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WealthWise magazine Vol I/No. 6

FREE

South Africa September 2011

Estate Duty Principles Demystified Holistic Estate Planning Interest rates and property returns Business column Surviving the credit squeeze

New! Ask Shaun:Your questions answered

Win e-training sessions and Zamar music albums! Details on page 57.


Foreword Planning time Spring is always a fabulous time – warmer days, happier faces, greener lands and more colours around us. This September we are keen on exploring more of the things that make us happy – if you’re down in the Cape, you would be happy to read our wonderful “kloofing” in Cape Town on page 52.

Nothing should bring more smiles on our faces than our families. We all need to take care of them and make provisions when times get tough or for that day when, sadly, we won’t be around anymore to watch their backs. This issues we have dedicated a lot of space to estate planning and making sure our readers get familiar with the principles and laws around this topic. We interviewed tax consultant Michael Stein on the new regulations surrounding estate duty (see page 16) and we did a bit of planning should you need to talk to an estate planner or financial advisor (see page 21). Investors should also be happier, as this month we bring some opinions and conclusions on the past months returns in real estate funds (see pages 26 to 32), while fledging entrepreneurs are given some more lessons to learn from their own mistakes (see pages 34 and 62). We had a wonderful opportunity to explore the business side of a music band with Zamar’s fantastic story (see page 40) and we have 5 of their CD albums to giveaway too! (see page 57). WealthWise magazine has exciting plans going forward – stay tuned for a bigger and bolder edition next time! We hope that our publication will inspire you to make every day, long-lasting changes to a wealthier future. Wishing you all the best,

Denisa Oosthuizen Managing Editor WealthWise magazine

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In this edition... On the Cover 16

Estate Duty Principles Demistifyed

21 26

Holistic estate planning

Interest rates and property returns

37

Business column: Surviving the credit squeeze

20

LifeWise

24

Ask Shaun: Your questions answered

11

QuickRead: Get to know the outside world

12 14

Effortless decision making Making the right decision

12

MoneyWise 15 28

30 4 WealthWise

QuickRead:Types of trusts

How will property returns perform forward?

30

Real estate funds top return tables


BusinessWise 33

QuickRead: Create wealth in your business

34

Common mistakes start-ups make Part II

40

Zamar:The business behind the music

40

CareerWise 47

QuickRead: What to lean from (other) bad bosses

48

Finding the elusive work/life balance

48

Agenda 51 52 58 60

This month we inspire you to... Another kind of Kloofing On the bookshelf Events, workshops and seminars

52

Regulars:

8

3 Foreword 57 Competitions 4 In this edition 62 Last Word 7 Mailbox 63 In our next issue 8 Contributors WealthWise 5


Mailbox

WealthWise

magazine

Publisher REO Media Solutions

Hello, I would like to thank you for the Hoogland Health Hydro prize I won early this year I chose my Mom as my partner and we had a time of our lives. The staff(more like family), guests and overall experience changed our lives. My Mom’s BP has been down since and my perspective on life has been tremendously inspired Your gift has changed how we live and that is the biggest gift For all our days, we will never forget the time we spent as Mother and Daughter And I will never forget the perfect silence at the height of my morning hikes Thank you for the rest of my life for what you’ve contributed to our lives and for a great magazine Warmest regards, Zama Zungu PS: Bless Vuyo’s energy cleansing neck & scalp massage

Managing Editor Denisa Oosthuizen denisa@wealthwisemag.co.za editor@wealthwisemag.co.za Contributors Shaun Latter, Carla Rossouw, Nikki Viljoen, Bob Powers, Paul Stewart, Ryk de Klerk Sales and Marketing denisa@wealthwisemag.co.za Graphic Design REO Media Solutions Distribution www.wealthwisemag.co.za www.wealthwisemag.com Copyright All content and information within WealthWise publication is property of the Publisher and should not be reproduced, copied or entirely quoted without the prior approval of the Publisher, being protected under copyright laws.

Should you wish to make use of any of the content displayed please contact us at Each month we showcase your best comments, feedback and suggestions for denisa@wealthwisemag.co.za or WealthWise magazine. Have your say! editor@wealthwisemag.co.za. Write to us at

editor@wealthwisemag.co.za! The best comments will be published in our next edition.

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Contributors Paul Stewart (right) is the managing director

of Plexus Asset Management. Founded in 1995, the Plexus group of companies is an independent financial services provider that specializes in providing innovative, unique and holistic financial solutions for both corporate and individual clients. As of 2010, Plexus Holdings (South Africa) incorporates Plexus Wealth Management (financial planning) and Plexus Asset Management (investment management services and solutions). Read Paul's opinion on property returns and interst rates in our MoneyWise section, pages 26 and 28.

Ryk de Klerk is co-founder and executive

director of PlexCrown Fund Ratings, a leading retail unit trust fund-rating agency in South Africa. Read his article on real estate funds performance in our MoneyWise section, page 30.

Shaun Latter is the Director and Wealth

Manager of Quaestor Wealth Management, where he specialises in Estate Planning and Investment Advice. He is a Certified Financial Planner速 and was recently announced as a finalist for the coveted FPI Financial Planner of the Year Award 2011. He will be regularly answering your most burning questions on wealth in our new monthly column "Ask Shaun" in the MoneyWise section, page 24.

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Michael Stein is a regular tax seminar

presenter and tax consultant. He has in the past edited various tax publications and is a regular contributor to texts such as Tax Planning and TaxNet. He has authored books such as the Eastate Duty: Principles and Planning and the South African Income Tax 2010/2011. Read Michael's insights about the recent amendaments of the Estate Duty Act in our interview in MoneyWise section, page 16.

Bob Power is presently CEO of Power Corporate

Consultants, which specialises in facilitating mergers and acquisitions, security and management consulting, coaching and training in the M&A spectrum, especially assisting those entering the SME market. Bob wrote the business column in our BusinessWise section, page 37.

Carla Rossouw is a Professional Conference

Organiser based in South Africa. She writes reviews on Venues, Hotels and Restaurants as well as International Destinations. She regularly writes for our Agenda section reviews of fabulous places. Visit her website www.carlarossouw.com and read her review on page 52.

Nikki Viljoen is an Internal Auditor and Business

Administration Specialist and owner of Viljoen Consulting. She is passionate about assisting SMME’s to grow sustainable businesses. Read Nikki's reflection on making decisions and an overview of the most common business mistakes in our LifeWise and BusinessWise respective section, pages 14 and 34.

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LifeWise Quick Read: Get to know the outside world When was the last time you had the most interesting conversation with your

family, friends, partner, co-workers or your clients? It is no surprise that most of us will be living in our inner bubble, too busy to look sideways, without paying attention to the outer larger world. In best-seller “The Rules of Life”, author Richard Templar rightfully says: “Taking an interest in the outside world is about developing you for yourself, rather than the world’s benefit”. Here are more points suggested by Templar and worth mentioning:

Keep abreast of what is happening. That doesn’t mean you have to

watch new constantly, but by reading, listening and talking, we keep informed of what is changing, what is new and what is happening in your community and in the outside world. Read that book, turn on the radio or watch some TV. We all need to catch up with the world once in a while.

Open your mind to new possibilities. Read as often as you can – at least a book per month should do – and try to pick diverse titles, both fiction and nonfiction, to expand your horizons. This way you might be able to see different situations from different angles, cultivate new interests and be able to share your thoughts to your peers, whether it’s about a cooking recipe, the latest economic crisis or Mark Billingham’s new thriller.

Think variety. Don’t limit yourself to just one topic (example: politics), know what happens in current events, movies, fashion, sports, science and so on. This will enable you to hold a conversation on any topic because you are interested in what’s going on and this makes you more interesting as a person.

Keep your mind fit. Exercising new things improves memory and keeps all of us healthy and younger. (goodbye, Alzheimer!) If you have never done or experience a certain thing, don’t think it is useless or not important enough to try. Avoid the self-sufficient mentality and keep yourself open to a whole new dimension, regardless your age. You might miss out on great things if you don’t!

Be part of something. Don’t shut yourself out from the world or hide under

your shell because of sadness, fear, not acceptance or whatever reason. “The happiest, most well-balanced, most successful people in life are those who are part of something. Part of the world, not cut off from it”, says Templar.

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Effortless decision making by Leo Babauta

How do you make a choice when you’re stuck at a fork in the road? How can you

decide when two or more possibilities seem equally good? I’ve been learning (but haven’t mastered) the principles of Effortless Decision-Making. It’s a way of making decisions where you can flow through the constant stream of decisions we must make every day of our lives, without getting stuck, without being paralyzed by fear. We choose, and flow, and we let go of worry. What follows is a very brief guide to making effortless decisions.

Let go of perfection. We’ll never make perfect decisions, and wanting to make the perfect choice keeps us paralyzed.

Get more information. Don’t let this hold you up, but if you’re stuck it’s often because you don’t have the necessary info. What info do you need? Can you easily get it? Get it now if you can, but don’t be held up by the lack of info.

Try and err. If you don’t have enough info — and that’s usually the case — just choose. It doesn’t really matter what you choose, just make a choice and let go of the idea of making the right choice. Now live with that choice for a bit, and see what happens.

This is called trial and error, and it’s often the best way to get information. We try something, and see how it works out — and then we have more information to make better decisions in the future. When you look at it this way, decisions are just a series of trial and error experiments, and it doesn’t matter what the outcomes are, because any outcome is good information. Try intuition. If you’re stuck and don’t have enough info, let go of worry and just make a choice. How do you make a choice? You could flip a coin, but you could also just go with your gut reaction. What does your intuition say? Start listening to it — often it’s an unconscious decision based on lots of factors that we can’t consciously process, so a part of our unconscious brain processes it and comes up with a split-second decision. Intuition can be wrong, but that’s still OK: we’re going to learn from the results no matter what. So just learn to hear your intuition, and go with it.

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Let go of worry. If you learn the above

principles, it’s easy to see that there’s nothing to worry about. You don’t need to be perfect, and a decision is very rarely the end of the world (at least, no decision has led to the end of the world yet). Sure, history is littered with the corpses of those who made bad decisions, but there are a million times more decisions that were made without any really bad consequences. You won’t die, you’ll just learn. So don’t worry — just choose.

Practice, and flow. You’ll get better at this

with practice, as you learn to let go of perfection and worry and see decisions as experiments. You’ll learn to do it better, faster, with more intuition. Soon you’ll flow through your daily decisions with ease. Do it consciously at first, keeping in mind all of the above principles, but it gets easier as you go. Making decisions is something we do all day long, and it doesn’t have to be difficult. We build certain decisions up in our minds because we think they’re incredibly important, but in truth they’re rarely that big a deal. This isn’t the Cuban Missile Crisis — we’re not deciding the fate of a nation. See choice as an opportunity to learn, and you’ll be happy for every single effortless decision that comes your way.

‘ If you’re

LifeWise

stuck and don’t have enough info, let go of worry and just make a choice

Leo Babauta is the author and blogger of Zen Habits, a weblog about “finding simplicity in the daily chaos of our lives”, as he describes it. His weblog is viewed by the publication Time as one of the top 25 blogs worldwide. Read his blog at www.zenhabits.net.

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Making the decision by Nikki Viljoen

Harvey Mackay says “People begin to become successful the minute they decide to be.”

