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Thu Feb 12, 2015 7:03 pm

4x4BEES wrote:
Mud Dog wrote:I could go on, but if the above (3+4 points) were adequately addressed, we could see a turn-around.
Do you honestly think it will ever happen??

Just asking :siffler:
About as much chance of that as me buying a Landy! :D:

They'll typically only do what they are forced to in order to scrape by, mostly just paying lip service to issues at hand. :crazy:
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Thu Feb 12, 2015 7:11 pm

My thoughts exactly :slap: :slap:

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Fri Feb 20, 2015 10:56 pm

Death of the rainbow nation - Part 2
(Magnus Heystek)


The scenes of our dear leader Jacob Zuma almost rolling in the aisles with laughter at precisely the time that the horde of ‘White Shirts’ marched into Parliament to remove the EFF members from the chambers during the State of the Nation (Sona) will forever, as far as I’m concerned, typify the leadership of Zuma and his bunch of ANC cronies.

As they crudely would have said, years ago when many of us had to do military service: “Hy voel f*k*l….”

He is so drunk with power, so assured that he has taken over virtually every lever of power, even the hallowed halls of Parliament, that his only emotional response to the dramatic scene that was playing out in front of us was one of amusement.

So many laws, protocols and conventions were broken by the ANC-cabal, all at the same time. First the cell phone and Internet signals were being jammed, then the removal of the EFF, all of them - not only the three offending members who kept on asking the same questions - by security forces, some of them SAP members.

Then there were the arrests of some DA members who were protesting outside Parliament. Reportedly, even members of the public who were wearing opposition t-shirts were threatened with arrest by members of the security forces.

Be afraid #2

So many millions of words have been written about these events since then, that I cannot improve on them. But when the Financial Mail (FM) this week has a front-page lead article with the heading “Be Afraid” you have to sit back and ask ‘Exactly what do we need to be afraid of?'

So here is my take. This interpretation needs to be read in conjunction with several of the speeches made by Zuma during 2014 and in particular his speech at the party’s 103rd birthday bash in Cape Town on January 12 this year.

In the speech he made direct references to the Freedom Charter and how all the land belongs to the people of SA…blah blah, not something new and something we are all aware of.

But he also underlined the ANC’s commitment to a radical transformation of the economy…his underlining, not mine.

First the foreigners …

So first in line are the foreigners who might own land in SA. This despite his pronouncements less than a month ago when he told delegates at the World Economic Forum in Davos, Switzerland that SA is a ”great place for foreign investment”.

For almost four days the debate raged around residential property and how unworkable this would be. Then the Presidency announced on Monday this week that the legislation was only aimed at foreigners becoming owners of farming land. The main reason given by his official spokesperson Mac Maharaj: food security.

It seems government is very concerned that foreigners will come in and buy our (very expensive) agricultural land and then not farm it. Foreigners who have the means to buy and own land in this country are not stupid.

Then it was the turn of the farmers. If there is one of the few pockets of excellence still left relatively untouched by the ANC-government, then it is the farming community - the estimated 36 000 commercial farmers help feed our population of 55 million plus.

The idea of limiting farm owners to an arbitrary 12 000 hectares of land is not only unworkable but will be a great threat to food security, the exact thing government says it is trying to protect.

Super farmers

It is said that there is a group of only about 1 000 so-called ‘super-farmers’ who produce about 80% of the foodstuffs we fill our trolleys with at supermarkets. These are the farmers who over many generations have built up massive agricultural factories in our major producing areas, using their combined experience, farming skills, finance and business know-how to become super-farmers.

Very little is known about these farmers in the gentrified cities most of us live in, but without these farmers, I’m told, our weekly shopping expeditions to Woolies/Spar/Pick n Pay would be a totally different experience.

To limit these farmers to a mere 12 000 ha will be devastating to them personally and catastrophic for food production for the country. If this plan is pushed through, then it’s time to start getting very afraid.

Is residential property at risk?

Why would such an arbitrary dispossession of assets stop at only foreigners owning land or limiting indigenous farmers to owning a farm of a certain size? Many commentators have obliquely referred to residential housing as the next target. Using the same political logic, who says there cannot be a limit placed of say two houses per home-owner, the rest to be distributed to the homeless?

After all, isn’t that what the Freedom Charter says?

There are many investors who own multiple properties as part of their investment portfolios. Like the super-farmers, you will find certain super-property investors who individually own properties worth billions of rands, like Jonathan Bear from Durban (Zenprop) or the Georgiou family from Bloemfontein.

Most high-end investors, in my experience, have in the last two decades bought more than one rental property as part of their portfolio.

What about a domestic worker who has been employed by a family for say 20 or 30 years - not uncommon - who then might have a claim on the property’s ownership? This is the same principle of the suggestion that workers on a farm [get land].

Is this what the FM is trying to warn about but not prepared to say outright?

Investors looking elsewhere for safe havens

I have, in my original article on the Death of the Rainbow Nation in November last year, expressed my views on what investors should be doing with at least a great deal of their money.

Ever since then I and most other financial advisors in the country have been flooded with people wanting to remit local money offshore, all with the intention of starting a nest-egg away from the control of the ANC government.

I met this week with someone who is selling property in Cyprus which will qualify the buyers for residency in Cyprus and ultimately European citizenship over time. After the Russians and the Chinese, South Africans are now the third-largest buyers of these properties, I am told.

Cyprus, I am told, has become popular because of the quality of the universities on the island and wealthy parents are buying flats for their children in order for them to study at one of these universities.

The SA Reserve Bank is not willing to disclose the amounts of money leaving SA right now via the dual allowance system, but from personal experience as well as anecdotal comments from some of the largest investment companies in SA, the initial little stream of money leaving the country has turned into a raging torrent.

It’s hard to believe that the choices made by the ruling party at the Polokwane elective conference in 2007 could have, in such a short space of time, had such an enormous impact on almost every key institution in this country.

I would love to describe Zuma as a “one-man wrecking ball” but that description, I am afraid, has forever in time been reserved by fellow columnist Max du Preez.

All I can add to that is the following: you’ve seen what the wrecking ball has done to Parliament. Don’t let him do it to you.
When your road comes to an end ...... you need a HILUX!.

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Life is like a jar of Jalapeño peppers ... what you do today, might burn your ass tomorrow.
Don't take life too seriously ..... no-one gets out alive.
It's not about waiting for storms to pass. It's about learning to dance in the rain.
And be yourself ..... everyone else is taken!

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Fri Feb 20, 2015 11:50 pm

If financial advisers start talking like that, what hope is there for us small guys??

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Sat Feb 21, 2015 9:02 am

Of the many voices out there in the financial arena, Magnus Heystek is one that I take seriously. As a "little guy" you can still make off-shore investments which can be a hedge against local inflation. Australia and NZ are good options IMO and I believe that you can even open a bank account on line in NZ.
When your road comes to an end ...... you need a HILUX!.

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Life is like a jar of Jalapeño peppers ... what you do today, might burn your ass tomorrow.
Don't take life too seriously ..... no-one gets out alive.
It's not about waiting for storms to pass. It's about learning to dance in the rain.
And be yourself ..... everyone else is taken!

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Sat Feb 21, 2015 9:39 am

Interesting :think:

I will have a look into it.

Hopefully in the next couple of months I will be sort of sorted to be able to do it.

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Mon Feb 23, 2015 3:00 pm

Ok, I've long since missed the "25yr old boat", but not entirely at the time, I had formulated my own plan along the lines of this very useful article below, and for the best part. I stuck to it.

Oh, .... and it's never too late to start - you might not (probably will not) achieve the same that someone else has, who had started earlier. ;-)


Dear 25-year-old me …
(Hilton Tarrant)


Seven years on, there are some things you should’ve just started doing then (and others you should have not done). Being in your early thirties, its still not too late to undo many of these mistakes, but its going to take a lot more discipline and effort than it should have if you’d started in the late 2000s. (Good luck catching up on that compounding of savings you missed out on!)

Buy a house as soon as it’s practical to I did, even though I had "live-in accommodation" supplied by my employers (Hotel Industry) and didn't need a house at that time

It sounds easy: stop paying rent (effectively someone else’s bond). But, you’ll argue that in your mid-twenties you don’t really have too many options. Thing is, you do. I’m not suggesting you should’ve tried to buy a house while earning R10,000 a month or in month one of your first job. Share an apartment/flat/townhouse with a friend for a year, and save, save (and save some more).

When you are able to buy, figure out what you can afford and then buy a house that’s 20% or 30% (or more) below that. If you can – at a stretch – afford an R800,000 house, for argument’s sake, rather look in the R550 000 - R600 000 price range. This is a very difficult decision to force yourself to make. It might mean a smaller place… it might mean your third- or fourth-choice area. Trust me, you’d be smiling now.

Once you’ve bought this house, pay it off as quickly as possible. Again, far easier said than done. It means drawing up some goals and ruthlessly sticking to them. Instead of partying and eating out every weekend, trim that back to every other weekend, and put the excess in your bond. Unexpected money at the end of the month? Don’t rush off and spend it on a new pair of shoes. You weren’t expecting it anyway. Into your bond it goes. And don’t ever touch the extra money in your home loan (the banks want you to, its why they’ve created these single current-come-mortgage accounts!)

Had you gone this route, your first house would’ve been paid off by now. It is easily doable in seven years. (I paid mine off in 5 yrs)

Buy a car below what you can afford

Looking back over the last seven years, you did achieve this, but it is arguably harder than the house decision. We all want the latest GTI or new Polo or BMW. Figure out what you can afford (knowing that you’ll be rather liberal with your calculations) and then buy a car 30% or 40% below what you think you can afford. This means driving a VW Polo instead of that GTI you reckon you might be able to barely afford. And stay very, very far away from any balloon payments or residuals or anything beyond a good, old-fashioned installment sale. It also means not “trading up” (read: losing R100,000 or more) every three years. I always bought older 2nd had vehicles and did my own maintenance.

