NFB Sensible Finance Magazine issue 13

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issue 13

PERSONAL FINANCE

November 2009

Magazine

TOO MUCH, TOO SOON It pays to take good care of the present, in order to prepare for the future RISK PLANNING consider all the possibilities and be prepared IT'S CHRISTMAS! some useful money saving tips WIN A WEEKEND AWAY IN KNYSNA see inside for details

financial services group

At NFB, we take planning for your

how

retirement seriously. And so we should living in an era where your

financially

prepared are you for retirement?

retirement years may be even longer than your working life and in a country where only 6% of the population retire financially independent. Yet, so few people give their retirement planning the necessary due consideration until it is too late, often also failing to provide the ongoing effective investment management required of living annuities beyond the date of retirement.

Let us

guide the way

NFB have 22 years experience in retirement and investment planning for both individuals and corporate groups. The company has developed an exceptional clientcentric culture with commitment to unrivalled product innovation and optimising investment results within client specific risk tolerances. Positioned as an independent and therefore unbiased financial services provider, NFB have three times been nominated as one of SA's Top 20 Unlisted Companies and were recently nominated as one of SA's Top 8 Best Practices of the Year!

Give one of NFB’s financial advisors a call and allow us the opportunity to assist in getting your retirement plan on track.

financial services group NFB is an authorised Financial Services Provider

East London Office Johannesburg Office Tel: (043) 735-2000 Tel: (011) 895-8000 Email: nfb@nfbel.co.za Email: nfb@nfb.co.za www.nfb.co.za

sensible finance

ED’SLETTER

editor Brendan Connellan bconnellan@nfbel.co.za

contributors Duncan Wilson (NFB), Travis McClure (NFB), Chris Lemmon (NVest), Shaun Murphy (Klinkradt & Assoc.), Grant Berndt (Abdo & Abdo), Kathleen Lee (Harvey World Travel), Natalie Dillon (Old Mutual), Verusha Ramlakhan (Glacier by Sanlam), Debi Godwin (IE&T), Jonathan Goldberg (Global Business Solutions), Robyne Moore (NFB) Paul Marais (NFBAM), Brendan Connellan (NFB)

advertising Robyne Moore rmoore@nfbel.co.za

layout and design Jacky Horn Design jacky@adhocconsulting.co.za

address NFB Financial Services Group East London Office NFB House, 42 Beach Road Nahoon, East London, 5241 Tel: (043) 735-2000 Fax: (043) 735-2001 E-mail: nfb@nfbel.co.za Web: www.nfb.co.za

Photos BigStockPhoto.com

The views expressed in articles by external columnists are the views of the relevant authors and do not necessarily reflect the views of the editor or the NFB Financial Services Group. Š2009 All Rights Reserved.

No part of this publication may be reproduced in any form or medium without prior written consent from the Editor.

a sensible read

W

hile researching news over the months from one edition to the next, it never ceases to amaze me just how much changes in short spaces of time. Unfortunately though, the positives do seem outweighed by the negatives over the last few months.

On the bright side, East Londoners have been treated with Hemingways mega mall's opening and will finally have more shopping and dining variety than ever before; the Loaves and Fishes Network (refer to the follow-up article in this magazine) were thrown a lifeline by Premier Kiviet to keep the organisation alive for another year and the Currie Cup has provided us with much-needed escapism.

But, on the not so bright side, we have, despite the recession, seen government Ministers spending obscene amounts on new cars (not to mention the Police Minister's hotel bill or the bountiful perks our Ministers receive), MTN and Bharti Airtel's failed merger, plans of the platinum smelter in Coega being cancelled (ala Eskom), the continued Jackie Selebi debacle, Bafana Bafana coach Joel Santana being fired only months before the World Cup, Caster Semenya's dreams dashed, the untimely deaths of Michael Jackson and Patrick Swayze, more tsunamis and whispers of 40%+ per annum rate hikes in electricity prices for the next three years!

Now how to tie all that back to one common personal finance theme I'm not exactly sure, except to say that we're still certainly in a negative environment which must have negative impacts on our economy. Although there are signs that the end of the recession is nearing, being cautious may still be a prudent strategy to follow.

Diversify your assets and investments, keep debt to a minimum, spend sensibly this Christmas and plan for the unexpected!

With that, NFB and the entire NVest Financial Holdings Group (including NVest Securities, Independent Executor and Trust and the various NFB divisions and branches), would like to thank our clients and partners for their support throughout an exciting year in our history. We look forward to further improving our service offering in the future.

May you have a safe and enjoyable festive season.

Brendan Connellan - Editor and Director of NFB Email your full name to nfb@nfbel.co.za to subscribe to NFB's free economic electronic newsletters. another aspect of our comprehensive service

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SENSIBLE CONTENTS

nfb sensible finance

November2009

3 THE LOAVES AND FISHES NETWORK NFB touching lives in our community...you too can make a difference!

4 STRUCTURING SALARIES Very little room to move for basic salaried employees. By Shaun Murphy, CA (SA), Partner - Klinkradt & Associates

6 TEACHING YOUR CHILDREN TO SAVE AND INVEST Wish you had started investing earlier? Help your children start off in the right direction.

8 MORE THAN JUST A RIGHT TO A VIEW The right to object is not limited to the objector's right to a view. By Grandt Berndt - Abdo & Abdo

9 HOLD A DIRECT SHARE PORTFOLIO THROUGH YOUR RETIREMENT FUND! How to increase the earning potential of your retirement savings. By Brendan Connellan, Director - NFB 9 MEDICAL SCHEMES AND ICD-10 CODES Why your claim may be rejected.

10 HAVE YOU INCLUDED RISK PLANNING AS PART OF YOUR OVERALL FINANCIAL PLAN? Consider the possibilities and be prepared. By Verusha Ramlakhan, Product Manager - Glacier by Sanlam

11 TIPS TO KEEP IN MIND WHILE TRAVELLING ABROAD Information for a stress-free, successful trip. By Kathleen Lee, Marketing Executive - Harvey World Travel

12 TOO MUCH, TOO SOON It pays to take good care of the present, in order to prepare for the future.

By Duncan Wilson, Financial Advisor - NFB

14 URBAN LEGENDS AND MISCONCEPTIONS DISPELLED Clarifying a few misconceptions associated with Wills and Estates. By Debi Godwin, Director - Independent Executor & Trust

16 CHRISTMAS MONEY SAVING TIPS There is no need to cancel Christmas this year! By Robyne Moore - NFB

17 SO WHAT IF YOU HAVE CONTROL OVER TRUST ASSETS? Be certain that your last will and testament allows for no grey areas. By Natalie Dillon, Legal Advisor - Old Mutual

18 THE FINAL PIECE OF THE BBBEE PUZZLE An integrated approach to BBBEE which can now finally be implemented.

By Jonathan Goldberg - Global Business Solutions

20 FOCUS ON SA FUND MANAGERS Aligning your financial manager's skill set to your objectives. By Paul Marais, Director - NFBAM

22 MAKING A CASE FOR STRONG DIVIDEND PAYERS Keep a watch for keenly priced investment opportunities. By Chris Lemmon, Director/Portfolio Manager - NVest

23 MONETARY FIGURES OF SPEECH Although we use them everyday, do you know what they mean?

24 Q&A. You ask. We answer. Advice column answering your investment, personal finance, life and/or risk insurance questions with Travis McClure, Financial Advisor - NFB

25 WIN A WEEKEND GETAWAY TO KNYSNA Stand in line to win a weekend away for two, compliments of the House of Travel, East London

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SENSIBLE RESPONSIBILITY

Loaves & Fishes Network Touching lives in our community – you too can make a difference!