Actually it is that simple. I think that for most of us, certainly in my case, this is true. We have been conditioned to believe that being successful is hard work, and I suppose that to some degree there is a certain amount of work that needs to be done, but in my case – the mindset is what is most important. We’ve all heard, and I am sure even uttered the words on occasion “It can’t be that easy!” When things just seem to slot in, or fall into place – that lucrative deal that you have signed just as the previous one was ending, or even more unusual, robots turning green just as you are about to apply the brakes – all way to work or home! I have learnt over the years that it is actually that easy. When my mindset is right and I am going in the right direction – things just seems to fall into place. When I am totally committed to what it is that I am doing, my plans are in place and I am mentally geared up – things seem to be very easy. It’s when I am not sure, or hesitant, when I haven’t done as much research as I probably should have or I am not completely sure of what it is that I am doing that I tend to second guess myself. When I second guess myself is when the doubts start creeping in – you know which ones I mean, not only the ones that I am prepared to vocalize and get out onto the table, but also those that I very seldom admit to - even to myself – those that I grapple with and do battle with in the dead of the night. By the time it gets to that point, I know on every level that I am ‘dead’ in the water and that there is no way that whatever it is that I am doing, is going to be successful. You see, I have on some level decided that I cannot do it. That is the decision that has been made and therefore that is the decision that will be successful. So here’s the bottom line – if it is success that you are looking for then clearly that is the decision that needs to be made. Nikki is an Internal Auditor and Business Administration Specialist who can be contacted on +27(0)83 702 8849, nikki@viljoenconsulting.co.za or www.viljoenconsulting.co.za.

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MoneyWise Quick Read: Types of trusts There are two different types of trusts: Inter vivos trusts and Testamentary

trusts. Here is some useful information to consider before choosing your trust:

Inter vivos trusts are creating during one’s lifetime for the benefit of his/her

dependants. “An inter vivos trust) is usually created by a contract, referred to as trust deed, in terms of which a person (the donor of settler) transfers property to trustees who have the obligations of administering the property for the benefit of one or more persons, namely the beneficiaries, until the trust is terminated if a specified event occurs”, defines Michael Stein, a Johannesburg tax consultant and author of Estate Duty Principles & Planning, published by LexisNexis.

A testamentary trust is created according to the specifications in one’s will

upon their death. “A testamentary trust is created by a will in which the testator stipulates that wither the whole or a portion of his/her estate, his/her assets and/or a portion of fixed cash are to be transferred in a trust to named trustees and administrators, who have to administer the property for the benefit of one or more beneficiaries until the trust is terminated if a specified event occurs”, explains Stein. If you do require to have assets transferred into a trust upon your death, it makes sense to consider an inter vivos trust and transfer your growth assets during your lifetime. Furthermore, any further growth registered by the estate will pertain to the trust, avoiding any growth attracting estate duty upon death. Here are some other points to consider when planning a trust: • The percentage of your estate going to your spouse • The percentage of the estate going to your children • If voiding paying estate duty and tax savings are the most important aspects • If protecting the children’s inheritance (minors or majors) is the most important aspect • Any capital (cash) to be left to spouse and children to ensure their selfsufficiency outside the trust • Any capital to be preserved for future generations For more information about trusts, estate planning and estate duty, read Chapter 11 on trusts and wills in Michael Stein’s book, “Estate Duty: Principles and Planning” (4h edition), published by LexisNexis.

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Estate Duty Principles Demystified by Denisa Oosthuizen

Tax expert and consultant Michael Stein talks

about the estate duty act and its latest amendments, as explored in his latest edition of Estate Duty Principles and Planning, published by LexisNexis. WealthWise magazine: What is estate planning and what is the role of the estate duty? Michael Stein: Estate planning is dealing with your assets distribution upon your death, to provide for one’s family, spouse and dependants, after death. Estate duty is one of the taxes that apply to one’s estate. There are various taxes that apply, including the income tax and capital gains tax (CGT). Estate planning does not involve just the tax side of it, but also the planning and distribution of the assets. Estate duty is a tax payable to the state, capital gains tax applies during one’s lifetime and also during one’s death and goes to the state and income tax applies even after death to the income that goes into the estate, if any. Estate duty is much like a wealth tax which applies to one’s estate that has been accumulated during one’s lifetime, but is payable upon his/her death. There are various rules, some unfair, that apply to capital gains during one’s lifetime. When one dies, the law refers to your capital assets (example: listed shares bought during one’s life) as being sold on the moment of one’s death. So, if one had listed shares at the moment of his/her death, the shares will be considered sold on that day to their market value and a tax has to be paid on this. WealthWise magazine: Shouldn’t these assets be normally distributed to the surviving family members? Michael Stein: Whatever goes to one’s spouse is free. As a rule, whatever assets one possesses on the day of his/her death, will be considered as sold, with some exceptions, such as some insurance policies, pension funds, charity money. The state pretends one had a “sale” on the day of his/her death and works out your capital gains accordingly. Even if the assets are not for sale, one might not have money to pay, because money is tied up in the asset. It is a very unfair provision, because it may require a forced sale of assets and even the liquidation of a business that has employees. There should be some kind of rollover or deferral to prevent forced sales of illiquid assets.

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MoneyWise WealthWise magazine: How is the estate duty calculated? Michael Stein: The state looks at all one’s assets, local and international, at the time of death and calculates the amount of the estate. This is the total value of the estate. Deductions are written off, such as debts, charitable donations, certain foreign property and other expenses. This is the net value of the estate. An abatement is given for the amount of R3,5 million, applicable on the net value of the estate, and 20% estate duty tax is applied to the rest, unless is going to a spouse or a charity. The tax is used to fund government’s expenditure, however it brings in very little as compared to income tax, for example. There are illustrative examples in the book to calculate one’s estate duty. WealthWise magazine: How has the Estate Duty Act changed over the years since the publishing of your first edition of the book? What would be the most important changes effected so far? Michael Stein: Some more recent changes have been the steady increase in the primary abatement and relief has been introduced on the death of a surviving spouse. Pension fund benefits (the lump sum carried over to successors) were taxed before, but are now excluded from estate duty upon death.

‘ifIdeally, you

start receiving an income and acquiring assets, you should consider having a will

WealthWise magazine: One of the recent amendments to the Estate Duty Act is the portable spousal deduction. What is the portable spousal deduction? Michael Stein: Let’s assume the husband dies first and his estate after deductions comes to R4 million. The primary deduction is R3,5 million, therefore there is R500 000 left to pay estate duty on. If the estate value will fall under R3,5 million after other deductions, he will not need to pay estate duty, because the first R3,5 million is exempt from estate duty. When the wife later dies, she can use her own primary deduction of R3,5 million on her estate, but she could also uses the previously unused R500 000 from her husband’s estate – it is a portable deduction. The wife can add the difference – what the husband hasn’t used as primary deduction – to her estate. The rules get more complicated if there is more than one wife involved, as often seen in South Africa. All these rules are described in the book. WealthWise magazine: Does this portable deduction apply regardless of the matrimonial property regime – in or out of community of property? Michael Stein: If one is married in the community of property, the community assets are split half-half. If one spouse dies, only half of the joint estate is subject to estate duty. There are various rules if more spouses are involved or if both spouses die at the same time.

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MoneyWise

WealthWise magazine: Who is liable for estate duty? Michael Stein: Anyone who dies while resident in South Africa who has a big enough estate to become liable. If one’s estate is under R3,5 million, you are not liable to estate duty, because the first R3,5 million is exempt of estate duty. One does need to do the calculations to find out whether one is liable, but anyone is potentially liable, from poorer to richer. WealthWise magazine: How is the total value of the estate determined? Michael Stein: One’s estate includes everything he/she owns, from company shares, business assets, property, furniture, cars and so on. Everything is valued at the current market value. This is the total estate value – all debts incurred and other deductions, such as charity donations, will come off to work out the net value of the estate. An inventory is carried out to determine the value of the estate; an accountant can value your business, shares, insurances and so on. A life insurance policy is also accounted for, if the estate is the beneficiary, but not if the spouse as beneficiary. Certain other policies are also excluded, for example, where it’s a qualifying buy-and-sell business policy or key-man policy. WealthWise magazine: Who is responsible for carrying on the duties pertaining to one’s estate? Is a will necessary? Michael Stein: The executor of the estate. Ideally a person should have a will and nominate his/her executor upon death, otherwise a person appointed by law will administer the estate, do an inventory of assets and liabilities and so on. I suppose a lot of people don’t have a will in place. I believe one should have a will as soon as he/she starts accumulating assets, irrespective of the person’s age. If a person gets married, he or she should have a will. Ideally, if you start receiving an income and acquiring assets, you should consider having a will. If one doesn’t have a will, special rules come into play. It’s very important to have a will. Also, not having a will in place will delay procedures with the asset distributions, having to wait for government’s officials to step in. A will is valuable especially if you are looking at having immediate income distributed to the surviving spouse (example: assuming your spouse is not working and she/he needs an income to survive). Having a will makes for a smoother transition.

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MoneyWise WealthWise magazine: Which situation is the most tax-effective when calculating estate duty: being married in or out of community of property? What is the influence of ante nuptial contracts over estate planning? Michael Stein: Ante nuptial contracts state that what assets are yours, remain yours. Generally, it is a good idea to have such contract in place. From the estate duty point of view, it matters because it affects what comes in your estate. If married in the community of property, the surviving spouse will be entitled to half of the assets that fall in the community of property, but some assets might fall out, such as certain inheritances. It all depends on the arrangements done by spouses. Estate duty tax shouldn’t influence the way one chooses to get married. The most important is to have a will – it gives one more flexibility. If married out of community of property, with an ante nuptial contract, spouses are in control of their assets, have more flexibility, but they can still share their estate as they wish. One should also think of the worst – the divorce – which one never expects when one gets married. It is not the most romantic of all, but spouses should consider drafting an ante nuptial contract and a will when they get married. Otherwise, it's a good plan to draw a will once children are born. And it's a good idea to review your will from time to time as your circumstances or the law changes. WealthWise magazine: How is the estate duty affected by the creation of trusts? Michael Stein: There is a big advantage in having a trust if one has assets that are growing in value, such as property, investments, shares. The assets can be either donated or sold to the trust in a loan account. Selling assets to a trust rather than donating them avoids the payment of any donations tax. One no longer owns the assets after selling them to the trust, and one’s asset is then the loan owing by the trust for the purchase of the asserts from you. The advantage of the trust is that one is not liable for estate duty once the assets are in a trust. Your only asset is then the balance owing on the loan, plus, of course, any of your assets that you did not transfer to the trust. A trust is also an important part of estate planning to provide for one’s family and dependants after death. If you do transfer assets in a trust by donation or for an interest free loan, you will still be liable for income tax on any income derived from the assets as a result of your generosity, to the extent that the income is not distributed to the beneficiaries of the trust. One also has to pay the capital gains tax when one disposes of the asset to the trust.

