Rand decline 'more complicated than domestic issues'

Article by Khulekani Magubane, Fin24.

The reason for the decline of the rand on global currency markets may have more to do with external than domestic factors that many would blame for its weak performance in the week that was.

This is according to Peregrine Treasury Solutions’ Corporate Treasury Manager Bianca Botes. When the rand fell this past week, spectators were quick to point the finger at local factors including remarks about land reform.

Botes wrote in a circular from Peregrine Treasury Solutions that emerging markets largely suffered severe blows due to the sale of riskier assets by investors. As such, she wrote, there are many factors that contributed to the emerging markets sell-off.

“The trade war has played a key role in the global economic dynamic and the effect we have witnessed on emerging markets. Initially starting as a spat between China and the US, this is now a full blown trade war filled with retaliation in terms of tariffs from countries across the globe,” said Botes.

Botes said Turkey, a key player in the emerging market sector, is the latest target with US President Donald Trump doubling tariffs on Turkish steel and aluminium imports.

“On Friday, Turkey experienced what could be classified as a currency bloodbath as the lira plummeted by over 18% bringing its 2018 losses close to 40%. Turkey is now accusing countries – the US being the most obvious subject of discussion – of engaging in economic warfare on the country following a failed coup in 2016,” Botes said.

Emerging markets have been lagging behind on the journey to stability and recovery from the economic crises of the past decade, she wrote. Turkey, South Africa and Brazil have all been victims of slow economic growth, rising government debt and poverty.

“We all owe something to someone, whether it's a lunch or a thank you note. It is no different in the market environment. Unfortunately, in the financial markets this debt is expressed in billions of dollars, and an IOU simply won't suffice,” Botes wrote.

A slowdown in manufacturing in China – a result of the trade wars and China’s move from a being producing economy to a consuming economy – impacted on emerging markets that rely on trade between the two economies.

“As China consumes over 50% of the world's hard commodities, one can see how a commodity driven country such as South Africa can feel the pinch when this number starts to decline,” she wrote.

Emerging markets, then, were the riskier element in the global economy and often bore the brunt as investors sought to protect their investments, she concluded. 

The Liberty ship turns slowly

Article written by Sasha Planting, MoneyWeb

After a year in the hot seat Liberty CEO David Munro appears to have succeeded in stabilising the company, at the very least. His challenge now is to grow new business volumes in an economic climate that is not supportive of growth.

The financial services company delivered normalised operating earnings up by 18% to R958 million, supported by increased earnings from its South African insurance operations and Stanlib businesses. However, weak investment markets detracted from the shareholder investment portfolio earnings (which delivers a return on shareholder funds invested) resulting in normalised headline earnings increasing by just 5% over the prior period.

“The results for the half year [to June 30th] were good, but not good enough,” Munro told Moneyweb. “They reflect a stabilisation of our business, but we are still some distance from where we need to be.”

Efforts to restore the financial performance of the SA retail insurance business, improve the investment performance of Stanlib, simplify the group’s overall organisational design, expand its relationship with the Standard Bank Group, and optimise investments in growth businesses have gained traction, but the financial metrics are not reflecting this yet.

This is visible via Munro’s key “measures of progress” which shine a light on current and future performance. According to these measures new business is being written at a margin of 0.7% (almost a giveaway); the return on equity is unchanged at 12% and growth in embedded value is 5%. “All of these metrics are better than the baseline established in December, so there has been change,” says Munro. In December the new business margin was 0.4% (the target is 1% to 1.5%) and growth in embedded value was 1% (the target is 12% plus). The return on equity (ROE) target is 15% minimum.

1 Screen-Shot-2018-08-02-at-5.46.14-PM.png

Source: Liberty results presentation

To be fair, these targets are to be achieved by 2020 – but Munro is in a hurry and wants to see visible signs of change. For instance, while on the surface the 5% growth in normalised headline earnings is acceptable, when you drill into the operating numbers there are some disappointments, which is why the ROE remained flat, he says.

The first of these is that while the value of new insurance business grew by an impressive 57%, this was thanks to cost cutting, efficiencies and better product design rather than new insurance business written. “We are doing the right things, but we need to see an improvement in the volume of new business coming in,” says Munro. “That will be our focus in the second half.”

The performance of Liberty Health and Liberty Africa Insurance, which returned losses of R45 million and R5 million, was also disappointing. “You absolutely have to make money from your financial services businesses,” he says. “It is critical. These are good businesses, with growth potential. But they lack scale.”

In addition, while much work has been done to improve investment performance within asset manager Stanlib’s multi-asset and equity franchises, with increased third-party net customer cash inflows into non-money market portfolios, it is a long-run game, Munro says. Stanlib South Africa saw net customer cash inflows increase to R8.4 billion from R5.6 billion in the prior period. Stanlib Africa however experienced outflows of R7 billion, mainly related to the termination of one large institutional mandate.

“These results suggest that Liberty’s turnaround is on track,” says Adrian Cloete, a portfolio manager at PSG Wealth. “They started the process of turning Stanlib around and the business is contributing positively to earnings and individual arrangements [the South African retail insurance business] is showing positive results. I think they are doing the right things.”

Liberty share performance

2 liberty.png

One area that requires attention, he says, is the bancassurance agreement with Standard Bank, which sees Standard Bank selling Liberty insurance, health, and investment products through its distribution network. The total indexed new business premiums sold under the agreement increased by a disappointing 3% on the prior period.

Liberty also needs to improve its new business margin. “Liberty’s share price is currently trading at a 15% discount to its group equity value, which is R138.66cps,” says Cloete. “But if they can bump up margins and grow enterprise value by about 12% a year, the market will reward them. But it needs the evidence.”

To put it in perspective, MMI trades at a 38% discount to group equity value, while Sanlam trades at a 26% premium. “The market is cautious, but has already given Liberty some credit for changes made,” he says.

Liberty has declared an interim dividend of 276 cents per ordinary share.

How SA trusts with offshore beneficiaries are taxed

Article written by Phia Van Der Spuy, Personal Finance. 

South African families who have created a trust in South Africa may be living in another part of the world. It is important to understand the tax rules and other implications for foreign beneficiaries.

Where do trusts pay tax?

Trusts are taxed in South Africa if they were formed or established in South Africa. They are also taxed in South Africa if they are foreign trusts but are managed in South Africa. If a foreign trust holds assets, such as property, in South Africa, the trust is required to register with the South African Revenue Service for tax purposes. Foreign trusts, therefore, are taxed on a “source” basis; on such income and not on a “residence” basis. 

