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DISCOVERY HEALTH’S 2020 MEDICAL AID INCREASES

Total monthly contributions for plans in the Discovery Health Medical Scheme (DHMS) will increase by between 8.88% and 10.96% for main members from January.   The increases are mostly skewed to the higher-end plans, with those in the Comprehensive range and the Executive plan increasing by very close to 11%. Discovery contends that “Only 19% of members will have the 10.9% increase, while 60% of members will have an 8.9% increase. One outlier is the lowest income band of the most comprehensive of the entry-level KeyCare plans, KeyCare Plus (R0-R8550), which increases by a similar amount.   With the exception of the Coastal Core plan (9.94%) and Coastal Saver Plan (9.9%), contributions for all other plans will increase by just under 9%. The Classic Comprehensive Zero MSA

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DISCOVERY VITALITY PRICE INCREASES AND MASSIVE CHANGES FOR 2020

Discovery has announced a number of changes for Vitality members in 2020 – including the return of Discovery Miles and new integration with Discovery Bank. Similar to programmes such as eBucks, Discovery Miles is a rewards currency that members can earn for getting healthy, driving well and spending responsibly. Discovery Bank clients can also spend their miles at a range of new in-store and online partners, or convert it to cash if they have a Discovery Bank account. Some of the ways that users can earn miles include: Earn for all purchases made with a Discovery Bank credit card in-store or online. Depending on their status, Discovery said that users can earn one mile for every R15 spent; Earn Discovery Miles for making healthy lifestyle choices. This includes up to 75% back when sh

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PUBLICATION OF NHI BILL TO PARLIAMENT

Since the release of the NHI Bill on Thursday last week, the extent of negative sentiment from press, investment markets and other stakeholders has been substantial. Discovery continues to study the Bill and to engage with numerous stakeholders, and our views will evolve over time. In the interim, we feel it is important to share our current views with our broker community. The NHI is a huge, complex and multi-decade initiative and a considerable amount of debate and effort will be required to make it workable. Discovery’s overall position on NHI is unequivocal: we are supportive of an NHI that assists in strengthening and improving the healthcare system for all South Africans - little is more important. You will know that we have consistently expressed our support and made our capabilit

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ECONOMIC UPDATE

Investment Note INVERSION, SUBMERSION AND DISPERSION Written By: Dave Mohr and Izak Odendaal  19 August 2019 Global equity markets enjoyed a temporary bounce last week when the US government said it would postpone the imposition of tariffs on some Chinese goods, while some items would not be taxed at all. President Trump initially planned to impose 10% tariffs on $300 billion Chinese imports at the start of next month. It does show that the Trump administration is worried about the impact of tariffs on the US economy, and wants to avoid prices on consumer items jumping ahead of the Christmas shopping season. However, this was soon overtaken by renewed concerns over the health of the global economy. SUBMERSION New data showed that Germany’s economy contracted in the second quarter, wh

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THE FATAL FLAWS OF NHI

While the government is eager to show it is doing something about the country’s health-care crisis, the practicalities of its proposed plan for National Health Insurance remain murky WRITTEN BY: TAMAR KAHN The proposed law seeks to breathe life into the government’s plan to provide universal health coverage, which it calls NHI. It aims to establish a central fund that will purchase services from public and private sector players on behalf of eligible patients, who will receive free care at the point of delivery. The envisaged reforms require huge restructuring of the health-care system, the creation of an enormous bureaucracy to register the entire population, new systems for contracting and paying service providers, and the accreditation of thousands of hospitals, clinics and private

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Government is enslaving citizens with its hefty price increases

BY: MIKE SCHUSSLER South Africa would be far richer if it wasn’t for government constantly ratcheting up prices on the things we can’t avoid paying for. In South Africa, from January 2008 to April 2019, consumer price inflation increased by 84.9% as measured by the consumer price index (CPI). That, in an international context, is steep. The euro area, for example, only saw prices increase by 16.8% over this period. But that is a mature and developed market, many will say. While Brazil saw the total price level increase by 79.5% over that period, the likes of China, Russia and Japan saw price level decreases. Other developing economies saw more reasonable consumer price increases, including Thailand at 18.7%, Mauritius at 42.1% and Rwanda on 53% while high inflation in Mexico saw

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PART 10: Retiring? The five most important decisions to ensure your income lasts