I

n the July edition of our magazine we highlighted the plight of the Loaves and Fishes Network whose entire government funding, which they had greatly relied upon, had been completely withdrawn.

Over the past few months, due to media coverage and the dedicated networking of staff, volunteers and friends of the LAFN, many more people in East London (and even overseas) have been alerted to their crisis. And donations of food, clothing, toys, equipment, furniture and even a brand new mini bus has come pouring in. In July, according to the balance sheets, the LAFN would in all likelihood have had to close it’s doors at the end of September, but now currently has enough funds to see them through to the end of February 2010!

Because of the fantastic and generous support from the East London community and businesses, it has been possible for the LAFN to continue assisting in the following ways: < keep delivering monthly grocery parcels of R204 each to more than 400 children; < help starving and destitute children to negotiate the administration of Home Affairs and social workers to receive grants; < get a desperately sick woman into hospital and find safe and caring homes for her children and, when she was discharged, an RDP home for the family to move into; < distribute mattresses and blankets to children shivering in bare hovels; < arrange uniforms and stationary for childheaded households and gas stoves to cook their food rations on.

Losing their government funding has highlighted to the LAFN that they need to diversify their funding. One of the avenues they are using in order to achieve this is by going on a major debit order drive. The aim is to build up a reliable funding base on which they can count when the going gets tough. If just 1,000 East Londoners each signed a debit order for R50, this would assist in covering

the organizations’ monthly administrative costs.

Should you wish to sign a debit order form in order to make a monthly contribution to assist in the sustainability of this very worthwhile organisation, kindly contact Robyne at NFB on 043 735 2000 or rmoore@nfbel.co.za

IT’S CHRISTMAS TIME!!!

That time of the year for spending with friends and family; a time of giving, festivities, gifts and feasting.

Please spare a thought for those who have no family, no home and who may not even have anything to eat at this special time. LAFN will be distributing gifts and hosting parties for the little ones. Should you wish to contribute in any way, please contact them at the numbers below.

For further reading or information: www.loavesandfishes.co.za LAFN contact details: 9A Dyer Street, Arcadia, 5241 P O Box 19640, Tecoma, 5214 Tel/fax: 043 – 722 0010 Cell: 082 306 5823 in proud association with

financial services group

As part of NFB's social responsibility programme, we support the Loaves and Fishes Network, a wonderful organisation that is making a huge impact on the lives of those who need it most in and around East London.

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SENSIBLE TAX

STRUCTURING SALARIES A very common question posed to us in practice is: â&#x20AC;&#x153;How can I reduce my monthly taxation or improve my salary structure to become more tax efficient?â&#x20AC;? Well, this is one place where, in my opinion, Trevor Manuel and SARS have been very CLEVER in their approach to allowable deductions for the salary earner. By Shaun Murphy CA (SA), Partner - Klinkradt & Associates

B

asic salary structured packages in today's

now sitting at 18,000 km out of a total of 32,000 km

world encompass basic salaries, travel allowances, motor vehicle fringe benefits

of travel per year leaving only 43% of the annual km's for business. As a result, it is becoming more

and then some form of company and employee

and more important for travel allowance recipients

contribution to pension and/or provident funds. It is important to note that there is a difference in the treatment for tax purposes of pension fund and provident fund contributions. Simplistically, pension fund contributions come from taxable income earned by the employee and provident fund contributions fall outside this, and as a result are not deductible on a monthly basis.

Provident funds are generally regarded as salary sacrifices i.e. the amount of taxable income contained in the Cost to Company package is

to maintain detailed logbooks, and when I say detailed, I do not mean mileage whenever you fill your car up, which is a common mistake - that is known as a fuel log!!

An important point for the recipient of a motor vehicle fringe benefit, (where the employer provides a vehicle for use in terms of the package) is that in certain instances where the tax payer can prove that the vehicle was used predominantly for business purposes with reference to a logbook, the commissioner (SARS) may reduce the amount

reduced by the contributions towards the provident fund on a monthly basis. The pension and provident fund scheme with employers further

subject to tax in the ratio of business versus private mileage. Not many individuals are aware that if you have the use of a company vehicle solely, that a

creates issues with additional retirement annuity contributions that you may or may not have at the time and the prospective deductions that you may be thinking is on the way. It is important to remember that if you have a pension or provident fund contribution that is based on a percentage contribution, that income is deemed to be gross retirement funding income, and this amount is excluded from the equation when determining the 15% of taxable income that is to be utilized for retirement annuity deduction purposes.

Travel allowances are rapidly being clamped down on by SARS and in a short while only legitimate log books will be accepted. This is one area where individuals are being caught more and

logbook may result in a tax saving.

In short, there is very little that is afforded to straight salary earners that wish to have elaborate schemes in place to reduce and or postpone the taxation that is levied in terms of the PAYE tables.

Cell phone allowances, entertainment allowances, subsistence allowances are all best left off as no deduction is permitted against these allowances any more, it is far more advisable to have the above on a re-imbursement allowance basis, which is generally speaking non-taxable.

In the next issue I will touch on commission earners who have a far better tax platform to play with.

more often with the shift in private mileage increasing each year under the deeming provision,

Should you have any queries please feel free to e-mail me on shaun@kliwal.co.za

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Photo BigStockPhoto.com

SENSIBLE LESSONS

Teaching your children to save and invest How many times have you looked back on life and wished that you had started investing earlier? Teaching your children, or grandchildren, a few simple lessons about saving and investing can start them off in the right direction toward a secure financial future, and can be as easy as 1, 2, 3.

Step 1: The value of savings

vehicles, such as Unit Trusts. It is important to

Teaching your children about saving money for a

educate your children that there is market risk

specific purpose is key to instilling good investment habits for the future. The lesson is a simple one - if

involved when investing in Unit Trusts, including possible loss of capital.

you want something, you have to save for it. Talk to

Hint: A great way to encourage your children

your children to find out what it is that they want (chances are they've already told you this during your last trip to the shopping mall). Once you know what it is and how much it will cost, work with your children on how they can save for it by using their allowance or pocket money. Give your children options for reaching their goals, such as saving all of their allowance for a certain number of weeks vs. saving half of their allowance for twice as long.