‘Putting assets

in a trust while one is alive is the most powerful way of saving tax and protecting your dependants

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MoneyWise Another mention on trusts: the trustees are very important; if one has younger children, leaving them the assets might not be a good idea. If the assets are in a trust , the assets would be managed by the trustees who would usually be a trusted person such as one’s accountant or lawyer or someone else that you have a good relationship with. Normally it would be a family member, but ideally one should also have an independent person as a trustee; as a general rule, I don’t believe in having an institution, such as a bank, as a trustee, because its usually too impersonal. WealthWise magazine: How can one limit or minimize the impact of estate duty and capital gains tax? Michael Stein: Having a trust is the common solution. Leaving assets to a spouse to delay the estate duty at least until the other spouse dies is another way. However, the portable spousal deduction reduces the incentive to leave assets to the spouse just to get out of the duty. Donations to charity will reduce the value of the estate, therefore it could have an effect on the estate duty. Putting assets in a trust while one is alive is the most powerful way of saving tax and protecting your dependants. Michael Stein is a regular tax seminar presenter for BSP Seminars and a tax consultant based in Johannesburg. Having authored and edited various tax publications and being a regular contributor to texts such as Tax Planning and TaxNet, Stein is an authority in tax legislation and latest tax regulations. Contact Michael Stein at mlstein@iafrica.com.

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MoneyWise

Holistic estate planning by Denisa Oosthuizen

When Professor Willie van der Westhuizen, Director at Millers Attorneys in George and Cape Town, specializing in estates, taxation and trusts, took the stage earlier this year at the Financial Planning Institute of Southern Africa (FPI) conference to talk about holistic estate planning, we expected a practical summary of the most important aspects of estate planning – both for the financial planner and the estate owner (client). However the “holistic” estate planning approach, as explained by van der Westhuizen, delivered much more insight in a process few of us really understand.

“Estate planning is not mere estate duty planning; it includes testamentary planning, assurance planning and financial planning”, affirmed van der Westhuizen. According to the Professor, both financial planners and estate owners must understand that estate planning goes beyond the estate duty and capital gains tax (CGT) calculations. This is the foundation of the “holistic” view of estate planning, better defined as opposed to the main misconceptions surrounding estate planning. Therefore: • • •

Estate planning is not just for the wealthy Estate planning is not an ad hoc event, it is an ongoing process Estate planning is not a single advisor activity, it is a team function

“Estate planning is a way of life and it involves a team of participants, including attorney, accountant, broker(adviser), trust company official, appraiser, the estate owner as the client”, continued van der Westhuizen.

Choosing your estate planner When choosing a financial advisor (estate planner) to assist with your estate planning, look beyond just the tax benefits and risk protection. As Professor van der Westhuizen advises, the right financial planner to partake in this process should have a broad knowledge of the law: tax law, succession law, family law, corporate and partnerships law, law of trusts, law of persons, insolvency law, assurance, pensions and valuations. Furthermore, the planner should regard factors such as inflation, financial planning (statements), exchange control and socio-economical and political factors as paramount in estate planning. “The psychology of testation determines what triggers the client’s need to do estate planning – it could be fear, wishes, feelings, cultural factors”, explains van der Westhuizen, adding that few financial planners would consider “seeing the big picture” and understanding the client’s unique psychological profile.

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MoneyWise

‘Setting the

estate planning objectives is not for your financial planner to decide, it is something that you, as a client, should decide

Counseling is not only reserved for life or business coaches or therapist – financial planners have a real advantage when they can apply various aspects of counseling to get to know their client’s type and needs. Van der Westhuizen is himself a fan of brain analysis to determine what type of person he has to advise – is it a right (creative type) or left (analytical type) brain dominance?

Steps to follow in estate planning “Estate planning equals with the decision in advance by an estate owner of what to do with his assets and liabilities (including digital assets) during his lifetime and upon retiring”, defined van der Westhuizen. The necessary steps to use in the process of estate planning are as follows: • Accumulate the information needed • Determine the wishes and objectives of the client towards estate planning • Analyze the information (estate planning environment etc) • Structure the information The Professor advised the inclusion of the following tasks during the estate planning process: • Determine the client’s personal profile • Determine the estate profile • Proceed with estate duty and CGT calculations • Determine the estate liquidity “Don’t end it here, carefully analyze the client’s psychological environment”, he said. Below we listed some of the factors that should be included for a more holistic approach to estate planning that one should know about: • Increased risks (eg.: ill health) • Law changes • Brain profiling and personality assessment • Psychological factors such as fears of family feuds • Financial/other risks • Cultural and religious factors (traditional versus modern views) • Political factors such as changes in government policies, BBEE, expropriation, nationalization

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MoneyWise • Juridical factors such as options of restructuring the estate, the matrimonial property system, the existence of ante-nuptial agreements, the option of one trusts or more • Deficiencies in current planning

Setting the objectives Although this information was presented as mandatory with regards to financial planners, every person interested in having his estate planned for the future, retirement and for the benefit of his successors should make note of these factors. Setting the estate planning objectives is not for your financial planner to decide, it is something that you, as a client, should decide. The major reasons why estate planning should be not disregarded are to enjoy flexibility (decide how you want to divide your assets), prevent family disputes, protect your assets against risks and provide for dependants.

Avoiding the pitfalls There are numerous neglected aspects to estate planning and one of the aspects on which van der Westhuizen focused, quite rightfully, was the problem of family disputes, especially in a country like South Africa with diverse cultures and religious beliefs. The traditional or modern views of an individual strongly affect the estate planning process. In traditional English/British families, the eldest son is the preferred inheritor, while in South Africa the eldest male relative is generally the main inheritor. This is in contrast to, for example, an Afrikaner (Boere) rural family, in which traditionally the sons would inherit the land and the daughters will find wealth in matrimony. Referring to matrimony only, the various options (in or out of community of property) and the presence of ante-nuptial contracts should be thoroughly discussed. Other important coordinate, often neglected, is, according to van der Westhuizen, the existence of a proper risk protection plan and a family/business relationship plan. The risk profile should be done according to the client’s risk aversion profile (high, medium or low). Also, the risk protection plan is absolutely necessary when dealing with restructured families, second marriages and various children, not to mention the polygamous families in African black culture, where man can have more spouses and therefore more children to take care of. Obviously, the risk protection plan is also a way of avoiding family disputes. Having all the aspects of estate planning at hand is tremendously helpful in making the right decisions for you and your family. This is why, as Professor van der Westhuizen believes, a holistic estate planning process should deliver better results and avoid the headaches usually associated with retirement planning. Contact Prof. Willie van der Westhuizen of Millers Attorneys at +27(0)44 874 1140 or email wvdw@millers.co.za. For more information, visit www.millers.co.za.

WealthWise 23


Ask Shaun Shaun Latter, Director and Wealth Manager of

Quaestor Wealth Management and Certified Financial Planner® will answer your most burning questions on wealth management, estate planning and investments. Send your question(s) to Shaun at editor@wealthwisemag.co.za and read his answer(s) in our next edition!

Question: I am in my early 30s, recently married, no children. When

should I consider starting a will? I have heard it is better to start planning for a will sooner than later – Johan, Pretoria

Shaun says: In essence, the purpose of a will is to ensure that your assets pass

onto your heirs and beneficiaries in accordance with your wishes. The law of succession is governed by the Intestate Succession Act (81 of 1987) and within the scope of this legislation, you either die Intestate (without a valid will) or testamentary (you have a valid will). To die Intestate means that your assets will be dealt with according to the provisions of the Intestate Succession Act. In short depending on who your dependants are (in the eyes of the law), will determine who gets what. All things being equal, if you are recently married and have no dependants, then all your assets will go to your wife. If you were to be single, then all the assets will be split equally between your parents and so on and so forth (the permutations are extensive). In light of the above, one may argue that someone in your position may not benefit immensely from having a will and, providing you do want all your assets to go to her, then this would be a safe assumption. Where a will does become very important is if there were to be a simultaneous death (you & your wife) and who then would be your desired beneficiaries. Even more importantly is when you have children (minors)– the law of intestate stipulates that in the event of both parents dying simultaneously, the assets will be liquidated (sold) and all the funds of the estate be placed in the government guardians fund for management and all income/capital needs will be determined by these trustees. By drawing up a will, these issues can be dealt with effectively and ensure efficient transfer of assets (succession) between generations. A valid will should contain the following characteristics: • – –

Testator must be 16 years & older Mentally capable

24 WealthWise


MoneyWise • –

Signed by testator Each page & last page

• – –

Witnessed Last page only Competent witnesses (2)

• At least 14 years old & not incompetent to give evidence in a court of law •

preferably not a beneficiary of the will

One should also consider including the following: • – –

Choose heirs & beneficiaries Extent of entitlement Any conditions

• –

Select trustees (testamentary trust) Control and provisions of trust

• Confirm legal guardians (minor dependants) •

Choose an executor(s)

Last wishes or instructions

In conclusion, although there are circumstances where a the law of intestate succession may be identical to one’s wishes, by having a valid and up to date will provides certainty to your heirs and beneficiaries as to what your wishes actually were and may avoid unnecessary heartache.

‘Drawing up a will

ensures efficient transfer of assets (succession) between generations

Shaun Latter is Director and Wealth Manager of Quaestor Wealth Management where he specialises in Estate Planning and Investment Advice. He is a Certified Financial Planner® and was recently announced as a finalist Shaun was a finalist and rated in the top 3 countrywide for the coveted FPI Financial Planner of the Year 2011. In addition to this, he has recently become a Certified Life Coach, has hosted the popular money show “Financially Speaking” on CNBC Africa , holding a wide media presence with regular contributions on radio, in print and online. Shaun can be directly contacted at +27(0)11 575 3159 and shaun@quaestorwealth.co.za.

WealthWise 25


How do interest rate changes affect property returns? by Paul Stewart

While property experts want you to believe property is a stable asset class and rental increases continue into perpetuity, short-term capital fluctuations of listed property can be hard for investors to swallow.

“The returns of the FTSE/JSE SA Listed Property Index over the past five years ended 30 June 2011 show that listed property outperformed the FTSE/JSE All Share Index by an astounding 7,6% per annum. Going back to the inception of the Listed Property Index in March 2002, the outperformance is even more pronounced at 11,2% per annum.� While this history may argue for an overweight exposure to listed property within a portfolio, there are also times when exposure to listed property should be underweighted. This is confirmed by a recent study in which Plexus Asset Management looked at listed property, taking into account the changes in interest rates (the South African repo rate) and comparing them to equity returns. For the study, periods of returns were divided between increasing, flat and decreasing interest rate cycles. The monthly total returns (including dividends and interest) of the FTSE/JSE SA Listed Property Index (SAPY) and the FTSE/JSE All Share Index (ALSI) were then analysed over these three cycles. The accompanying graph shows the interest rate cycles as well as the SAPY and ALSI performance indexed to 100 in March 2002.

