The South African, The Investor?

I personally did not expect Auntie Gill to reduce the Repo rate, but miracles still happen! The question is why did they do it? And more importantly, how does it impact you! Before jumping on google, think about it for a moment. Are they now happy with an inflation rate of only 5.7%. Should you run out the door and swipe your credit card?
So what is the point that I.m making? Being a financial advisor I am often asked where one should invest for special goals such as children's education, a new car or that wedding that you are planning. I reply by asking, "are you already saving?" And like a choir and with a proud answer, "Yes, in the bank!" I personally think that their are many South Africans that would want to invest and receive a better return, but don't because of fear of what happened with their grandparents or has been misguided by their local financial guru/tong master around the braai on a Saturday.
Depositing your money in the bank can hardly be called investing as such monies need to be liquid in order for you to withdraw as and when you need it. 32 day call accounts etc. could offer you a bit more interest as you would have to notify the bank, and this provides them with time to raise the funds, but still look at the interest rate offered minus bank charges and compare it with the inflation rate. If this is a negative, ask yourself the question, "Am I really investing?"
Speak to a financial advisor when investing money and he/she would conduct a risk profile analysis. This would take the term, your age, health etc. to see where your apatite for risk lies. Then, invest accordingly.

Remember that cash is only one of the asset classes. Have you considered Bonds, property, equities, or a spread of these according to your apatite for risk?

Home office expenses and deductions

There are certain requirements that must be met in order to claim a deduction for your home office expenses.

1. It must be necessary for you to have such a home office for trade purposes. If you use the room for trade purposes not linked to your current employment(where you get your salary) then you qualify.
But if it is connected to your employment, you will only be allowed the deduction if you earn additional income such as commission or other variable payments that are based on your work performance. The additional income must be more than 50% of your total income, and most of your duties must be performed in such a room.

2. The room must be equipped for your trade and be used on a regular basis. SARS could inquire how often and how many hours per month the room is used.

3. The room must be used only for trade purposes. You cannot place a computer in the corner of your TV room and claim it's a home office.
You can claim a portion of the following expenses: Interest paid on your bond, electricity, rates and taxes, insurance, salary of your domestic worker and maintenance and repairs.

Example:
The deduction allow is calculated as follows. Total square metres of your home office(15), divided by the total square metres of your house(150) multiplied by the above actual expenses(50 000).
(15/150) x 50 000 = 5 000

You can claim R 5 000 as a home office expense.

Tax, Friend or Foe?

With mad season open and you finding yourself digging trough heaps of slips and invoices trying to remember 1985's new years resolution: "I'll file my slips weekly, I will keep a logbook,.......". You suddenly feel a migraine coming on. But no, it's not a headache, it's the vague memory of your tax consultants name.

Let them sort out this mess!

It does not have to be like this! Yes, by paying your tax you are contributing to this lovely country of ours, but by managing your finances properly you could get a "13th check" back from SARS. Here's how it works: You earn a salary(gross income) and pay tax on it. SARS actually only tax you on your income that qualifies as Taxable Income.
What's the difference? SARS allows certain exemptions and deductions from your gross income, and only tax you on your taxable income. Therefore see your tax return as a document that proofs to SARS that they have received more than they should. Sit with your financial planner or tax consultant and discuss these different exemptions and deductions that SARS allows.
Who knows, SARS might sponsor your holiday.

Thy will be done

The holiday deposit is paid, the car is full of petrol, all the children are accounted for and off you go. You know this will be the holiday of holidays! Sounds great! But, have you thought of everything?
In a time where you work to reach your next coffee break, paycheck or holiday, it is easy to imagine a little, insignificant thing like a "last will and testament" fall to the way side.
Like the old saying goes: "not planning, is planning to fail". This couldn't be more true for someone who dies intestate(without a valid will). How many times have you heard of a deceased estate that took a year or even more to be wound up? Imagine the financial implication for the surviving spouse and children. Or worse, what happens if both parents pass away?

Having a last will and testament is not something to conveniently forget about.

Consider the following before you contact a professional: burial/cremation, who will get what, who will be the guardians of the children should both parents pass away, how will finances be managed if both parents pass away, special bequests, compile a list of all assets and liabilities.