These rules may result inlead to  a trust – whether South African or foreign trusts – being taxed in more than one jurisdiction. South Africa has entered into treaties with various countries that determinein order to agree in which one country a trust will pay tax. In most cases, the country in which a trust is managedThe place of effective management of the trust  will in most instances  determine where the trust pays tax.

According to the Income Tax Act, a South African-registered trust is defined as a South African resident. TheOECD Organisation for Economic Co-operation and Development (OECD) treaty takes this one step further and states that if a trust is registered in South Africa but conducts its business, or earns its income and capital gains offshore, it is still deemed a resident of South Africa and will be taxed in South Africa. Furthermore and conversely, the OECD treaty states that if the trust is managed in South Africaeven if it is registered offshore, it is deemed a South African resident, even if it is registered offshore, and will be taxed in South Africa.

South Africa is one of the many non-member countrieseconomies with which the OECD has a working relationship, in addition to its 34-member countries.

How are South African residents taxed on income distributions to foreign beneficiaries? 

If a South African discretionary trust distributes an amount to a non-resident beneficiary as a result of a donation, settlement or other similar (gratuitous) disposition, such as a soft loan, made by a South African resident, and this amount would have been included in the non-resident beneficiary’s income if he or she had been a resident, such amount will be deemed to be income in the hands of the South African resident donor or funder and included in his or her taxable income.

If an asset is disposed of for less than its market value, the difference between the selling price and the market value will be deemed a donation. The resulting income on the difference between the selling price and the market value will be treated the same way as above.

Where there is an expense, allowance or loss that the foreign beneficiary could have claimed as a deduction from the income (if he or she had been a resident in South Africa), such expense, allowance or loss is deemed to have been incurred by the donor or funder, but is limited to the amount of income distributed. As a result, a loss cannot be created from such deductions. 

If a non-resident paid foreign tax on the same amount (which actually accrued to him or her), the South African donor or funder may deduct a rebate equal to the foreign tax that has been paid.

How are South African residents taxed on capital gains distributions made to foreign beneficiaries?

Where a South African discretionary trust distributes a capital gain to a non-resident beneficiary, the South African resident donor or funder who made the donation, settlement or other similar (gratuitous) disposition (such as a soft loan) – not the non-resident – will be taxed on the capital gain that results from the disposition.

If a non-resident paid foreign tax on the same amount (which actually accrued to him or her), the South African donor or funder may deduct a rebate equal to the foreign tax paid.

Other tax implications

It is important to understand whether other countries may tax foreign beneficiaries on South African trust income, apart from the taxes discussed above. Trustees need to do a proper assessment of beneficiaries to understand and plan for any possible negative international tax consequences.

Exchange control implications

A South African trust runs the risk of being classified as an “affected person” if it has foreign beneficiaries.

An affected person is a body corporate, foundation, trust or partnership operating in South Africa, or an estate in respect of which either:

  • 75% or more of its capital, assets or earnings may be used for payment to, or to the benefit in any manner of, a non-resident; or
  • 75% or more of its voting securities, voting power, power of control, capital, assets or earnings are directly or indirectly vested in, or controlled by or on behalf of, a non-resident.

“Affected persons” may obtain financial assistance in South Africa subject to certain restrictions. Financial assistance includes taking up securities, granting credit, lending currency, discounting, factoring and guaranteeing or acceptance any obligation. In other words, if the trust needs to borrow money, it may be restricted.

A possible way to counter the negative effect of a trust being labelled an “affected person” is for the trust deed to include a clause stipulating that if a non-resident beneficiary’s participation in allocations, payments or applications for his or her welfare results in the trust, or any company or other entity in which the trust has a direct or indirect interest, being classified as an “affected person” for the purposes of the exchange control regulations, the trustees may, by unanimous decision, restrict such a beneficiary’s participation in allocations, payments or applications for his or her welfare, to avoid such classification, treatment, preclusion or restriction, with the right to reinstate such person’s participation when the restrictions are no longer necessary or operative.

Be aware of the implications

It is important to be aware of the tax and other implications of non-resident beneficiaries of South African trusts. Always use the services of a professional to draft your trust deed. It may be wise to appoint an independent trustee who can guide the other trustees on technical issues such as those described above.

Phia van der Spuy is a registered Fiduciary Practitioner of South Africa and the founder of Trusteeze, which specialises in trust administration, and the author of Demystifying Trusts in South Africa (Createspace).

Portfolio Managers talk Modern Portfolio Theory

Source: Investopedia

At Meet the Mangers on Monday 23 July, top financial advisers were opened up to speak directly to portfolio managers.

One of the topics raised from the day was the Modern Portfolio Theory (MPT), hypothesized by Harry Markowitz.

Also called "portfolio theory" or "portfolio management theory," MPT is an investment theory based on the idea that risk-averse investors can construct portfolios to optimize or maximize expected return based on a given level of market risk, emphasizing that risk is an inherent part of higher reward. It is one of the most important and influential economic theories dealing with finance and investment.

MPT suggests that it is possible to construct an "efficient frontier" of optimal portfolios, offering the maximum possible expected return for a given level of risk. It suggests that it is not enough to look at the expected risk and return of one particular stock. By investing in more than one stock, an investor can reap the benefits of diversification, particularly a reduction in the riskiness of the portfolio. MPT quantifies the benefits of diversification, also known as not putting all of your eggs in one basket.

Consider that, for most investors, the risk they take when they buy a stock is that the return will be lower than expected. In other words, it is the deviation from the average return. Each stock has its own standard deviation from the mean, which MPT calls "risk."

The risk in a portfolio of diverse individual stocks will be less than the risk inherent in holding any one of the individual stocks (provided the risks of the various stocks are not directly related). Consider a portfolio that holds two risky stocks: one that pays off when it rains and another that pays off when it doesn't rain. A portfolio that contains both assets will always pay off, regardless of whether it rains or shines. Adding one risky asset to another can reduce the overall risk of an all-weather portfolio. 

In other words, Markowitz showed that investment is not just about picking stocks, but about choosing the right combination of stocks among which to distribute one's nest egg.

To help further understand this notion, watch the video below or click here.

The new insurance act - what you need to know

Article by Business Tech

A raft of changes to insurance legislation came into effect on July 1, 2018, which will enhance consumer protection and provide new opportunity for insurers.

The Insurance Act was passed by the National Council of Provinces in December.