Like with the house, pay off said car as quickly as possible. If you’re spending less than you think you’ll be able to afford on both a house and a car, you should have some extra money to throw at each every month. And after your next pay rise, you should have a little bit more extra each month (versus the trap that most young middle class South Africans fall into – where they can finally afford their car and house after two years of struggle and a ballooning credit card). Once your car is paid off, don’t rush off to buy another. That extra R3000/R4000/R5000 a month could make your bond disappear (and your savings pot grow) far quicker than you think.

Get rid of your cellphone contract

Well done for realising prepaid is cheaper over three years ago. You do not need a contract where you’re spending close on (or over) R1000 a month simply because you had to have the latest iPhone or Galaxy S device. You especially don’t need the second or third contract! Many people fall into the trap of choosing the phone first and then finding the cheapest contract for that phone. This means they’re more often than not on one of the most expensive contracts (out-of-bundle) without even realising it. Cancel your contract. Move to prepaid and then set aside R200/R300/R400 a month in a savings account to fund the outright cash purchase of your desired smartphone every two years. Sell your old phone to fund the shortfall. Being on prepaid also means carefully managing your spend each month. This all requires discipline. (Alternatively, buy your device via a bank-structured smartphone plan. You’re effectively paying it off, but pleasingly it gets you away from having a contract and the punitive pricing.) I have had one phone at a time on pre-paid since the advent of cell phones, (I once tried the contract thing, but never renewed it.) ... and I never had the smartest of gadgets either. A phone is supposed to be a phone, not a gaming console.

Review your expenses (at least) once a quarter. Good idea, I do it about twice a year on average.

This is critical. A once-a-year springclean of your finances is simply not good enough. As part of your monthly budgeting process, interrogate every single debit order and figure out where you’re spending all your money. You shouldn’t have dozens of debit orders (you shouldn’t even be in double figures!). Keep an eye on your renewal dates for things like car and household insurance and get these revalued (read: adjusted down). If your current provider won’t budge, shop around. Figure out how to get your banking done most cost-effectively. Be wary of the all-in bundles that every bank is hawking (more about that soon).

Well done, you’ve gotten very good at doing all of this.

Save!

I’m not going to prescribe exactly where you should be saving your money (this is a topic for another day). But leaving money in a cheque account is not saving, neither is putting it in a savings pocket (you’re earning little to no interest on your money which is downright punitive). What’s most important is that you are disciplined about saving. Set yourself a goal and meet (or exceed) it. The challenge is to make sure you’re saving while also paying down your house and car as quickly as possible. This is a balancing act… it’s not one thing at the expense of others. Make sure you increase the amount you’re saving every year (in line with your pay increase). The tax-free savings accounts which will be introduced in the next month or two are going to be the most-obvious and simplest place for you to save. How I wish these were available when you were 25. Then again, that Capitec savings account did ok!

It’s guaranteed that your personal balance sheet will be in a much better place today than it is if you’d been disciplined about all these things over the past seven years. You succeeded on some but failed on others (or missed them completely). Catching up is very hard, but at least you’re aware of your mistakes and have doubled your efforts.

Now, on to the next seven.


Also watch out for credit cards - you can easily loose track of your debt and it can run away with you. I don't have credit cards, I have cheque cards and debit cards, which means you have to have funds loaded in order to be able to use them. Avoid debt at all costs, but if you must incur debt for a critical expense, use your mortgage bond - it has the lowest interest rate of any lending structure. So even when your house is paid up, keep your bond open by leaving R1000 or so with repayments designed to just cover the monthly interest. If you don't make this arrangement the banks will close the bond automatically.

So what do you do with the savings that start accumulating after you have paid off your house and all your commitments have been met? As so rightly said above, don't leave it in a current account, in fact don't leave it in any bank account. Get it to work for you. I bought blue chip shares, investment bonds and unit trusts and as soon as I had accumulated enough, I used it as a down payment on another property. Back to square one! - Well not quite, because in addition to the savings that were thrown into that bond, there is the rental income from that property that you should also use to pay off the bond. So another five years and you start saving again, but it goes a bit quicker to raise the down payment on a third property because you are now adding a rental income from the second one. And so it goes, accumulating a property portfolio which IMO is the best investment. It grows in value AND provides an income. This is also your retirement nest-egg. I now have 22 units including the house we live in, enough for retirement and more. Another nice thing is that our kids will inherit these to kick-start (already in 5th gear) their own portfolios. I also put these properties into a trust, so that there will be no death duty on them, i.e. nothing will have to be liquidated to pay taxes.

If I can do it (with a spouse that has had a condition from shortly after we were married, which requires a considerable monetary outlay), then you can do it too. I'm no financial guru, I just take note of what works and what doesn't, but more importantly, I act on it.


I hope this, and all the other articles posted above, will actually help some of you guys. ;-)
When your road comes to an end ...... you need a HILUX!.

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Life is like a jar of Jalapeño peppers ... what you do today, might burn your ass tomorrow.
Don't take life too seriously ..... no-one gets out alive.
It's not about waiting for storms to pass. It's about learning to dance in the rain.
And be yourself ..... everyone else is taken!

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Mon Feb 23, 2015 3:21 pm

This throws some perspective on retirement plans. One thing I did not see mentioned is that once retired, you are going to have loads more leisure time, so instead of working you will be enjoying your retirement - THAT NEEDS MONEY! So even if you were to make provision for an income equivalent to 100% of your salary, it might not be enough.


Do you really have enough to retire?
(Patrick Cairns)


CAPE TOWN – Anyone saving for retirement is at some point going to start asking: 'do I have enough yet'? After all, the whole reason for building up your retirement capital is so that you can eventually put it to use.

The problem, however, is that nobody actually knows the answer. It is impossible to know exactly how much you will need, because there are three variables in play that nobody can predict: how long you will live, what inflation will be in the future, and what return you will earn on your investments.

The best anyone can do, and good financial planners should tell you this, is make an educated guess. There are broad ranges and guidelines that can be used to give you some idea of what should be enough.

The 4% rule

The most commonly used calculation is the 4% rule. This was first established by financial planner William Bengen 20 years ago.

Using a portfolio that was split 50-50 into US stocks and bonds, Bengen ran a number of calculations using historical data to work out how much of a person's retirement capital they could safely withdraw every year if they wanted it to last at least 30 years. He worked out that for 95% of the time, an initial withdrawal rate of 4% adjusted every year for inflation would have lasted.

So what does that mean in practice? If you stuck to the 4% rule, how much retirement capital would you need?

The below table shows the starting monthly income you would receive from different capital amounts if you retired now.



Retirement capital Monthly income

R1 000 000 R3 333

R2 000 000 R6 667

R3 000 000 R10 000

R5 000 000 R16 667

R7 500 000 R25 000

R10 000 000 R33 333

R12 500 000 R41 667

R15 000 000 R50 000

R20 000 000 R66 667



Income replacement ratio

Most financial planning works on the assumption that you will not need the same monthly income after you retire as you are earning when you are still working. In South Africa, generally it is assumed that you will need to replace 75% of your income.

This is probably something that is not scrutinised closely enough. If you are currently earning R20 000 a month, is R15 000 a month going to be enough just because you are retired?

Certain expenses may be lower certainly, but you still have fixed costs like water, electricity and medical aid that don't get any cheaper just because you aren't working any more. A 75% replacement ratio might work for much larger salaries where these fixed costs make up a lower percentage of the whole, but it's a lot more difficult lower down the scale.

A number of financial planners are rather proposing that we should be working on at least a 90% replacement ratio. If we can achieve that, we can assume that we will be in a good position to maintain our standard of living into retirement.

Putting that into figures, to achieve a 100% replacement ratio, you would need to have saved 25 times your final annual salary if you stick to the 4% rule. For a 90% replacement ratio, you would need to have saved 22.5 times you annual salary.

These numbers are far higher than the 12 times or 16 times your final annual salary that you often hear bandied about. If you stick to the 4% rule, having retirement capital of 12 times your annual salary will actually only give you a replacement ratio 48%.

The below table illustrates the capital you need to have saved to match up with your current salary:



Current mthly salary Current ann salary Capital req'd (100% repl'mnt) Capital req'd (90% repl'mnt) Capital req'd (75% repl'mnt)

R10 000 R120 000 R3 000 000 R2 700 000 R2 250 000

R15 000 R180 000 R4 500 000 R4 050 000 R3 375 000

R20 000 R240 000 R6 000 000 R5 400 000 R4 500 000

R30 000 R360 000 R9 000 000 R8 100 000 R6 725 000

R40 000 R480 000 R12 000 000 R10 800 000 R9 000 000



These numbers are probably quite sobering to many people. It is unfortunately true that the majority of us underestimate how much we will actually need.

That being the case, rather than asking how much you will need, the more relevant question may be how much you can get with what you have. Next week we'll look at different scenarios that illustrate how long different amounts will last at various withdrawal rates, in different inflation environments, and at different rates of return.


This is a another reason why rental property is so cool .... rentals go up with inflation so your income does as well.
When your road comes to an end ...... you need a HILUX!.

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Life is like a jar of Jalapeño peppers ... what you do today, might burn your ass tomorrow.
Don't take life too seriously ..... no-one gets out alive.
It's not about waiting for storms to pass. It's about learning to dance in the rain.
And be yourself ..... everyone else is taken!

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Mud Dog
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Mon Feb 23, 2015 3:23 pm

This throws some perspective on retirement plans. One thing I did not see mentioned is that once retired, you are going to have loads more leisure time, so instead of working you will be enjoying your retirement - THAT NEEDS MONEY! So even if you were to make provision for an income equivalent to 100% of your salary, it might not be enough.


Do you really have enough to retire?
(Patrick Cairns)


CAPE TOWN – Anyone saving for retirement is at some point going to start asking: 'do I have enough yet'? After all, the whole reason for building up your retirement capital is so that you can eventually put it to use.

The problem, however, is that nobody actually knows the answer. It is impossible to know exactly how much you will need, because there are three variables in play that nobody can predict: how long you will live, what inflation will be in the future, and what return you will earn on your investments.

