How to have a baby and still reach your investment goals
The happy news needn’t be bad news for your pocket Once the excitement of the news of your baby-to-be has worn off, the practicalities kick in. Where will the baby sleep? (Cue desperate call to architect for plans for an additional room). Where will they go to school? (Whopping deposit to be paid to your private school of choice to go on the waiting list). And, then there’s the consideration of that designer pram you covet, a “baby moon” holiday in Mauritius before your life changes… the list of wants goes on. Before your baby is even born, the bills rack up. Follow this advice to avoid putting your future financial health at risk. #1 Don’t cut back on your investments You’ve projected your savings and investment needs with your financial adviser, and this doesn’t
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LIVE ON EXPRESSO: How to Retire Wealthy
Part 1 [embed]https://youtu.be/027VAwuWzPg[/embed] Part 2 [embed]https://youtu.be/FXzoFF9NleM[/embed] Part 3 [embed]https://youtu.be/W8d2UhcVmzM[/embed]
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Choose your executor with care
You will need to appoint an executor in your will. This person must have the technical expertise to administer the estate. If no executor is nominated in your will, the Master will appoint someone at their discretion. Estate administration is very complex and it is better to involve a professional person or institution to handle the matter on your behalf. The duty of the executor is vast and the more complex the estate, the more responsibility rests on the executor’s shoulders. What are the services of an executor? All admin regarding the estate. The distribution of your estate, according to your wishes. Protection of your business interests. Value assets and family heirlooms. The distribution of assets must be in exact accordance with the terms
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Understanding the ups and downs of a Will
What is the difference between a joint will and a living will? What exactly is a will? And what can make it invalid? We answer your frequently asked questions about wills. What is a will? A will is a written instrument that contains instructions to ensure your wishes are carried out legally and your loved ones are taken care of, and items of monetary and sentimental value are properly protected and distributed on your death. Anyone over the age of 16 years may make a will. The loss of a loved one is a very traumatic experience. It is at this time that one needs the love and support of family and friends. It is also a time when a multitude of tasks are presented and must be attended to. It is a time when professional assistance is a comfort and a must. If you pass away
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Wills 101
Ensuring you have a valid will can make all the difference to your family when you pass away. Without it, the laws of intestate succession come into play. This means your estate will be divided according to a specified formula by law. A will is a crucial part of your estate and financial planning, as it stipulates how you want your assets to be dealt with on your death. Proper estate planning will ensure your estate is set up in a tax-efficient way that not only benefits you during your lifetime, but also your beneficiaries after your death. It is worthwhile to get professional advice whilst drawing one up. Things to remember when drafting a will: • Keep the wording simple. • When referring to a person, use their full name and a short description, for example 'my n
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Awesome tips for effective and stress-free budgeting
We've hit the half-year mark and this is a good time to stop for a moment and reflect on your spending habits. Is your budgeting still on track? This article by Rob Berger shares five tips to keep that budget effective and stress-free. We've highlighted the key points. Spending less than we make is often cited as the most important personal finance goal. It helps us get out of debt, save for emergencies and stash money away for retirement. It’s the primary habit that enables us to achieve some level of financial freedom. It can also be really difficult to accomplish. In some cases, it’s lack of income that creates the financial strain. In many cases, however, the problem is overspending. With those who overspend in mind, here are some tips for more effective and stress-free bud
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How inflation affects your buying power
Let’s assume you are currently 35 years old and want to retire in 20 years time at the age of 55. You believe that, based on your monthly budget, you could easily survive on R10 000 per month. However, we understand that you will not 'buy' the same value for your R10 000 when you do retire in 20 years time, at age 55. Let’s assume that we have an average inflation rate of 8% per annum over the next 30 years. The million dollar question you need to ask yourself is: How much income will you need to maintain a reasonable standard of living in retirement? YEAR AGE TODAY'S INCOME REQUIRED INCOME 20 55 R10 000/m R47 000/m 30 65 R10 000/m R100 000/m 40 75 R10 000/m R218 000/m 45 80 R10 000/m R506 000/m To put the above
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The magic of compound interest
This is how big corporate companies, banks and wealthy people make their money: they let their money work for them by earning interest on interest. Otherwise known as 'compound interest'. The illustration below gives you an idea of how effective this is. If you were to pay yourself 1 cent today and double it each day for 31 days, what will you have at the end of the month? The sooner you start, and the longer you stay in any investment, the better the results become over the longer term. It is like a snowball. It eventually runs away with itself. So, start saving NOW and don’t stop for anything. Set yourself goals and go for it. Let's look at another scenario. If you invested R100 000 today at 10% compounded interest, how much will it be worth after 31 years?