26 WealthWise


MoneyWise It is not immediately clear from the graph whether there is any correlation between the interest rate cycle and the performance of listed property. "However, by isolating and summarising the average returns for each stage of the interest rate cycle (see accompanying table), a clearer picture emerges". The table below shows that while the average monthly return for both property and the ALSI is positive, regardless of the interest rate cycle, the minimum return over a single month can be significantly large. “It is interesting to note that listed property’s biggest down-month at -13,9% was greater than the biggest down-month for the ALSI". Furthermore, it is somewhat surprising that the best period of average monthly returns for property is when the interest rate cycle is flat. “Conventional wisdom would have one believe that property would do best when interest rates are decreasing". The flat interest rate cycle also provides the largest outperformance of property over the ALSI. It is clear that the up-cycle in interest rates is the most difficult period for property. “The average monthly performance is the lowest, the Property Index underperforms equities and the monthly standard deviation is greatest during this cycle". Interest Rates

Declining Cycle

‘ It is somewhat

surprising that the best period of average monthly returns for property is when the interest rate cycle is flat

Flat Cycle

Increasing Cycle

Property

ALSI

Property

ALSI

Property

ALSI

-4,52%

-9,87%

-6,58%

-13,24%

-13,93%

-13,14%

13,42%

11,02%

18,19%

14,07%

12,70%

12,45%

2,32%

1,94%

3,21%

0,65%

0,60%

1,11%

0,44

0,44

0,22%

0,22

0,37

0,37

3,64%

4,89%

4,99%

6,31%

6,13%

4,73%

Minimum Maximum Average Correlation: Property vs ALSI

Standard deviation

WealthWise 27


MoneyWise Another interesting statistic is the correlation between the monthly returns of the Property Index and the ALSI. “It is relatively low over all interest rate cycles and makes a good case for having both property and equity exposure in a diversified portfolio". “Despite the fact that the interest rate cycle is still flat, concerns regarding increasing inflation could prove to be ominous for the property sector. While one would not want to lose the upside potential of property returns during the flat interest rate period, having an overweight property exposure at this stage could be detrimental to portfolio performance when the interest rate up-cycle starts”.

How will property returns perform forward? Is listed property performance correlated more with bonds or equities? by Paul Stewart

Real estate unit trust funds have been in the limelight of late owing to their strong performance numbers at the end of the June quarter. "Not only did the sector take top position for the June quarter, but it was also the top-performing sector over the past three and five years".

Plexus Asset Management research team analyzed the relationship between the domestic equity market (the FTSE/JSE All Share Index), JSE-listed real estate (the FTSE/JSE SA Listed Property Index) and local bonds (the BESA All Bond Index). Year-on-year returns based on total return data were calculated for each asset class on a rolling monthly basis for the period from the end of March 2003 to the end of July 2011, amounting to 101 observations. These were then grouped based on year-on-year equity market performance figures. The group ranges were: less than -10%; between -10% and +10%; between +10% and +20%; between +20% and +30%; between +30% and +40%; and more than +40% (see table on next page), amounting to a more or less even dispersion of observations for each. “As can be expected, the correlations between the equity (ALSI) and bond (ALBI) markets proved to have the weakest relationship, especially during periods in which equities performed well, as is most apparent for performance figures in the 20% to 30% range". “What can also be observed is that the correlations between the bond (ALBI) and real estate (SAPI) markets proved to be much greater than those witnessed between equities and real estate. For the bond/real estate pair, the relationship proved to be strongest during negative equity markets and gradually weakened as year-on-year equity performance increased.”

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MoneyWise <10%

-10% to 10%

10% to 20%

20% to 30%

30% to 40%

>40%

ALSI & SAPI

0,21

0,36

0,67

0,39

0,46

0,44

ALSI & ALBI

0,22

0,23

0,58

0,06

0,30

0,18

ALBI & SAPI

0,94

0,94

0,94

0,82

0,74

0,69

ALSI Y/Y Returns

The opposite proved to be true for the real estate/equity pair, which exhibited weaker correlations during negative equity markets and stronger correlations during positive periods, specifically between the 10% to 20% range, which exhibited the strongest relationship among the positive periods. “This implies that real estate is generally affected by factors similar to those of bonds, but starts behaving slightly more like equities as equity markets start exhibiting highly favourable returns". The current uncertainty in global financial markets has resulted in more subdued performance from equity markets, with year-on-year performance gearing down to 13,1% as at the end July 2011 from June’s 24,6%. “If the current global climate of risk aversion results in a continuation of the recent bouts of relatively weak month-on-month performances, it is not unlikely that year-on-year equity returns could be confined to the three lower bands of the study (i.e. those below the 20% level). If this proves to be the case, this study would imply that bond-related factors could play a much greater role than equityrelated factors in determining real estate returns over the next couple of months, especially so for year-on-year equity returns below the 10% level”. “With the Monetary Policy Committee expected to tighten monetary policy in roughly six to eight months’ time, this could prove to be the case as the related interest rate hikes could impact both bond and equity markets negatively. Drawing inference from the results of the study, and if historical findings are anything to go by, real estate returns could possibly show a stronger correlation to those of bonds (bearing in mind that real estate return fluctuations could prove to be much larger than those witnessed in the bond market space), and end up losing some of their recently strong equity-like performance". Paul Stewart is the managing director of Plexus Asset Management. Contact Paul at +27(0)21 970 2400 or pstewart@plexus.co.za. Founded in 1995, the Plexus group of companies is an independent financial services provider that specialises in providing innovative, unique and holistic financial solutions for both corporate and individual clients. As of 2010, Plexus Holdings (South Africa) incorporates Plexus Wealth Management (financial planning) and Plexus Asset Management (investment management services and solutions). For more information, visit www.plexus.co.za.

WealthWise 29


Real estate funds top return tables by Ryk de Klerk

Investors in domestic real estate unit trusts had reason to celebrate in a quarter

characterised by significant price swings in domestic and global financial markets. The returns of domestic real estate unit trusts averaged 4,4% with income reinvested, with Property Index Tracker SAPY the third best of all collective investment schemes with 6,0%. “Global equity markets only managed to eke out a paltry gain of 0,7% in terms of US dollars in the June quarter". The FTSE/JSE All Share Index returned -0,6% with income reinvested for the three months ended 30 June 2011 for local investors and -0,7% in terms of US dollars. “The relief rally after Japan’s terrible twin disasters continued in the first week of April but gave way as the impact of the disasters on the global economy became evident. At the same time concerns regarding a possible debt default by Greece intensified the nervousness, resulting in the market falling by nearly 6% a week prior to the end of the quarter". “Global equity markets shrugged off the black swans and erased the losses by the end of the quarter after a swift rally". The domestic real estate unit trust sector’s superior returns were not limited to the past quarter. “The sector is also the leader over three and five years with returns of 22,1% and 15,9% per year respectively." “Local investors in domestic bond unit trusts benefited from the concerns regarding the global economic outlook and a lower oil price as investors sought refuge in less risky assets". The quarterly returns of domestic bond funds averaged 3,9% with income reinvested, mirroring the BESA All Bond Index’s return of 3,9% from the previous quarter as the yield dropped by 17 basis points to 8,7% from 8,9%. Zshares GOVI Exchange Traded Fund took the honours as the best of all collective investment schemes with a return of 7,8%.

30 WealthWise


MoneyWise With an average total return of 3,1% funds specialising in industrial shares were a short head behind bond funds, but topped the charts over 12 months by returning 27,1% on average with income reinvested. The Satrix INDI Portfolio Exchange Traded Fund was the best-performing fund of all collective investment schemes over the past year with a return of 33.9%. Resources and basic industries funds on average returned -5,1% for the quarter as the FTSE/JSE All Gold Index shaved 13,0% off its value. “For the 12 months to the end of June resources and basic industries funds returned 20,9%, with the FTSE/JSE All Gold Index returning -6,7% despite a surge in the gold price to US$1 500 from US$1 242 a year earlier and a 6,5% rise in terms of rand". “While the quarter’s results could encourage many investors to buy property unit trusts, after the strong run in the prices of listed property this asset class is not cheap at current levels. Furthermore, although many investors perceive property to be less risky than equities, few realise that the correlation between listed property and the market as a whole has risen significantly over the past few years”.

Ryk de Klerk is co-founder and executive director of PlexCrown Fund

Ratings. Contact Ryk at +27(0)21 970 2400 or edeklerk@plexus.co.za. For more info on Plexus group of companies and PlexCrown Fund Ratings, visit www.plexus.co.za.

WealthWise 31


BusinessWise Quick Read: Create wealth in your business In the current global economy, maintaining maximum profitability and minimizing the ups and downs fluctuations is the key to grow and create more wealth in a business. Here is what business owners can do to invest wisely in their own businesses:

Assess your corporate portfolio. What assets does your business have at

the moment and how can you diversify this to create passive income, even in times of crisis, where your core business might suffer? Think about assets that appreciate in value (property) rather than depreciating assets (a fleet of executive cars).

Incorporate a real estate portfolio. If your business can afford, consider buying premises rather than renting and expand this to a property portfolio (buying other properties). These can be used as other premises, accommodation for travelling employees or rented out to other businesses. Include real estate holdings is another possibility.

Invest in high-growth businesses. Put our money in promising ventures and share the profits between companies. Strategic alliance investments – similar to private equity investing – can give your business a boost if properly done and well managed.

Don’t forget your employees. Create a group pension fund or a co-

operative where employees have access to increasing their wealth and even receive financial planning advice. Never believe that creating corporate wealth resumes to the company’s shareholders only. Employees are your main assets – make sure their results outperform the initial expenses and training costs associated with employment. Investing in real talent and knowing how to reward this talent equals with great assets (people) in your company and more wealth flowing in your company.

WealthWise 33


Common mistakes start-ups make and how to avoid them Part Two by Nikki Viljoen

Recently I’ve had the opportunity to speak with one of my clients, whose eyes

became like saucers when I expanded on things that she could introduce and do within her business that she hadn’t even thought about. She had the idea, the basic idea – but she was so caught up in that basic idea that she couldn’t see the wood for trees – there were several different additional dimensions that she could also go to, but she hadn’t. She was being restrained by herself. Don’t be scared to dream big! One of the other things that I often see small business owners and entrepreneurs doing wrong, including myself, is the old 80:20 rule. It’s not new, it’s not difficult and it certainly is one of the most basic rules that we should all know and yet I for one, often struggle with it badly. I think that one of the reasons for this is that I am so ‘caught’ up in the moment that I don’t see it coming or that I am in the middle of it. It’s only when I am just about strangled to death by it, that I see what’s happening and then take the necessary steps to stop it. Usually, by that time, it has already caused the damage and I have to start again. Let me step back for a moment and explain what I mean. When 80% of your sales or your income is generated from 20% of your customers – your natural instinct is to spend the greater amount of your time with those particular customers. The problem with this of course, is that because you are getting most of your income from these customers you are often coerced into giving them bigger discounts or freebies and that means that your margins are cut. The bottom line is that you may be getting the lion’s share of the turnover from them, but you are also getting the least profitability from them. There is also the very real danger that should you lose, even one of these customers, you have lost a very big piece of your income and that is never a good thing. Balancing the 80% with the 20% is a very delicate thing and if you get it right your business with soar to incredible heights, but getting it wrong could also lead to your downfall. It is something that needs to be kept in sight at all times.

34 WealthWise


BusinessWise

Linking to the 80%/20% spilt is customer service. If your 80% clients are running you ragged with all of their demands, and believe me some of those bigger clients can have a very lopsided view of what their money buys from you, chances are that you may very well have both little time and/or energy left for your smaller clients. Their perception then is that they are not getting good customer service from you. If I go into a shop every single day or once a year, I want good service. If that is how I think, then surely my clients are entitled to the same. Giving consistently good service to ALL of your clients will result in loyalty. Loyalty in a client means that not only will they come back time and time again, they will also recommend you to all of their friends and word of mouth referrals are the best kind of marketing you can have. Believe me too though, when I tell you that this is also the worst type of marketing you can have, if you have upset a client. Remember that ‘bad’ news also travels faster than ‘good’ news does and it has a bigger impact. So be sure to give consistently good service to your clients.