This teaches your children to view their options and make informed decisions about how to manage

to invest more of their savings is through a â&#x20AC;&#x153;matching programâ&#x20AC;?, where for every rand they invest, you match it with a rand of your own.

Step 3: Stay involved in the process

their money.

Hint: A good way to encourage smaller children to start saving is to provide them with a

children's bank or Unit Trust statements with them. If they are investing in a Unit Trust account, show them how to look up the value of their funds in the

"piggy" bank.

Step 2: The value of investing Once your children have learned how to save money to achieve their goals, it's time to teach them how to earn money through interest accumulation. Learning about the benefits of compound interest is important to encourage your children to invest their money in income producing investments.

It's now time to put principle into practice. A good first step in moving from the piggy bank to the stock market is a simple savings account. As your children's savings grow with money from waitering, baby sitting, or other first jobs, you may want to introduce them to other investment

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Most children look to their parents as a primary source of financial information. This makes it important for you to stay involved with your children throughout their learning experience with investments. Take the time to go over your

newspaper or on the Internet. Get your children interested in their investments at an early age, and it will stick with them for life.

Last, but not least, practice what you preach.

You can talk to your children about investing until you're blue in the face, but chances are good that they will not pay close attention to the subject unless they see that you are following your own advice.

For further information on how to start your investment journey, contact Marc Schroeder, one of NFB's Financial Advisors, on 043-735 2000 or mschroeder@nfbel.co.za.

SENSIBLY LEGAL

MORE THAN JUST A RIGHT TO A VIEW In a previous edition we dealt with the right to a view. The issue has again been dealt with by our Courts, this time highlighting the fact that the right to object is not limited to the objector's right to a view.

By Grant Berndt - Abdo & Abdo

T

he basic facts dealt with, were that a structure

was being added to the eastern side of a residential home, 2 ½ storeys in height with windows running along that side of the structure.

The objector maintained that a person standing in this newly constructed room would have an unobstructed view into the interior of the western side of his home and into his recreational area, that the alteration would block out direct sunlight, the building line had been encroached on and the construction was unsightly.

The major issue dealt with the National Building Regulations and Building Standards Act of 1977.

The relevant section states that if a local authority, having considered an application (ie. the approval of a building plan) and is satisfied the plans comply with the Act, it is to grant approval. However, if the local authority is satisfied that the building to which the application relates, is to be erected in a manner or will be of such a nature or appearance that: 1. The area in which it is to be erected will probably or in fact be disfigured; 2. Will probably or in fact be unsightly or objectionable; or 3. Will probably or in fact diminish the value of adjoining or neighbouring properties, then the local authority is to refuse the application and give written reasons for the refusal.

The Court held that the refusal of an application is mandatory not only when the local authority is satisfied that the plans do not comply,

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but also when the local authority is in doubt about their compliance. An example would be where plans submitted do not clearly indicate the proposed height above the natural ground level if there are height restrictions affecting the particular residential area.

The Court held further that the local authority must be satisfied that the undesirable outcome was certain, and that if it was satisfied that the building would probably have a detrimental effect as set out in the Act, that it has to refuse the application.

The local authority would have to make this judgement. Thus, if the local authority was not satisfied that the requirements of the Act had been met, it has to refuse the application for approval of the building plans.

In the case in question, however, the court found that the local authority had applied its mind to the objections raised, and had not been satisfied that a reduction in the value of the adjoining property would result and was thus obliged to approve the plans, which it had done.

The local authority must therefore, not merely rubberstamp applications, but ensure that they comply with the Act. The Court also stated that the appeal procedure against an approval, as provided for in the Act, must first be followed before one approaches the court.

So once again, each case must be treated on its own merits, but in terms of the National Building Regulations and Building Standards Act, the right to object is not limited to the loss of a view.

SENSIBLE RETIREMENT

Hold a direct share portfolio through your retirement fund!

How to increase the earning potential of your retirement savings. By Brendan Connellan, Director, NFB

M

ost of us spend our working lives striving to be financially secure at retirement. Some are fortunate enough to reach this goal and the rest are left wishing they'd made better investment, career or study choices. Our role at NFB may not be to steer you in your career path, but we certainly can help guide you when it comes to making the best financial decisions.

Investors often make the mistake of not investing enough of their retirement savings in shares for fear of the higher risk associated with stock market investing. However, research has consistently shown that the risk of investing in the stock market diminishes substantially the longer one is invested in it! In fact, an investor is probably putting their retirement savings at greater risk investing in low risk, low yielding assets when they still had the time to benefit from the long term growth potential of shares!

Access to shares can occur in two ways; direct access (e.g. through a stock broker) or indirect access (e.g. via unit trusts). Both have their place and suit different types of investors. However, for

investors in retirement investment vehicles (retirement annuities, preservation funds, living annuities etc), the ability to access shares directly was not, until recently, an option. Flexible retirement investments are now available that combine the use of unit trusts or life funds with the ability to hold a portion of the underlying investment in an individually tailored share portfolio.

Our ability to do this makes various benefits available to the investor such as the ability to â&#x20AC;&#x153;lock inâ&#x20AC;? to dividend yields (income) without these distributions being affected by other investors moving in and out of fund structures, and complete transparency and control in respect of the underlying investment portfolio. Various risk-profiled models are also available.

If you would like more information as to how you can maximise your retirement nest-egg by investing directly into the stock market, contact an NFB financial advisor on 043-735-2000 or email nfb@nfbel.co.za

SENSIBLE HEALTHCARE

Why do medical schemes reject healthcare related claims because it does not contain an ICD-10 code?

Why your claim may be rejected What is the ICD-10 code? < From 1 January 2005, it is a legal requirement for all South African healthcare providers to include diagnostic information in the form of an ICD-10 code on claims or accounts. < ICD-10 stands for International Classification of Diseases and related health problems. < It is a coding system developed by the World Health Organisation that translates the written description of medical and health information into codes in a standard format. For example, J45.9 is the ICD-10 code for Asthma, unspecified.

Medical Schemes use these codes to accurately identify the conditions for which members receive medical care and also to reimburse the healthcare providers correctly for the services rendered.

It becomes very important if you have a PMB (Prescribed Minimum Benefit) condition as these can only be accurately identified by the correct

ICD-10 codes. If the correct diagnosis information is not provided your PMB-related services might be paid from the incorrect benefit e.g from the medical savings account instead of the risk benefit.

It may even be rejected altogether because you have exhausted your day-to-day benefits or belong to a benefit option that has no day-to-day benefits.

Medical scheme members can ensure that claims are properly assessed and paid for correctly by their medical scheme, by checking that an ICD10 code appears on the account before it gets submitted to the medical scheme for reimbursement.

Should you have any medical aid related queries, contact Leonie Schoeman, our Accredited Healthcare Intermediary, at NFB on 043-735 2000 or lschoeman@nfbel.co.za

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SENSIBLE INCOME

HAVE YOU INCLUDED RISK PLANNING AS PART OF YOUR OVERALL FINANCIAL PLAN? When you go on holiday, you start preparing and planning months beforehand to make sure that your holiday will go smoothly. And yet many people fail to put a similar amount of effort into preparing a financial plan.