It brings with it changes to the Long Term Insurance Act (LTIA), Short Term Insurance Act (STIA) and more specifically the Policyholder Protection Rules (PPR), creating new opportunities for existing insurers and providing for licensed micro-insurance products.

Amendments to insurance legislation aim to give more South Africans the opportunity to cover themselves and their assets and will provide for greater protection for policyholders, including a 48-hour turn-around time for funeral pay-outs.

Johan Ferreira, Legal and Compliance Officer for Africa Unity Life (AUL) said that a number of new products can be provided under a micro-insurance licence.

“Insurers will go through a process with the Prudential Authority to convert their current licences and, if part of their strategy, apply for a micro-insurance licence which can include a number of different life and non-life classes of insurance as set out in Schedule 2 of the new Insurance Act,” he said.

Schedule 1 of the Insurance Act amended the LTIA and STIA to differentiate between registered insurers and licensed insurers.

During the transition period, under these new amendments the LTIA and the STIA will govern market conduct while the Insurance Act will apply from a prudential point of view, to all insurers.

These amendments are designed to introduce micro-insurance products – traditionally funeral plans – more accessible, affordable and fair for consumers.

The second tranche of amendments to the PPRs will bring into effect the National Treasury’s Microinsurance Policy Document, which specify micro-insurance product standards under Rule 2A of the draft PPR’s.

The new Insurance Act and the PPRs provides for regulatory and supervisory frameworks which will make it easier for low-income earners to access quality insurance products, said Africa Unity Life.

It also aims to turn informal insurance providers into formal, regulated and resourced insurance providers, the financial service provider said.

The PPRs will also see that products are designed in such a manner to support an improved consumer understanding of the different insurance products.

The Insurance Act introduces new authorisation classes for the industry.

Under this Act, micro-insurers may offer life and non-life insurance. Life insurance includes classes such as credit life insurance, risk insurance and funeral cover.

Non-life insurance includes motor insurance, property insurance, legal expense, as well as accident and health insurance, Africa Unity Life said.

“Insurers will have a blank canvass to roll out new innovative products subject to products standards, of course. These standards protect customers in a number of ways, like the maximum term cover that can be provided; shorter waiting periods and so on,” said Ferreira.

“Active policies written under a traditional licence will not be affected at this stage unless transferred into a microinsurance licence.”

Prudential Standards state that micro-insurers may not, without the approval of the Prudential Authority, issue a life or non-life insurance policy that provides for a loyalty benefit, no-claim bonus or rebate claim.

Under the Prudential Authority, policies will be capped at R100,000 for life insurance and R300,000 for non-life insurance.

There will also be caps on the maximum benefit for funeral policies, whether provided by micro-insurers or traditional insurers, at R100,000.

Consumers will now have a range of micro-insurance products to select from if they want to manage their assets and should therefore be on the lookout for new policies.

“South Africa is a unique country and we need something unique in order for everyone to manage their own risk no matter how rich or poor you are.

“The Insurance Act and the micro-insurance product standards under the new Policyholder Protection Rules will make this a possibility. It is exciting times in the insurance industry,” said Ferreira.


Important changes for micro-insurers includes:

Caps under micro-insurance policies are limited to R100,000 for life insurance and R300,000 for non-life insurance;

Caps on the maximum benefit for funeral policies offered by both micro-insurers and traditional insurers will be capped at R 100 000 to ensure that policyholders are afforded the same protection;

To avoid confusion, only micro-insurers will be allowed to use the word “micro-insurance”;

To ensure that policies are easy to understand, micro-insurance policies and funeral policies may only provide risk benefits with no surrender value or investment elements. A micro-insurance policy may not make any of its policy benefits subject to the principle of average;

Contract terms: Micro-insurance policies should have a contract term of not more than 12 months for life business;

Variations of the terms and conditions of micro-insurance policies are prohibited unless the insurer can demonstrate that reasonable actuarial grounds exists to justify the variation or change, and that the variation will benefit the policyholder or member concerned;

Waiting periods are restricted to a quarter of the contract term for death or disability due to natural cause; no waiting periods are allowed for policies covering accidental death or disability; no waiting periods are allowed for credit risk policies; no waiting period may be imposed when a policyholder cancels a policy with one insurer in favour of a policy providing similar cover with another insurer;

Exclusions will not be allowed for funeral and credit life classes of micro-insurance policies; exclusions for suicide will be allowed for a period not exceeding 12 months from inception of the policy regardless of whether a micro-insurance policy or a funeral policy has been renewed during the 12 month period. No exclusions should be allowed for pre-existing health conditions for funeral polices and credit life insurance policies;

Excesses will only apply to non-life micro-insurance policies. These may impose only one standard excess per risk event covered which may not exceed 10% of the value of the policy benefits payable for the risk event, or R1,000, whichever is the lower amount;

Micro-insurance and funeral policy claims must be settled within 48 hours after receiving all the necessary documentation;

Insurers must reinstate policyholders on the same terms as previously, after a lapse. It is, however not mandatory for the insurer to reinstate a policy when it has lapsed and the insurer and policyholder may choose to rather enter into a new policy instead;

Micro-insurance policies may not provide that a policy benefit, paid as a sum of money, is payable directly to a service provider;

Insurers must submit all proposed new micro-insurance policies and funeral policies to the FSB / FSCA at least 31 days before launching the policies.


A new approach to living annuities

Article by Investec Asset Management. 

One of the biggest risks pensioners face is running out of money.  A lack of retirement savings and depressed investment markets have left many pensioners and financial advisors anxious about the future. 

Q: How should pensioners invest their capital and what level of income can they afford to draw? What exposure to offshore equities should be considered and what is the significance of volatility on ensuring a comfortable retirement?

Investec Asset Management's in-house research introduced some new ways to approach this age-old problem.

Watch Jaco van Tonder outline our findings and present a new approach to living annuities.
Click below to watch

Building a sound retirement strategy when you’re slow off the mark

Article by Well Spent.

Original title: Listen up, late starters

One of the more common questions we get asked, is along the lines of: “What do I do if I’ve left retirement saving a bit late in life?”

The answer is relatively simple.

‘Relatively’ in the sense that it’ll require some changes to your lifestyle, and can’t be dismissed as inconsequential. Let’s not forget that you’re planning on saving; saving means ‘not spending’. Unless you have a money tree growing in your garden, sacrifices are going to have to be made.

