In a land of inequality, education has a greater value than ever before and it can pave the path of success for children. However, many parents are financially crippling themselves in order to offer what is considered the ‘best’ education for their offspring, when this is arguably not wholly necessary.

In an unstable political and economic climate, in which certain human rights are sadly still far from inalienable, most parents understand that it is important to invest in their child’s welfare and future. If value were to correspond directly with quality, it could be safely assumed that higher fees would equate to a higher standard of education. However, the worth of a service is often subjective, and various factors should be taken into consideration before parents make assumptions about what higher school fees will buy.

Fin24 recently published an article that questioned education experts on the worth of private boarding schools in South Africa. Sadly, the government is still unable to provide everyone with free education, and private schools are quite simply filling the gap in an ill-functioning market. The lack of spaces at some low-fee schools, which tend to offer a better education than no-fee state schools, also means that the elite private school sector is rapidly expanding and pressure is put on parents to pay astronomically high fees for these exclusive alternatives.

Private schooling in South Africa can set parents back over ZAR200,000 annually per child. Granted, this does often include boarding, but not the cost of stationery, sports equipment and uniforms.

Dr Michael Le Cordeur, Chair of Curriculum Studies at the University of Stellenbosch’s Department of Education, ascertains that “a good education is determined by the quality of teachers, the quality of leadership at the school and how the governing body of the school performs its task.”

However, the question begs whether there is a disparity between the cost of private schools and the education that they provide. The bang may potentially not always be in line with the buck, so to speak.

It may be the case that some expensive schools are able to provide top-notch facilities, an international curriculum, a greater staff-student ratio, and a wider scope of extra-curricular engagements for the pupils.

However, there are still many schools with low- or middle-priced fee structures that also cater highly for their students thanks to donors. It is, therefore, important for parents to decipher how exactly their money will be spent so that they can make careful decisions accordingly.

The general premise is that some of the elite South African schools provide little more for their students than an old school boys/girls network, which offers the dubious advantage of cronyism but doesn’t necessarily make for better rounded or more educated young adults.

So if you are a parent looking for a suitable school for your child, ask yourself when reviewing options whether you will get your money’s worth, or if it would be equally well spent in a school with a different fee structure. Are you simply paying for networking opportunities? Whatever you decide, do so with open eyes. Invest in your child’s future today by doing thorough research and ensuring you have enough money saved to choose the option you believe to be best.

Over the past year or so the financial planning industry has been positioning for significant reform and regulation around fees for financial advice, and Fin24 recently published an article on the Retail Distribution Review (RDR).

The first phase of RDR is expected to bring South Africa a step closer to making direct payment for financial advice a greater reality; creating a new financial advice scenario. And this stage is due to be implemented later this year.

RDR will, among other things, bring an end to commission earned by financial advisors on lump sum investments. It forms part of the Financial Services Board’s (FSB) framework that seeks to ensure fair outcomes to customers and tries to minimise potential conflicts between the interests of customers, product providers and advisors.

Essentially, fees will be charged for advice given in lieu of commission, which will be falling away. Since there is a current perception that financial advice is offered for free, RDR will require a new way of thinking.

Whilst the exact models for charging fees will vary, here are some perspectives on how it might look.

The RDR framework could include hourly-rate billing for the cost of financial advice given, just as a consultation with most other professionals would be charged. It could also take the form of a per-use billing structure, which is effectively a transactional cost for services. And then, in relation to investments, billing could be a fee that is linked as a percentage to the size of the investment.

Another significant paradigm shift, and a very encouraging one at that, is that the focus will be on the financial advice offered, and the ongoing value of having a trusted, knowledgeable, skilled and experienced financial advisor. This separates the value of the advisor, from the value of the product, which could bring more clarity to the final decision making process.

Charging fees for financial advice will also reinforce the value of a relationship that is built on mutual trust and respect in the advisor-client relationship. As the implementation draws closer, it is important for all of us to prepare for financial advice fees.

America is a massive global economy. Whilst we can all agree that whatever happens over there will certainly affect our economy and investment opportunities (local and offshore), you may have some questions as to how it affects us.

Brian Kantor, chief economist and strategist with Investec Wealth, recently published his thoughts online on the BizNews website. The article presents some insightful graphs and specific trends that may not interest everyone, but certainly paint the scene in a way that allows us to see ‘real-time’ affect on our economy.