Written by Verusha Ramlakhan, product manager - Glacier by Sanlam

T

o develop a sound financial plan, you need to draw up a budget and identify your financial and lifestyle objectives. When you are developing a framework for a financial plan, you need to recognise the fact that you will always live according to your value system. Values are the things that define you or that are most important to you - for example, possessions, status, relationships or even the freedom to travel the world.

A sound financial plan consists of: Estate planning Proper estate planning will ensure that there is sufficient liquidity in your estate to prevent the forced sale of assets to cover any outstanding debts.

Investment or retirement planning Investment planning encompasses capital growth, saving for - and receiving income during – retirement. In addition to supplementing savings in a pension or provident fund, contributions to a retirement annuity are tax-deductible up to the limits set by legislation.

Risk planning Risk cover means insuring oneself against the unforeseen - accidents or violent crime, serious illness and unexpected death. In other words, you take out insurance against misfortune. Insurance companies use the term “risk cover” as a collective term for life insurance, disability cover, functional impairment cover, dread disease cover and accident cover.

You will need to work out how much money your dependants will need to maintain their standard of living when you're no longer here. This process requires the advice of a qualified financial

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planner who can assist you to plan right down to the last cent. For example, there should be a lump sum in the estate to eliminate existing debt, replace the family car and pay for the children's education. Risk cover can be a good way to cover any shortfall in the amount that the family may require after all assets have been taken into consideration.

Each person is unique - with his/her own circumstances and needs. And personal circumstances and needs are the things that count when it comes to taking out risk cover. To start planning, you should consider the following: Will it ever happen to me? Could I lose everything I've accumulated in an instant? What if I become ill – will my family be taken care of? Am I covered if I have an accident?

What kind of accident could I have? What would happen if I become a victim of violent crime? Am I protected against unforeseen and unexpected events? Could any of these unexpected events change my life forever? Do I have enough saved up to take care of the family? Will we be able to maintain our standard of living?

What happens when the savings are used up?

Could I become a financial burden to others? Do I have sufficient risk cover? Do I have the right type of risk cover for my needs?

A qualified financial planner will be able to assist you to determine the needs of both yourself and your family and to ensure that you have a sound financial plan.

SENSIBLE TRAVEL

Tips to keep in mind while travelling abroad Information for a stress-free, successful trip. By Kathleen Lee, Marketing Executive â&#x20AC;&#x201C; Harvey World Travel, East London

L

et's begin by stating the obvious: one can

system; it is safe, quick and painless.

The second suggestion I would make is to find

never have too much information! This is never more true than when travelling.

out about tourist passes that can be used in the

Information is key to a successful trip, as it will give

city of interest; an example of such is a Roma Pass.

you the tools to save time and money, and may

A Roma Pass is a tourist tool, and provides free

get you out of a sticky situation. Having recently

access to two tourist attractions, the metro system

vacationed in Italy, I will share some of the

and buses in Rome. This is a practical tool, as not

valuable information that ensured our trip was a

only is it worth every cent and more in

success. Whilst this knowledge was gained whilst

transportation alone, but it saves you time too as

researching and touring Italy, I would imagine that

you get to skip the queue at the tourist attractions.

A couple of other quick tips would be:

it is valid in most other European and/or other major cities.

Our Italian experience was made up of residing in and travelling between Venice, Florence

<

always ensure your passport is still valid

<

have travel insurance which ensures monetary

and medical cover

and Rome. The first mistake we nearly made was

<

have funds easily available for an emergency

hiring a car to use as our primary transport. This

<

stay within walking distance of a transport system

seemed like a wonderful idea as one would have freedom of movement, and we assumed it would be a good way to see some of the countryside.

Little did we know that there is little to no available

unless you have hotel transfers or are willing to pay astronomical costs for taxis <

keep in mind the lugging of baggage and try to

pack as light as possible.

parking in Rome and Florence, and the part of Venice we were staying in had no parking

My last tip would be to stress less, and simply enjoy

whatsoever. Not only is parking a nightmare, but

it!

the roads are often congested and, other than Tuscany, the main routes are not scenic. Italy has an incredibly efficient public transport system, therefore, my advice: use it! To get from one city

Kathleen Lee, Marketing Executive at Harvey World Travel in East London.

to another, a more than viable option is the rail

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It pays to take good care of the present, in order to prepare for the future. By Duncan Wilson, Financial Advisor - NFB

T

he infamous demise of Lehmans and the ensuing crises in world markets, should have taught us humans that the bursting of one

bubble should not allow for the inflation of another.

As Lehmans capitulated, the U.S. Government wagged their finger at other institutions believing that any anaemic ties that other institutions had with Lehmans, had all been severed. They were so wrong.

The market was not convinced, world indices sold off and the streets turned red as the premiere for The Great Depression 2 bore malevolently down on us. The government support that followed seemed to only reinforce to major market players that they could take whatever they wanted, and when the market crashed, they could get to keep it.

Outside of the now famous Ponzi Schemer's,

â&#x20AC;&#x153;The best way of preparing for the future is to take good care of the present, because we know that if the present is made up of the past, then the future will be made up of the present. All we need to be

Bernie Madoff and Allen Stanford, a far greater number of people were in fact jailed after the junk bond collapse in the 1980's. Estimates indicate that the final tally of government spending that would have been thrown at the problem, will be close to $10 trillion. The irony is that quantitative easing (monetary expansion) that is not part of an overall program to reform, regulate and renew the system is flawed. The inability to change and correct the very elements that caused the crisis in the first place, is nothing more than a Ponzi scheme itself.

Most would estimate that yet another equity bubble has been inadvertently engineered by the Fed in the US, and to a lesser extent globally. It is the fairly simple idea of monetary expansion, which

real economy and has instead been directed at far riskier assets. We should also remember that it makes for bad politics to impose heavy reforms on capital markets.

The reality is that global markets have recovered well, despite having come off a very low base, and being bullish is back in vogue. It has

was initially intended to address the problem, but which failed miserably through a lack of reform of the underlying issues. This monetary injection from

never paid to be a bear, nor a realist for that matter. If bears are proven wrong they are ostracised, but if their utterances are proven right

the Fed, and others, has not found its way into the

they merely suffer with everyone else. One must

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responsible for is the present moment. Only the present is within our reach. To care for the present is to care for the future.â&#x20AC;? Buddha

SENSIBLE INVESTOR also realise that major financial centres have been built on the ability to peddle hope over reality.

and widely credited with accurately predicting the previous crisis, sees anything but a convincing recovery. He has gone as far as saying that the US

The fact remains that fundamentals have

government has already planted the seeds for the next financial crisis.

not been adequately tended to and many equate much of the recent market push to that of a structure built on sand.

