’re very versatile and in the past have consistently delivered higher returns than call accounts and other immediate-access deposit accounts, explains Sean Segar, Head of Product at Nedgroup Investment: Cash Solutions.

“Money market accounts spread their exposure between banks and other high-quality counter-parties, so the risks are lowered. These can be used to park cash or diversify an investment portfolio,” he adds. For more information, visit: www.nedgroupinvestments.co.za

LIFE INSURANCEDeath and disease may be traumatic realities – but when planned for properly, their impact is lessened. While funeral policies remain popular, there’s a stigma associated with taking out a life policy on your partner. Jenny Gordon, Senior Legal Adviser at Alexander Forbes Financial Service, says women need to start

“Comfortably affording your children’s school and tertiary

education fees requires careful budgeting. As with any

investment plan, the sooner you start putting money aside, the longer it will work for you. Even

if you start investing late, the money you put aside can still ease the burden of the more

expensive later years of education.”

72DWealth_milestones.indd 4 2013/11/20 2:45 PM

In association with

WEALTH REpoRT

page 164 | JANUARY 2014

playing an active role in securing their future finances.

“We always rely on the men in our families to take out life cover. But wives also need to take out life cover for their husbands, their children and themselves, including policies for dread diseases and loss of income due to disability or accident. With people living longer nowadays, there’s a bigger chance that they’ll suffer a dread disease, so it’s important to have something to supplement your lifestyle. If something terrible happens to someone in your family, at least you know you’ll have the finances to cope with it,” she explains.

HOT TIP: LIFE AND DREAD DISEASE COVER

Most insurance underwriters offer a wide variety of these covers. However, it’s crucial to consult a financial adviser and carefully investigate the options.

“Many wives are reluctant to ask questions about money and insurance, but this is a mistake. I’d advise brides to say their first ‘I do’ at their wedding ceremony and the second one when their husbands ask whether they intend becoming involved in financial matters,” says Lara Warburton, MD of Imara Asset Management SA. For more information, visit: www.imara.com

“We always rely on the men in our families to take out life cover. But wives also need to take out life cover for their

husbands, their children and themselves, including policies for dread diseases

and loss of income due to disability

or accident.”

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REVISITEDRETIRING

Gone are the days of working for a single employer for years on end. Here’s a handy job-hopper’s guide to prepping for your

golden years

According to the latest Old Mutual Savings and Investment Monitor, 50% of South Africans aged 18-30 have a pension or provident fund, yet only 13% of them have some form of retirement annuity.

This illustrate the largely blasé attitude a large portion of young people in this country have towards their retirement.

Even more alarming results come out of the deVere Group/Fin24 survey, which shows South African women’s lack of preparedness for retirement. Women represent less than 25% of the retirement planning sector, with only 12% of women approaching retirement age (51-60) currently seeking retirement planning advice.

Prem Govender, Chairperson of the Financial Planning Institute, says the tendency of young people to delay saving for their retirement is very worrying.

According to the 2013 Sanlam Benchmark Survey, 51% of South African pensioners are failing to make ends meet predominantly because they started saving for retirement too late in life.

Ideally, young people should start saving for retirement no later than the age of 23. At this stage of your life, financial advisers say, you probably have little debt, lower overheads and expenses and will pay comparatively less in premiums.

Personal financial consultant Tessa Nkukwane (31)

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WEALTH REpoRT

advises against putting retirement savings into unit trusts or annuities because she believes that what you get out of them is insufficient. “By the time people reach retirement age, they never have the money they thought they’d have. Their retirement savings fall far short of what they need to live comfortably,” she says. However, she does maintain that having some sort of savings plan for retirement – preferably through non-traditional methods – is crucial.

Nkukwane puts her money into a high interest-bearing savings account.

Candice Bailey (29), a senior journalist at the Sunday Independent, disagrees with Nkukwane’s viewpoint.

“I already belong to a provident fund, but a friend advised me to get a retirement annuity plan as well so that I don’t find myself cash-strapped in my old age. She told me that the earlier I started, the less

I’d pay, so I began about two years ago. I only pay an extra R300-odd a month, which is what I might have spent on drinks,” she says.

Having changed jobs five times in 10 years, Bailey says she sees the benefit of transferring her provident fund from job to job because she’s able to keep track of its growth over the years. More importantly, she says, not having access to it has prevented her from “splurging it on nonsense”.

Nkukwane, on the other hand, cashed out her pension fund in her mid-20s when she left her former employer. She admits blowing some of the money on good living, but the balance did help pay her rent for 18 months while she struggled to find a permanent job.

Govender warns that this approach can only be taken if you’re in your early 20s and in specific circumstances, like needing

In association with

According to the 2013 Sanlam Benchmark

Survey, 51% of South African pensioners are failing to make

ends meet predominantly because they started saving

for retirement too late in life.