‘Simple’ in the sense that those few variables that account for 99% of your investment performance over the long run, can probably be explained in a few pages. Appreciating them, and committing to them, means you’re 99% of the way – the rest is out of your hands.

Getting the basics right

It is important to realise that there are very few ‘things’ that will dictate your investment returns over the long run. Get them all right, and there is little more that you can do to give yourself the best shot at your long-term investing goals. To go into all these ‘things’ now will likely confuse you, so allow us to focus on the one that really matters right now.

Costs: think of them as negative returns

Increases in the value of your unit trusts is good.

A quarterly report from your pension fund showing a 6% return for the quarter is great.

Increased investment returns are good.

Anything that would look to reduce those investment returns is bad.

One item that is generally responsible for a reduction in your investment returns are costs. Costs can creep in, in many places. Annual unit trust costs, platform fees, policy admin fees, investment management fees – the list goes on.

We don’t think of this as being contentious, so we’ll leave it at that.

Taxes: Just another cost

It’s when you start to appreciate that taxes paid on your investment money as being nothing more than a cost, that you start to appreciate the power of ‘tax deferred investing’.

All your investments will earn things like dividends, interest, capital gains, maybe even some rental income. As and when these income sources are earned, taxes need to get paid. You are left with an after-tax amount, which can be reinvested and so the cycle continues.

What if you didn’t have to pay tax?

What if you could earn all those investment returns, tax-free, and only pay tax when you want to access the money?

If you think of tax as a cost (which it is), and you consider how avoiding this cost is possible within a tax deferred investment vehicle, then you must realise the long term benefits of avoiding tax, especially when you appreciate the negative effects of compounded costs that add no value.

We don’t think paying tax adds any value to your investment balance.

Retirement annuities

When it comes to investing and doing what you can to get more out of your investment balance, paying attention to things like taxes is one of the few things you can actually do, to enhance your investment returns.

A Retirement Annuity or RA, allows investors to invest in typical underlying investment products, but all within the confines of the RA ‘wrapper’, meaning that you pay no tax on your investment returns while you’re still saving towards retirement.

The economic advantages presented by saving on your taxes, and those savings compounding over years and years are enormous. You could end up with 10%-30% more money in your bank account when you retire based on how much tax you can defer, and the kinds of asset classes you invest in.

Takeout: If you don’t have an RA, consider getting one.

RA’s are designed to incentivize you to save. Whether it be the taxes deferred or the very generous income tax deductions for contributions, utilizing an RA offers real tangible benefits for long-term investing.

So if you’ve left all this saving stuff a bit late, the important things to remember:

The best time to start is today.

The basic principles of long term investing are proven to work better and more reliably than risky shortcuts.

Cutting costs and avoiding tax will greatly increase the compounded growth of your investments and savings.

The journey is long and these things take time. Sometimes the only way to really believe or appreciate the difference it does ultimately make, is to listen to sound judgment like our own, or that of a financial advisor who can take you through the nitty gritty of how an RA might compliment your long-term investing goals.

Here’s what you need to know about your retirement funds when you leave SA

Article by Business Tech

If you are thinking of leaving South Africa (SA) permanently, you may wish to know what to do with your retirement annuity, says Daniel Baines, author of How to Get a SARS Refund and tax consultant at Mazars.

You have two options in this regard, you can withdraw the entire amount and take it with you or you can leave your fund as is, without contributing more, he said.

These two scenarios have different tax implications.

Scenario 1 – Withdrawing your Retirement Annuity

There are not many circumstances in which you are allowed to withdraw your retirement annuity funds prior to reaching retirement age; one of these occasions is upon emigration, Baines said.

The tax effect of withdrawing your retirement annuity when you are emigrating is illustrated by the following example:

·         Amount in Retirement Annuity: R2 000 000

·         Amount of tax payable upon withdrawal: R567 000

·         Amount available to take with upon emigration: R1 433 000

If you withdraw your RA you will pay quite a large chunk of tax, the tax expert said.

“You must have formally emigrated with the South African Reserve Bank to be able to withdraw from your retirement annuity; if you do not do this you will not be able to withdraw your fund. Also note if you have previously withdrawn from any fund that the above calculation will differ.”

Scenario 2 – Leaving your retirement annuity

Your other option is to simply leave your retirement annuity as is and make no further contributions, said Baines. “Your fund should grow in value and when you reach the age of 55 you will be able to leave the fund and receive an annuity (monthly payment) from SA. This is only an option if you do not formally emigrate; formally emigrating will result in a forced withdrawal from your RA.”

The place of taxation of this annuity will depend on the country that you have become tax resident in. For example, if you have become a tax resident of the United Kingdom (UK), the annuity will only be taxable in the UK i.e. you will be paid the annuity from SA, but it will be taxable in the UK, Baines said.

This is in terms of the Double Taxation Agreement (DTA) between SA and the UK. It would then form part of your taxable income in the UK and be taxed according to the UK tax rates, he continued.

“If you become a tax resident of Australia the situation is different. Under certain circumstances this annuity may be subject to taxation in SA in terms of the DTA between SA and Australia.

“This would mean that if the amount of the annuity that you receive exceeds the tax threshold (currently R78 150 for persons under 65) it may be subject to taxation in SA. The annuity could, however, also be subject to taxation in Australia. Australia may, however, grant you a tax credit for the tax, thus potentially avoiding any double tax.

“If you are considering leaving SA permanently, you should carefully consider the tax implications of withdrawing your retirement annuity as opposed to leaving it in the fund and letting it grow in SA.”

Factors to consider when ceding your life policy

Article by Lee Bromfield, CEO of FNB Life.

Editor's note: Since publishing, Wealth Planning became aware that as of August 2017 changes have been made to the National Credit Act. The NCA has introduced new provisions when ceding a policy for credit insurance.  

Many consumers who are eager to finalise the house-buying process often rush into taking out and ceding life insurance without first doing their homework.

The ceding of a life policy involves legally transferring a portion of the cover amount to be used as collateral by a creditor in the event that the policy-holder is unable to meet their debt obligation.

When applying for a home loan, banks may require that you take out life cover as security if you do not meet certain earnings criteria. The life cover is then ceded and used as collateral against the home loan to ensure that your loved ones or beneficiaries still have a home in the unfortunate event that you pass away.

Key factors to consider when ceding a life policy:

Cover amount – when ceding an existing life policy, it is recommended that you increase the cover amount to avoid leaving your beneficiaries underinsured in the event that you pass away. This is because a portion of the cover amount will now be used to settle the home loan. You also have the option of taking out a new life policy or mortgage protection plan if you do not want to interfere with your existing policy. If you are taking out a life policy for the first time, consider a higher cover amount to ensure that your family or dependents are also protected financially in the event of death.