The best anyone can do, and good financial planners should tell you this, is make an educated guess. There are broad ranges and guidelines that can be used to give you some idea of what should be enough.

The 4% rule

The most commonly used calculation is the 4% rule. This was first established by financial planner William Bengen 20 years ago.

Using a portfolio that was split 50-50 into US stocks and bonds, Bengen ran a number of calculations using historical data to work out how much of a person's retirement capital they could safely withdraw every year if they wanted it to last at least 30 years. He worked out that for 95% of the time, an initial withdrawal rate of 4% adjusted every year for inflation would have lasted.

So what does that mean in practice? If you stuck to the 4% rule, how much retirement capital would you need?

The below table shows the starting monthly income you would receive from different capital amounts if you retired now.



Retirement capital .Monthly income

R1 000 000 .R3 333

R2 000 000 .R6 667

R3 000 000 .R10 000

R5 000 000 .R16 667

R7 500 000 .R25 000

R10 000 000 .R33 333

R12 500 000 .R41 667

R15 000 000 .R50 000

R20 000 000 .R66 667



Income replacement ratio

Most financial planning works on the assumption that you will not need the same monthly income after you retire as you are earning when you are still working. In South Africa, generally it is assumed that you will need to replace 75% of your income.

This is probably something that is not scrutinised closely enough. If you are currently earning R20 000 a month, is R15 000 a month going to be enough just because you are retired?

Certain expenses may be lower certainly, but you still have fixed costs like water, electricity and medical aid that don't get any cheaper just because you aren't working any more. A 75% replacement ratio might work for much larger salaries where these fixed costs make up a lower percentage of the whole, but it's a lot more difficult lower down the scale.

A number of financial planners are rather proposing that we should be working on at least a 90% replacement ratio. If we can achieve that, we can assume that we will be in a good position to maintain our standard of living into retirement.

Putting that into figures, to achieve a 100% replacement ratio, you would need to have saved 25 times your final annual salary if you stick to the 4% rule. For a 90% replacement ratio, you would need to have saved 22.5 times you annual salary.

These numbers are far higher than the 12 times or 16 times your final annual salary that you often hear bandied about. If you stick to the 4% rule, having retirement capital of 12 times your annual salary will actually only give you a replacement ratio 48%.

The below table illustrates the capital you need to have saved to match up with your current salary:



Current mthly salary .Current ann salary .Capital req'd (100% repl'mnt) .Capital req'd (90% repl'mnt) .Capital req'd (75% repl'mnt)

R10 000 .R120 000 .R3 000 000 .R2 700 000 .R2 250 000

R15 000 .R180 000 .R4 500 000 .R4 050 000 .R3 375 000

R20 000 .R240 000 .R6 000 000 .R5 400 000 .R4 500 000

R30 000 .R360 000 .R9 000 000 .R8 100 000 .R6 725 000

R40 000 .R480 000 .R12 000 000 .R10 800 000 .R9 000 000



These numbers are probably quite sobering to many people. It is unfortunately true that the majority of us underestimate how much we will actually need.

That being the case, rather than asking how much you will need, the more relevant question may be how much you can get with what you have. Next week we'll look at different scenarios that illustrate how long different amounts will last at various withdrawal rates, in different inflation environments, and at different rates of return.


This is a another reason why rental property is so cool .... rentals go up with inflation so your income does as well.
When your road comes to an end ...... you need a HILUX!.

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Mon Feb 23, 2015 3:30 pm

This throws some perspective on retirement plans. One thing I did not see mentioned is that once retired, you are going to have loads more leisure time, so instead of working you will be enjoying your retirement - THAT NEEDS MONEY! So even if you were to make provision for an income equivalent to 100% of your salary, it might not be enough.


Do you really have enough to retire?
(Patrick Cairns)


CAPE TOWN – Anyone saving for retirement is at some point going to start asking: 'do I have enough yet'? After all, the whole reason for building up your retirement capital is so that you can eventually put it to use.

The problem, however, is that nobody actually knows the answer. It is impossible to know exactly how much you will need, because there are three variables in play that nobody can predict: how long you will live, what inflation will be in the future, and what return you will earn on your investments.

The best anyone can do, and good financial planners should tell you this, is make an educated guess. There are broad ranges and guidelines that can be used to give you some idea of what should be enough.

The 4% rule

The most commonly used calculation is the 4% rule. This was first established by financial planner William Bengen 20 years ago.

Using a portfolio that was split 50-50 into US stocks and bonds, Bengen ran a number of calculations using historical data to work out how much of a person's retirement capital they could safely withdraw every year if they wanted it to last at least 30 years. He worked out that for 95% of the time, an initial withdrawal rate of 4% adjusted every year for inflation would have lasted.

So what does that mean in practice? If you stuck to the 4% rule, how much retirement capital would you need?

The below table shows the starting monthly income you would receive from different capital amounts if you retired now.



Retirement capital...............Monthly income

R1 000 000.........................R3 333

R2 000 000.........................R6 667

R3 000 000.........................R10 000

R5 000 000.........................R16 667

R7 500 000.........................R25 000

R10 000 000........................R33 333

R12 500 000........................R41 667

R15 000 000........................R50 000

R20 000 000........................R66 667



Income replacement ratio

Most financial planning works on the assumption that you will not need the same monthly income after you retire as you are earning when you are still working. In South Africa, generally it is assumed that you will need to replace 75% of your income.

This is probably something that is not scrutinised closely enough. If you are currently earning R20 000 a month, is R15 000 a month going to be enough just because you are retired?

Certain expenses may be lower certainly, but you still have fixed costs like water, electricity and medical aid that don't get any cheaper just because you aren't working any more. A 75% replacement ratio might work for much larger salaries where these fixed costs make up a lower percentage of the whole, but it's a lot more difficult lower down the scale.

A number of financial planners are rather proposing that we should be working on at least a 90% replacement ratio. If we can achieve that, we can assume that we will be in a good position to maintain our standard of living into retirement.

Putting that into figures, to achieve a 100% replacement ratio, you would need to have saved 25 times your final annual salary if you stick to the 4% rule. For a 90% replacement ratio, you would need to have saved 22.5 times you annual salary.

These numbers are far higher than the 12 times or 16 times your final annual salary that you often hear bandied about. If you stick to the 4% rule, having retirement capital of 12 times your annual salary will actually only give you a replacement ratio 48%.

The below table illustrates the capital you need to have saved to match up with your current salary:



Current mthly salary...Current ann salary...Capital req'd (100% repl'mnt)...Capital req'd (90% repl'mnt)...Capital req'd (75% repl'mnt)

R10 000......................R120 000..........................R3 000 000.......................R2 700 000.......................R2 250 000

R15 000......................R180 000..........................R4 500 000.......................R4 050 000.......................R3 375 000

R20 000......................R240 000..........................R6 000 000.......................R5 400 000.......................R4 500 000

R30 000......................R360 000..........................R9 000 000.......................R8 100 000.......................R6 725 000

R40 000......................R480 000.........................R12 000 000.....................R10 800 000.......................R9 000 000



These numbers are probably quite sobering to many people. It is unfortunately true that the majority of us underestimate how much we will actually need.

That being the case, rather than asking how much you will need, the more relevant question may be how much you can get with what you have. Next week we'll look at different scenarios that illustrate how long different amounts will last at various withdrawal rates, in different inflation environments, and at different rates of return.


This is a another reason why rental property is so cool .... rentals go up with inflation so your income does as well.
When your road comes to an end ...... you need a HILUX!.

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Life is like a jar of Jalapeño peppers ... what you do today, might burn your ass tomorrow.
Don't take life too seriously ..... no-one gets out alive.
It's not about waiting for storms to pass. It's about learning to dance in the rain.
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Fri Mar 20, 2015 8:57 am

Well, somehow they've been keeping the lights on, and load-shedding has not yet become the big issue that everyone was warning us about - (it may still come). Obviously they've been running the OGT's (open gas turbines) flat out - at a huge loss! Primarily their intended use was purely for occasional emergency back-up, not continual use and it appears that they are going to try recover that loss from the consumer .... this article refers ....


Eskom wants 25.3% tariff increase

(By Antoinette Slabbert)


Eskom’s electricity tariffs may increase by 25.3% from April 1 this year for its direct customers and July 1 for municipal customers if an application to the national regulator is approved.

The increase has the full support of government’s war room.

It is aimed at paying Eskom’s diesel bill in order to avoid load shedding and to extend and conclude short-term agreements to buy electricity from other producers (short-term power purchase programme = STPPPs), including companies like Sasol and Sappi as well as municipal generators like City Power. It also makes provision for the increased environmental levy announced by Finance Minister Nhlanhla Nene during his budget speech.

News of the application came after the City of Cape Town issued a statement on Thursday night in which it expressed its concern that many customers won’t be able to pay the huge increase. The City also apologised to its customers for having to table a draft budget next week that reflects electricity tariffs that may increase further if the Eskom application is approved.

Moneyweb reported in February that Eskom may be applying for a re-opener, but neither Nersa nor Eskom would respond to questions at the time.

Eskom is now asking for a selective re-opener of the tariff determination that was earlier granted for the five years from April 1 2013 – March 31 2018. An annual tariff increase of 8% was then granted. The increase for 2015/16 was later increased to 12.69% to compensate Eskom for under-recovery in the previous tariff period.

If the new application is granted it would apply to the remaining three years of MYPD 3. It would see tariffs increase by 25.3% in 2015/16, drop by 3.24% in 2016/17 and increase by 7.26% in 2017/18. These are the total proposed increases, including those granted earlier.

Eskom says in a submission to the local government association Salga and National Treasury dated March 16 that government won’t give any further equity injections over and above the promised R20 billion that will be paid over in the new financial year.

It says credit downgrades have seen it at the limit of any significant borrowings and even if there was appetite among financiers, the cost would be too high.