5. The US Consumer, although deeply scarred, is still a force to be reckoned with, but is shopped out, heavily burdened with debt and having to cut

Points to Consider 1. Credit growth does not support the resurgence that we have seen thus far and some go so far as to equate the major financial institutions with 3rd World despots, hijacking the incoming aid to finance warlords, with little or nothing reaching the masses. Unconstrained credit in gluttonous volumes is dire as we have so discovered, but an adequate supply of it is vital.

2. The Gold Price currently sits at a record high of $1064 an ounce. Most would argue that the Gold price rises due to inflation concerns (from the sheer increase in money supply), but in fact Gold is not nearly as good an inflation hedge as previously thought. Gold is a far greater measure of uncertainty in the market.

3. Global markets, but particularly the US, have moved quickly from a state of “cautiously optimistic” to “cautiously pessimistic”. The proof of the company earnings will be in their true tally. The graph below depicts this overvaluation in the form of the S&P 500's current price earnings ratio, indicating a current state of overvaluation from a not so distant undervaluation.

4. Nouriel Roubini – The man dubbed Dr. Doom,

back on consumption. Let us not forget that unemployment in the States is at an historic high.

6. A Premature Monetary Policy Response – The difficulty in judging the lag associated with a monetary policy response such as a cut in interest rates, combined with the fear of future inflationary pressures, has a number of experts worried that a knee jerk hike in interest rates will only add to the recovery problems.

Dissipating ensuing trouble So what can be done to avoid further pain? < Implementing a US exit strategy, from the

massive monetary easing of the past year. < Proper calculation of asset prices and the risk of

asset bubbles. < Supervising and regulating the financial system

more effectively.

The burning question is whether this will be done?

The risks are apparent and the underlying regulatory problems remain unaddressed. This government sponsored wall of liquidity is clearly chasing certain assets, and many have been criticised for remaining overly cautious or for having been out of the markets completely.

There is, however, a growing disparity between asset prices and the real economy. Stock markets are notoriously bad leading indicators. You can't fool the masses all of the time, but if enough of them are delusional for a spell, bubbles can continue to inflate. It seems as though the age old teachings of Buddha ring true to this day - if only it pays to be a realist.

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SENSIBLE PLANNING

URBAN LEGENDS & MISCONCEPTIONS â&#x20AC;&#x201C; DISPELLED Clarifying a few misconceptions associated with Wills and Estates.

By Debi Godwin, Director - Independent Executor & Trust

U

rban legends are the often hilarious, always engaging, occasionally bizarre, and almostalways-with-a-moral stories that we've all heard, known, and shared as part of our daily lives.

They run through a range of simple ghost stories told around a campfire or slumber parties, to rumours of industrial and governmental conspiracies and cover-ups. Here are some of the urban legends and misconceptions (a mistaken thought, idea, or notion; a misunderstanding) associated with Wills and estates.

If I Die Intestate (Without A Will) The State Gets All The Assets.

NO. The state seldom receives assets from deceased estates. If there is no Will, the law determines who the closest relatives are and they will then inherit.

A Verbal Promise Of An Inheritance Is Valid.

NO. Only an inheritance that is written in a Will is valid.

The Estate Is Frozen Until It Has Been Finalised â&#x20AC;&#x201C; There Will Be No Cash Available For Living Expenses.

YES and NO. If you were married in community of property to the deceased person, access to cash can take some time. Your account may have to be frozen by the executor until he is sure that the estate is solvent. Cash from the estate itself may be advanced to you once the executor is confident that he can do so (and once funds have been received by the estate).

The Executor Will Sell Everything.

NO. The executor will only sell assets if the Will directs this, or if the beneficiaries agree to sell assets. In some cases, the executor may have to sell an asset in order to generate sufficient cash to meet debts, but this can be avoided if the beneficiaries contribute cash into the estate to cover any such shortfall.

It Is The Duty Of An Executor To Make Funeral Arrangements.

NO. However, if he does so, it is in his personal capacity. Only funeral costs and the cost of a gravestone are permissible claims against the estate. Other costs, for example telephone and travelling costs and the cost of refreshments, cannot be claimed unless authorised in the will.

Signing Powers And Power Of Attorney Continue After Death.

NO. Only the executor may, once he has been appointed by the Master, withdraw funds and sign documents.

The Longer It Takes To Administer An Estate, The Higher The Executor's Fee. NO. There is only one rate for the administration of estates and different rates are not charged for easy or difficult estates.

I Have A Valid Will If I Have A Printed Will That Is Not Yet Signed NO. In order for the Will to be valid it must be properly signed and witnessed.

At Independent Executor & Trust we are committed to personalized service and individual attention. With combined experience of 65 years, we specialize in the Drafting of Wills, Administration of Estates & Testamentary Trusts.

49 Beach Road, Nahoon, East London, 5241 | PO Box 8081, Nahoon, 5210 Telephone: (043) 735 4633 Fax: 086 693 3356 / (043) 735 3942 | e-mail: debi@iet.co.za

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Photo BigStockPhoto.com

SENSIBLE SAVING

IT'S CHRISTMAS TIME!!! – SOME MONEY SAVING TIPS There is no need to cancel Christmas this year! By Robyne Moore - NFB

Y

es, that time of the year is almost once again upon us. Christmas is a time to spend some precious time with family and friends; a time of religious celebration; a time for resting, reflecting, festivities and feasting. It is also a time for giving and receiving. The credit crunch has made this a tough year for many and this year, more than most, the saying “it's the thought that counts” is going to be uppermost in most minds, when doing the rounds of the malls and ticking off the gifts on your Christmas shopping list. Just bear in mind that there is no need to go into debt to finance your Christmas festivities.

There are some people out there who are fortunate enough not to have to put any monetary ceiling on their Christmas budget, but for most of us, strictly sticking to our budgets will prevent us from going into debt to fund our holidays. As we get closer to Christmas, now is the perfect time to gather your thoughts, get ideas and put your budget into place, rather than leaving things to the last minute and carelessly pulling out your debit or credit card in desperation to complete your gift list.

However, there is no reason to put Christmas on hold just because we have had to tighten our belts.

Here are a few pointers to assist you (and your Christmas elves) in getting your Christmas stockings all filled and lined up: < Shop around for your gifts. Starting early will help with this one, as you won't be “forced” into buying something just because you are running out of time. And don't forget to use the internet – some sites also do free gift-wrapping. < Don't feel “guilt-tripped” into buying an expensive gift. Other people need to understand that times are tough and you just may not be able to afford it. If you need to, you may have to explain the situation to them. < Make a list of all the people you need to buy gifts for and then set a limit on the amount you will spend on each. < Once you have bought the present for a specific

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person, don't feel you need to add “a little extra”, as this will cause you to spend more than you budgeted. < Sometimes gifts of your time or talents can save you huge amounts. For example, give someone a babysitting “voucher” (redeemable when they next need time out); massages, baking or any other “spoil” will always go down well with loved-ones. < Don't overspend on your children because you think you have to. Speak to them and explain that money is tight and you just cannot afford that specific gift at the moment. < Watch your grocery bill! Christmas is always associated with heavily laden tables and other delectable goodies which we don't normally eat during the year. The racks and shelves are stocked with awesome and delicious foods which we recklessly pile into our trolleys. After Christmas day, we usually find we didn't really need all that food or didn't need six packets of the same product when two would have done just fine. < Instead of buying a gift just for the sake of having something wrapped under the Christmas tree, chat to the people you are buying for and ask them directly what they would like. They may surprise you and want something simple and inexpensive, and not the fancy gadget which you had imagined. < Be realistic with your spending; stay within the limits set by your budget and spend only what you can comfortably afford. Don't go into debt in order to have a flashy Christmas; this money will have to be paid back at some stage and why put pressure on yourself by starting the New Year in the red.