As a short precursor it’s important to note that Trump’s post-election rallying, from an economic perspective, with all his promises of various reforms, led to a peak in the real bond yields in the US towards the end of December. Real rates have been very low recently as the world-wide demand for capital to invest in extra capacity shrunk away and as global savings rose. This essentially means that the Trump-inspired increase in real rates portended faster economic growth in the US and the extra demands for capital that can be expected to accompany faster growth.

Still… the Trump administration will need to deliver on its promises to deregulate and lower taxes and also to bring jobs home.

As Kantor notes: “These are prospects that have received particular favour from small business in the US, whose confidence levels have reached record highs, as well as from the customers of the leading banks that apparently are now willing to borrow more.

It is this additional confidence of households and business that will influence their willingness to spend and borrow more. Balance sheets of US households have greatly strengthened in recent years, with more saved and more equity in their homes, while lower interest rates have reduced their interest expenses; similarly for business borrowers.”

For our local trade and economy, it is interesting to note just how consistent has been the recent behaviour of the gold price in response to real interest rates. Real interest rates represent the opportunity cost of holding gold. The more expensive it is to own gold, the lower its price.

Aside from a locally perceived inflation trends in the US, the Trump election raised inflation expectations in SA to over 7%. Very recently, however, as the Trump rally faded, inflation expected in SA over the next 10 years, as revealed in the RSA bond market, has receded sharply to below 6.5%.

This must be regarded as helpful for the SA economy.

The Reserve Bank has a highly exaggerated view of the influence of inflation expectations on inflation itself. This retreat in inflation expectations as well as a much improved outlook for inflation itself may encourage the Reserve Bank to reverse the course of short term interest rates – an essential requirement if growth in SA is to pick up momentum.

In addition to this positive perspective is the evidence of a strengthening rand value against the dollar that comes with better inflation. The Rand, after initially weakening in response to the Trump election, has benefitted from a strong recovery of about 7% since November.

As Kantor concludes his statements he says: “Clearly the extra growth and higher US interest rates associated with a Trump administration have neither raised long term rates in SA nor weakened the rand. Indeed the opposite has happened. This should encourage the Reserve Bank to focus on the downside risks to economic growth in SA rather than the upside risks to inflation. These surely have declined, both with the stronger rand and the prospects of lower food prices. The case for lower interest rates in SA has strengthened with the Trump election so that SA too can look forward to faster growth.”

January may begin with resolutions for the year ahead – but March begins with Tax Resolutions for the next tax year. We promise ourselves to be a little more organised, a little more prudent and try to minimise our contributions the next time around.

BusinessTech recently said that with the many challenges small business owners face every day, being tax compliant is often not at the top of the list and tax deadlines often come and go in the struggle of trying to keep the business afloat.

The single, sole proprietor often goes it alone, not realising that business tax returns are far more complicated than individual returns.

Research conducted by TaxTim shows that 58% of small businesses do not get professional help when submitting their annual tax returns. In fact, only 13% handed the role over to an outsourced professional.

Marc Sevitz, co-founder and CFO of the online tax return tool TaxTim, says that SMEs do not have one standard deadline for submission to SARS. SMEs must complete their annual tax returns within 12 months of the end of their financial year, which can be any time from January to December.

If this is ringing a familiar bell with you, then here are some top tax tips!

Use the correct rates for depreciation

If your business owns assets that devalue over time, be sure to use the correct wear and tear rate from SARS’ list of different asset types. For example, computers depreciate at a different rate to vehicles. Also, check whether your business qualifies for the Small Business Corporation or Section 12C Manufacturing Assets special wear and tear allowance.

Know all the allowed deductions

There are numerous deductions and allowances available to SMEs. It is in your best interest to familiarise yourself with them to ensure you never pay more tax for your business than necessary. For example, a business can claim an allowance for a building that it owns, or special tax deductions for leased assets.

Provide properly for provisions

Remember that accounting provisions are treated differently for tax purposes. Ensure you reverse the Provision for Leave Pay and Provision for Employee Bonuses in your business’s tax calculation as these are only deductible for tax once they’ve been paid.

Record every cent earned or spent

Whilst it may sound like an administrative headache, keeping an accurate and up-to-date record of your business’s income and expenses, allocated to their various categories, is critical to ensuring a smooth tax return. The nature and size of your business will determine whether you’d want to look at investing in an accounting software or package, or if a basic spreadsheet record will suffice.

Keep all your slips

Keep all documents relating to income and expenses, such as invoices and receipts, and file them in a logical order. Should SARS request verification on your business’s tax return, you’ll easily be able to supply these. Scrambling around to find slips from the past year can easily be avoided.