Downgrade

The news also broke on Thursday that Standard & Poors has downgraded Eskom to junk status, a mere four months after Moody’s did the same.

Eskom further states that it is on a drive to save between R50 billion and R60 billion over five years and has reprioritised capital spending, bringing the total down from R337 billion to R300 billion.

It says a full re-opener of the MYPD3 tariff determination would take 12 to 18 months and therefore the war room suggested a selective re-opener.

The basis for the re-opener is that Eskom assumed in its MYPD3 application that Medupi, Kusile and Ingula projects would have delivered power and therefore no provision was made for the extensive use of its diesel-gobbling open-cycle gas turbines (OCGTs) and STPPPs.

Following the deterioration of its generation fleet, the explosion at its Duvha plant, the collapse of the coal silo at Majuba, issues with coal quality and delays in the completion of the new build programme, the use of OCGTs and STPPPs are the only way to keep the lights on.

Eskom says the war room took the decision that it should continue to use these measures, because the cost of power interruptions to the economy is even higher than the additional costs incurred for diesel purchases and STPPPs.

The utility asks for an additional R32.9 billion for diesel and R19.9 billion for STPPPs over the next three years.

Eskom acknowledges that submitting the application this late, means it would not be able to comply with provisions of the Municipal Finance Management Act (MFMA) to table proposed bulk tariff increases to municipalities in Parliament before March 15.

It says it would have to obtain special permission from the Minister of Finance for late submission.

It asks for the cooperation of local government stakeholders to enable implementation on July 1, but says if that cannot be achieved, implementation on September 1 should be considered.

As the City of Cape Town indicated, the municipal budget cycle is far advanced and all the municipalities countrywide would have to revise their budgets as soon as there is finality regarding Eskom’s application.
When your road comes to an end ...... you need a HILUX!.

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Life is like a jar of Jalapeño peppers ... what you do today, might burn your ass tomorrow.
Don't take life too seriously ..... no-one gets out alive.
It's not about waiting for storms to pass. It's about learning to dance in the rain.
And be yourself ..... everyone else is taken!

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Tue Mar 24, 2015 8:24 am

You can’t build wealth if you don’t master this…
(Hilton Tarrant)


I took a fair amount of flack from Moneyweb readers a few weeks back in my letter to 25-year-old me. Those comments have evaporated into the ether, but the gist of many of them was: ‘How could you leave budgeting off the list?’

I didn’t omit it in the list of financial lessons I wish I’d learnt then.

I mastered this a decade ago.

I’m constantly amazed by just how many of the people I know have zero idea what actually happens in their cheque account between the 25th of the month, and a week or two later. There’s a lot of “paying” accounts and some shuffling of money between accounts and credit cards, but no real plan.

I get it. Numbers and maths are hard. We’re not all accountants (I certainly am not).

But, budgeting is actually dead easy.

I’m a big fan of Carl Richards, author of the forthcoming book The One-Page Financial Plan (and previously The Behavior Gap: Simple Ways to Stop Doing Dumb Things with Money). And the reason I’m a fan is that he explains (often complex) concepts so simply. Carl’s the sketch guy. I was lucky enough to interview him 18 months ago.

What-you-can-afford (2)

In a recent New York Times column, Richards told a story about a couple he knew in a ‘parable’ illustrating his idea for that week: What you can really afford. His sketch is (almost) laughably simple, and it’s something I’ve increasingly lived by over the past few years.

You cannot afford what you’re not able to spend. It’s precisely what I would’ve told myself to at age 25: buy a house at 20% or 30% what I think I can afford. Ditto with a car (and here it’s useful to be even more ruthless with the percentages). Debt is useful, but only if you’re disciplined about it. Which is tough, because most people aren’t disciplined.

But, back to the whole budgeting thing….

Most people have a single income. You work a job. Or maybe, two jobs. That’s money in. Then there’s the mountain of expenses (money out).

(Forget rental income and interest income and dividends and all of that. If you’re worrying about any of those on a monthly basis, I’ll bet you don’t struggle with budgeting.)

Draw a line down the middle of a piece of paper and write your monthly (net) income on the left (or put it in one column in Excel).

On the other side (or in column B), start listing your expenses. Debit orders, car repayments, insurance, rent/bond repayments, bank charges, medical aid, cellphone contracts (get rid of those), school fees, etc.

Broadly speaking, there are three categories of expenses.

Non-negotiables are probably the rump of those you’ve just listed. These are fixed. You can’t exactly elect whether or not to make your Wesbank payment for the month!

Predictable expenses are relatively constant and easy to quantify. Food, for example, would fit in here (yes, technically it’s non-negotiable, but it’s going to move up and down within a range month-by-month). Fuel also fits into this category. These numbers aren’t entirely fixed, and if it’s a tough January (we all have those), you end up eating tuna mayo sandwiches towards the end of the month.

Discretionary expenses are the things we tend to waste ‘all’ of our money on. Eating out. Clothes we can’t afford. Gifts. Those times when we ‘spoil’ ourselves, you know?

Figuring out where all the money is going is important, but the next step is even more crucial. Expenses need to be cut. You’ll notice I haven’t mentioned savings anywhere. That’s because most people don’t save (and those who do, don’t save properly). A few hundred rand a month in a savings pocket is not ‘saving’.

You may think cutting the discretionary stuff is the only room you have to move, but you’re wrong. There is room to cut expenses in all three of these categories.

Your fixed expenses aren’t cast in stone. Sure, you can’t miss a car repayment, but you can trade down. Ditto with your predictable expenses. And your discretionary stuff? Ja, well. Interrogate every single expense and do so regularly (not only once a year, or when you remember to).

Beyond figuring out what you’re spending your money on and then making the necessary adjustments, the real crux of ‘budgeting’ is being utterly disciplined in your spending every month.

This is a real-time exercise. It’s not something that you sit down and ‘do’ one week into the next month.

Humour me. If you know you’ve only budgeted R500 or R1000 (or whatever the number is) on eating out and takeaways for the month, and you suddenly have to join friends for a birthday dinner out or something, adjust. Find that extra R400 elsewhere. Do the same with clothes, food, or anything that isn’t fixed for that matter. This often catches out those people who do budget. They don’t adjust, don’t measure and look back three/four/five weeks after the fact, struggling to understand why they didn’t have any money left last month (or the month before that, or the month before that)…

Discipline!

I haven’t mentioned credit card debt or repayments anywhere. That’s not what a credit card is for. Some argue that credit cards are for ‘unexpected’ expenses. Uhm, no. The reason why this doesn’t ‘work’ is because most of us are rather ill-disciplined when it comes to the meaning of ‘unexpected’. A R1000 pair of shoes you weren’t planning to buy but saw on Saturday is not unexpected.

In an ideal world, you should use a credit card as if it were a debit card, and settle it in full at the end of every month (or, better yet, pre-fund it). Credit cards earn you far better points on loyalty schemes and cost you nothing to swipe in stores (the merchant pays all the fees). They’re also a necessity when booking overseas flights, given the free bundled travel insurance on many of them.

But, I digress.

Finally, once you’ve cut back everywhere you can (spending what you can afford), you should end up with a decent chunk of money to save. In theory, you’re taught to put aside x% of your income and save it. We all know that in reality that seldom happens. Tackling this from the other angle has worked for me.

And then (again) it’s all about being disciplined. You’ll honestly be surprised at how much you’re able to save. At this point, where you save is secondary. That you save is primary.

The choice is almost entirely binary:

Don’t save and you’ll always be in debt, juggling one bit of credit for the next.

Or, be completely ruthless about what you’re spending where and when, which means money to save. And then you’ve got a very real chance of creating actual wealth.
When your road comes to an end ...... you need a HILUX!.

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Life is like a jar of Jalapeño peppers ... what you do today, might burn your ass tomorrow.
Don't take life too seriously ..... no-one gets out alive.
It's not about waiting for storms to pass. It's about learning to dance in the rain.
And be yourself ..... everyone else is taken!

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Wed Apr 15, 2015 6:58 am

Tax-free savings: Three things you should know. (Also read first post in this thread.)


JOHANNESBURG – Following the introduction of tax-free savings accounts on March 1, product providers have started their marketing efforts and a wide variety of options are now available.

Tax-free savings accounts offer South Africans the opportunity to invest up to R30 000 per annum (R500 000 over a lifetime) and investors won’t pay any tax on the returns (capital gains, dividends and interest) in these accounts.

But as investors start to ponder the pros and cons of using tax-free savings accounts in their personal investment portfolios, a number of important questions have been raised.

In this article, three of those are considered.

1. What happens to my tax-free savings account when I die? Will my heir get any tax benefits if the inheritance comes from a tax-free savings account?

Natasha Marhye, legal advisor at MMI Investments and Savings: Retirement Solutions, says upon the death of the account holder, the proceeds of a tax-free savings account (the capital and all returns earned prior to death), will form part of “property” as defined in the Estate Duty Act. This means that estate duty will be levied on this amount.

In terms of the explanatory memorandum issued by the South African Revenue Service (Sars), the returns earned by the estate after the date of death will not be included as “property” in the estate.

2. Retirement fund assets are protected against the claims of creditors. Is this also the case for tax-free savings accounts?

Marhye says a retirement benefit is protected against the claims of creditors because section 37C of the Pension Funds Act specifically excludes a retirement benefit from forming part of the deceased estate. In terms of section 37C the allocation and distribution of retirement benefits are dealt with by the fund’s trustees and this process is completely separate from the estate.

There is no similar provision pertaining to a tax-free savings account. In fact, National Treasury indicated in the explanatory memorandum to the Income Tax Amendment Act, that contributions to a tax-free savings account and all investment returns earned up to the date of death will form part of the deceased estate. This means that this amount does not enjoy any special protection and will be dealt with in the same manner as the rest of the estate.

3. Are fund managers allowed to use hedging instruments in unit trusts in a tax-free savings account wrapper?

Rowan Burger, executive: Large Corporate Segment (Momentum) says basically each license has investment rules. Unit trusts and life companies have these. The principles are that derivatives can be used for protection and asset allocation. They cannot be geared or be seen as speculative in nature (you can't short a share). So the funds qualifying would not be considered hedge funds.
When your road comes to an end ...... you need a HILUX!.