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Ready to retire
My story starts at the end, rather than the beginning. Here I am, it's 2016 and I am finally heading towards 'retirement'. That means I can start to focus on everything I love the most: art, photography and travel. I initially set myself an objective to retire at the age of 55. However, at age 45 – 10 years before that determined date – it became obvious that it was not financially achievable. So I readjusted my retirement date and postponed my exit for age 60. From age 42, I became obsessed with saving and preparing for retirement. Every spare rand was invested and I did whatever I could to consolidate or downscale my life. To simplify it through a range of committed disciplines over the ensuing years. At around age 22, I met a senior and extremely successful businessman,
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Is South Africa that bad after all?
Can you believe that we are in the year of 2015 already and how fast the years seem to be flying by?! I am sure that over the holiday season, you had at least one conversation with someone regarding the state that South Africa is in, and I am sure that that conversation didn’t have a very positive tone to it, after all that South Africans have had to endure in 2014. Let’s have a quick recap of the kind of year South Africa faced in 2014. For starters Eskom taught us how to be way more romantic, with candle light dinners every other night. We have learnt (or at least it seems so) to accept our president for all of his flaws and corruption charges. We learnt that the best way to combat a fire on your property is to build a big swimming pool. We found out that our president has spent ov
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Buying property as an investment
One of the questions I get asked on a daily basis is, whether property is a good investment or not. This answer has so many variables, it’s really something you would have to look at on a case for case basis, but let’s look at some guiding principles that can help you make the right choice. Let’s say you find a house at a MARKET VALUE of R1000 000 and you take out a 90% bond (with a 9% interest rate) on the house, as most banks are not giving a full 100% bond anymore over a period of let’s say 25 years. First off you are going to have the following costs: Transfer cost on R1000 000 will cost you about R33 000 Bond Registration cost of R900 000 will cost about R20 000 Let’s look at the future costs of the house: The R900 000 bond over 25 years at an interest rate of 9%
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Making tax work for you for retirement
Now that we have been through the foundations of investing, through understanding how important asset classes and asset allocation is in setting up the right Unit Trust that will best suit you. We can now move our attention onto retirement investing and what options are available for us all to invest into regarding this. Before I start, I want to just point out that many people start investing or planning for this process without an end goal in mind, and I find this to be counterproductive. The reason being, is if you don’t know how much money you need every month during retirement, how do you know how much money you need to save every month towards retirement. So the first thing I would like to point out in this post is, before you read any more investment advice, first determine in
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The best unit trusts to suit your needs
Investment philosophy and ethics There is no one-size-fits-all option when it comes to unit trusts, as we all have different personalities and investment goals. Start by looking at the top asset managers in your country with excellent reputations. In South Africa, we recommend looking at Allan Gray, Coronation, Prudential and Investec to get you started. Then do some research on each company’s investment philosophy (how they buy and sell asset classes or shares to make you money) and see if you agree with their philosophy or not. After all, there's no point in investing in companies when you don’t believe in their ethics or investment philosophy. Age is important The younger you are, the more risk you are able to take when selecting a unit trust. The reason for thi
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Investments 101: Stocks
Now that we have touched on the foundation of investments namely; COMPUND INTEREST, INFLATION and TIME, I hope that you have a better understanding of why it’s so important to start investing. Today we will have a brief look at some investment options and over the next few weeks I am going to tackle one investment vehicle / opportunity at a time. The reason for this is not to overwhelm you with too much information in one very long post that 99% of people will not ever bother to read (let’s be honest), but also to highlight each option on its own for what it is. I like to call this investments 101, so you can get a very broad overview of investing and hopefully start to understand how things work. Please keep in mind that the posts over the next few weeks are going to give you
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Making Time Work For You With Investments
Today I am going to give you some handy tips to help you think through investments and financial planning in a simple and basic way. Now that we have touched on Compound Interest and the EFFECTS of Inflation in the last two articles, we can move on to a practical example of how the two work hand in hand with each other and with spending time in the market and not trying to time the market. The example below illustrates not only the importance of compound interest and inflation, but also how to use TIME to your advantage when it comes to investing. I really wish that they taught this to us this in school… Let’s take a basic example and say we have John and Max. John and Max are wanting to invest some money into exactly the same investment that gives a return of 10% and also has
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Compound Interest
My first few blog posts will deal with the foundation of finance. Once you understand these foundations, it will make a huge change in your life and outlook on money. One of my favourite things in the world is called compound interest, yes I know I am a nerd, but it really gets my blood boiling, as it is a huge phenomenon. I think I am not the only one who shares this fascination on compound interest. Albert Einsten once said: Compound interest is the eighth wonder of the world. He who understands it, earns it … he who doesn’t … pays it. My goal in this article is to get us all very comfortable around compound interest and its capability of changing your life. I think the best way I can illustrate this without going into too much financial jargon is to create a picture
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