Make copies of documents

It’s best to keep both a hard copy and electronic version of documents. Scanned copies can be stored online using cloud services like Google Drive or Dropbox, which ensures they’re safe, even if the originals get lost or if your computer is damaged or stolen.

Store documents for five years

Don’t toss away your documents once you’ve filed your business tax return. Legislation requires that SMEs keep all relevant documents for a minimum of five years. SARS may request a review of previous tax returns and you don’t want to be missing vital documents that impact your business’s tax liability.

Small businesses play a crucial role in the strength of our economy and the future of our country. Let’s keep supporting SMEs where ever we can!

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The Budget for 2017 has been presented to parliament and is awaiting final approval, but if all goes through as planned, here are some key issues that may affect your financial planning for the year – as well as your investment portfolio.

Significant announcements

• New 45% tax rate for those earning more than R1.5 million per annum. (Around 100 000 taxpayers are affected)
• Dividend withholding tax increased from 15% to 20% (this will have an impact on your investments)
• No increases in VAT or Capital Gains Tax (great news on no change to CGT)

Tax changes

• Government will raise an additional R28 billion during the new tax year
• New 45% marginal tax rate for those earning more than R1.5 million per annum
• Other taxpayers will not receive full relief from fiscal drag – the impact of inflation on tax brackets
• Tax on dividends increase from 15% to 20%. (Tim let me show you how to get this down from 20% to ZERO)
• Taxes on fuel to rise by 39c a litre. (Fuel levy +30c and RAF levy +9c)
• Total fuel levy on petrol will amount to 36% of pump price
• Total fuel levy on diesel will amount 40.2% of pump price
• Properties sold for less than R900 000 will not pay transfer duties (2016: from R750 000)
• Sugar tax: Will be implemented once parliament passes legislation
• Carbon tax: Revised legislation will be published mid-2017 for public consultation

Sin taxes

• Duties on malt beer rises by 9% or 12c to R1,47 per 340ml can
• Duty on unfortified wine rises by 8,8% or 30c to R3,61 per liter
• Duty on fortified wine rises by 6,1% or 35c to R6,17 per liter
• Duty on sparkling wine rises by 8,8% or 93c to R11,46 per liter
• Duties on ciders and alcoholic fruit beverages rise by 9% or 12c to R1,47 per 340ml can
• Duty on spirits rises by 8.5% or R4,43 to R56,50 per 750ml bottle
• Duty on cigarettes rise by 8% or R1,06 to R14,30 a packet of 20s
• Duty on cigars rise by 9,5% or R6,58 to R75,86 per 23g

These are some significant announcements but are simply a snapshot of the whole presentation. If you want more information, visit The National Treasury website here.

Some people are amazingly good at bringing order to chaos and organizing their lives in such a way that makes the rest of us simply stand and gawk, thinking ‘How do they do it?’.

Finding just the right amount of order in your life will not only help you minimise waste – but it will also help you reduce stress!

When you can find what you’re looking for, quickly and easily, you will have more time to be creative and work on projects that will help you grow, but you also won’t need to go out and ‘buy another one’…

There are so many great ideas on the web – but here are some of them from 100+ Ideas:

USE ONLINE GROCERY SHOPPING

Think about it: do some clicking in the comfort of your own home at night; select your delivery option – and it’s done. The groceries magically appear – you (and your family) don’t even have to get into your car.

Most of the local online grocery options also enable you to order previously purchased products, keeping a list of your popular items – making it quicker and easier to top up your fridge and pantry each time you log on to your
account.

USE HANGING SHOE HOLDERS

Whether it’s behind the bathroom door for extra toiletries and medicines, hanging inside the broom closet with your detergents or in the garage with tools, paints, chemicals and odds and ends – these simple, ridiculously cheap, organizers can be hidden away and hung almost anywhere discreet and give you considerably more shelf space – and allow you to see the full scope of what you have.

You’ll never buy too much jik, or lose your spare razor blades again!

USE A TASK SCHEDULER THAT IS DIFFERENT TO YOUR EMAILS

This is a goodie for your work ethic!

When you’re trying to be super productive at work, nothing is more disruptive than an email coming through that is asking you to ‘quickly’ do something. It breaks your creative work flow, slows you down and increases your stress levels.