Inform beneficiaries about the cession – it is important for your beneficiaries to understand how this process works to avoid unnecessary complications should they have to claim.

Joint home loan – when applying for a joint home loan, the bank may require both parties to take out life cover to insure their respective portions of the loan, should one or both of them pass away before settlement.

Home loan settlement – when the home loan account has been settled and closed, it technically means the policy is no longer ceded. It is therefore important for you to immediately follow up with your lender and insurer to update the status of the policy.

Ceding conditions – before ceding, familiarise yourself with the terms and conditions stipulated by your lender, to understand how they impact your life policy.

Although home loan providers may make it mandatory for you to have life cover in place, it doesn’t mean you shouldn’t take your time to go through the policy wording or seek advice when you need clarity. At most, you will delay the process by a day or two, while making sure that you are adequately covered.

Value investing in a world of accelerating change

Article written by Steven Romick, NedGroup Investments

Accelerating change swirls around us, placing us in the middle of a vortex that is not without investment implications. In this new world of change, traditional value investing – buying a business or asset at a discount that offers the potential for upside appreciation while providing downside protection – is not what it used to be.

The existential risk to corporations is greater than it has ever been and businesses are either disappearing or facing shorter lifespans in the face of digitisation, technology and data availability.

In the 1960s, the vast majority of corporations listed on a stock exchange would be expected to remain in the index for at least five years before they were either acquired, bankrupt or overtaken in market capitalisation by other public companies. Now, those odds have fallen to the mid-60% range and are continuing to decline. Furthermore, where in the late 1970s and early 1980s, the average company had been in the S&P 500 for almost 40 years – a study by Innosight* suggests that the average lifespan of a company in the S&P 500 index is expected to hit a new low of 12-13 years.

A case in point is General Electric (GE). It is the only company currently listed in the Dow Jones Industrial Index that was included in the original 1896 index. One can only wonder if its Dow days are numbered.

The art of finding value today

When we model a company’s potential outcomes, we do not try to predict earnings this year or next, let alone this quarter. We build a low, base and high case. We make investments in those businesses that should offer a reasonable rate of return in our base case, have upside to the high case and the low case should not be too bad. Furthermore, we expect the base or high cases to be more likely than the low case.

A good investor must always understand the competitive pressures from existing and new businesses and technologies but we would argue that it holds even greater importance today. We have evolved to recognise that many of the better investment opportunities have seen the margin of safety shift from the balance sheet to the business. A business that can increase its free cash flow over time and appropriately reinvest or distribute that cash flow might afford greater downside protection than another business that could be liquidated at a premium to its current market price. This is because the business that could be liquidated at a premium to its current market price could have stagnant or shrinking cash flow in the face of new, more innovative competition.

We face the daily choice of change or decay. We opt for the former. Whereas we once might have been more willing to buy mediocre businesses at unbelievable prices, we are now committed to buying good businesses at great prices and great businesses at good prices.

How much you could make in a tax-free investment?

Original title: How much you could make in a tax-free investment account over 2, 4 and 10 years. 

Article written by Business Tech

As of 2015, the National Treasury has introduced a number of incentives for tax-free accounts in a bid to encourage long-term, disciplined saving.

With respect to the tax-free savings and investment limitations, an individual may currently contribute up to R33,000 per year with a lifetime contribution limit of R500,000.

According to Roenica Tyson, Investment Product Manager at Glacier by Sanlam, tax-free savings and investment accounts tick many positive boxes as part of a diversified financial plan.

She added that she would encourage every investor to consider including one in their portfolio, and take advantage of the opportunity to grow their savings without paying any tax on the interest, dividends or capital gains they earn.

All good things come to those who wait

“Life happens, and unforeseen events result in us sometimes having to dip into our savings, but I would encourage investors in this product to resist the temptation to withdraw from it to ensure disciplined, lucrative saving,” Tyson said.

In this way she said that investors should consider tax-free investment plans as complementary savings for your retirement investment.

As an example of why this money is best left alone for as long as possible, she provided the following example.

The table below demonstrates the sample values (including the tax savings relative to a normal investment plan) based on a monthly investment of R2,750 over a period of 2, 4, 6, 8 and 10 years, for an aggressive investor, and with intermediary fees of 0.50%.

The noteworthy point is that over a 10-year period, total contributions of R330,000 can grow to R536,048, which is R29,222 more than a similar plan without the tax savings.

*Table assumes return of 11% per annum and marginal tax rate of 35% on investment plan returns.      


Ten Rules for income investing

Article by Nedgroup Investments

In an environment where investment returns are becoming increasingly strained, many investors could be tempted to chase yield. This however is a very dangerous investment strategy as it often fails to take the associated risk into account.

Sean Segar, Head of Nedgroup Investments Cash Solutions, provides the following rules to guide investors to avoid potential investment traps:

Rule #1 Use the risk-free rate as the base reference point

The risk-free rate is the yield on government paper for the comparable period, and is efficiently determined by the market.  Therefore, once the risk-free rate has been established, it is easier for investors to assess if additional yield is worth the additional risk. Be wary of outliers on this spectrum and avoid investing where the risk appears disproportionate to the yield.

The main types of risk to consider are:

Credit risk: This is the risk that a borrower may not repay a loan and that the lender may lose the principal of the loan or the interest associated with it.

Liquidity risk: This risk occurs when an individual investor, business or financial institution cannot meet short-term debt obligations. For example, the investor or entity may be unable to convert an asset into cash without giving up capital and/or income due to a lack of buyers or an inefficient market.

Interest rate risk: This is the risk that an investment's value will change due to a change in the absolute level of interest rates, in the spread between two rates, in the shape of the yield curve, or in any other interest rate relationship.

Rule #2 Understand what you are investing in

-When investing in an interest paying instrument ensure you understand the following:

-A guarantee is only as good as the entity issuing the guarantee. Understanding the strength of the guarantee is crucial as certain guarantees are worth very little. A common mistake is to assume that nothing can go wrong simply because a deposit is guaranteed.

-Understand if the rate quoted is effective or nominal, and if it is net or gross of fees.

-Ensure costs are reasonable. Income type funds should typically be cheaper than equity and balanced funds.