Just because you are counting your pennies there is no need to cancel Christmas all together; if you stick to your budget and shop sensibly you and your family can still have an awesome time. If you stay smart and use your imagination, you can still enjoy the spirit of Christmas and have a great holiday!

TECHNICALLY SENSIBLE

So what if I have control over the assets in my family trust?

Be certain that your last will and testament allows for no grey areas. GETTING TECHNICAL with Natalie Dillon, Senior Legal Advisor - Old Mutual Broker Distribution

A

t death, all the worldwide assets of the

deceased, form part of the deceased's estate. Despite not being owned by the deceased at date of death, certain assets will be deemed as assets of the estate. Deemed assets include any assets which the deceased had control of at date of death – assets which the deceased was competent to dispose of for his benefit or for the benefit of his estate.

What is meant by “competent to dispose of”?

A person is deemed to be “competent to dispose of” any property:(i) if he had power that would have enabled him to dispose of such property as he saw fit (whether exercisable by will or any other manner) (ii) if, under any deed of donation, settlement or trust, or any other disposition made by him, he retained the power to revoke or vary any provisions relating to such property.

A trust is set up to hold assets for the benefit of the beneficiaries of the trust. The assets are managed by the trustees of the trust and they have a fiduciary responsibility to manage the assets in such a way that the best interests of the trust beneficiaries are protected.

Assets that are placed in a trust (there are various ways of transferring assets to a trust, but that falls beyond the scope of the current discussion) are placed under the total control of

the trustees and the donor relinquishes all rights of control over the trust assets. Since the donor has no control over the assets in the trust, they cannot be included in his estate for purposes of estate duty.

If, however, the donor is deemed to have control over any assets held in trust (i.e. competent to dispose of the assets for the benefit of his estate), such asset may very well be included in the donor's dutiable estate at death. SARS will regard the trust as a sham and any estate planning advantages that the deceased's estate was expecting from having placed assets in a trust, could be lost.

The most common problem with a trust deed, relating to the issue of control, is where the trust has only two trustees - normally a husband and a wife, and the beneficiaries of the trust include these two trustees. Other examples include inter alia the donor having a right to veto any decisions made by the trust or acting on his own on behalf of the trust without the necessary resolutions being passed by the trustees authorising him to represent the trust.

The circumstances in which a deceased will be deemed competent to dispose of an asset are very widely framed and it is thus critical that there is absolute certainty that a person's last will and testament and any trust deeds which they are party to, are structured in such a way that the question of whether they have control or not, can never be raised.

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THE FINAL PIECE OF THE BROAD BASED BLACK ECONOMIC EMPOWERMENT PUZZLE An integrated approach to BBBEE which can now finally be implemented.

By Jonathan Goldberg, B.Comm. LLB. MBA. Global Business Solutions

I

mplementation of Broad Based Black Economic

Policy Framework Act still dictates that tenders for

Empowerment in South Africa has been a slow

Government and Quasi Government work will be

process. The Commission for Broad Based Black

issued on the basis of what we define narrowly as

Economic Empowerment (“BBBEE”) convened in

Black Economic Empowerment. The system is

2001 which finally resulted in legislation being

based on an 80/20 split for tenders below R500 000

enacted in 2004 called the Broad Based Black

and a 90/10 split for tenders above R500 000.

Economic Empowerment Act (“the Act”). The Act

What this means is that either 10% or 20% -

was a skeleton document which did not contain

depending on the value of the tender - can be

actual implementation mechanisms. These

utilized in respect of adjudication of points for

mechanisms were subsequently set out in the BBBEE

BBBEE. Up to now, this calculation is based on the

Codes of Good Practice. These Codes took from

measurement criteria of ownership and

2004 to 9 February 2007 to draft and finalise. It is

management control of such enterprises. The

only after the finalization of these Codes of Good

Preferential Procurement Policy Framework Act has

Practice that enterprises had the necessary clarity

still not been aligned to the Broad Based Black

and direction to embrace the implementation of

Economic Empowerment Act and its

BBBEE.

corresponding Codes, creating huge confusion in

The next challenge centred on issues of

tender and tender adjudication processes for

verification of BBBEE implementation and scores.

Government and Quasi Government, as well as the

The verification agencies established to do

enterprises bidding for the work concerned.

accredited assessments of enterprise's scores was

Draft regulations have now been published by

still not approved by the Department of Trade and

Treasury which are designed to align these laws

Industry. This took another two years for the first

and regulations into a more holistic and integrated

draft of verification agencies to be approved by

framework. This is the final piece of the long running

the Department of Trade and Industry.

legal and regulatory jigsaw required to give real

The co-ordination and dovetailing of the

meaning and impetus to BBBEE. The integrated

various BBBEE legislation and the supporting Codes

approach to BBBEE does not only look at

of Good Practice has been a further hurdle,

ownership and management control, but looks at

specifically the alignment of the current

a seven element scorecard including ownership,

Preferential Procurement Policy Framework Act

management control, employment equity, skills

and the Broad Based Black Economic

development, preferential procurement, enterprise

Empowerment Act. The Preferential Procurement

development and socio-economic development.

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SENSIBLE SENSIBLESOLUTIONS INVESTOR Procurement and the bidding for work through

ownership perspective. This will translate into even

Government and Quasi Government tenders is one

more pressure being imposed on those local

of the key cornerstones of BBBEE. The significance

suppliers over which the legislation and Codes do

of this arena is illustrated by way of a case study on

apply.

Mercedes Benz South Africa (“MBSA”).

