![]() What is it: It is a tax-free investment account. You can invest up to R36,000 a tax year into the account. You can do this for yourself, your spouse and your children. All your contributions, investment growth and interest in the account, and withdrawals are tax free, for life. You may withdraw at any time, although it is recommended that you invest for the long term (5 years +). You can contribute up to R500,000 in your lifetime. What is this product suited for? You may consider investing using this product if: you wish to save up to R36,000 per year, or up to R3,000 per month you wish to invest for your child's education fund you wish to supplement your pre-retirement savings you wish to pay no tax on your investment What is this product not for? It is not a transactional account. It is not for short-term investment What are the investment options? Allan Gray offers the Allan Gray Tax-Free Balanced Fund, which is a good option for most investors. We as a Financial Advisor can use external fund managers to put together a portfolio of funds for our clients. We currently recommend the Morningstar TFSA Portfolio. What are the costs? This is the part where it can be difficult to make sense of. Fund managers of the funds you invest in charge fund management fees. The Total Investment Charge (TIC) is expressed as a percentage. Allan Gray as a LISP (linked investment service provider) charges a platform fee of 0.58% per annum, this is deducted monthly, calculated on the account balance. A financial advisor charges an initial advice fee and an annual advice fee for the advice and services rendered. Why do we recommend Allan Gray Tax-Free Investment? 1. Reputable asset management company; 2. Financially sound; 3. Efficient administration platform; 4. Clever use of technology delivers excellent user interface; 5. Excellent staff delivers excellent client service; 6. Competitive platform administration cost; 7. Reduced admin fee for using Allan Gray funds; 8. Select range of good performing unit trusts; 9. Easily creates customisable, informative investment overview; 10. May nominate beneficiaries on the investment; 11. Enables clients to submit instructions online. To find out more how you may benefit from this investment, or to start such investment, please contact Kevin Yeh, email [email protected].
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![]() Last Month we shared our pocket guide to money. This month let's focus on Step 1 - Make as much money as you can. For most people, most of our money or wealth comes from our ability to work, to earn an income. Most of us were not born into a rich family. Many in South Africa were born into abject poverty. We had to learn, acquire skills, find a job or start a business, to provide for ourselves and our family. It is therefore important to improve your education, knowledge and skills, to network with the right people, to enhance your employability, or be equipped to have your own business. 1. Formal education This is the official way of certifying that you have a certain level of education. While a matric certificate is probably the minimum requirement when looking for employment, many young people study further, to get a degree, honours, or even masters and doctorate, to gain in-depth knowledge in certain discipline, to increase his job and income prospects. An example is a medical doctor. A student will need to complete a 5 year Bachelor's degree in Medicine and Surgery. he then works 2 years as a Clinical Intern. Then he becomes a Medical Doctor. A Medical Doctor has an income of R50,000 to R110,000 per month. If he studies further for 5 years to become a specialist, he can expect to have an income of R100,000 to R300,000 per month. So by studying further, a medical doctor increases his income potential. What you study is important. You will want to study something that you enjoy, that has applications in real-life work. 2. Study to become a skilled tradesman This is so underrated, but skilled tradesman like plumbers, electricians, handyman, carpenters, builders are in demand and earn a good income. If you don't like studying but like doing things with your hands, this may be the job for you! 3. Learn something new and useful YouTube is arguably the undisputed largest video library in the world. 1.3 billion people use YouTube. 300 hours of video are uploaded to YouTube every minute! Almost 5 billion videos are watched on YouTube every single day. Instead of just watching fun, entertainment, sports and gaming videos, choose a topic you want to learn and watch videos on that topic. Over the last 12 months I have watched videos on cooking (and that helped me make delicious bolognese and chicken biryani); technology and financial planner coaching (and that helped me transform my business to be remote working ready); chess (thanks to Agadmator channel, I have improved my chess game); news (in English and in Mandarin, to understand how the world is evolving); investing and book summaries. Recently I have decided to become a YouTuber, so I have been watching tons of videos on how to develop a YouTube channel and contents, and video editing. There is so much to learn out there, but focus on one thing at a time. Watch videos that are related to your work or business. I highly recommend anyone watching lots of YouTube to subscribe to YouTube Premium. It costs R71.99 per month, and the family plan costs R109.99 per month. It gives you ad-free viewing. Consider this as an investment in yourself and your family. Why try save the (little) cost and waste all the time watching/enduring the ads, not to mention the interruptions. 4. Start a business While starting a business is not for the faint-hearted, it can be rewarding. A successful business can meet a customers' need, create employment, contribute to the economy, and generate sustainable income to its owners. When I was in my university years, I was already fascinated by the idea of starting my own business one day. In 1991 I bought my first book in this pursuit, Small Business Opportunities in South Africa by Ian Clark and Eric Louw. Over the years I bought or received many business books. Only in 2006 I stepped into starting my own business, a financial advisory business. I had a plan, I wanted to focus on investments only, but after I got into contact with my target market, I quickly realised I had to broaden my offering to one-stop shop, covering life insurance, medical aid, car insurance, business insurance and investments. 15 years later, in 2021, I have a viable financial advisory and insurance brokerage with a sustainable annuity income, providing income to 12 families. Along the way I have made mistakes, faced challenges and setbacks, had to learn quickly, continuously adapt to ever-changing regulatory and business environment. During this period we went through at least three global crises: The 1997 Asian financial crisis, 2008 Global Financial Crisis, and 2020 Coronavirus pandemic crisis. If you want to start a business, you need to do at least 4 things well:
5. Networking In business, it's about who you know. Whether you are a salaries employee or business owner, it is important to network with the right people, to learn, to exchange ideas and to get exposure. You should consider networking with:
I hope this gives you some ideas you can implement. What is the one thing you want to do? Write it down, stick on your wall, and do it. Next time, I will talk about "Do not spend more than you earn." After a careful selection process, we chose Morningstar Investment Management South Africa in the second half of 2019, to be our Discretionary Investment Manager, to provide model portfolios tailored to our clients' risk profile. So how have they done? I am pleased to report that their South Africa managed model portfolios have done well for our clients in 2020. Despite a very challenging year and the March market sell-off in the face of a hard lockdown, the All Seasons portfolio, which is suitable for aggressive investors, returned 12.26%. The Balanced portfolio, which is moderate, Regulation 28 compliant and suitable for retirement savings, returned 9.44%. Its Tax-free Savings Account portfolio, which is suitable for long-term investment, returned 10.16%. Morningstar Moderate Income, which is designed for pensioners drawing an income from living annuity, returned a very credible 9.45%. Morningstar Investment Management actively manages these portfolios as a Discretionary Manager, on behalf of our clients. As market conditions changed and more information came to light, they effected fund changes during the year, to manage risks and take advantage of new investment opportunities.