WRITTEN BY THANDI SKADE

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page 168 | JANUARY 2014

to settle high interest-bearing debt, or a student loan. Nobody older than 30 should even entertain the idea of cashing out their retirement savings.

“You’ll only be shooting yourself in the foot because you’re only allocated one once-off R22 500 tax-free lump sum. You can say you just want the R22 500 when you leave your job and transfer the rest to your new employer’s pension fund. But if you change jobs again the next year, you can’t ask for another R22 500 tax free. Ultimately, blowing that money will come back to haunt you because when you reach retirement age, the first R315 000 is tax free, but you’ll already have reduced that amount by R22 500,” warns Govender.

FOOT-LOOSE, BUT FINANCIALLY SECURE Govender’s advice to young adults inclined to play the employment field is to talk to a financial planner about the various retirement annuity options available.

“If you’re going to be job-hopping, you should buy into a very flexible unit trust-based retirement annuity. It shouldn’t be underwritten retirement by an insurance company because if you opt to reduce premiums or stop the plan completely, there’ll be heavy penalties attached,” she cautions.

BIG RETIREMENT MISTAKES TO AVOID

1. Operating without a goal.2. Procrastinating. Don’t put off saving

for retirement: even if you can only afford to start with 1% of your salary, you can increase your payments over time. Katie Brewer, LearnVest Planning Services’ Chief Financial Planner, says: “Putting away 10% now will be a lot less painful than putting away 50% later.”

3. Approaching retirement with outsized home loan costs.

4. Being unaware of whether you have employer match. Although many companies are going the cost-to-company route, some offer to match a percentage of retirement plan contributions.

5. Putting your kids before your retirement. It’s tough love, but in order to avoid having to move in with your children in your 80s, you can’t afford to sacrifice your retirement savings.

(Source: The Daily Muse)

RETIREMENT ANNUITIES VS UNIT TRUSTS

• The biggest advantage of a retirement annuity is the tax rebate you’re able to claim from your deductions. However, should you access your funds before the age of 55, you face heavy tax penalties on your lump sum, with just R22 500 of your total amount saved tax-free.

• The biggest disadvantage of a retirement annuity is that if you suddenly find yourself retrenched and unemployed for an extended period, you

aren’t able to dip into those funds.

• With unit trusts, there are no tax deductions or tax benefits, but the advantage is that you’re able to access the money immediately if you need it. However, warns Govender, if you’re not a disciplined individual, the unit trust option isn’t for you. “Another option is to split it. Put some money into select investments or unit trusts and the rest of the money into a retirement annuity for the best of both worlds,” she advises.

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Leon Daniels, Nedbank Head of Funding, says cultivating a regular savings discipline is a mindset and the first step to securing your retirement future.

“A smart approach is to allocate part of one’s savings to a savings instrument that makes provision for 24-hour withdrawals and part to an instrument that yields a higher return but which, to account for the higher yield, may not be withdrawn for a certain period.

“The proportional allocation decision hinges on several factors, not least of which is your risk tolerance and the number of years scheduled to elapse prior to your retirement,” he says.

While life often has a way of throwing unexpected curveballs and expenses our way, Daniels says it’s important to resist the urge to use retirement savings that you’re unlikely to replace.

“Forge a keen awareness of how crucial it is to put some of your income aside, to invest the surplus in the avenue most advantageous to your unique circumstances and stay the pace. Keep your eye on the ball of the future,” he says.

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HIGHLIGHTS

TRENDS– Slightly fewer HNW individuals gave in 2012 (91% compared to 94% in 2010).

– Value of giving was marginally lower (63% gave less than R25 000, up from 50% in 2010).

– Religion was a signifi cantly more common motivation for giving in 2012 (cited by 37% versus 19% in 2010).

– Givers are taking a longer-term approach to their donations: 45% have been giving to the majority of their benefi ciaries for more than fi ve years (2010: 33%).

Most (63%) gave less than R25 000 in value (2010: 50%). At the high end, 7% gave more than R100 000 in value (2010: 6%).

63%

VALUE GIVEN

7%

TOP REASONS FOR GIVING– Care about the cause– Want to make a difference– Want to give back to my

community– Religious beliefs– Family tradition

BENEFICIARIESGiving most commonly targeted social and community development causes (hospices, children’s homes, support for the aged).

Implementing institutions (non-profi t organisations) were the most popular benefi ciary type.

56%

Political parties and advocacy groups were the least popular.4%

VOTE

4%VOTE4%

PURPOSE OF FUNDING

Nearly three-quarters (74%) of givers provide

general support.

MOST IMPORTANT SELECTION CRITERIA

123 Proven impact

Alignment with personal interests

Reputation

STRATEGIC PLANNINGMore than half of

givers have neither

a strategy nor a

budget for giving.

Larger givers follow

a more formalised

approach to giving.

