Maya Fisher French

South African financial institutions could learn a thing or two from innovations abroad that provide for retirement. Many people consider their homes, which they intend to sell on retirement, as their pension. The problem is that downsizing does not necessarily save money as townhouses, clusters or retirement villages often carry a premium price.

While more young people are becoming increasingly concerned about making provision for their retirement, savings numbers show that they are doing very little about it. Old Mutual commissioned a retirement fund survey using a sample of 60 local retirement funds comprising a total of 92 000 active members and 33 000 pensioners.

When creating your investment and savings plan, you need to understand your goals and how to achieve them. You will have different strategies according to your goals. Independent financial educator Dave Crawford cites an example of a 36-year-old client, who by the age of 49 wants to have set up his investments so that he can live off the income they generate.

Passive funds are big business overseas, with most pension funds using them as core investments and using specialist funds as performance kickers. Passive funds are exactly that. They simply track an index; there is no fund manager actively buying and selling shares and trying to out-perform the market. Hence, passive funds tend to be quite a bit cheaper.

By early next year retail banking will move into the 21st century and provide real-time electronic payments. While the Competition Commission’s report into the banking industry claims that banks have been working in real time since 1998, the reality is that this only applies to large corporate transactions of more than R5-million.

Many people feel extremely uncomfortable having the "tough talk" before they walk down the aisle. It may feel as if seeing a lawyer to draw up a marriage contract in case of divorce will put a bad omen on the marriage. The reality is that a marriage contract is not only about divorce but can have consequences throughout married life.

The problem with being a first-time investor on the JSE is that you generally need a lump sum to invest in order to make it financially viable. With minimum brokerage fees of about R100 each time you buy and sell, you would need to buy R5 000-worth of a single share in order for it to be cost-effective, and then you would have exposure to only one share.

Leswill-Sam Lewis and his sister Connie Solomons recently opened their own bed and breakfast (B&B), Golden Feathers Lodge, in Rondebosch East, Cape Town. The accommodation is aimed at the upper end of the market, which Lewis is able to maintain because he has years of experience working in five-star hotels in Gauteng.

Conveyancing attorneys and estate agents can tell many stories of dodgy electrical certificates. These are confirmed by horror stories told at dinner parties about the quagmire of buying a new home. By law, an electrical certificate of compliance has to be provided when buying a house. The problem is where that responsibility lies and the opportunity for fraudulent behaviour.

Before you open an account with a stockbroker, the first question you need to ask is whether you want to go for a full broker service or execution only, which is usually supported by an online facility. Your decision will be driven by how much you want to invest and what you are prepared to pay for advice.

A great number of high-level financial services players are leaving the business world to pursue "personal interests". Over the past two years, we have seen Pete Backwell of Nedcor head off to become an avocado farmer, then Wendy Lucas Bull packed up, after heading FNB Retail for four years, to pursue altruistic causes, and last year Laurie Dippenaar, CE of FirstRand, decided he needed to slow down.

Watching one of the most awesome cricket matches of all time, Bruce Hemphill was understandably tense. Along with other South African cricket fans, he was pleasantly shocked by South Africa’s win. His appointment to the top job at Liberty came as no less of a surprise. The new chief executive said: "I knew that I was possibly in line for the job, but it came a lot sooner than I anticipated."

Absa recently ran an advert on how you can save 10% on your home loan repayments every month. The problem is that it didn’t mention what this was going to cost in the long run. Basically, the idea is that you can extend the period of your home loan from 20 to 30 years.

Before you start investing, you need to understand the risks involved in buying shares. Last month we highlighted the benefits and said that over time equities prove an excellent investment, although there are risks that need to be managed. The interest earned from cash is considered a "risk-free rate".

Larry Williams hit headlines when in one year he traded $10 000 into $101-million in the 1987 World Cup Trading Championships. Ten years later his home-schooled 16-year-old daughter made the news for winning the same competition, trading her $10 000 into more than $110 000. He is currently in South Africa conducting seminars around the country.

So the prospect of running Liberty through one of the toughest periods in the history of the life industry did not prove sufficiently appealing to Myles Ruck, who recently resigned as CEO, followed by his second-in-command Ian Kirk. Ruck, who headed up Standard Corporate and Merchant Bank before moving to Liberty Life in 2003, has undoubtedly accumulated a large nest egg.

The government has chopped tax on retirement funds by half, to 9%, saying it is prepared to make further cuts to stimulate savings. However, it wants the 9% to be used as a carrot in wider discussions about reforming the life industry. Minister of Finance told journalists at Parliament that the national Treasury would release a document proposing significant changes to retirement funding provisions.

Over the past 10 years, Finance Minister Trevor Manuel has charmed taxpayers by continually providing greater tax relief. This year is no different and individuals will pay R12,1-billion less tax once adjustments have been made for reduced vehicle allowances.

For most people, their pension fund is their biggest savings and will make up the majority of their income on retirement. Yet most people spend very little, if any, time making sure their pension is properly invested and providing decent returns. There is no point in discovering at the age of 50 that a pension plan was badly invested and has left you high and dry. Take control of life savings yourself.

If you are buying, selling, building or renting a home, having a thorough inspection of the property could save you a load of money and frustration. Unlike in the United States and the United Kingdom, where home inspections are standard before a sale is concluded, in South Africa there is a standard voetstoots clause which states that the buyer is buying the property "as is".

When selling a property, an agent may request a 10% deposit from the buyer, which is not refundable if the buyer pulls out of the deal. In a hot property market where there may be many buyers lining up for a property, it makes sense for the buyer to put money on the table to secure the property.

Record-breaking gains on the JSE are passing unit trust investors by as they shun equities in favour of less risky asset classes, newly released figures show. South Africans are investing heavily in unit trusts — the industry netted R58-billion of inflows last year, a 40% increase on 2004. But investors have continued to choose low risk funds.

Over the past year, the finance minister has made a number of tax changes that will have a material impact on taxable incomes. While you may be celebrating lower tax rates, the government is starting to squeeze the items that can be used as tax deductions, including medical aid contributions and travel allowances.