‘value Give

for money and good service and you’ll always have business coming your way

This of course, does not mean that you have to become a doormat for nasty and bad clients – you should just get rid of those anyway. Give value for money and good service and you’ll always have business coming your way.

More common mistakes and proper advice We all have good days and bad days – we’re human after all and sometimes that’s just the way things are. Of course that does not mean that we just sit back and do nothing! What it does mean, though, is that we have to work extra hard at getting ourselves re-motivated. Our lives and our businesses depend on it! Instead of beating yourself up when you are feeling low, try doing something different. Do something that you absolutely love, or at the very least, do something that will take you out of the normal routine – go and watch a movie or take yourself ‘out for tea’ or ‘out for a meal’, or go for a massage. Take yourself away from your day to day drudge and troubles – chances are that when you come back you will be in an altogether different frame of mind and you can then get back onto the treadmill – ready to face whatever may come your way.

WealthWise 35


BusinessWise

’We all need

a little help every now and then and having a mentor is usually a good thing

You need to understand that you will have to exercise great patience and tenacity when you have you own business. It is more than likely that you will need to speak with someone whom you can brainstorm with and/or bounce ideas off or who can (and will) challenge you and keep you motivated and going in the right direction. We all need a little help every now and then and having a mentor is usually a good thing – remember to ‘pay it forward’ though and help or mentor someone else too.Keeping your emotions in check is also something that you will need to do, especially when you are making decisions that will have a huge impact on your business.

Decisions, of course, need to be made only after careful consideration, after a good deal of research and even more clear headed soul searching, in order for them it have the greatest beneficial impact. Decisions made ‘on the fly’ or without any kind of deliberation could have serious negative financial implications, which could bring about the demise of your business. So always think things through first. A business needs to grow and that is a good thing – it’s a natural thing and it evidences that the product and/or service that you are offering is of value and that there is a demand for it. Here’s the thing though that you need to be aware of and plan for. When you grow, your will need more money to facilitate the expansion. Ensure that your growth is measured and gradual and that you don’t grow too quickly as that will take more finance away from the day to day running and working capital of the business, which in turn would impact hugely on the cash flow and therefore the well being of the company. Whatever you decide to do and however you decide to do it, remember why you started the business in the first place and remember to have fun! Nikki is an Internal Auditor and Business Administration Specialist who can be contacted on +27(0)83 702 8849 or nikki@viljoenconsulting.co.za or www.viljoenconsulting.co.za.

36 WealthWise


BusinessWise

Business Column Surviving the credit squeeze by Bob Power, owner of Power Corporate Consultants (www.powerconsulting.co.za) on behalf of Optima (www.optima.mu)

While facing this suffocating credit squeeze, consider the

following case study to avoid experiencing the regret of whishing you’d known before.

The predicament A few years ago I was apprised of a small business owner on problems emanating from the then credit squeeze. His predicament centered on the following ten issues:

1.

Cash flow was running out

2.

Personal expenses were charged to the business card

He was taking too much money out of the business He was honest enough to admit he wasn’t ethical in terms of charging personal expenses to the business account; including

3. Expensive holidays that were enjoyed at the cost of the business 4.

Arrears on rental payments

5.

Carrying non-contributors on the business’ expense

6.

Customers were neglected

7.

Administration was weak

8.

No relationship with the bank

9.

No relationship with creditors

Lease rental payments were two months in arrears He was employing and paying family members who were not contributing anything to the business He ignored his customers because he thought he had the market. He was always late for meetings and would not visit them at their premises to settle problems. They were now looking elsewhere. He was weak with the administration and recording systems He had a bad relationship with his bank manager His creditors were pushing him as he didn’t keep them informed

WealthWise 37


BusinessWise 10. Inaccurate tax submissions

His tax payments were made, but, not always accurate He was now in the position, that, at the end of that month, he only had enough money to pay either his staff or VAT. We know, many small business owners are, or have been, in the same position. His reply on how he planned on settling this predicament was to: • • • •

Reduce the amount of cash that he draws from the business Increase the price of products Charge for more consultancy hours than what he actually performed; and Rather pay his staff, than the VAT, by the end of the month.

Advice provided I strongly advised him that: • Reducing his cash withdrawals was the way forward, but expenses wherever possible, had to be curbed as well • It would not be sensible to increase his prices because customers were close to leaving him; and • If he opted for overcharging the consultancy hours, and did not pay his VAT, he was guilty of fraud- so those could not be considered as viable options.

The solution We came up with the following three point plan:

1.

Relentlessly manage the cash flow

2.

Keep company money in the business

3.

Work on building lasting relationships

• Reduce withdrawals to the bare minimum (even more than initially planned) and only use what’s essential for household needs. Social ‘habits’ also had to be curbed and a reduced liquor intake would take well to his health • Fire family members who didn’t contribute to the bottom line, their salaries were more than half of the payroll! • Company money must only be used for company business. So, using the company business card for personal means was off limits • Refrain from expensive holidays, even if he was paying himself. He was needed for the business to turn it around before it was too late • Try to negotiate with creditors; but • Be ruthless with debt collecting; and • With “the cap in the hand”, visit all those people whom directly influence the health of the business and explain the position openly and honestly seeking a mutual solution, including the bank manager, the customers, the lessor and the receiver of revenue.

The outcome The following actions eventuated from him being honest about his predicament:

38 WealthWise


BusinessWise • The lessor gave him 6 months to settle arrears (without interest) - Lessors are also struggling: “A bird in the hand is worth two in the bush” • The family members’ employment contracts were terminated: they had contributed little, but had taken a monthly income. This aspect alone was a saving grace. Some of his family members were not happy, but accepted his position, they had no option. They also realised that they may have avoided tax, so they wanted to exit quietly. • He visited all customers, on time, at their premises and humbly explained his position... He did not raise his prices and he gained their loyalty • With regards to the bank manager, they also gave him a reasonable time to resolve his predicament, because of the way he approached them • The receiver of revenue was also approachable, and gave him a month to settle (with interest); and • A friend advised him to update the administration and he changed his bookkeeper, whom he blamed for not helping him; but, I pointed out that it is easy to blame someone else for your shortcomings. He was the boss and he was to be blamed.

’Explain the

position openly and honestly seeking a mutual solution

Lessons learned The lessons that were learned from this case study include the following: • Get it right and do it right from the start • Cash is definitely King: cash-flow even more so • Keep business and personal finances separate • Pay the receiver of revenue, however, I wonder how many, in the same position, would also have paid their staff first, before VAT • Family businesses are in order provided all contribute • Set aside savings for a rainy day • Don’t neglect administration: perhaps we all do…but…don’t! • You are the boss: be on the look-out for warning signs • Call the bank manager and receiver of revenue; and • Perhaps luck also comes in to it. We all learn the hard way, but, it’s easier to avoid such a mess than to try and salvage what is left.

Bob Power is presently CEO of Power

Corporate Consultants, which specialises in facilitating mergers and acquisitions, security and management consulting, coaching and training in the M&A spectrum, especially assisting those entering the SME market.

Optima is a global specialist provider of training and

expert support to small and medium enterprises (SMEs), financiers of SMEs, business advisors to SMEs, entrepreneurs and other business leaders and managers in commercial organisations.

WealthWise 39


Zamar:The business behind the music by Denisa Oosthuizen

Photographs: limedrop.co.za and zara-zoo.com. Zamar ladies dressed by Hip-Hop

Stellenbosch-based music group Zamar has taken up the South African music

industry by storm as far as 2004, being regularly featured at local festivals, proudly representing the country abroad or, most recently, playing their music at the reception of Prince and Princess of Monaco on their visit in Durban. Zamar’s story is a true example of how energetic young musicians and passionate artists follow their dreams to become one of the country’s most successful music bands. From humble beginnings, Zamar, which means ‘to celebrate with the plucking of strings’, has managed to effortlessly combine their passion for music with the realities of owning and supervising every aspect of their music journey. Here is the business story behind the music group, as told by Zamar’s talented musicians. Founded in the heart of Stellenbosch, Zamar reflects an unique eclectic music style, incorporating both traditional and modern elements, experiencing “everything from Gypsy to Jazz”, including classical music, folk music, South American tangos, Hungarian rhapsodies, contemporary classics and African traditional songs. Zamar consists of five vibrant and talented musicians, with various backgrounds: Veronica (vocals and violin), Lyuda (vocals and accordion), Danica (djembe and percussion), Ignatius (bass) and Brian (vocals and guitar).

History of Zamar The band started in 2004 with four members of Joyful Noise Ministries, a group of young musicians founded in 1995 by Usher Bell. The group aims to serve and improve their community by promoting young talented artists. The band firstly performed at weddings and corporate functions.

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BusinessWise From the original band composition, only Veronica (now married to Usher Bell), who extensively studied violin, piano and vocals and Ukrainian-born Lyudmyla Heath, the accordionist, remained to continue the Zamar dream. Lyuda was “scouted” during a visit to Ukraine and became a part of Joyful Noise team in 2002, joining Zamar in 2004 as accordionist. One year later acoustic guitarist Brian O’Neill joined the Joyful Noise Ministries in Stellenbosch and met Danica Kruger, who firstly joined as a drummer and discovered her love for percussion (he later married her in 2007). The couple became part of Zamar at the beginning of 2008. Ignatius Kloppers joined shortly after as bassist. The five artists, now friends, are representing Zamar together since 2008. Although the band’s members have changed since 2004, Zamar has produced so far five albums, “Songs of Celebration” (2005), “Spell on You” (2005), “Zamar and Friends” (2007), “Passion becomes a dream”(2008) and most recently “Best of Broadway” (2010). In 2005 they were signed by EMI. In 2009, they were recording their first video for “Libertango”, from the album “Passion becomes a dream”.

Building a strong b(r)and 2008 was a defining year for Zamar as the band reached new dynamics with the new members in its composition. The band went through long rehearsal times and decided to share management responsibilities between its members. “We decided to do Zamar full time since 2008. This meant that each member had to be always available for Zamar gigs, marketing functions, photo shoots, CD recording. Like any good relationship, it takes effort and quality time to build a steady foundation for the band to operate upon”, says Veronica, Zamar’s violinist. “To start a music band, is very much like starting a new business. You have a person who drives a specific concept, who realizes that he/she can’t achieve his/her goal without other great people involved in the project. In Zamar we rely very much on each musician’s specific flavour of playing and personality, bringing diversity to the brand, although we share the common sound of world music”, she adds. Being part of a band does not only require to be skilled on an instrument and to love making music – there is hard work involved, including administrative tasks, marketing and promotions. “It takes hard work, patience and lots of perseverance”, admits Ignatius, Zamar’s bassist.

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BusinessWise “The entertainment industry can be very demanding. One has to make quality decisions in the entertainment industry concerning lifestyle. We have alternative working hours and high performance demands each time we work with our clients”, explains Veronica. Zamar does its own marketing, strongly relying on word of mouth and internet marketing. “Our website www.zamar.co.za has fantastic Youtube video clips and audio to introduce a client to Zamar”, says Zamar’s violinist. Apart from their website, Zamar uses Facebook, Twitter, YouTube channel (thebandzamar), distributes brochures and postcards, and emails their own database of clients to promote future gigs and advertise their albums. “We have a database of email collected from our live performances which we email on a regular basis”, says the band’s “Our best advertising is our live performance”, continues Veronica. The band also commits to functions and weddings to increase its live exposure. According to Veronica, the band has its fair share of media exposure, which helps tremendously whenever the band releases a new album or promotes an upcoming public performance. “Although we don't have a huge fan base yet, the fans that we do have are very loyal and they also help promote where they can”, she says.