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Life is like a jar of Jalapeño peppers ... what you do today, might burn your ass tomorrow.
Don't take life too seriously ..... no-one gets out alive.
It's not about waiting for storms to pass. It's about learning to dance in the rain.
And be yourself ..... everyone else is taken!

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Mud Dog
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Real Name: Andy
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Thu May 07, 2015 8:29 pm

Worrying article by Magnus Heystek. Magnus is one of the handful of voices that those in the know listen to - his message is not promising. :(

This chart should scare you
(Magnus Heystek)


I started my career in financial journalism in January 1980. The gold price had just hit a record $850 an ounce, the rand was trading at $1.35 - no mistake - and Johannesburg was literally the City of Gold.

At the time, South Africa was the world’s largest producer of gold (over 1 000 tonnes per annum), platinum and other precious metals. We were truly the centre of the mining universe and our politicians of the time couldn’t stop reminding the outside world how important we were to them….

The JSE gold board had over 30 gold mining companies listed; and then there were the mining holding companies: the Anglos, Gencor, Rand Mines, JCI and many smaller ones.

The financial and investment community literally lived from gold-fix to gold-fix, still then relayed to the waiting world from London via telex messages, which came spattering out into the hands of the copy boys whose sole task was to tear a strip of paper with either good or bad news and run to whomever was paying his salary. And as Baron de Rothschilds* proved during the Napoleonic Wars, being first with vital information made the difference between huge profits and losses.

The Johannesburg CBD was booming. Head offices, restaurants, bars, clubs and even massage parlours were scattered in and around the precincts of the head offices of some of the most powerful mining companies in the world.

As a financial journalist one also witnessed and experienced first-hand some of the excesses, today unthinkable, which was part and parcel of a relatively small group of businessmen, financiers and miners, who were making enormous amounts of money.

One example that comes to mind was the ‘party bus’ imported by Darling & Hodges, a supplier of mining equipment to the gold and platinum industry. Another example was a well-known PR practitioner who booked out a whole massage parlour for the afternoon to entertain all the senior financial editors in the Johannesburg area. Regrettably I was the junior in the office and had to cover for the editor who went to a ‘press conference’ that lasted well into the night.

All good things come to an end

It’s my view that 1980 signaled the start of the end of Johannesburg, and hence South Africa, as being the centre of the global gold and mining universe. What followed thereafter was a long and slow decline. First came the decline in the price of gold and other precious metals, which lasted for more than 22 years before the cycle ended in 2002. Then came the mergers, consolidation and eventually the flight of miners - amongst others Anglo American - out of SA, seeking alternate listings. By the time gold had roared back to new heights in 2011 at around $1 900 per ounce, the South African gold industry, had virtually disintegrated and there was very little left to benefit.

Today, a mere generation later, our gold index consists of only four companies. The JSE index is about half of what it was 20 years and more ago. We have also dropped down the list of gold-producing countries to no. 7 and at last count we’d been overtaken by Peru of all places.

Sadly, many old-school investors held on to their belief that the gold price and hence our mining and commodity shares would arise, Lazarus-like from the grave and once-again start producing super-profits and ever-rising dividends. There are too, also sadly, some local fund managers, who also still hold this view but have seen the investment returns of the funds they manage being obliterated by the death-convulsions of an industry that does not have much longer to live, particularly our gold mining industry.

In the investment world your investment returns are not always influenced by the investments you make, but by the ones you avoid. Avoiding the gold and commodity sectors in SA over the past five years has been a very good decision.

Before I get emails about being wise after the event and commentating with hindsight, I’ve been warning about this trend for the past four years. It has been clear to me for some time that we are witnessing the end-times of our gold mining industry. This has been the result of a combination of factors including rising labour costs, frequent strikes, electricity (costs as well as certainty of supply), the uncertainty about ownership of mineral rights, affirmative action and BEE-codes. However, our mining grades have been falling in addition to sharply higher costs to get the remaining gold out of the ground.

The only people really making any money out of gold mining are the executives paying themselves obscene amounts of money for being in charge of a dying industry.

This chart should scare you

The chart below compares the Old Mutual Mining and Resources Fund returns with that of the JSE All Share index over five years.
Screen-Shot-2015-05-03-at-10.11.17-PM.jpg

In spite of a very nice uptick of over 11% over the past month, the fund has not produced any returns for investors who have hung around for five years or so. I have merely picked the OM fund as a matter of convenience. All the other gold and commodity funds tell similar tales of woe.

This has been wealth destruction on an industrial scale. Its impact is more widely felt than in just the ups and down of quoted shares or the values of investment funds.

The full-scale effect of this waning mining industry is being felt in many areas of South Africa, including job creation, tax revenue collections, new foreign direct investments and even in the decay of former mining towns, scattered around the Witwatersrand.

As I said in the heading: it’s a chart that scares me as it should scare you. It highlights how quickly things that might appear to be of a permanent nature can change. It also scares me how little government seems able to do about it. It appears to me that there is very little long-term planning being done to consider how a replacement needs to be found for the mining industry.

In a certain sense the graph also warns about the dramatic effects of how rapidly things collapse. Last week global consulting firm A.T. Kearney released a report on how senior management around the globe rate various countries in terms of foreign direct investment (FDI). See 2015 FDI Confidence Index here).

SA was highly ranked at no. 11 in 2012, no. 15 in 2013) and no. 13 in 2014.

This year, mainly due do the mining unrest and the prolonged strikes at our platinum mines last year, we have simply vanished off the list. Kaput!

What is particularly worrying is the very strong correlation between these rankings and future FDI. The developed world is looking better all the time but more worrying is that not one country in the Middle East and North America (MENA) or sub-Saharan Africa make the rankings this year.

We need FDI now more than ever, but we are not getting it, and it would be appear as if at every turn we are making life as difficult as possible for potential foreign investors to set up shop in SA.

Without meaningful FDI our relative chart (SA versus the world) could well end up looking like the chart enclosed.

Is foreign investment a remnant of our colonial past?
When your road comes to an end ...... you need a HILUX!.

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Life is like a jar of Jalapeño peppers ... what you do today, might burn your ass tomorrow.
Don't take life too seriously ..... no-one gets out alive.
It's not about waiting for storms to pass. It's about learning to dance in the rain.
And be yourself ..... everyone else is taken!

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Real Name: Andy
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Mon May 25, 2015 11:28 pm

SARS - How to deal with invalid objections
(Ingé Lamprecht)

JOHANNESBURG – Submitting an objection to a tax assessment can be a cumbersome process for many taxpayers, including small businesses, especially if they don’t have the money to consult a tax practitioner.

Pieter Faber, project director for tax at the South African Institute of Chartered Accountants (Saica), says while the relevant tax matter may not be of a technical nature at all, the objection process itself may pose a number of challenges.

In order to expedite the process and ensure compliance, the rules for lodging an objection have to be followed to the letter, he says.

The first step is to use the submission form as prescribed.

Faber says in the past the South African Revenue Service (Sars) only used an ADR1 form, but another form has also been introduced.

Nowadays the NOO01 form, which is available electronically on the Sars eFiling system, is used for objections related to personal income tax matters, corporate tax as well as for the interest and fines associated with these taxes.

The ADR1 form is used for objections involving trusts, employees’ tax and value-added tax (VAT).

Sars generally use the “invalid objection” rejection in three scenarios.

1. Sars claims an invalid form was used

Faber says if an invalid form was used, Sars is required to issue a notice to the taxpayer that the objection is invalid.

The taxpayer will typically have an additional 20 business days from the notice of invalidity to file an objection using a valid form.

Faber says if a valid form was used but Sars still rejects the submission, the dispute is of an administrative nature.

Instead of filing another objection it is advisable to rather approach the branch manager and to resolve the matter before attending to the initial objection.

Often resubmitting an objection complicates the matter, he says.

2. Sars claims no supporting information was submitted

Faber says in practice Sars would often argue that no supporting documents were submitted to substantiate the information provided.

If no supporting documents were submitted, Sars has to notify the taxpayer that he needs to submit the documents in which case the taxpayer must adhere within 30 days of this request.

If no supporting documents are submitted within this time frame, Sars may disallow the objection, Faber says.

If Sars informs the taxpayer that no supporting documents were submitted, but does not disallow the objection, it would be an administrative dispute and the taxpayer would need to phone the Sars contact centre to resolve the matter.

3. Sars claims the objection was not submitted within the required time frame

Faber says if the taxpayer submitted an objection within the required time frame but Sars disallows the objection because it argues that the taxpayer did not adhere to the time frame, the dispute would be of an administrative nature.

However, if the taxpayer did not adhere to the specified time frame, he may request condonation. In such a case Sars will consider whether there were reasonable grounds for the late submission.

If Sars does not agree that a concession should be allowed, the taxpayer may lodge an objection, Faber says.

* This article was sponsored by Saica.
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Tue May 26, 2015 7:26 am

on Monday yet another national company went "belly up" ..... another few hundred people not getting paid for the month of May ....


stark reminder of how quickly thing can change ....

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Thu May 28, 2015 4:02 am

Buying foreign citizenship
(Hanna Barry)


JOHANNESBURG – With enough money you can buy anything, even a foreign citizenship. And for the outrageously wealthy, the power to move and live wherever they like is worth paying for.

“For families with means, it’s really just about giving yourself and your kids options,” says Andrew J. Taylor, vice chairman of Henley & Partners, the company whose chairman basically created the citizenship-by-investment concept and turned the fortunes of a struggling Caribbean island, St Kitts & Nevis, around.

Taylor says that 90% of Henley & Partners’ clients don’t want to move from their home country immediately, often due to significant business or family interests, but would either like the option to do so at a future date or want the travel benefits associated with having multiple passports.