-Ensure there are no once off costs to buy or sell income bearing investments.  These can distort net yields enormously, especially for shorter dated income investments. For example, a 1% fee to enter a six month investment yielding an annual rate of 8% results in a net annualised yield of only 6% over the period of the investment.

-Before investing in an income fund, review the investment mandate to ensure that this does not permit investment in instruments you are not comfortable with. For example some income funds are permitted to invest in property, preference shares, offshore currencies, non-investment grade credit, or very long dated bonds.  All of these instruments can offer generous yields - but they also come with a higher risk of capital fluctuations.

-Avoid fads and look beyond the marketing message. Rely on the data and talk to a financial advisor for guidance.

-Understand the regulatory environment of the product and the issuer and be clear that you are investing legally and ethically.

Rule #3 Make use of pooled income funds

-Pooled investment funds are convenient and offer the following advantages:

-Higher yields than call accounts, but access to funds is similar to being on call

-Spread of counterparty credit risk through diversification of investments held in the fund

-Ability to invest in longer dated instruments at higher yields but still having easy access to funds

-Unit trusts are regulated and in many cases rated by independent rating agencies, offering an additional level of comfort to investors

-Professional, specialist investment management

-Minimum investment amounts are relatively low, or even zero when the investor has no surplus cash to invest, unlike direct investments where the top interest rate is only earned by the largest of investors, or the interest rate is subject to a minimum balance or minimum term

-The scale that unit income unit trusts have keeps fees low and provides the fund with buying power with banks and other issuers. Small investors invest alongside large ones with the same benefits.


There are no transacting fees, low investment management fees, and fees are only applicable while funds are invested

Be comfortable with the investment mandate and the investment manager of any income fund. Ensure that they are reputable; credible, their investment philosophy is sound; they have a robust process; the team is suitably qualified and experienced with a good track record and finally; that the track record belongs to current team/individual manager.

Rule #4 Ensure that you have suitable access to your money

It is always tempting to earn higher yields by fixing investments for a set term. However, should you for some reason need to draw on such funds there are likely to be penalties. So the lesson is: If you make fixed term investments ensure that you will not require the funds over the life of that term and do not “lock up” your funds if you may need access to them. Fixing a deposit term for higher yield may backfire.

Rule #5 Match income receipt dates to your needs

Taking Rule #4 a step further, ensure that the frequency of the income distributions of the investment is in line with your needs. It will create unnecessary administration and even penalties should you have to tap into the investment’s capital to fund cash flow requirements.  Some investments only distribute every six months or at the end of the investment term. On the other hand, should an investment distribute income more frequently than you require, reinvest this income rather than draw it unnecessarily. This will allow for compounding of returns and ensure you are not tempted to waste these funds.  Always favour steady, predictable income streams.

Rule #6 Don’t leave cash on one-day call unless you really might need it in one day

Ensure potential yield is not being sacrificed for the luxury of having immediate access to funds, which in fact is not really needed. The yield on daily call monies is lower than that on funds placed for fixed term because it is immediately accessible. Unless funds are possibly required at short notice, cash should be put to work without forfeiting potential yield uplift until it is required to be deployed. This simple planning of future cash flow requirements enables funds to be better deployed. It is worth spending some time forecasting cash requirements to ensure optimal investing, and sweeping cash into funds from inefficient current or call accounts into appropriate higher yielding vehicles. The incremental interest adds up fast and the discipline of efficiency becomes entrenched behaviour.

Rule #7 Don’t be too conservative

There is such a thing as being too conservative. Most people can afford to take on an element of risk for which they should be appropriately rewarded through higher interest rates. Understand your level of risk tolerance and apply it. A financial advisor can provide valuable assistance in assessing your investment risk profile before you decide where and how to invest.

Rule #8 Consider the implications of tax

Interest is taxable as are capital gains.  However, there are both annual interest and capital gains exemptions available to individual tax payers. Utilise such tax allowances before investing in tax structured products. Retirement fund wrappers like Retirement Annuities and Preservation funds offer a total shield against all taxes on interest and capital gains made within such structures. Use of Tax-Free investments is also a very attractive tool here and should also be maximised by individuals.

Rule #9 Remember the power of compounding, but also the effects of inflation

This applies both to the length of time that funds are invested and to the interest rate achieved which drives growth. To maximise the power of compounding re-invest distributions where possible. Of course inflation is the enemy of the investor, and also compounds. This can make investing feel like paddling upstream. If yields are lower than inflation then real returns are not being achieved and the investor is effectively going backwards in real terms.

Do not remain in income investments that do not generate inflation beating returns for too long. In volatile and uncertain times, even inflationary times, it may make sense to park funds in cash until normality resumes. Even though yields may not be above inflation, or returns potentially as high as other asset classes, at least the investment will be liquid, the capital is likely to remain intact, and a positive return should be achieved being the interest received.

Rule #10 Pay off high cost debt before investing for interest

Interest paid will almost always exceed interest earned, especially after tax. The best interest rate is therefore the saving that can be achieved by paying down debt. Always consider first paying off debt before beginning to invest for interest.

Investing is a marathon, not a sprint - ask an endurance runner

Article written by Marc Macsymon, Business Live

Arecent US survey showing that endurance athletes earn three times more than the average person came as no surprise to me. As a financial planner and a passionate trail runner, I have come to realise that investors and successful endurance athletes have much in common, including incredible reserves of discipline and courage.

Investing requires consistency, perspective and patience. It's a marathon, not a sprint.

These are the six most important attributes successful investors and endurance sports athletes share:

1. They set defined goals

Successful investors and endurance sports athletes are not afraid of setting specific and meaningful goals - visualising and thus owning their future.

This involves a precise allocation of daily energy, resources and time and includes making difficult trade-off decisions. Should you allocate your hard-earned cash to important short-term goals such as a stress-relieving holiday, or should you focus on the long-term dream of retiring comfortably, for example?

2. They pace themselves and avoid instant gratification

Investing requires consistency and a long-term strategy that is balanced enough to prevent burnout. There will be moments when you feel that the long-term goal is unattainable, but ongoing planning, time in the market and kilometres on the trails will support success.

3. They rely on 'coaches'

Just as top athletes listen to coaches, winning investors rely on professional advice that is not only objective and based on years of experience, but also appreciative of the emotions that go into our hard-earned savings - and investor biases which can lock in a permanent loss.

Financial coaches help their clients to filter out the economic and political noise and apply investment strategies with the highest probability of success.

Investing requires consistency, perspective and patience. It’s a marathon, not a sprint.