Behind the curtains Zamar’s booking agent, Bell Events, is represented by Usher Bell, Veronica’s husband. “Finances are split up in many different directions, so we thought: why not do it ourselves and keep the business in the family”, explains Veronica. Bell Events handle all logistics regarding live performances, from liaising with clients, arranging the travel and food requirements to dealing with the band’s finances. But it’s Zamar’s members who take responsibility for the marketing of their public performances. “Our booking agent responds by following up with an email or phone call to receive more details on the upcoming function. The gig price is then negotiated. We would rather play than lose a gig just because the clients can’t afford to have our festive music at their special function”, affirms Veronica. “Organizing a concert happens like this: we phone a theater and ask if they have any open dates. If we have a corresponding open date, then we settle on ticket prices, venue hire price and so on. Then we start inviting people and doing our marketing via our database and Facebook”, confirms guitarist Brian. Brian believes that by doing its own marketing and admin, the band can build on a good foundation for later expansion and stay true to its specific direction in the market. The band is responsible for all administrative and promotional tasks as the booking agent only handles the bookings once they are received via phone or email.

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BusinessWise According to percussionist Danica, a full time agent and admin person would ease Zamar’s daily business commitments, however this would require to “perform often and constant enough at well paid gigs”, which is not possible at the moment. This is one of the reasons why the band has chosen to do its own marketing, besides being hands-on and knowing best what it wants to achieve in the future. “We do learn a lot about the industry and about one another that we wouldn't have otherwise, if we have appointed someone else. And we are growing and getting better for it. It's also sometimes good not to have an agent tell you where to perform, what to wear and so on. We have values and we are not going to compromise on that to get more money or fame. So in a way it also protects us”, explains Danica. Even without an agent in place, each members has its own administrative responsibilities: Lyuda is in charge of song arrangement, composing, rehearsals, the ladies’ dresses (sponsored by Hip Hop) and the CD projects; Veronica takes on the admin, performances, business and finances; Ignatius is in charge of the transport, email databases and Zamar’s website; Brian is responsible for the photos, the Facebook profile, the administration of thatgig, a community for fans and artists, and designing; Danica helps with the posters, newsletters, prayer support, bookkeeping, the band’s Twitter account and charities. “We rehearse three days a week to keep our standard of music very high, and then we use the other two days to market and administrate the band. And then obviously we gig as often as the gigs come in”, says Ignatius.

Reaping the rewards There’s no greater reward for a musician to see its audience entertained – and Zamar is no exception to this. Says Veronica: “In the beginning we could only offer a dream pursued with lots of passion and commitment. Each of us was paid per gig in 2008 and 2009. By 2010 we have grown to the capacity of paying a fixed amount per month to each member”. “The salaries were implemented to give more stability to the band members”, says Ignatius, adding that it would be ideal for the band members to be rewarded at the end of the year, similar to a performance bonus, an idea that has yet to be implemented successfully. Danica admits that changing from payment per gig to a constant monthly salary for each member was much like a leap of faith, but the decision has its advantages: “Since gigs aren't constant each month (June and July are usually quiet, while September to December can be crazy busy), it was difficult to budget. We all have families to look after. It's a relief to know you're getting paid and how much you are paid at the end of every month”.

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BusinessWise Brian agrees: “Music is our passion and we love doing it full time. We decided to explore every avenue that the music industry offers. Delving into the "business" side takes a lot of admin and we need to do this full time. When paying a salary, certain jobs are required of you and can be expected of you, like in any normal job”. Zamar is a full-time commitment to all its members and this requires each musician to be available whenever the band calls, although, as Veronica admits, holiday time and more recently, maternity leave, are planned in their busy schedules.

Overcoming the challenges Being in the music industry comes with both its highlights (the best performances) and the unseen, less glamourous part: the challenges artists have to face to keep their passion for music alive and continue to entertain the crowds. “When we started running Zamar as a business, the greatest challenge, except for marketing our band, was the uncertainty of income. Starting any business takes a while to generate enough finances to pay salaries so that we could all afford to do it full time. But only two years in, we started paying salaries, and we could afford to give raises at the beginning of 2011”, says Brian. The biggest challenge, though, is the marketing. Having not being signed with a major company and doing the promotional work themselves, the band finds it sometimes difficult to get out there in the market with their new album releases: “It doesn't help much that your CD is available in the stores, but people don't know it's there”, says Danica. As for finances, the inconsistent revenue in the months were the music industry goes quieter – such as the winter months (June, July) or holidays (January) means that Zamar has to save and rely on its album sales rather than performances. Some challenges are confined to the work/life balance, with current issues as family relationships and maternity leave, while others pertain to the music industry, such as having to perform on very small stages, with not enough space to set up sufficient equipment. All members agree though that the highlights of being in the industry, doing what they love most – music – overcome the challenges.” lt's a pleasure to be part of Zamar and it's a pleasure to work with people you love”, affirms Danica, who is also blessed to share this experience with her husband Brian. Among the greatest moments in their careers, having played in the Seychelles and in Durban for the newlywed Prince and Princess of Monaco tops their list, together with the 2009 IPL Cricket Grand Finale function and the 2010 British and Irish tour to South Africa, both events being important avenues of growing their brand awareness. “One of our biggest moments was performing for the prince and princess of Monaco just a few weeks ago. And that is a very good example of how important promoting your brand is. The princess saw us perform quite a few years ago and she bought one of our CDs. It was a great honour for us not only to play our music at their reception, but also to meet her”, continues Danica.

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Whether playing in front of a live audience, recording a new song or performing for different kind of audiences, from public crowds to CEOs of companies and royalties, Zamar touches and inspires people with their joyful, everlasting music. “Music is an universal language and has the power to ignite one’s passion, to pursue a dream. It can give courage to overcome anything, it can create a quiet, serene, resting atmosphere or a soul healing experience”, believes Veronica.

’Perseverance is the key to success. The only way you'll get it right, is to first get it wrong

The music industry is immensely rewarding for those with a passion for music and the perseverance to succeed either solo or in a music band. Veronica’s advice for the industry starters is to “believe in what you have to offer in the industry and start off with accessible music, should you want to find common ground with as much people as possible”. In an industry where “vocal music sells”, mainly instrumental bands should not be afraid to “play well known tunes and slowly but surely introduce their own compositions”. Accessible music also leads to more CD sales, but the artists shouldn’t compromise just for the money alone. Having an agent who understands the artist and “isn’t involved just for the money” is worth to consider.

It is also recommended to “talk as much as possible with artists who have been in the industry for quite a while”, to know what one can expect on this journey. But perhaps the most important thing when starting as a musician is to understand that it is in fact a journey one is after: “You are not going to do everything right from the beginning. Rather enjoy the discovery of all your possibilities. It’s not a matter of learning the lessons to apply later, it is about enjoying the learning process”, says Veronica. Or, better still, as Brian puts it: “Perseverance is the key to success. The only way you'll get it right, is to first get it wrong”. “It's not the easiest thing to be part of a band”, adds Danica. ”It looks like a lot of fun, but there are, like with everything, various challenges and every person deals with this in their own unique way. You have to get to know one another very well. And I think, most importantly, you have to put aside selfish ambitions. Listen, rather than speak. Have grace for one another. It's fun to be part of something bigger than yourself”. Zamar’s longevity in the industry is the proof of their strong commitment to each other, to their growing audiences and to their focused dream of sharing their music with the world. “We wouldn’t have been able to have come this far without financial support, sponsorship, prayer support and people who believe in the product we offer”, concludes Veronica. To book Zamar, call Bell Events at +27(0)21 886 6121 or email usher@bellevents.co.za. Zamar CDs are available in most music stores. For more details visit www.zamar.co.za.

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BusinessWise

Getting started in the music industry Believe in yourself and your music. Choose a music style you personally enjoy (don’t force it) and one that public can relate to. Have patience – stars are not born overnight! It takes practice, rehearsals and fine-tuning to make it happen. Don’t compromise what you believe in just for the money alone. If finances allow, book an agent that has your interest at heart, not just money. As difficult as it might sound, rather do everything on your own in the beginning than having an unreliable agent. If in a band, learn to respect and understand each other. Perseverance is key – expect to often be wrong before you get it right. Every business experiences ups and downs – learn for every step you take. Talk to other bands and artists in the industry to find out their challenges and what to expect going forward. Be proactive – contact smaller venues, pubs and restaurant to arrange for live gigs and performances. Send a demo to a local, regional or national recording company. Take part in local, regional or national talent competitions – don’t dismiss any opportunity that might get you noticed! And the most important of all…have fun!

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CareerWise Quick Read: What to learn from (other) bad bosses

What makes a good boss or employee? Can both employees and managers learn

their lessons from bad examples of boss behaviour? Here are the answers we found (and totally agree upon) to these interesting questions, whether you are an employee or the boss himself:

Build trust. If the main person in an organization does not care or support its

staff, why should they care about? Don’t overlook showing respect to people, being there or having someone there to guide them or have their backs if something goes wrong. Build trustworthy relationships and make yourself a trusted person.

Listen more. And do it with careful attention. Most conflicts at workplace can be avoided if proper listening is done, from both the management and employees sides. Bad management means poor listening and misunderstanding that costs in the long run. Avoid rushing or pushing your own judgment over any matter – first listen!

Don’t lose control. Anger management is easier to be said than done. Even

the occasional “breakout” hurts in today’s workplace. Plus, good bosses can also lose it over pressure and stress. Don’t make shouting, screaming at your peers or employees or other such manifestations a habit. Losing control can permanently damage your reputation in the workplace.

Get energized. Don’t be the de-motivator, the always pessimistic person to be around. Be energetic, creative, encourage people to come and talk to you – not to be afraid of you or not willing to communicate with you because of your “bad karma”.

Learn the power of constructive criticism. Even when most bosses do

criticize, can they do it in a constructive, non- hurtful way? Few can. Constructive criticism should be orientated towards the solution, not the problem itself; it should be not directed towards the person, but the actions and its consequences; it should deliver results and promote change, not fear or rejection.

Know what to expect. A little long term planning doesn’t hurt. Avoid keeping

your sub-ordinates or peers in the dark. People are mostly irritated when being part of something they do not understand or feel they are not being told the whole picture. So get out there and share your plan of action and make sure everyone feels part of it.

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Finding the elusive work-life balance by Leo Babauta

How do you find a balanced life when you’re overloaded with work? How do you switch off work when you’re away from the office? The answers to these very common questions are elusive. It’s never an easy thing. But once you do find this balance you’ll find enormous benefits: more enjoyment of life and better relationships and less stress and a better quality of life overall.