If you are interested in getting more information on these managed portfolios of unit trusts, please contact Kevin Yeh on 0836334671 or WhatsApp. ![]() Around this time of the year, we would like to remind you to consider topping up your retirement annuity fund and tax-free investment. Retirement Annuity According to the current legislation, you may contribute up to 27.5% of your taxable income (strictly speaking, non-retirement funding income) to a retirement annuity fund and enjoy tax deductions. As 28 February is the end of the tax year, you must calculate and pay the additional amount to your retirement annuity prior to this date, in order to qualify for tax deductions and tax refunds. Below is an example of topping up your retirement annuity: Ms Rama has a monthly salary of R80,000. In December she received a bonus of R100,000. Every month she contributes R5,000 to a personal retirement annuity fund. Her annual income is then R80,000*12 + R100,000 = R1,060,000. The maximum tax-deductible contribution to retirement annuity is R1,060,000 * 27.5% = R291,500. Over the year she has contributed the following to a retirement annuity fund: R5,000 * 12 = R60,000 The additional amount she may top up in his retirement annuity (RA) is R291,500 Less R60,000 = R231,500 Tax-free investment You may contribute up to R36,000 to a tax-free savings account in a tax year. You must calculate how much you have contributed so far since 1 March 2020 and pay the additional amount to your tax-free savings account prior to 28 February, in order to make use of current tax year's allowance. You can also start a tax-free investment in the name of your children. To top up your retirement annuity or tax-free investment, please contact [email protected] We have partnered with Fedgroup in offering their financial solutions for many years. A recent update shows that Fedgroup Participation Bond continues to attract investors interest in the volatile and uncertain markets. Its fund size has grown from R1.9 billion to R3.9 billion. It is a five-year term investment. The current fixed interest rate is 7.6%. The Growth Option, which compounds interest income, offers a very attractive 9.21% effective rate. This investment is suitable for investors and pensioners looking for steady income and a fixed return. Please contact 083-633-4671 or [email protected], if you are interested in this investment. It is now time to review your medical aid scheme cover for 2021. This means you have a window within which you can switch to a different plan for the new year. This window usually closes at the end of November (depending on your current provider), so don’t delay collecting the necessary information. This is not a decision to be rushed.
Why do I have to decide now? Medical aid providers allow you to switch to a higher plan once a year (at the end of the year) without penalties or consequences. If you want to save on premiums or you need to increase benefits, now is the time to do it. Generally, medical schemes give you until the end of the year to change your plan. What if I want to change providers altogether? If you are unhappy with your medical aid provider, you can switch to another at any time of the year. But before you do, consider the following: Waiting Periods Medical Aids by law must accept anyone who applies to join their scheme. To protect themselves from older or sickly members that join without having contributed to the risk pool, they usually impose a waiting period of between 3 and 12 months. Waiting periods will apply if 1) you have not been a member of another South African medical aid for the past three months or more, 2) if you change medical schemes before 2 years of being covered with your previous medical aid provider and 3) if you have a pre-existing medical condition. Finding out about any waiting periods is extremely important before deciding to change providers. Late joiner penalty As an additional means to manage the risk of older or sickly members joining without having contributed to the risk pool, medical schemes (according to the Medical Schemes Act) are entitles to add a late joiner penalty to your premium if you were not part of a medical scheme before 01 April 2001. The late joiner penalty is calculated (using a prescribed formula) based on the number of years that you were not on a registered South African medical scheme. The late joiner fee can range between 5% and 75% of the total contribution, depending on the number of years that you were not covered by a medical scheme. It is important to keep proof of all your previous medical scheme membership, as it would help reduce or remove the Late Joiner Penalty. General considerations When reviewing your medical aid plan, you should consider the following factors: - benefits - exclusions - co-payments and deductibles - provider network restrictions - financial soundness of the medical scheme - the medical scheme's service and ability to pay claims - premium (affordability) - gap cover product to supplement your medical aid. Please contact our health team, Tel 011-658-1333, Option 2, or email [email protected] , to find out about different medical aid options. ![]() Sirago is one of the leading medical gap cover providers in South Africa. If you have medical aid, then Sirago gap cover is an essential supplement to your medical aid, to cover payment shortfalls. Sirago offers some of the premium, benefit-rich products. Overall, the premium increase will be 8.6%. It has some great updates and additions in 2021. These are:
Continuing with their focus on specific niche markets, they will be launching the following products:
2021 Sirago Gap Cover Premium |
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