4. They embrace technology

Successful investors, like champion runners and cyclists, harness technology to their benefit and learn from online calculators and algorithm-driven applications.

What's more, they embrace the sophisticated financial planning software used by their advisers. They absorb and analyse the constant flow of information from digital platforms and have the confidence to rely on and discuss new concepts provided by their professional advisers.

5. They take a holistic view of life

In the same manner that successful endurance athletes balance training and rest, effective investors embrace a multidisciplinary approach that combines risk, liquidity, tax and estate planning. They appreciate the need to periodically realign their asset allocation to ensure it fits their financial goals and they value the efficient transfer of generational wealth.

6. They learn from their mistakes

There's no guarantee that you will win every race or ace every investment decision. In fact, life has a funny way of ensuring that some things don't go to plan.

Successful investors expect setbacks, are flexible in their decision-making and appreciate that how they respond to negativity plays a large role in their eventual success.

The finish line

As any marathon runner will tell you, with enough discipline and effort, human beings are capable of achieving anything we put our minds to. It all begins with breaking seemingly unattainable long-term goals up into manageable and achievable short-term objectives. To do this, you have to remain in the present by managing setbacks, fully commit to the process and trust that each seemingly insignificant step is one step closer to the end goal.

Provided you surround yourself with the right people and keep your eye on the prize by being goal-oriented, determined and consistent, you can finish the race we call life with flying colours. As they say in China, a journey of a thousand miles begins with a single step.

President Cyril Ramaphosa investment drive for the country

Article by Brand South Africa.

President Cyril Ramaphosa has successfully secured £50M (R857M) funding from the United Kingdom (UK) to help South Africa improve its business environment, making it more attractive to investors with the aim of creating jobs and opportunities. This agreement was reached between the President and the British Prime Minister Theresa May.

Points of discussion during the meeting included the potential for reinvigorating and revitalising the partnership between the UK and South Africa, where May said Britain was ready to support South Africa’s transformation and National Development Plan.

This investment by the UK follows the President’s announcement on Monday evening that South Africa would be hosting a major investment conference in August or September 2018, which aims to raise over R1trillion in new investments over five years.

“The investment conference, which will involve domestic and international investors in equal measure, is not intended merely as a forum to discuss the investment climate. Given the current rates of investment, this is an ambitious but realisable target that will provide a significant boost to our economy,” said Ramaphosa,

Ramaphosa also unveiled the names of four ‘special envoys on investment’, who he said would spend the next few months engaging both domestic and foreign investors around economic opportunities in SA.

The team includes;

Former Minister of Finance Trevor Manuel,

Former Deputy Minister of Finance Mcebisi Jonas,

Executive Chair of the Afropulse Group Phumzile Langeni,

Chair of the Liberty Group and former Standard Bank Head Jacko Maree.

“They will be travelling to major financial centres in Asia, Middle East, Europe and the Americas to meet with potential investors. A major part of their responsibility will be to seek out investors in other parts of Africa, from Nairobi to Lagos and from Dakar to Cairo,” he said.

The President also named businesswoman Trudi Makhaya as his Economic Advisor and the person who will coordinate the work of the four special envoys and arrange a series of investment roadshows in preparation for the conference.

Makhaya holds a number of degrees in Business and Economics, including from Oxford University and the University of the Witwatersrand, she has vast experience in the financial sector.

“Our task, as South Africans, is to seize this moment of hope and renewal, and to work together to ensure that it makes a meaningful difference in the lives of our people,” said Ramaphosa.

“This requires tough decisions to be made to close the fiscal gap, stabilise debt and restore the health of state-owned enterprises”, he said

Earlier in the year Team South Africa attended the annual meeting of World Economic Forum held in Davos, Switzerland led by President Cyril Ramaphosa. South Africa’s theme for was “Reigniting Growth Momentum”.

Upon return from the forum, President Cyril Ramaphosa said “the South African delegation returned with a “bag full of investment commitments”,

This means that the investment drive announced by the President then now being implemented.

“Many of the business leaders I have met here have said they are buoyed by this new mood in the country. We want to hear the investing world saying that your message is clear, positive and forward-looking It is the type of message that you can have confidence in and correct some of the missteps in the past,” said Ramaphosa.

The success of the investment will be one that positively impacts South Africa and paints the Nation Brand with strokes of a better brighter economy.

Investing on your own takes preparation

Article by 702

Original headline: Investing on your own takes preparation says certified financial planner. 

Taking the option to invest alone takes some serious work. The financial universe is huge and understanding it needs a lot of research and study.

Certified financial planner Paul Roelofse says that it’s very difficult to find a high yield on your investments in the financial market because the economy is flat-lined.

The stock market at the moment is delivering low yields and the only place you can get a certain return is in the money market space he adds.

“In investing you want the highest return you can possibly get over the longest period of time because we understand that compound interest is the way you make money,” says Roelofse.

Roelofse says that fees are starting to become a question because if you are taking 3% off your investment and it’s tracking poorly, then it’s probably not worth paying those fees so people tend to opt to do it alone.

Listen to the full interview below:

Understanding the retirement fund death benefit

Article written by 10x Investments

The award of the retirement fund death benefit is a controversial, complicated and slow process, that is not well-understood by fund members and their dependants. The inevitable fear, frustration and financial hardship that follow from long payment delays add to the emotional strain of losing a loved one.

Below, we explain how the process works, the issues trustees must take into account, and what you, as the fund member, can do, to expedite the process.

Process regulated by Pension Funds Act

The payment of death benefits from a Pension, Provident or Retirement annuity fund is regulated by section 37C of the Pension Funds Act 24 of 1956. When a member dies and a claim is made, the trustees of the fund must follow the requirements as set out in the Act and cannot merely follow the beneficiary nomination which was made by the member.

In determining who will receive the benefit on the death of a member, the trustees are granted 12 months from the date of death to search for any dependents of the deceased member. This must be done despite the presence of a beneficiary nomination.

The trustees have the final say with regards to the distribution of the death benefit; however, they must ensure that there is equitable distribution.

The beneficiary nomination acts merely as a guideline to the trustees as to the wishes of the member and will be taken into consideration when investigating the claim.

The trustees need to take the following matters into consideration:

  • The age of the parties involved
  • Their relationship with the deceased
  • The extent of their dependency on the deceased, if any (did the deceased provide any money to them)
  • The financial status and affairs of the dependants (employment, capability of managing money)
  • The future earning potential of the dependants (are they likely to find employment if unemployed; are they students; are they disabled etc.)