I should note that in many countries — including the U.S. — this is a common problem even if it’s not as pronounced as in Hong Kong (for example). We all face these problems whether we’re employees or self-employed or free-lancers or own our own businesses. I’ve created a life where balance is intentionally built-in but it hasn’t always been that way. I’ve worked in the private sector (in the news industry) where they try to squeeze every bit out of employees and we were often asked to work longer hours without compensation. I’ve worked in demanding public service jobs where working into the night and weekend hours (again without more pay) were the norm. It wasn’t easy finding balance. But don’t despair. Change is possible. These days I have created a life where I work less but on things I love. I make time for staying active and getting outside. I make time for playing with my kids and being alone with my wife. I find time alone for reading and walking and thinking. And as I do these things work isn’t always on my mind. I have a few key tips that should help no matter what your work situation:

1. Set a time to shut off work. Working all day and night means you are

nothing but your job. Your life belongs to your employer (or if you’re the employer then your life belongs to your employees or customers). Take ownership of your life — find variety and ways to burn off stress and find enjoyment in life! Start by setting a time each day when you shut off work. Whether that’s 5 p.m. or 5:30 or 6 or 7 or 9 p.m. Some of you can set it even earlier if you start earlier — say 4 p.m. or something like that. Set that time and make it happen. After that shut-off time you will not do work or check email or think about work.

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2. Find something to immerse yourself in after work. What do you love doing besides

work? Do you love to read or run or play sports or hang out with friends or play with your kids or build model ships or play games? If you don’t already have a passion then pick something that sounds fun and give it a try. It doesn’t have to be expensive — it could be as simple as hiking around your neighborhood or volunteering at a charity or helping friends with household projects. Schedule it as soon after work as possible. And while you’re doing it try to completely immerse yourself. Don’t think about work — only think about the after-work activity.

3. Learn to be mindful and present. It’s

’ Find something to immerse yourself in after work

not easy to just switch your mind off work but it’s a skill you can learn over time. The way to learn this isn’t to try to block work from your mind — it’s to learn to bring your mind back to whatever you’re doing after work. It doesn’t matter what you’re doing: it could be household chores or exercise or talking with someone or taking a bath or eating. Whatever it is … that’s all you want to focus on. Your mind will inevitably slip into something else. That’s OK. Bring it back gently and without reprimand. Slowly with practice you will get better at being present. Which means your work won’t always be on your mind.

4. Take breaks at work. Not everyone will have this flexibility but it’s worth

doing if you can manage it. Basically if you’re working for 8 or 10 hours you don’t want to do it non-stop. You need to find balance even at work. So at least once an hour get up and walk around. Get outside if you can and take a walk. Stretch and massage your shoulders and get your blood moving. Do some squats or pushups if you want to start getting fit. Talk to someone. Drink water. Eat fruits and vegetables. Your break just needs to be 5-10 minutes but it’s important.

5. Increase your skills while at work — to prepare for leaving work. If you are very skilled at what you do then you become worth more. In fact it’s often possible to quit your job and start your own business if you’re good enough. And it doesn’t take a lot of money to work for yourself — you can start a business with practically no money. I started mine while still working full time: my job funded my startup business. Even if you don’t go into business for yourself you’ll be worth more with a high skill level. So devote your work hours to learning and perfecting your work skills.

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CareerWise

6. Find ways to increase your income while decreasing hours. As

your skills increase your value increases. Slowly pick jobs or projects that earn more money per hour. This often means changing jobs but it might be a promotion or change in roles. It could mean starting your own business or becoming a consultant. If you already have your own business or work for yourself then you should slowly be picking jobs or business projects that pay more for every hour you spend working on them. By increasing income you can decrease hours and free up more time for yourself.

7. Learn that you are not defined by work. You can be happy without your job.

Your value isn’t completely tied to your work. For example: I’m a writer but it’s not the only thing I am. I’m also a father and husband and know that those are my most important roles — not my role as a writer. I am more than that as well: I run and read and learn and help others and am constantly experimenting with life. I can do things other than my job and be fulfilled. So can you. And once you discover this you’ll free yourself to find a life outside of work. Then balance is simply a matter of logistics — you just need to make it happen by taking small steps. Small steps is always the answer. You don’t need to be perfect at shutting off work or being present or pouring yourself into something after work. You just need to start doing it and in doing so you’ve already started down the road to balance. Leo Babauta is the author and blogger of Zen Habits, a weblog about “finding simplicity in the daily chaos of our lives”, as he describes it. His weblog is viewed by the publication Time as one of the top 25 blogs worldwide. Read his blog at www.zenhabits.net.

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Agenda This month we inspire you to... Invest in yourself GetSmarter.co.za offers online world-class courses on finance, business, marketing and many more. No need to go back to school - get your certificate by studying online. Perfect for business professionals, busy managers and entrepreneurs.

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Go for cloud-based CRM solutions Keep up with what happens in your business 24 hours a day with cloudbased CRM software such as www.zoho.com or www.sugarcrm.com. The information is safely stored online and always available at your fingertips. Free software is available for small businesses with small number of employees.

Think out-of-the-box funding for your business Crowfunding is going big - so take your idea online and leverage the power of masses. Sites like Profounder.com, Kickstarter.com, Indiegogo.com or www.crowdfunding.co.za allow you to present your business case to others and receive their support...in money. Give it a try, it might work for you.

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Another kind of Kloofing by Carla Rossouw

By now I am sure you are already thinking of the adrenalin rush that goes with Kloofing (canyoning): the speed, the water, nature flashing by, and the exhilaration. However, this time I want to talk to you about another kind of...kloofing.

On a recent trip to Cape Town I was adamant to experience and explore the Kloof Street area in Gardens, Cape Town, on the foothills of Table Mountain. Twenty one hours later, it turned out to be a fabulous experience and one that I would like to repeat soon as this area has so much to offer. Arrival in a rainy and grey Cape Town could dampen the spirits somewhat, but within a few hours the rain stopped, the clouds lifted and the nippy weather improved, a great start to a light lunch at Café Paradiso, clearly a popular lunch spot amongst locals and visitors alike. Café Paradiso has been going for more than 26 years, housed in a store that has been lovingly restored by The Royal Countess Madame Zingara. Many Capetonians and others have been enjoying the interesting cuisine and various locations of Madame Zingara’s array of restaurants and dining options for years.

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Agenda: Destination CafĂŠ Paradiso is open six days for breakfast, lunch and dinner (09:00-22:00) during weekdays and on Sundays (10:0015:00). The extensive menu offers interesting breakfast options, health sandwiches, meat and vegetarian antipasti as well as delicious starters, salads, pasta/ risotto and main dishes incorporating chicken, fish and red meat options. We enjoyed the very tasty lunch table at a very low price of R35 per small plate and R45 per bigger plate. This is obviously a firm favourite judging by the number of people enjoying this option, including us. It started initially as an option during winter months, but due to its popularity, the offer has now been extended into spring. The lunch table offers a wide selection of home style dishes (hot and cold), accompanied by soup, salads, pastas and fresh home baked breads. CafĂŠ Paradiso also offers a wide selection of cakes and bakes. The restaurant is licensed and also offers freshly pressed juice for a non-alcoholic treat. Pay them a visit at 110 Kloof Street or dial 0861 623 263 (locally) or +27(0)21 423 8653 (also internationally) for bookings and more information. After lunch the weather has cleared somewhat and allowed us to stroll down Kloof street to further explore, browse and experience.

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Agenda: Destination

My companion and I both remarked that one has to remind oneself rather often that you are actually in Cape Town. It is a very cosmopolitan area with a unique buzzing atmosphere. There are lots of pedestrians and a wide variety of shops, eateries and other interesting nooks. This area is popular amongst local, as well as international guests and its central location makes moving in any direction an easy task. A very interesting shop is the Wellness Warehouse with a variety of departments, including a healthy food market offering an onsite facility, fresh and frozen take out options and a healthy supermarket loaded with very interesting products. Other sections include integrative health, home and lifestyle and beauty care. I noticed that they stock a number of unfamiliar product ranges. They have a few other branches scattered throughout Cape Town. Visit www.wellnesswarehouse.com for more information. Our accommodation for the evening was located at More Quarters, part of the More Hotels Group, a family business developed over a number of years. More Quarters is adjacent to its sister property Cape Cadogan, together with two luxury homes, Redcliffe House and the Owners Villa. The Cape Cadogan is a stately double-storied Georgian and Victorian building that dates back to the beginning of the 19th century. It was originally a farmhouse which was â&#x20AC;&#x2DC;Victorianisedâ&#x20AC;&#x2122; in 1912 and declared a national monument in 1984. Cape Cadogan, located in Upper Union Street, consists of 12 rooms, each individually decorated with lush furnishings, ensuring that every guest is comfortable and properly pampered. Public areas include breakfast room, lounge with fireplace, library with laptop for guestsâ&#x20AC;&#x2122; convenience, garden area and pool.

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Agenda: Destination Next to the Cape Cadogan is the Owners Villa, consisting of a spacious lounge area, fully equipped kitchen with own braai and pool area. A large bedroom with bathroom is located upstairs. The lounge area, leading out to the braai and pool, is suitable for small private groups for informal conferences, dinners and cocktail events. Cape Cadogan and More Quarters are linked by a passage way where one can walk into Kloof street and around to the next street. More Quarters, in Nicol Street, currently has 14 one bedroom apartments and 2 two bedroom apartments. They are expanding with similar property that becomes available in both Nicol and King streets. Redcliffe House on the hill consists of four en suite rooms, lounge, kitchen and own plunge pool. All the apartments are very spacious with fully equipped kitchens, dining and lounge area. Neither Cape Cadogan nor More Quarters offer lunch or dinner due to the abundance of restaurants in Kloof street. Guests can phone through to reception to assist with dinner bookings or to place take away orders from a variety of restaurants.

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Agenda: Destination We made use of the close proximity of Da Vinci’s on Kloof for a delicious salad and thin base wood burning oven pizza in the comfort of our own apartment. Visit www.davincis.co.za or phone +27(0)21 424 7504 to book your table or place your order. Be warned, they are very popular, thus it is best to plan ahead to avoid disappointment. After a good night’s rest we were treated to the More Quarters breakfast, served in a beautiful, light and airy room, complete with chandeliers and great views of Table Mountain. The continental spread included a variety of fresh juice and fresh cut fruit, cold cuts, cheese, muesli, pastries and other embellishments, complimented with good coffee and a selection of teas on burners. Hot dishes can be ordered individually. The dining room is available for small private dinners, cocktail functions or special occasions for up to forty guests. Gardens is an old fashioned stay, work and play suburb; with Kloof Street at its centre, the area is often referred to as the heart of Cape Town. Close by is the Gardens Shopping Centre, the proximity to the Table Mountain Cable Station is excellent and no matter where you are you can enjoy excellent views of Table Mountain and Signal Hill. Other interesting options to explore include the Mount Nelson Hotel and Spa, Labia movies, Melissa’s gourmet shop, Toni’s Portuguese, Saigon Vietnamese, Café Milano, Asoka Asian, Yindees Thai Restaurants, as well as LIM décor & lifestyle, Nap & Alexandra Höjer Boutiques. After twenty one lovely hours spent in the heart of Kloof Street, I can honestly declare that I’m hooked on Kloofing and will definitely return to experience more. For further information on the More Group of hotels visit www.morehotels.co.za. Photos courtesy of More Hotels. Contact Carla on carla@carlarossouw.com to take your next function or conference to a new level. Also visit www.carlarossouw.com for more reviews on conference venues, accommodation and international destinations.

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Competition

WIN one of 5 "Taking You Beyond" e-training programme by Kobus Neethling! WealthWise magazine gives you now the chance to experience Kobus Neethling’s unique e-training programme. Five of our WealthWise Club members stand a chance to win the “Taking You Beyond” programme! To enter this competition, all you have to do is joining our WealthWise Club, by subscribing to our publication at no cost! Go to www.wealthwisemag.com and click on "Subscribe" or follow the link: www.wealthwisemag.com/wealthwise/subscribe. Subscription is absolutely free! Winners will be notified during October.