MBSA are unlikely to be fined or penalized

The above knock-on effect is illustrated by the consultancy firm now having to get its

directly for not implementing the BBBEE Act through

empowerment credentials up to speed. In so

the mechanics of the legislation itself. They do,

doing, it would also be forced to look at its own

however, do business with the Government insofar

procurement. Here, it could be assumed that one

as the sale of vehicles and trucks are concerned.

of the major expense items is business travel. The

They further rely on Government incentives for their

consultancy will now put pressure on its family

export programs. It is in this key interface of business

owned travel agent to become BBBEE compliant.

where the Government can and does apply the

The reality is that the alignment of this

legislation to impose direct pressure on MBSA to

legislation is imminent and this is excellent news for

comply with the provisions of BBBEE. Further down

the Government tender process. Government

the supply food chain a family owned consultancy

should be able to simplify their tender processes

firm, for example, wanting to do business with MBSA

because - where issues of price and quality are

would have to get a positive BBBEE score to enable

similar - adjudication should be on the basis of

MBSA to, in turn, get a good score under the

verification certificates independently issued by

element of procurement. In this way, the legislation

verification agencies. This stands to de-mystify

is designed to become self policing in the sense

Government tender regulations entirely and, if

that the pressure to comply is directed at the major

properly implemented, could make the tender

enterprises to ensure that they themselves procure

process far more transparent.

from companies and organizations that have embraced the requirements of BBBEE. Returning to the case study in hand, a motor

What does this mean for business? The legal and regulatory requirements on BBBEE are being sharpened and all enterprises – regardless of

manufacturer is often limited in the area of

industry and size – will be well placed to take

procurement in that major procurement tends to

notice and evolve to ensure that they remain

come from international enterprises that are not

competitive and sustainable.

required to comply with the codes from an

SENSIBLE OBJECTIVES

FOCUS ON SA FUND MANAGERS Aligning your financial manager's skill set to your objectives. By Paul Marais, Director - NFBAM

I

nvesting is at all times an emotional activity. At its heart we fear that we won't be able to live in the lifestyle to which we've become accustomed after we retire or that our children may have unfulfilled financial needs; so we save. And when volatile markets threaten the sanctity we've created through years of saving, we are that much more anxious; that much more emotional. At such times, investors must return to their long-term financial plans, which if prepared properly and with a healthy modicum of market experience thrown in, will have at the very least considered that at times markets are irrational, and sometimes irrational in wholesale fashion. Returning to a wellconsidered investment plan, which is updated at regular intervals to take account of changes in personal and, by extension, emotional circumstances protects investors from making inappropriate investment decisions. Selling out of a market that has lost 30% of its value not only crystalises losses, but also introduces the verydifficult-to-get-right concept of timing; of just when to expose capital back into the market.

Assuming that an investor has an appropriate exposure to the markets, lower for investors closer to retirement in favour of cash holdings and higher for younger investors as a broad heuristic simplification, it then becomes critical to evaluate the manner in which this exposure is being managed. It is not enough simply to allocate to the market and rescind all investment decision making to the manager to which such exposure is accorded. An understanding of what said manager is doing to protect the investor is critical.

For example, though current market conditions have been difficult for bond, property, equity and cash managers alike, within these managers there have been wide dispersions of returns.

In addition, there are managers who are able to trade their portfolios not just within equities, but

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sensible finance nov09

across asset classes, as well as across borders.

Much insight can be gained from understanding which managers are able to protect their portfolios by getting foreign currency exposure calls right. For example: by allocating 15% of a portfolio offshore when the rand is at 7 represents a gain of 6% for the overall portfolio when the rand weakens to trade at 10 to the dollar. On a relative basis this gain could very well be larger should a comparable manager elect to remain invested in South African equities whilst the offshore exposure is held in cash (if that cash was held with a bank that didn't fold over the past year, which has proved to be far trickier an investment call than it ordinarily has been). To be fair, this is a massively easy judgement call to make in hindsight, but skilful managers â&#x20AC;&#x201C; those that make these types of calls on a regular basis â&#x20AC;&#x201C; can be identified through this form of retrospective analysis.

What's critical here is to identify those managers who demonstrate a skill set that is commensurate with an investor's objectives. For example, it is of very minimal use for an investor approaching retirement to have a significant portion of their portfolio exposed to a manager whose skill set is determining just when to introduce or eliminate foreign currency exposure. That skill set is not commensurate with an investor who is about to spend their savings over the next two or so decades in South Africa.

In summation, investing is an emotional activity made that much more so in volatile market conditions. Investors should stick to their long-term investment objectives which, together with a competent financial advisor, should have been documented as part of an overall investment plan, which in turn would be allocated to investment managers whose style of investing, skill set and remuneration is commensurate with that of the investor's objectives.

The Eastern Cape's first home-grown stock brokerageâ&#x20AC;Ś..

NVest Securities (Pty) Ltd: NFB House 42 Beach Road, Nahoon, East London 5241 P O Box 8041 Nahoon 5210 Tel: (043) 735-1270 â&#x20AC;˘ Fax: (043) 735-1337 Email: nvest@nvestsecurities.co.za www.nvestsecurities.co.za

MAKING A CASE FOR STRONG DIVIDEND PAYERS Keep a watch for keenly priced investment opportunities.

By Chris Lemmon, Director/Portfolio Manager - NVest. fter a difficult start to 2009 the all share

A

has become increasingly important to look for

index has staged a remarkable rally since

keenly priced investment opportunities. While profit

March, following global indices in a

figures can sometimes be misleading, operating

rampant charge from the lowly depths of 18000 on

cashflows provide a good indication of the

the ALSI to the lofty heights of 26000, a bounce of

strength of underlying trading within a company. It

approximately 44%. Following the deep pessimism

is this strength that provides the backbone to

of early March, global investors have shown an

sustainable, quality earnings into the future. While

increasing appetite for risk, with a large amount of

there are a number of valuation techniques that

cheap money being pumped into the system

are used to determine good value, dividend yield is

finding its way into emerging markets. From

an easy metric to track, the foundation of which is

valuation levels which appeared cheap in March,

a healthy cash position in the company. Even with

even with the rate of global deleveraging, the

a market dividend yield of 2.5%, historically below

market is now priced for a far more

average, there are still a number of good

accommodative outlook, with a PE of 15 reflecting

investments carrying twice the forward yield of the

investors increasing comfort with the future

market. With cash returns having consistently

earnings outlook.

declined during the last 12 months, the investment

On the back of these strong moves and a still murky outlook for the global economy into 2010, it

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sensible finance nov09

case for strong dividend payers remains compelling at these levels.

SENSIBLE MEANINGS

Monetary figures of speech we use everyday – do you know what they mean?

1. A fool and his money are soon parted

a. love

"A fool and his money are soon parted" suggests that stupidity doesn't mix with

b. monetary greed c. money

a. fools b. money c. partners

7. Money makes money If the idea that "money makes money" is true, rich people can use their money to

2. A good payer is master of another's purse The saying "A good payer is master of another's

a. help the poor b. get richer

purse" recommends

c. mint money

a. paying on time b. controlling your purse c. controlling other people’s money 3. Early to bed and early to rise makes a man

8. Pay beforehand was never well served If you believe the saying "Pay beforehand was never well served", you will always try to pay a. after a job is done

healthy, wealthy, and wise "Early to bed and early to rise makes a man healthy, wealthy, and wise" is a recommendation

b. when you sign the contract c. before a summons is served

not to go to bed a. late b. early c. before getting up

9. The best things in life are free "The best things in life are free" is a saying suggesting that a. the best thing of all is freedom b. money cannot buy life’s best things c. you should help yourself to what you want

4. Health is better than wealth Someone who believes that "health is better than wealth" would probably prefer to be a. financially healthy and physically ill b. rich, with a heart condition c. poor, but in good shape physically 5. Money doesn't grow on trees A parent might tell a child "money doesn't grow on trees" when the child a. keeps asking for money and spends it carelessly b. asks where money comes from c. wants to plant a tree 6. Money is the root of all evil "The love of money is the root of all evil" implies that all badness comes from

10. Where there's muck there's brass "Where there's muck there's brass" suggests that rubbish can be used to create a. metal b. money c. methane gas Answers 1. b; 2. a; 3. a; 4. c; 5. a; 6. b; 7. b; 8. a; 9. b; 10. b Contact Philip Bartlet, one of NFB’s Financial Advisors, on 043-735 2000 or pbartlett@nfbel.co.za for assistance in setting up your financial plan.