Many of us allow our emails, texts or phones to govern our task scheduling. We start off the day with one project in mind – and then if a message comes through, instead of prioritising and scheduling it for later, we deal with it now because we know that if we close that message… we might forget.

Having a task programme that is separate to your emails, allows you to transfer requests, schedule them and stick to the job at hand. And you won’t miss a beat.

In an article recently published on Moneyweb Today (by Paul Leonard, CFP, Regional Head, Citadel), several points were made that succinctly provided useful insight for those considering the options about investing in a TFSA, and deciding whether or not it would be the most appropriate savings vehicle.

Before making any final decisions, it’s always best for us to meet and assess your investment plan based on your financial needs analysis – but these pointers should help you understand the nature of this product and how it would work inside of your financial plan.

The use of tax free savings and investment accounts is generally most appropriate in the following circumstances:

1. Achieving long-term investment goals
2. Saving for retirement when your income is below the income tax threshold, and you’ll consequently not enjoy any personal income tax relief contributions made to retirement funds
3. Topping up retirement savings over and above the maximum amount per annum (namely R 350k) that one can receive tax breaks on. Given that most South Africans are under-funded for retirement, there is a need for most working people to play catch up and contribute more than the deductible limits in retirement funds. It is generally recommended that investors make use of all the tax breaks available for retirement funding investments before using TFSA. This is in line with the government’s objective to ‘complement initiatives and incentives to promote retirement savings”
4. Savings for retirement when you are uncertain about your long term income or job security and therefore may need to access the capital should you become unemployed
5. Saving for retirement if you are uncertain as to where or not you will emigrate, in which case you may want to realise the investment to expatriate your capital should you leave

In short – when you have a large amount of money that you can nest away for an extended investment period, a TFSA should most certainly be one of the options that you consider.

The best gifts are the one’s that show deep consideration for the recipient. That means that Valentine’s Day is not just about flowers, chocolate, biltong and a cute travel mug… it’s about knowing your partner and buying them something that they would truly love!

So here are some pointers for this Valentine’s day for expressing your appreciation!

EXPERIENCE OVER EXPENSE

The best gifts are memories, not expensive trinkets. If you plan it right, your entire Valentine’s treat could revolve around a unique, personal and breath-taking experience! You could plan to have the element of spontaneity, showing attention and forethought whilst keeping it romantic and exciting.

If you go this route – maybe you’d like to arrange an instant film camera where you can take polaroid-type photos that capture and print the moment without needing your phone or digital camera to distract you. Instax offers a great, novel option for this – you could buy one as part of the experience, or borrow one from a friend and simply purchase a 10-pack of film for the date.

LESS OVER MORE
Try not to go over the top – remember this is Valentine’s day, not a 50th birthday party. Whilst you might want to simply shower your partner with lavish gifts, when you buy too much, the gifts overshadow the sentiment… and Valentine’s Day is all about the sentiment!

PERSONAL OVER PRICEY
When a gift has personal meaning, it becomes a gift without a price tag. When your partner opens the gift – gets the reference and looks at you with that priceless look of ‘You remembered!’… don’t tell them how much it cost or what a good deal you got!

However you are planning to celebrate this Valentine’s day, have fun!

Every year we see an internal migration of individuals and families between the major cities of South Africa – mostly for work reasons. These decisions are sometimes thrust upon us due to simple economics, but other times we are able to explore the opportunities and the pros-and-cons of living in a new city.

But how exactly can you make informed decisions without relying mostly on hearsay or the perceptions of friends and colleagues.

Which cities are on the higher scales of cost of living (relative to income) and which are lower down?

It may be safe to speculate that many people would rate Cape Town or Johannesburg as the most expensive place to live in South Africa, and they wouldn’t be far wrong – but according to the latest surveys by Expatistan.com, Benoni has the highest cost of living, with Cape Town ranking 4th! (at the time of publishing this post)

Check this link out for the full details:
https://www.expatistan.com/cost-of-living/country/south-africa

Once you’ve clicked through to the each city, you can view a comprehensive presentation of living expenses ranging from a lunchtime meal in the business district, through to data costs and the hourly rate for cleaning services. Being able to consider the rental of small housing units, utilities and transportation costs are extremely helpful – even the cost of a TV and microwave are there!

You can also find comparative costings for basic goods like milk, eggs and chicken as well as clothing options and personal care products.

Remember, these expenses need to be weighed against your earning potential whilst living there – so every presentation should be in context of your unique situation. If you need advice or guidance, then send me a text or email and let’s make a plan to go through your options, together!