POST-DONATION BEHAVIOURHalf of givers expect no follow-up after making donations. The most common expectations were a thank you letter and ongoing communication.

70% of givers do not measure the impact of

their donations.

MEASURING SUCCESS

of HNW individuals gave

money, time or goods in

2012, slightly down from

94% in 2010.

91%

S O U T H A F R I C A | U N I T E D K I N G D O M | U N I T E D A R A B E M I R A T E S | J E R S E Y | G U E R N S E Y | I S L E O F M A NS O U T H A F R I C A | U N I T E D K I N G D O M | U N I T E D A R A B E M I R A T E S | J E R S E Y | G U E R N S E Y | I S L E O F M A N

Nedgroup Pr ivate Wea lth (Pty) Ltd (Reg No 1997/009637/07) , t rad ing as Nedbank Pr ivate Wea lth , i s an author i sed f inanc ia l se rv ices p rov ider and regi s te red c red i t p rov ider th rough Nedbank Ltd , and a member of JSE Ltd through Nedgroup Pr ivate Wea lth Stockbrokers (Pty) Ltd .

8254 Nedbank PrivateWealth Infographic Resize 275x210 Rev3.indd 1 2013/11/11 5:16 PMUntitled-11.indd 2 2013/11/12 8:05 AM

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“Going back to its semantic roots, philanthropy really means ‘for the love of mankind’, so anyone can be a philanthropist, regardless of what they’re able to give,” says Anna Vayanos, Head of the Philanthropy Office at Nedbank Private Wealth. While the fulfilment that comes with giving back is unquantifiable, having a strategy for doing so is essential, she adds.

STRUCTURE BEFORE FUNCTIONWhile The Giving Report II, Nedbank Private Wealth’s recently released second study (which surveyed giving in 2012), reveals that 91% of high-net-worth individuals (HNWIs) are involved in some form of philanthropy, this figure’s also down by 2,5% from the previous study which surveyed giving in 2010, revealing the impact of the financial crisis. There’s a renewed upward trend, though, says Vayanos, but more structure is needed. “The report shows that only about 40% of givers in this category have a strategy or budget,” she explains. “Implementing a strategy forces a donor to think consciously about what they’d like to achieve through their giving, allows them to track the impact of their donations and see long-term change, and helps ensure that they take advantage of the tax breaks available and use those savings to augment their giving.

“We always work more effectively in something we’re passionate about, so by having a strategy you can plan exactly what you’re determined to make a difference in and how you’re going to do it.”

Nedbank Private Wealth’s Philanthropy Office helps donors do just that. Having been involved in charitable investments for over 150 years, the bank’s committed to helping clients make an impact in this sector. “We have a wealth of knowledge and

experience in this and look to use it to best effect, providing services to the benefit of the sector through advising donors on their philanthropic endeavours and investing in the organisations themselves.”

GAINING THROUGH GIVINGWhatever your reasons for giving back, there’s no doubt that sharing your earnings is a significant feel-good factor. “The report shows that HNW donors, in particular, are motivated by caring about a cause. There’s also the obvious neediness that we confront in SA every day,” says Vayanos. “Interestingly, in both Nedbank’s Giving Reports, religion came through as a significant motivation for philanthropy, with ‘religious causes and institutions’ as the second-most popular cause to fund.”

There are also financial benefits to philanthropy that our government’s looking to increase, since SA lags far behind countries like the USA, where tax deductions can extend to as much as 50% of the donor’s income. “The available tax

deduction for giving is limited to 10% of a donor’s taxable income in SA,” explains Vayanos. “Once this ceiling’s reached, the value of your total donations which exceed this is lost as a deduction. The proposed changes will enable a donor to carry over that part of the donations which exceed the limit into future tax years, making it more attractive for donors to make larger donations. While our research shows that donors aren’t solely motivated to give by potential tax savings, better tax benefits would motivate many of them to give more.”

GIVING ITAWAYYour bank balance may not quite match Warren Buffett’s yet, but it’s never too early to

consider ways to use your growing capital to uplift the lives of others

• Gettherightadvice. You need to know how to structure your foundation in order to achieve your objectives and so that the legal and taxation requirements are fully complied with too.

• Consciouslyexploreyourpersonalandfamilyvalues and whether these lead you to a particular cause. Is it the environment, education, healthcare or the well-being of children? Would you like your foundation to give locally or internationally?

• Seekadviceonorresearchthecauseandorganisationsyouwanttobenefitthroughthefoundation and what the most effective solutions would be.

• Calculatehowmuchmoneyultimatelyneedstogointothefoundationto enable its objectives to be fulfilled and then ensure that the funds are invested accordingly.

• Involveyourfamilyandchooseyourtrusteescarefully.

HOW TO SET UP A PHILANTHROPIC FOUNDATION

WRITTEN BY GILLIAN KLAWANSKY

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