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23

SENSIBLE FINANCE QUESTIONS & ANSWERS

“Sensible Finance - Questions and Answers” is an advice column that will allow our readers the opportunity to write to a professional and experienced financial advisor for advice regarding investments, personal finance, life and/or risk cover.

Travis McClure will be answering any questions that you may have.

Travis McClure

Q: When seeking financial advice and deciding on

5. What services can you offer? Your advisor should

a financial advisor what should I be looking for and

be able to provide you with retirement, investment

what questions should I be asking ?

and estate planning. While it isn't necessary that your advisor is an expert in all these areas (in fact

A: It is always important to establish credibility. After

be wary if he says he is), he must have alliances

all, you are entrusting your finances to someone. I

with other firms that can provide you with expert

have highlighted below some of the questions one

advice. The role of the advisor is to bring it all

should ask.

together for the client and manage the relationship.

1. Do you have a licence? - An advisor should be licenced with the Financial Services Board (FSB)

6. Who are your providers? Make sure your advisor has contracts with reputable firms. Your advisor

2. What are you qualifications? – Ideally your

should have a deep understanding of the products

advisor should be a certified financial planner

he is offering and a good relationship with that

(CFP) which is internationally recognized.

company to ensure quality service.

Experience also matters, however, and should your advisor have 20 years experience and strong

7. Is your advisor market related? You should

referrals this is often worth more.

establish what market research he has access to. Is he basing the decision on his own gut feel or does

3. Continuity? – What happens if the advisor leaves

he have a process and management team that

or is hit by the proverbial bus. It is better to deal

assist with market and economic decisions.

with a company and not an individual. Although there is an individual relationship you need to

8. How often will we meet? It is important to

ensure that your financial planning does not fall

establish when your portfolio will be reviewed. It

apart if that relationship ends.

should be a minimum of once a year. During this meeting your advisor should assess your plan

4. Word of Mouth? Establish that the advisor has a

against the actual outcome and adjust the plan

good reputation. If it is a referral, find out why the

accordingly.

client is happy. Is it due to his money doubling in a month or is it more due to the fact that the advisor

We believe that at NFB we meet the above criteria.

has set a long term plan in place that works and the client has seen the benefits of building a

Please address all Questions to: Travis McClure,

legacy. Does the advisor give regular feedback?

NFB Sensible Finance Q&A, Box 8132, Nahoon, 5210 or email: nfb@nfbel.co.za

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sensible finance nov09

WIN A FANTASTIC… Weekend stay for two people at the Premier Hotel Knysna courtesy of Harvey World Travel East London.

AA W i M trav nne rJ e r ur l h of ie a th Ve mp e nt er er is :

Premier Hotel Knysna offers the traveller luxury accommodation with up-market furnishings and the lifestyle conveniences of a modern home. The hotel is situated on the secluded banks of the Knysna Lagoon in the midst of enchanting woodland gardens, offering air-conditioning, secure off-street parking, business and conference facilities, restaurant, swimming pool and gas barbeques. Make your choice of 23 Deluxe Rooms, 19 One-bedroom suites, 6 Two-bedroom suites and 11 Luxury Waterfront Villas.

Premier Hotel Knysna – The Moorings will surpass all your needs, whether it be for business or for pleasure.

SUBSCRIBE and

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with Harvey World Travel and NFB Financial Services Group

TO ENTER SIMPLY… Send your first name, surname, email address and contact telephone number to nfb@nfbel.co.za with “NFB Sensible Finance Weekend Giveaway” as the subject line.

Please specify in the email if you would like an NFB financial advisor to contact you for a free investment portfolio evaluation or financial advice.

TERMS AND CONDITIONS • All entrants will be added to NFB's electronic mailing list (recipients may then manually unsubscribe). • The contact telephone number is simply to contact the winner telephonically. Unless NFB are specifically authorised to do so, entrants will not be contacted directly in an attempt to solicit business. • The giveaway is valid until the end of May 2010 (subject to availability) and is not transferable.

• The draw will take place on 4th December 2009 and the winner will be contacted telephonically. • No employees or direct family of employees of NFB or Harvey World Travel will be eligible to win the prize.

NFB have a STRONG, REPUTABLE TEAM OF ADVISORS with a WEALTH OF EXPERIENCE between them: Anthony Godwin (RFP, MIFM) - Managing Director and financial advisor, 21 years experience; Gavin Ramsay (BCom, MIFM) - Executive Director and financial advisor, 15 years experience;

Marc Schroeder (BCom Hons(Ecos), CFP) Financial Advisor, 5 years experience; Phillip Bartlett (BA LLB) - Financial Advisor, 9 years experience; Duncan Wilson (BCom Hons, CFP) – Financial Advisor, 4 years experience;

Andrew Kent (MIFM) - Executive Director and Share Portfolio Manager, 16 years experience;

Stuart Coates (BCom) – Financial Advisor, 1 year;

Walter Lowrie - Financial Advisor, 23 years experience;

Leona Trollip (RFP) - Employee Benefits Divisional Manager and Advisor, 32 years experience;

Robert Masters (AFP, MIFM) - Financial Advisor, 22 years experience;

Leonie Schoeman - Healthcare Divisional Manager and Advisor, 11 years experience;

Bryan Lones (AFP, MIFM) - Financial Advisor, 18 years experience;

NFB has a separate specialist Short Term Insurance Division, as well as now offering specialist group companies in the fields of stock broking, wills and the administration of deceased estates.

Travis McClure (BCom, CFP) - Financial Advisor, 11 years experience;

sensible finance nov09

25

“It requires a great deal of boldness and a great deal of caution to make a great fortune...but when you have got it, it requires 10 times as much wit to keep it” Nathan Rothschild, 1834

You’ve worked hard for your money... now let NFB make your money work for you. fortune favours the well advised contact one of NFB’s financial advisors east london • tel no: (043) 735-2000 or e-mail: nfb@nfbel.co.za johannesburg • tel no: (011) 895-8000 or e-mail: nfb@nfb.co.za web: www.nfb.co.za

financial services group

NFB is an authorised Financial Services Provider