In addition, the trustees also need to take into consideration:

  • Parties the deceased had a legal duty to support (spouses, children, parents, grandparents, unborn children etc.)
  • ·Factual dependants (common law spouses, same-sex partners, step children, foster   children)
  • Customary law spouses
  • Major children who the deceased had a legal responsibility to support

    The way that the death benefit is paid is also regulated by section 37C and currently allows for the following options:
  • Payment directly to the dependent or nominee
  • ·Payment to a trust
  • Payment to a guardian or caregiver
  • ·Payment to a beneficiary fund.

Other considerations

When a death benefit is payable to a minor then the trustees may only pay the benefit to the guardian of the minor or to a beneficiary fund. As a guardian has the right in terms of law to administer the financial affairs of the minor, the trustees cannot, without applying their minds to the facts, pay the benefit into a beneficiary fund and not the guardian.

Should the trustees not find a dependent within the 12 month period following the death of the member and a beneficiary was nominated by the member then the trustees may pay the benefit to the nominated beneficiary. If no beneficiary was nominated then the benefit will be paid into the deceased’s estate.

The most effective way to speed up the process is to ensure that, as a fund member, your beneficiary nomination form is kept up to date all the time and lists ALL your financial dependants. This helps the Fund trustees greatly in their investigation, and therefore minimises the delay.

Taxation of benefits

The beneficiaries who will receive a share of the death benefit can choose to receive their benefit either as a cash lump sum or as an annuity (or as a combination of the two). The annuity income will be taxed in the hands of the recipient per the prevailing income tax tables. Cash lump sums are taxed according to the retirement lump sum tax table, as though they had been received by the deceased on the day before their passing.


New Act broadens access to insurance

Article written by Personal Finance

The Insurance Act, which was signed into law earlier this year, aims, among other things, to increase low-income earners’ ability to access insurance products and foster transformation in the insurance sector.

The Act, which was approved by Parliament in December last year, aims to bring smaller players into the fold under the auspices of the regulator, the new Prudential Authority, which will fall under the South African Reserve Bank.

“Not only will the new law make it easier for low-income consumers to access insurance products that cater to their needs, but it also gives small businesses the opportunity to enter the insurance industry,” says Vera Nagtegaal, the Executive Head of Hippo.co.za.

Nagtegaal says the Act seeks to link licensing with the sector’s overall transformation targets as set out in the financial sector code. “This will empower the [regulator] to push for development targets, financial inclusion and transformation objectives.”

The framework’s transformation component is linked to the Broad-based Black Economic Empowerment Act and the financial sector code, which have made transformation in the insurance industry a priority.

The inclusion of smaller businesses is a great way to foster innovation, Nagtegaal says. “It means insurers can think out of the box and look to accessible insurance product solutions that have worked in many African countries.”

For example, Sanlam and MTN have partnered to launch a micro-insurance joint venture called aYo. With aYo, people will be able to apply for and buy insurance from their mobile phones using their airtime balance.

Nagtegaal says that making insurance products accessible to a wider consumer base means that more people can protect their assets and themselves.

“Outlets such as Jet and Pep have started selling life cover products at point-of-sale. Much like the growth of mobile money wallets in South Africa, and what’s being done by aYo, we can expect easy-to-use products that are made available through cellphones.”

To ensure that consumers are protected, insurers will have to invest in consumer education, she says. 

“It’s important for insurers to inform the public about changes in the financial services sector, such as the introduction of the Twin Peaks system, aimed at reinforcing consumer protection.” 

“Twin Peaks”, to be introduced this year, will see financial regulation split between the Prudential Authority, responsible for the financial stability of providers, and the Financial Services Conduct Authority, responsible for market conduct.

The new law introduces a legal framework for micro-insurance, and amends and replaces certain parts of the Long Term Insurance Act and the Short Term Insurance Act. It has three broad objectives, which are to:

• Broaden consumer access to adequate insurance products;

• Strengthen the insurance frameworks to maintain financial soundness in the industry; and

• Align with international standards. 

Big change to tax-free savings accounts in SA

Article written by Business Tech.

While there was very little in the 2018 National Budget indicating an impact on long-term savings – positive or negative – a National Treasury regulation that kicked in on 1 March 2018 provides South Africans with added flexibility when it comes to Tax-free Savings Accounts (TFSAs).

This is according to René Grobler, Head of Cash Investments at Investec Bank, who said that as of 1 March 2018, South Africans will be able to switch part of or their entire TFSA’s from one financial service provider to another at no cost – at a maximum of twice a year.

This will enable investors to re-evaluate their tax-free investments and adjust it to their personal circumstances, if required, said Grobler.

“Three years ago on 1 March 2015, the South African Government introduced Tax-free Savings Accounts as an incentive for South Africans to save more,” she said.

“With tax-free investments, investors are allowed to invest up to R33,000 per year with a lifetime limit of R500,000, taking advantage of the medium- to long-term benefits of compounding, without paying any tax on interest, dividends or capital gains tax (CGT).

“The additional tax savings these investments offer can also add up and compound over time growing into a substantial investment,” she said.

Tips to get the most out of your TFSA

To maximise the tax benefits and returns of a TFSA at a bank, investors are encouraged to keep their funds invested for as long as possible to benefit from compound interest over the investment period, Grobler said

This is because notice deposits normally have lower interest rates attached to them than fixed deposits, but allow for greater flexibility in terms of withdrawals, she said.

“You should carefully weigh up what would be most beneficial – a notice deposit or a fixed deposit, for the investment period you have chosen. For example, you could ask your bank to provide you with a preferential rate if you choose a 12 month fixed deposit option.”

Grobler added that before holders of TFSAs choose an investment product (i.e. cash at a bank, unit trust-based or equity based investments) they should consider the following:

  • Investment horizon or investment goal: Are you investing for the long or short term?
  • Risk profile and return requirements: Given the state of the financial markets at a particular time – stable or volatile – are you seeking a capital guarantee or wish to place the funds higher risk/return investments?
  • Who will be the beneficiary or beneficiaries should you want to leave the product as a legacy and not make withdrawals in your lifetime?
  • How important is it to you to access the cash as and when required? Are you prepared to leave the cash within the investment for several years?
  • Tax considerations, in relation to the asset class, such as whether the full interest tax exemption has been utilised.
  • It is recommended that you discuss these considerations with your financial adviser who will be able to assist in selecting the appropriate product and asset class based on your risk profile and the rest of your investment portfolio.