According to Henley & Partners latest Visa Restriction Index, South Africans can access 97 of 199 countries visa-free. The UK and Europe, however, are not included in this list of countries and South Africans, both for work and play, favour these destinations.

It’s perhaps no surprise then that the Caribbean Island of St. Kitts & Nevis, as well as Antigua & Barbuda are popular citizenship choices for the well travelled due to their favourable passports, which allow visa-free business or leisure travel for up to 90 days to Europe and the UK.

Malta, Antigua, Cyprus

Malta, a group of islands in the Mediterranean, is especially popular at the moment among clients at the top end of the wealth spectrum, according to Taylor.

“Malta has a minimum contribution to infrastructure and development of €650 000 per person, growing by €25 000 for every child under 18. On top of this contribution, you would need to invest €150 000 into a government bond and buy a property for €350 000, or lease property for five years at €16 000 a year,” Taylor explains.

“As soon as you become Maltese you become European and have the right to live, work and study in any one of the EU member countries,” he adds.

There is also no restriction on passing down citizenship to future generations. Generally, South Africans with more than R100 million in liquid assets choose Malta, says Taylor.

“In Antigua, you can either donate $200 000 to government, excluding due diligence and professional fees in the region of $100 000, or invest in real estate, where you would be looking at around R5 million to R6 million, which could be liquidated after five years of holding citizenship,” Taylor explains.

In Cyprus, meanwhile, which is also a member state of the EU, a real estate investment of at least €2.5 million is one of the requirements to obtain citizenship.

Each jurisdiction has its own legislation, which may result in additional costs depending on an investor’s specific situation, as well as longer or shorter time periods to secure citizenship. For instance, in Malta it takes roughly 12 months to process citizenship, while in Cyprus and Antigua this is four months.

Henley & Partners charges clients a processing and administration fee, which differs from client to client depending on individual circumstances.

Residence vs citizenship

Taylor cautions against opting for a lower cost residence-by-investment option as a means of securing citizenship, unless you plan to relocate and acquire citizenship by another means. “Residence does not guarantee citizenship and this route can take time,” he says.

For instance in Portugal, a €500 000 investment in urban real estate can get you a Golden Residence Visa but before citizenship is granted the government wants to see you build ties to the country by, for example, learning Portuguese, says Taylor.

“It’s not just a matter of living there for six years,” he says, warning against misleading marketing.

“If you want to remain in South Africa, then you want to look at a pure citizenship programme,” he adds, noting that as a citizen your legal standing within the country is also of a higher level than a resident.

Taylor advises against choosing a programme where you get a passport without citizenship. “There are always people in political power selling passports that aren’t technically legal or where the constitution does not allow for it. You must first be legally naturalised as a citizen; a passport is just what you get by having citizenship,” he explains.

Promoting illicit money flows?

Organisations such as Global Financial Integrity (a Washington-based research organisation), Human Rights Watch and Amnesty International argue that large outflows of illicit money via a shadow financial system aggravates poverty in emerging economies.

“Illicit money leaves poorer countries through a global shadow financial system comprising tax havens, secrecy jurisdictions, disguised corporations, anonymous trust accounts, fake foundations, trade mispricing, and money-laundering techniques. Much of this money is permanently shifted into western economies,” according to a group of 21 organisations – including universities, non-profits and faith-based organisations – which have together signed the New Haven Declaration On Human Rights and Financial Integrity.

Alongside potentially unfavourable and unsavoury money flows, there are concerns that these programmes enable criminals and terrorists to secure second passports. In November, Canada implemented a visa requirement on St. Kitts & Nevis "due to concerns about the issuance of passports and identity management practices within its Citizenship by Investment program", the Canadian government said at the time.

Taylor, however, argues that these programmes hold positive benefits for the countries that offer them and give these countries a means to attract wealthy and talented individuals. “As soon as an individual becomes a citizen in a country, they develop ties with that country and start investing money there,” he says.

For instance in Malta, which is currently attracting the wealthiest people in the world, some of the investors want to re-engineer the entire telecommunications infrastructure, he notes.

Taylor says that Henley & Partners does not deal with countries where legislation in this area is unclear or the tax situation is grey.

South African interest

The company's Cape Town office receives “daily enquiries” from South Africans, according to Taylor.

Nadia Read, a private consultant at independent world residence and citizenship company, LIO Global confirms that there’s been a notable increase in recent months in queries from South African families looking for EU citizenship options, mainly to give their children the opportunity to work and study in Europe.

"Families are looking for the global freedom, mobility and access that a second passport can offer," she says, noting that Malta is the most popular choice.

“It’s important that the client understands what their end goal is, whether residency or citizenship, in order to make the best choice,” Read adds.

Read notes that South Africans, when applying for a secondary citizenship, need to apply for retension of citizenship at Home Affairs.
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Mon Jun 15, 2015 8:27 am

Are we not (slowly at first) heading down the same path?

175 Quadrillion Zimbabwean dollars are now worth $5
( Bloomberg )


The Zimbabwean dollar will be taken from circulation, formalizing a multi-currency system introduced in 2009 to help stem inflation and stabilize the economy.

The central bank will offer $5 for every 175 quadrillion, or 175,000 trillion, Zimbabwean dollars, Governor John Mangudya said in an e-mailed statement from the capital, Harare. While it marks the official dropping of the currency, transactions in the southern African nation have been made using mainly the US dollar and rand of neighbouring South Africa for six years.

“The decommissioning of the Zimbabwean dollar has therefore been pending and long outstanding since 2009,” Mangudya said on Thursday. “We cannot have two legal currency systems. We need therefore to safeguard the integrity of the multiple-currency system or dollarization in Zimbabwe.”

The economy plunged into crisis after the government started a campaign in 2000 of violent seizures of white-owned commercial farms to distribute to black subsistence growers, slashing exports of tobacco and other crops. Inflation surged to 500 billion percent and the economy shrank during a near decade-long recession that ended in 2009. Under policies implemented by a coalition government, the economy began expanding and the recognition of foreign currencies as legal tender helped tame inflation. Consumer prices fell an annual 2.7% in April, according to the statistics agency.
Quadrillion Dollars

Zimbabweans can convert their local dollars between June 15 and Sept. 30 at commercial banks, building societies and postal agencies, Mangudya said.

Savers with Zimbabwe dollars in their bank accounts will get a flat $5 for anything up to 175 quadrillion Zimbabwean dollars. They can convert any cash they have “on a no questions asked basis” at a rate of $1 to 250 trillion Zimbabwe dollars for notes printed before 2009, Mangudya said.

The move demonstrates the central bank’s “commitment to the multiple-currency system,” Mangudya said. Zimbabwe needs to increase its foreign reserves, improve its fiscal management and strengthen the financial sector before it can change the system, he said.
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Tue Jun 16, 2015 6:31 am

When your road comes to an end ...... you need a HILUX!.

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Mon Jul 13, 2015 12:49 pm

The Davis Committee's VAT report unpacked
(Amanda Visser)


The Davis Tax Committee’s first interim report on Value Added Tax (VAT) opens the door for a possible increase in the standard VAT rate. The rate has been applied at 14% since 1993.

The report refers to a 3 percentage point increase to 17% as an example.

The debate on an increase in the VAT rate has been shunned for many years, mainly because of the political hot potato created by trade unions who insist it will harm the poorest of the poor the most.

However, the Davis Tax Committee found that from a “purely macro-economic standpoint” an increase in the VAT rate will be less distortionary than a rise in the personal income tax or corporate income tax rates.

The Davis committee was appointed by former Finance Minister Pravin Gordhan to assess the tax policy framework, and its role in supporting the objectives of growth, employment, development and fiscal sustainability.

The Davis report points out that VAT has accounted for approximately a quarter of the total tax revenue in the last couple of years. It amounted to 25.6% in 2011-’12, 26.9% in 2012-’13 and an estimated 27.8% in 2014-’15.

For government to generate an additional R45bn it will have to either increase the VAT rate by 3 percentage points, the personal income tax rate by 6.1 percentage points or the corporate income tax rate by 5.2 percentage points.

A simulation by the National Treasury on behalf of the tax committee shows that while the VAT increase will be inflationary in the short-run, the impact of a VAT increase on economic growth and employment would be less severe than a rise in individual or company tax rates.

Fiscal impacts of an increase in VAT vs. similar increases in PIT and CIT
Screen-Shot-2015-07-12-at-9.55.56-PM-500x361.png
Source: Davis report

“Increases in direct taxes dampen growth, which in turn leads to reductions in tax revenues and constrains the ability of the State to reduce inequality through the expenditure side of the budget,” the committee concludes.

PwC Africa head of indirect tax Charles de Wet says in a statement that studies done by the Organisation for Economic Cooperation and Development (OECD) indicate that broadening the VAT base (no zero-rating or exemptions granted) is the best way to increase VAT revenues.

The OECD report on VAT also confirms that relief for poor households can be better provided through direct transfers such as the social grant system that South Africa already has.

“We hold the view that a reform of the tax mix in South Africa should commence with broadening of the tax base by the elimination of certain zero-rated supplies, with the exception of exports, and any increase in the VAT rate should be considered in tandem with targeted social grants,” says de Wet.

SA Institute of Tax Professionals (SAIT) VAT committee chair Victor Terblanche says a detailed economic analysis should be done on the items included in the basket of zero-rated food stuffs.

“It is not the ideal instrument to benefit the poor. No further zero-rated food items should be considered. It is better to collect tax revenue and redistribute through a targeted transfer to the poor,” he says.

In 2011-2012 more than R40 billion in revenue was forgone as a result of zero rating of certain supplies, of which R19 billion was in relation to basic food such as vegetables, fruit and milk.

SAIT Deputy CEO Keith Engel says the tax committee’s report favours “traditional VAT thinking” with the biggest surprise the openness to a debate around the VAT taxation of financial supplies.

Under the current legislation a non-fee based financial service is exempt from VAT. This means that the financial institution is not able to deduct the VAT paid to a third party supplier of services, which then becomes a hidden cost.