By: Nazia Kahlon Planning is essential to ensure your retirement money lasts as long as you do. Before you retire, it is crucial to have a frank look at your finances to assess what your needs will be during this phase of your life, and plan accordingly. There are two key financial risks you face in retirement: You could outlive your capital or inflation could erode your money’s buying power. Think carefully when you make these five important decisions to ensure that your retirement income lasts. Decision #1: Guaranteed or living annuity? Investors often feel that they need to choose between a guaranteed life annuity and a living annuity, but a combination of both may also work in some circumstances. A guaranteed life annuity will pay you a pre-determined income for as long as y

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PART 9: When can I retire? Some questions to ask before you hang up your boots

By: Nazia Kahlon Important questions to ask before you decide to retire. Deep breath in. Deep breath out. It’s time to assess whether or not you are financially ready to hang up your work boots. And if you are a young retirement saver – well done for beginning with the end in mind. This piece will give you a sense of why it helps to start sooner rather than later and answer that all important question: when can I retire? Putting all the facts on the table may be a painful exercise, but the sooner you do this, the more options there will be to work with. If age and health are not dictating the terms of your retirement, it’s worthwhile asking yourself the questions below to make sure you don’t exit the workforce too soon. In many cases it is difficult to get back on the bus onc

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PART 8: What can I do if I don’t have enough money to retire?

By: Nazia Kahlon   Nine tips to help you increase your retirement savings pot. You’re in your forties, you’ve done the sums, and the situation at retirement age is not looking pretty. Before you give up all hope, wallowing in regret over not starting to save for retirement on day 1 of your career, and not preserving your retirement savings when you changed jobs, don’t despair! You may need to be more disciplined and aggressive in your approach, but there is still time to create a nest egg.   Follow these 9 practical tips to help improve your situation: Start immediately The sooner you start saving, the more time you will have to save, and the longer you will benefit from the power of compound interest – earning interest today on interest you earned yesterday. Don

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RETIREMENT PART 7: How much is enough when saving for retirement?

You should aim for a retirement income of 75% of your final salary. Here’s why…The million dollar question: How much of my income do I need to save? Of course we would all love that answer. After all, humans prefer certainty. We have an aversion to ambiguity and will do whatever we can to get answers. Psychologists have researched this phenomenon, concluding that our need for answers can influence our choices. The trouble with answers to personal questions is that even well-researched answers refer to averages and generalisations. It is important to take your personal needs and goals into account when putting your financial plan together. It is worthwhile talking to an independent financial adviser who can look closely at your circumstances and give you tailored advice.&nb

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RETIREMENT PART 6: How do retirement products work?

By: Nazia Khalon It is important to understand how your retirement product works and for retirement annuities this means understanding what the underlying unit trusts invest into. The products described in Part 5 of the Retirement Savings Series provide you with different benefits and restrictions, but you may wonder how do retirement products (i.e. pension funds provident funds and retirement annuities) actually work? Retirement products wrap around investments, which grow over time. In a retirement annuity your returns usually come from unit trusts, where your money is combined with the money of other investors and our investment managers use the pool of money to buy underlying assets, such as equities, bonds, cash, property and offshore - depending on the unit trust’s objective. As y

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There’s more to Section 12J than ‘45% immediate tax relief’

Inge Lamprecht Beware the pitfalls. With the tax year end just more than a month away, there has been a growing marketing effort aimed at luring investors to Section 12J venture capital and private equity investments. The Section 12J tax incentive is a government initiative aimed at assisting small and medium-sized businesses to access equity finance in the hope of creating jobs and boosting economic activity. Investors can write off 100% of an investment into an approved 12J vehicle against their taxable income. Against the background of meaningful tax hikes and growing concerns about wastage of taxpayer money, this may seem like a no-brainer – effectively it means that investors can get ‘up to 45% immediate tax relief’. And with the JSE moving sideways for

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16 Investment tips for 2016

Duggan Matthews, an investment professional from Marriott Asset Management, shares 16 investment tips to consider while you build the future you want:   Invest for income and let the capital take care of itself. The value of a business is based on the income or earnings it can generate. Only through increasing its income can the value of a business increase, a maxim well known by those running their own businesses. Over the long term, this principle holds true for investments.   Don’t speculate with your life savings. Speculating invariably involves buying and selling investments based on very little fundamental knowledge and typically produces enormous anxiety and poor results in practice.   Start saving early. The earlier you start saving for retireme