WIN one of 5 Zamar "Best of Broadway" music albums! Zamar, which means ‘to celebrate with the plucking of strings,’ was founded in the heart of Stellenbosch by energetic young musicians, equally passionate about their music, reflecting a style which is both traditional and cosmopolitan. The vibrant group is Veronica (vocals & violin), Lyuda (vocals & accordion), Danica (djembe & percussion), Ignatius (bass) and Brian (vocals & guitar). During their performance they take you on a tour around the world, visiting many different countries - you will experience everything from Gypsy to Jazz! Five of our WealthWise Club members stand a chance to win Zamar’s latest music album, “Best of Broadway”! To enter this competition, all you have to do is joining our WealthWise Club, by subscribing to our publication at no cost! Go to www.wealthwisemag.com and click on "Subscribe" or follow the link: www.wealthwisemag.com/wealthwise/subscribe. Subscription is absolutely free! For more info on Zamar, go to www.zamar.co.za.

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Agenda: Books

On the bookshelf...

WealthWise recommends

Michael Stein, Estate Duty: Principles and Planning, 4th edition LexisNexis, R350.00 from www.lexisnexis.co.za. Michael Stein is a regular tax seminar presenter and tax consultant in South Africa. Having authored and edited various tax publications and being a regular contributor to texts such as Tax Planning and TaxNet, Stein is an authority in tax legislation and latest regulations. In his latest edition of Estate Duty Principles and Planning, published by LexisNexis, Stein discusses the recent amendments to the Estate Duty Act, such as the portable spousal deduction. The book, now in its fourth edition, was first launched in November 1984, co-authored with late Dr Aubrey Silke. The main purpose of the book is to bring readers up to date and factual information about changes effected to the Estate Duty Act 45 of 1955. The latest revised edition includes updates on estate duty and capital gains tax implication upon death, namely the portable spousal deduction, which allows for the “portability” to the surviving spouse of the unused portion of the deceased spouse’s abatement. Other topics include retirement funds and donations made by a deceased spouse during his/her lifetime. For the first time, the book goes beyond explaining the changes in estate duty legislations, with practical planning points offered as an add-on at the end of every chapter and practical ideas on how to legitimately minimize or limit the impact of the estate duty and the capital gains tax. This advice, together with the illustrative examples, makes for an unique, compelling and user-friendly approach to the Estate Duty Act. A must read for financial planners, testators, professional advisers, students of the subject and the general public in need of estate planning advice, Stein’s latest release, although still very much in tune with the law’s jargon, is the most accessible, clear and concise reading yet on this subject. Also by Michael Stein with Costa Divaris: South African Income and Tax Guide 2010/2011, R300,00 from www.lexisnexis.co.za. Read our interview with Michael Stein in our MoneyWise section, page ….

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Agenda: Books Richard Templar, The Rules of Life Prentice Hall Life, Pearson, R167 from www.kalahari.net Defined by UK author Richard Templar as “a personal code for living a better, happier, more successful kind of life”, “The Rules of Life” is in fact a collection of guiding principles that should make any person reaping the benefits of fulfillment, joy and happiness. Now in its second edition, the book is based on its predecessor, which became an instant bestseller and global phenomenon, with a following worldwide of more than 2 million readers who now play by the Rules. The updated edition contains an extra 9 rules, totaling 106 rules , divided in four chapters: Rules for You, Partnership Rules, Family and Friends Rules and Social Rules. The brand new rules were added based on the responses and suggestions from real readers. Similar to “The Rules of Work”, Templar’s first acclaimed best-seller in its field, the anticipated “The Rules of Life” delivers simple principles based on the mantra “do less, be more”, which are not set in stone, secret or difficult to consider. The Rules are not a product of self-help inspirational or New Age advice – they are based on the author’s observation of the most successful and happiest person he had encountered throughout his life. Templar’s Rules are enjoyed by millions of readers and his collection also includes “The Rules of Wealth”, “The Rules of Management”, “The Rules of Parenting” and “The Rules of Love”. As the author best explains: “What you will find is good old-fashioned common sense. There is nothing here you don’t already know. This book isn’t a revelation, it’s a reminder. It reminds you that the Rules of Life are universal, obvious, simple. Do them, they work”.

Lonely Planet, New Zealand guide E-book available from www.kalahari.net for R205,00

With the Rugby World Cup 2011 kicking in New Zealand this month, check out Lonely Planet’s guide to New Zealand, a complete experience of islandhopping from the Bay of Islands to the amazing Abel Tasman’s bays. The book includes over 150 detailed maps, unforgettable attractions, activities from abseiling to kayaking and even a green index for a carbon-free travelling! The edition is available in digital format from www.kalahari.net. Have you read an inspiring book recently? Share your experience and send us your review at editor@wealthwisemag.co.za!

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Agenda: Events

Events, workshops and seminars

Business Opportunities and Franchise Expo

Where: Coca Cola Dome, Northriding, JHB When: 15 to 18 September Sponsored by Standard Bank, the Business Opportunities and Franchise expo awaits over 10.000 visitors, entrepreneurs and investors, to showcase new ventures, business opportunities and franchises. For more info visit www.bofe.co.za.

Taste of Joburg 2011

Where: Montecasino, Fourways When: 15 to 18 September One of the best culinary experiences in the city and a must for foodies! Fourteen of Joburg's top restaurants will serve delicious, trend-setting and mouthwatering signature dishes, while award-winning wineries will showcase the best wines. A weekend of good food, wine and fun, not to be missed. For more info visit www.tasteofjoburg.com.

Look and Feel Good Expo 2011 Where: CTICC, Cape Town When: 16 to 18 September

South Africaâ&#x20AC;&#x2122;s favourite health, wellness and lifestyle exhibition, Look and Feel Good Expo showcases everything from beauty, welness, health, nutrition and is an ideal platform to try and experience new things, do a health test, attend welness workshops, relax with a good massage or pamper yourself. Backed by Clicks as a major sponsor, the expo hasa huge following. For more info visit www.ifeelgood.co.za.

Good Food and Wine Show Gauteng Where: Coca Cola Dome, JHB When: 22 to 25 September

Held in Cape Town, Durban and Johannesburg, the Good Food and Wine Show delects over 50.000 visitors with tasty food and great wines. For more info go to www.goodfoodandwineshow.co.za.

Do you have an event, workshop or seminar you would like to promote in WealthWise magazine? Send your suggestions to editor@wealthwisemag.co.za and we will publish your event in these pages!

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Agenda: Events Open Book Festival

Where: Cape Town When: 21 to 25 September The inaugural Open Book Festival will run in several locations around the Fugard Theatre, chosen as themeeting place for book lovers, local and international authors such as Damon Galgut, Christopher Hope, Ettienne van Heerden and others. For more info visit www.openbookfestival.co.za.

Arts Alive 2011

Where: Johannesburg When: 1 to 25 September Arts Alive features dance, visual art, poetry and music at venues in the Joburg inner city. The major event includes international performances and the popular Jazz on the Lake concert. More info at www.artsalive.co.za.

Cape Town International Boat Show 2011 Where: CTICC, Cape Town When: 23 to 25 September

Super luxuy yacht, boats, boating equipment and related produicts are on display at one of the biggest boating shows in the country. For more info see www.boatshow.co.za.

Robertson Wine Valley Festival The Joburg Bubbly Festival

Where: Hyde Park Corner Shopping Centre, JHB When: 17 to 18 September Joburgers should expect fine foods, live music and a selection of the best of South Africa's Cap Classique producers and Champagne Houses. For bookings go to www.webtickets.co.za.

Where: Muldersdrift, Gauteng When: 17 to 18 September The festival, held at Kloofzicht Lodge in Muldersdrift, brings wine lovers together to indulge in fine wines and scrumptious food. For more info see www.robertsonwinevalley.com.

Do you have an event, workshop or seminar you would like to promote in WealthWise magazine? Send your suggestions to editor@wealthwisemag.co.za and we will publish your event in these pages!

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Last Word Getting it wrong is getting it right The past months we learned so much about business and our recent articles on

business mistakes – let’s better call them learning experiences – made our team realize that even the most successful business people do get it wrong and thank goodness for that. You have to get it wrong sometimes to get it right the next time. Perhaps there’s no better example of business and entrepreneurial guts than Richard Branson himself. In one of his books, “Business Stripped Bare – Adventures of a Global Entrepreneur”, Richard dedicates an entire chapter to his not-so-candid mistakes in life and business, “Learning from mistakes and setbacks”. People do learn better from their failures than their successes. Similar to Nikki Viljoen’s business journey, published in our August and September issues – “Common business mistakes” series – I would like to pen down some other “common sense” mistakes that fledging entrepreneurs might get into – not because I am condemning these bad moves, but because by doing at least one of them, we learn the hard way and we become better at preparing the next step. So here they are:

Getting over-excited. Whenever an entrepreneur has “the idea”, everything else revolves around his mission, goals and transforming that idea into action. Getting caught up and enthusiastic is wonderful, however when neglecting important aspects – target market, cashflow, projected expenses and so on – the over-excitement might not be founded on a real basis. It’s time to go back to the drawing board.

Renting office space too soon. Having an office address does look more

professional, but it is a good decision to rent space once you’re up and running? This depends entirely on your business, your team (whether you’re solo or have other people working with you), your finances (based on your cash flow projections). Starting an online business can go initially without an office, while starting a shop needs premises. Don’t get to excited about having an office just to “look good”. If finances are tight, rather save the rent money and use it wiser to promote your business.

Hiring people too soon or when you can’t afford it. Unless we are

talking about getting in business with a partner/friend/colleague, hiring your first employee is a major step, a decision that needs to be carefully taken into consideration. There are costs involved in hiring an extra person (office costs, training, salary and so on), therefore your finances should dictate if the time is right for hiring. Make sure you can afford the salary and can pay on time as agreed, otherwise it might not be a good idea to employ and not be able to commit to your promises. You could also consider hiring on a commission-only basis if finances are tight and sales people are needed in the business. Or you could offer profit share in the business. See what works and what doesn’t work for you.

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In next edition... October/November issue Better and Bolder!

Dr. Demartini An exclusive interview with world renowned human behavioural specialist, speaker and author Dr. John Demartini about understanding the worldâ&#x20AC;&#x2122;s current turbulent economy and how it relates to the laws of the universe; finding balance in our lives and the role wealth plays in our lives, among others;

Extreme Money International expert in financial derivatives with over 25 years experience in the market and consultant of banks and corporations worldwide, Satyajit Das talks about his latest book, "Extreme Money", and the world of extreme money from an insider's perspective - real, fascinating and shocking insights!

Tactical asset allocation Andrew Dittberner, Senior Investment Manager at Cannon Asset Managers and portfolio manager of the Cannon Flexible Fund talks about the SAâ&#x20AC;&#x2122;s exciting new tactical asset allocator unit trust which aims to provide investors with capital growth over time by investing in two asset classes, namely equities and cash.

Seeing the stock for the flow Gavin Wood, Kagiso Asset Management chief investment officer, looks at the basics economic concepts of "stock" and "flow" when valuing assets.

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WealthWise September 2011  

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