In order to avoid this cost financial institutions try to undertake the required service themselves and in the process the institutions have become increasingly vertically integrated.

This has led to less competition, less specialisation and less potential growth of the industry, says de Wet.

The Davis committee is of the view that various approaches in other jurisdictions should receive urgent consideration by National Treasury and the South African Revenue Service.

One of options to consider is to allow financial institutions to tax supplies of financial services to entities that are in a position to claim the VAT as input tax.

Terblanche warns that the complexity and compliance cost of these concepts deserve detailed analysis before implementation could be considered.
When your road comes to an end ...... you need a HILUX!.

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Life is like a jar of Jalapeño peppers ... what you do today, might burn your ass tomorrow.
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Mon Jul 13, 2015 6:19 pm

You're a barrel of fun tonight, Andy! ;)


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Mon Jul 13, 2015 6:55 pm

Hehe! Aren't I just! :D:
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Mon Aug 17, 2015 10:33 am

Never take investment advice from a fund manager
(By Magnus Heystek)


What’s that old saying again? “History doesn’t repeat itself, but it does rhyme...”

Therein lies a lesson for many South African investors who still seem to think that inertia is the best investment strategy, especially, considering the tumultuous and wealth-altering times we have been living in over the past few years.

For the past five years I have been on a crusade, some would call it, trying to warn investors and anyone who cares to listen, that the foundations of wealth creation for the average investor in South Africa are under enormous pressure and, like a sand castle, are being undermined by the incoming tide.

Five years ago I hosted a countrywide series of seminars with the redoubtable Clem Sunter, our foremost scenario planner and author. At the time Sunter was still vacillating between SA being part of the first league or perhaps a country playing in the regulation play-offs. He was even calling for a stronger rand going forward. Once a mining man always a mining man, so it seems.

I was firmly of the view that offshore assets were vital to the portfolios of all local investors. And so it came to be….

On my reading, SA is now firmly set on the low road and about to be relegated to the third league, notwithstanding the delusions of our president. Our economic fabric is fraying at the edges. We won’t see an economic growth rate of 3% per annum for a very long time, especially not with the current mishmash masquerading as economic policy.

The rand’s outlook

Let’s take the rand for example. In five years the rand has dropped from 6.50 to the US dollar, to this week’s R12.85. Everything you pay for in US dollars will now cost you 90% more.

Overseas travel will decline, the purchase of imported goods and services will soar in value and in a normal situation inbound travel would soar, were it not for the imbecilic visa regulations by another ANC-politician with a chip on both shoulders - a well-balanced politician in other words.

The rout in the rand is not over, not by a long shot and by the time this is all over, the rand could be trading at R15, R18 or maybe even R20 to the US dollar.

It’s interesting to note that now that Cees Bruggemans, former chief economist at FNB, is not constrained by the political chains of his former position, he is free to speak his redoubtable economic mind.

As I have said before, most full-time economists work either for one of the big banks or large asset managers where the truth is better left alone. Speaking the truth about the economic road that lies ahead could be career limiting. Political expediency triumphs over the truth. But every day normal, middle-of-the-road people base their investment decisions on these heavily massaged facts that are trotted out to the media and eventually to the public.

Bruggemans can now ask the probing question that all economists should be asking: ‘How many economists five years ago or even as recent as three years ago suggested a substantially offshore position in your investment portfolio?’ Here and there you might find one but most mainstream economists operate on the basis of ‘don’t rock the boat’.

How would you react, gentle reader, in reading that an investment of a similar risk (S&P 500 versus the JSE in rand terms) has returned more than double that of the local investment?

Where would you read that? Nowhere, as much of what you read in the financial press is heavily controlled by a number of large asset managers. The truth is, the JSE has returned 15% per annum over the past five years whereas an investment in the S&P 500 more than 33% per annum. The same pattern is repeated over three years, one year and even six months. All the other major indices of the world show a similar pattern.

So, on a global basis your local investment returns have been slaughtered by the returns international investors have been earning. Never take investment advice from a fund manager.

Let’s talk residential property prices

The other day I was driving home listening to a favourite radio station, MixFM, when up popped an interview with a local estate agent. Again we were saddled with that hairy old chestnut that “residential property is the biggest investment the average investor will make in his or her lifetime”. I almost flipped my car as I tried to Google the station’s number to try to point out this bald-faced lie.

“It’s your biggest debt, not your biggest investment”, I wanted to shout down the line, as thousands of would-be property moguls are finding out to their detriment as the residential property market enters its seventh year of a bear market.

Average property prices - with the exception of the Western Cape - are still 20% lower in real terms than they were at the peak at the beginning of 2008 and are set to decline by another 2% to 3% in real terms this year.

You haven’t seen or heard the term ‘negative equity’ yet, but you soon will. Property values are dropping in both real and nominal terms in many parts of the country. The pockets of areas where property prices are holding their own is shrinking rapidly. In many smaller towns the property market has stopped functioning.

World class African city? I think not

You cannot have an efficiently-functioning property market when Johannesburg, still proclaiming to be a World Class African City, takes over seven months to issue clearance certificates.

As I wrote in April this year I sold one of my ‘investment’ properties in Dainfern, and I cannot get this wonderful city to sort out this mess. Millions of rands have effectively been locked up, the house stands empty and I’m massively out of pocket. Likewise, the survivor from Stalingrad (read Investment Lessons from Stalingrad), who sadly passed away some weeks ago, also sold his house in December last year. To date the transfer has not been completed. So please don’t tell me residential property is a sound investment. It’s not.

South Africa and all its people, rich or poor, are rushing headlong into an economic disaster. I don’t share the sanguine views proffered by columnists Max du Preez and Peter Bruce. I think President Jacob Zuma is unlikely to leave at the end of his term in 2019 and even if he does, the economic damage he has done would be so vast and deep that it would take many years to heal the scars. Even replacing Zuma with someone else will make no difference. The system of political patronage now runs so deep and wide, affecting all sectors of political power and money, that it’s not going to be dislodged soon. An octopus does not let go easily.

All this at a time when commodity prices have collapsed and are unlikely to increase again for many years. Even if they recover tomorrow, will foreign investors rush into setting up mining companies in South Africa? Not after our government last week effectively made mining rights subject to the whims of a mining minister. Say goodbye to foreign investment in our mining sector.

There is very little to show from the most recent commodity boom (1980 to 2002). Nor from the boom fuelled by the inflow of money sans 2008. The cupboard is empty. Yet government wages are up 40% since the Great Financial Crash. In many other parts of the world government officials have accepted cuts of up to 25% in wages and salaries.

The ever-shrinking tax base is now in the cross-hairs of Sars. Prepare to be hunted down like Cecil the Zimbabwean lion.

Let me end with a quotation from Warren Buffett: “Read, read and read some more. Or suffer the consequences….”

*Magnus Heystek is the investment strategist at Brenthurst Wealth. He can be reached at magnus@brenthurstwealth.co.za for ideas and suggestions.
When your road comes to an end ...... you need a HILUX!.

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Mon Aug 17, 2015 12:05 pm

:shock2: :shock2: Wow, the future looks non-bright after reading that :shock2: :shock2:

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Mon Aug 17, 2015 12:11 pm

Seems Magnus also needs to take a "wider look" ... but that might just not suit his style of writing .....


His section on the rand tot he dollar might as well have been copied from the press ten years ago - when we also saw R13 to the dollar .... at the time many moved their money out of SA - to only LOOSE money as the exchange rate reset itself.

YES, over many decades the rand has consitantly lost ground to the dollar, but Magnus is just a tadd alarmist at this point in time


property prices - yes, in the Western Cape it HAS picked up, and massively so !! I know of properties where the recorded sales prices has risen by 30% in the last 18 months, in ordinary middle class areas.

But lets look wider, AND longer.
2001 - 245k for a 2 bed roomed property
2005 - 300k for the same property
2007 - 800k for that same property !!! 2007 saw an absurd rise in property prices.

beginning 2008 the market "Reset" itself, and hovered there for 5 years before picking up again in the Western Cape. Other areas may pick up, or it may drop a bit, either way still WAY above the 2005 levels.

Certainly not the time to NOW buy for a quick profit. Those that buy now must have a long term vision.



as for "shares" .... I only need to look at my annuity, the real value at the moment, and the actual money paid to realise just how BAD the markets are doing at the moment, measured over the last decade.... or more correctly, there have been high points, but right now the markets is LOW ....



all things considered - right now I DONT know what to invest in !! Certainly, NOT in shares ....

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Mon Aug 17, 2015 12:44 pm

Property in the Western Cape is still a good option at this time, but it's true that the market in the rest of the country has dwindled. Magnus is still one of the voices out there that I take seriously and yes, he can come across as being a bit alarmist, but he's never far off the mark.

That said, I differ slightly with his opinion IRO property, depending on what and how you invest. Property based shares are not performing as well as they were 8 to 12 months ago, bit they're still better than most others with far less risk. I would try avoid commercial property for a while, but residential is still producing good returns, especially when it comes to student accommodation where good management is in place.

Off shore investments certainly do look very attractive at the moment and I agree with him there. It's always wise to diversify a little and not have all your proverbial eggs in the same basket.

The share market outside of property is more tricky. One has to really have a finger on the pulse all the time but some of the blue chip stuff is still a fair long term option.

One thing is for sure, you cannot leave it standing idle in a bank account. You have to try grow it in some way or another.
When your road comes to an end ...... you need a HILUX!.

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Life is like a jar of Jalapeño peppers ... what you do today, might burn your ass tomorrow.
Don't take life too seriously ..... no-one gets out alive.
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Vehicle: '90 SFA Hilux DC 4X4, Full OME, 110mm lift. Brospeed branch, 50mm ss freeflow exhaust. 30 x 9.5 Discoverer S/T's on Viper mags. L/R tank. (AWOL) '98 LTD 2.4 SFA, dual battery system. Dobinson suspension, LR tanks, 31" BF mud's.
Real Name: Andy
Club VHF Licence: HC103

Thu Feb 25, 2016 12:55 am

The 2016 - 2017 budget summarised .....

http://today.moneyweb.co.za/article?id= ... s4sNXYxCE4" onclick="window.open(this.href);return false;
When your road comes to an end ...... you need a HILUX!.