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Preservation Funds

What is a preservation fund? If you have been investing into a Pension or Provident fund through an employer, and have to leave the fund due to whatever reason, and you move to a new employer that doesn’t offer a pension or provident fund for you to transfer your funds to, you will have to then transfer the funds to a Preservation Fund. A Preservation Fund does exactly what the wording says it does, it allows you to preserve and grow your investment until you reach retirement age, without losing the huge tax benefit that you gained through the pension or provident fund. The great thing about the preservation fund is that the return on the investment is also not taxed. How do you Invest in preservation funds The only way you will have access to a preservation fund is by

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Retirement Annuity

What is a retirement annuity? A retirement annuity, or an RA, is the most tax-efficient way to save for your retirement. Certain tax deductions are allowed on your contributions towards an RA. This could mean that your salary is taxed at a lower rate or SARS pays you some money at the end of the year. The other advantage of an RA - that no other investment product can beat - is that the returns on the RA are also not taxed.   How do you invest in retirement annuities? There are two ways that you can invest into an RA. One is by means of a lump sum contribution. The second option is by setting up a monthly debit order. You can also transfer existing RA fund benefits to another RA, if your fund rules allow it. However, this is a bit more complicated and

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Introduction to Investment Products

So what is an investment product? We have chatted in depth about unit trusts, so I am hoping that by now you are more confident in your understanding of them. So let’s start chatting about the different investment vehicles or investment products that you can use to buy into different unit trusts. Every investment vehicle or product has been designed for a very specific purpose or goal. The underlying unit trust will be the same, but will be governed differently according to the investment product rules.   What do the product rules define? The rules of each investment product will determine how that specific investment vehicle is allowed to operate. For example, the rules can determine the contributions that you’re allowed to make to the investment product. Another on the

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Endowments

If you have an income tax rate that is higher than 30%, an endowment fund could work out to be beneficial for you as there are tax benefits within the endowment if your tax rate is higher than 30%. The other area that an endowment will help is in estate planning, as you can nominate beneficiaries to an endowment and in the event of your death the funds will be paid out to the beneficiary straight away, without it being caught up in the wounding up of the estate. The value of the endowment will still be included in your estate for the calculation of estate duty, but the endowment policy allows your estate to save on executor’s fees. How is your investment taxed? With regards to any investment return, both the interest and capital growth would be included in your taxable income an

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Best Investment Option for You

What is the best investment option for you? The first thing that you need to establish from the beginning is what your investment objective is, once you have established that, you can go through a process of elimination to determine what the best Investment product or Investment Vehicle will be for you to achieve your investment objective. Once you have determined what vehicle you will be using, you can then determine what sort of risk tolerance you are willing to take off with the underlying unit trust. The longer your investment time horizon (interment period), the higher the amount of risk you can afford to take. How do you choose the right products that meet your needs? In some cases you might have more than one product that might meet your needs, so you will then look into wha

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Living Annuity

What is a living annuity? A living annuity is an investment product that you will use to invest your retirement savings in order to generate and draw a stable income after you retire. How do you invest in living annuities Once you retire, you have to take at least two thirds (you can take the full amount, you just cant take less) of your Retirement Annuity and invest that into a Living Annuity Investment Vehicle. The other options is to transfer funds from an existing Living Annuity to another Living Annuity, however this is a more complicated situation and is admin intensive. With a Living Annuity, you can control your investment, by selecting your own underlying Unit Trust and how much you want to draw from the fund on a monthly basis, as long as they meet the limits set

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Change the Way You Invest by Understanding Asset Classes.

If you have an understanding of the different asset classes, it will help to change the way that you invest! Now that we have had an in-depth look at what the stock market is all about, we can move onto Unit Trusts as the next topic or investment vehicle (investment option). Before I do this we need to rewind one step quickly and talk about something that is called ASSET CLASSES. The reason, for this, is because without this foundation information, we will not understand how most investment options are structured. I encourage you to come to grips with the term ASSET CLASSES and ASSET ALLOCATION, as this will play a major role in setting up a successful investment portfolio for yourself. Before we can really go in depth for selecting the right funds for your portfolio, we need to underst

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Effects of Inflation

Today we will move onto the effects of inflation. In my opinion this is once again another important aspect that one needs to be aware of and pay a huge amount of attention to. I like to call inflation the cancer of economics, as it is continually eating away at the value of our daily expenses and making things way more expensive for us. The main reason for all of my articles is not to scare you or paint a negative picture for you, but rather to educate you so that you are not one of the 71% of South Africans that can’t retire well! (I have linked this to the website of a really good interview if you would like to watch it).  Ronald Regan (former US President) once said: “Inflation is as violent as a mugger, as frightening as an armed robber and as deadly as a hit man”. Milton

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