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Life is like a jar of Jalapeño peppers ... what you do today, might burn your ass tomorrow.
Don't take life too seriously ..... no-one gets out alive.
It's not about waiting for storms to pass. It's about learning to dance in the rain.
And be yourself ..... everyone else is taken!

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Stef
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Joined: Mon Jan 25, 2010 12:54 pm
Town: Pretoria
Vehicle: '98 LTD
Real Name: Stefan
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Thu Feb 25, 2016 2:56 pm

Andy, about credit cards 4 posts or so up...never had one myself until recently when I financed the offroad trailer. If managed correctly it is finance at your fingertips without the hassle and what I like about it is that the installments decrease as the outstanding capital decreases and every little bit you pay extra has tangible impact.

When I did my homework on credit card vs HP, it came to a R30k saving on final amount paid back over the term, assuming that the credit card installments did not decrease and the fact that the credit card is over 36 months as opposed to the HP for +-R400 less/month but over 60 months. By my calcs, if I were to pay an additional R1000 monthly, I could pay it off in less than 24 months.

Admittedly, very easy to abuse that hassle free finance :mrgreen: one has to have some discipline

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Mud Dog
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Vehicle: '90 SFA Hilux DC 4X4, Full OME, 110mm lift. Brospeed branch, 50mm ss freeflow exhaust. 30 x 9.5 Discoverer S/T's on Viper mags. L/R tank. (AWOL) '98 LTD 2.4 SFA, dual battery system. Dobinson suspension, LR tanks, 31" BF mud's.
Real Name: Andy
Club VHF Licence: HC103

Thu Feb 25, 2016 4:03 pm

Stef, I've never really looked at it in detail, but I'll take your word for it. :D:
Fact is, I've only had one credit card ever in my life which I cut it up after 3 months and every other one of the dozens that the banks subsequently sent me over the years. (I was in my early twenties at the time). It's a fact that you will abuse it a little (maybe a lot) here and there over time, even if you try exercise discipline.

I do however have a couple of debit cards .... no danger there - there have to be funds in the account to use it.

I'm sure that I've said it here before, if I cannot pay cash (or debit card) for something, it means that I cannot afford it at that time. As a result I have no debt other than my municipal and Helkom accounts that I always pay timeously. Debt of any kind is expensive to service, especially if it's big and long term.

Wait, I lied, .... I do have another debt, but it's purposely maintained, and that is a mortgage bond of a few hundred rand, just to keep the bond account active. If I ever need big money desperately and have to make use of some form of finance, a home loan is the cheapest form of finance that you can get. These days it's easy enough to take out a bond extension, provided that the property value comfortably exceeds the bond amount plus the extension amount.

I'm no financial guru, but my way of thinking is that if you are servicing debt you're haemorrhaging hard earned resources that are ultimately lost forever and set you back from reaching financial freedom. Just M2CW. :winkx:
When your road comes to an end ...... you need a HILUX!.

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Life is like a jar of Jalapeño peppers ... what you do today, might burn your ass tomorrow.
Don't take life too seriously ..... no-one gets out alive.
It's not about waiting for storms to pass. It's about learning to dance in the rain.
And be yourself ..... everyone else is taken!

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Stef
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Real Name: Stefan
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Thu Feb 25, 2016 4:23 pm

:D: I also did not believe the so called personal banker when he told me the credits cards are cheaper than HP.

I must say I put down a 50% deposit in cash which minimizes the cost of servicing the debt (plus I couldn't wait another 2yrs LOL)

I've done the "borrow from the the bond" thing in the past for home improvements, provided one puts the extra money in monthly it could work ito the personalized rate etc. But 2 years down the line I still had +- the same outstanding balance so I'm steering way clear.

Vehicles & houses one will always have to finance, other than that I pretty much have the same philosophy, cash/debit card all the way, even home improvements ...reason why basic stuff takes 5 yrs to complete :mrgreen:

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Mud Dog
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Vehicle: '90 SFA Hilux DC 4X4, Full OME, 110mm lift. Brospeed branch, 50mm ss freeflow exhaust. 30 x 9.5 Discoverer S/T's on Viper mags. L/R tank. (AWOL) '98 LTD 2.4 SFA, dual battery system. Dobinson suspension, LR tanks, 31" BF mud's.
Real Name: Andy
Club VHF Licence: HC103

Wed Dec 07, 2016 7:26 am

As you read this, your e-toll debt might be prescribing
By Antoinette Slabbert


Outstanding e-toll debt has begun to prescribe as three years have passed since the controversial system became operational, the South African National Roads Agency (Sanral) confirmed.

This means that unless road users were summoned or formally acknowledged the debt, they would be able to defend efforts by Sanral to recover the money by raising prescription as a defence in court.

Road users at the end of September owed Sanral R6.2 billion in unpaid e-tolls, Sanral said.

With every day that passes, the outstanding e-toll debt incurred on the same day three years ago, would qualify for prescription.

Sanral told Moneyweb “Conservatively speaking, the civil claim of unpaid tolls does expire after three years unless prescription is halted. It is important to note that prescription is a defence that the debtor must raise and a court is not allowed to mero moto (out of own motion) take note of prescription.”

Sanral told Moneyweb it has so far “prepared 6 286 summonses” to be served by the Sheriff to road users. These summonses represent R575 million of outstanding toll fees. This, it says, is the first step to recover the total outstanding R6.2 billion.

It is not clear how many of these summonses have in fact been served.

The roads agency however says that non-payment of toll is both a criminal and civil offence in terms of the Sanral Act. Since criminal offences only prescribe after 20 years, the outstanding amounts are still recoverable, it maintains.

Sanral would therefore not quantify the financial risk posed by prescription.

Organisation Undoing Tax Abuse (Outa) chairman Wayne Duvenhage is however very sceptical about Sanral’s chances of success with criminal prosecution and asks how that will assist it in collecting the outstanding amounts.

He points out that transport minister Dipuo Peters earlier gave an undertaking that road users won’t be criminalised as a result of failing to pay e-tolls.

He further criticises Sanral’s reporting of outstanding e-tolls in its annual financial statements for 2015/16. “The most alarming aspect of Sanral’s 2016 financial statements is the increase in trade receivables from R1.15 billion in 2014 to R4.96 billion in 2015 and R7.66 billion in 2016. Sanral clearly continues to count unpaid e-tolls as an asset on its balance sheet, when all indications point to virtually no hope of recovering this money,” Duvenhage says.

Duvenhage says only one in five users pay for the use of Gauteng’s freeways and 2.9 million unique road users are in default. Nevertheless “there appears to be no acknowledgement in Sanral’s annual report that the scheme has largely failed in achieving its aim to repay the debt borrowed for the upgrade”.

This comes as the Less60% campaign aimed at encouraging motorists to pay their historic e-toll debts rendered only R146 million in discounted total payments so far and payment agreements for a further R123 million.

Since the campaign ended in May Sanral’s income from e-tolls has varied between R61 million and R71 million against a forecast of R101 million. The forecast was revised in May 2016. This is an under-recovery of between 29% and 39%.

Nevertheless investors showed considerable appetite at Sanral’s last debt auction in September when the R500 million requirement was more than three times oversubscribed with bids totalling R1.7 billion.

“Our going concern is intact and we have sufficient cash to meet our obligation for this year and the next,” Sanral told Moneyweb.
When your road comes to an end ...... you need a HILUX!.

Image
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Life is like a jar of Jalapeño peppers ... what you do today, might burn your ass tomorrow.
Don't take life too seriously ..... no-one gets out alive.
It's not about waiting for storms to pass. It's about learning to dance in the rain.
And be yourself ..... everyone else is taken!

User avatar
Mud Dog
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Posts: 28542
Joined: Tue Apr 29, 2008 2:18 am
Town: East London
Vehicle: '90 SFA Hilux DC 4X4, Full OME, 110mm lift. Brospeed branch, 50mm ss freeflow exhaust. 30 x 9.5 Discoverer S/T's on Viper mags. L/R tank. (AWOL) '98 LTD 2.4 SFA, dual battery system. Dobinson suspension, LR tanks, 31" BF mud's.
Real Name: Andy
Club VHF Licence: HC103

Wed Jan 18, 2017 11:56 am

Just love this article! :D:

http://firstthing.dailymaverick.co.za/a ... H803HYxDxU" onclick="window.open(this.href);return false;
When your road comes to an end ...... you need a HILUX!.

Image
Image

Life is like a jar of Jalapeño peppers ... what you do today, might burn your ass tomorrow.
Don't take life too seriously ..... no-one gets out alive.
It's not about waiting for storms to pass. It's about learning to dance in the rain.
And be yourself ..... everyone else is taken!

User avatar
Mud Dog
Moderator
Moderator
Posts: 28542
Joined: Tue Apr 29, 2008 2:18 am
Town: East London
Vehicle: '90 SFA Hilux DC 4X4, Full OME, 110mm lift. Brospeed branch, 50mm ss freeflow exhaust. 30 x 9.5 Discoverer S/T's on Viper mags. L/R tank. (AWOL) '98 LTD 2.4 SFA, dual battery system. Dobinson suspension, LR tanks, 31" BF mud's.
Real Name: Andy
Club VHF Licence: HC103

Thu Jan 19, 2017 11:24 am

This one follows .... another eye-opener! :blink:

http://firstthing.dailymaverick.co.za/a ... IB5MHYxDxU" onclick="window.open(this.href);return false;
When your road comes to an end ...... you need a HILUX!.

Image
Image

Life is like a jar of Jalapeño peppers ... what you do today, might burn your ass tomorrow.
Don't take life too seriously ..... no-one gets out alive.
It's not about waiting for storms to pass. It's about learning to dance in the rain.
And be yourself ..... everyone else is taken!

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