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Financial Planning

Financial planning is a dynamic process of assessing your financial situation and putting a plan in place to achieve your financial goals.
GATHER UP.

To determine your current financial position, you have to gather all of the relevant data, including information on your income and expenses, insurance policies, investment accounts, tax material and any additional information.

GOAL SET.

You also have to set out clear and measurable life goals, such as buying a house, saving for the children’s tertiary education, travelling, retiring comfortably, creating wealth over time and the list goes on.

GAME PLAN.
Depending on your available financial resources and your life goals, you must put together a realistic financial plan on how to attain your goals. A comprehensive financial plan can often get complicated, as you need to plan holistically for a number of aspects, such as: budgeting, life insurance, investments, retirement, tax and estate planning.
GAIN SKILL.

Some people prefer doing their own planning, and you can access our online material to help you navigate through this process. Should you however need help with your financial plan, please get in contact with a financial adviser to assist you.

Pillars Of Financial Planning

Financial Planning is an extremely broad topic with many overlapping layers. There are however six generally recognized pillars of personal Financial Planning: budgeting, life insurance, investment planning, retirement planning, tax planning and estate planning.

Budgeting is the starting point, as this is where the organisation of an individual’s finances takes place and a greater understanding of their assets, liabilities, income and expenses is derived.

 

Unpacking spending or having a monthly financial blueprint for your income, savings and expenses is the very foundation of financial success.

 

The benefits of financial blueprints are endless and will change your outlook on money forever:

  • It helps you to align your lifestyle with your values
  • Provides a plan of action for everyday spending
  • Highlights the pitfalls in your spending patterns
  • Assists in creating healthy money habits
  • Enhances your relationship with money

Educational Material

Life insurance offers financial protection for you and your loved ones in the event of loss of income, death, disability or severe illness. Although Fairtree does not offer life insurance, it remains an important part of holistic financial planning.

 

Income Protection

Your ability to earn an income is the most valuable asset you’ll ever own. Being unable to work due to sickness, injury or trauma can have a devastating effect on your finances and future aspirations.

An income protection product will provide you with a regular flow of income to provide financially for yourself and your financial dependents.

 

Death

Your premature death may place your loved ones under serious financial strain, especially if you are the breadwinner of the household or high levels of debt exist.

Life cover policies will pay out the insured amount upon your death, to cover any financial obligations and to provide financial security for your nominated beneficiaries.

 

Disability

Disability comes in many shapes and forms: the level of severity will differ in each case and your disability could be either temporary or permanent.

A disability policy will pay you a lump sum if you’re unable to continue working, due to a permanent illness or injury that renders you disabled. The proceeds can be used to pay for disability related expenses, settling debt or providing you with future income.

 

Severe illness

Severe illness cover will pay out should you be diagnosed with one of the specific illnesses as defined and listed by the insurer. Most insurers provide extensive and comprehensive cover, including cover for cancer, heart attacks, strokes, certain trauma events and so forth.

 

Receiving the proceeds will prove to be extremely helpful in these financial and emotional challenging times, affording you financial peace of mind whilst being treated for or recovering from your condition.

 

Life insurance companies provide a range of different policies to cater for your unique needs and circumstances. Speak to a financial adviser to assist you in selecting the most suitable products, ensuring that you’re well covered when you need it most.

Investment planning includes an individual’s entire investment portfolio which caters for a variety of financial goals ranging from saving towards a child’s education to buying a home, wealth creation and growth, retirement, and so forth.

 

Investment planning is the process of identifying appropriate and tax-effective solutions which align to your financial objectives. A sound investment plan will set out your objectives in a clear, structured manner, the action steps on how to reach them, as well as track your progress. In addition, it will improve your self-discipline, commitment and motivation to achieve better investment outcomes.

 

At Fairtree, we specialize in professional investment planning and offer investment solutions that are as unique as you and your financial needs and goals.

 

To read more about key investment principles and selecting appropriate investment products, visit our Investment Planning Section.

 

To find out more about our unique investment solutions, visit our

Investment Management Section.

Retirement planning includes an individual’s entire investment portfolio which caters for a variety of financial goals ranging from saving towards a child’s education to buying a home, wealth creation and growth, retirement, and so forth.

 

Skilful retirement planning will ensure that you have enough money to provide you with a sustainable income throughout your retirement years.

 

It’s never too early or too late to start saving for retirement – whether you have recently started your first job or have been part of the work force for many years.

 

At Fairtree, we approach retirement planning differently. Visit our Retirement Planning Section to find out why we don’t believe in “simply retiring”, but rather planning for another phase of your life.

The objective of tax planning is to arrange an individual’s financial situation in a tax-efficient manner.

 

Different types of tax influence all aspects of financial planning. Tax planning should therefore not be treated in isolation, as it plays a fundamental role in your journey to financial success.

 

Tax planning can be defined in short as: analysing and arranging your financial situation in a tax-efficient manner, taking full advantage of lawful exemptions, deductions, rebates and allowances to reduce your tax to a minimum.

 

It's important to note that trying to save tax should never be the starting point of your financial plan, but rather to enhance reaching your financial goals.

 

By employing tax-efficient strategies in this process, you will inevitably save a substantial amount of money over your lifetime. Each country has tax-friendly structures and products available to help individuals to reduce their tax liability and the secret is to make the most of these opportunities.

 

Types of tax that impact personal financial planning the most:

  • Income Tax
  • Capital Gains Tax
  • Dividend Withholding Tax
  • Donations Tax
  • Estate Duty
  • Transfer Duty
 
Income Tax

Personal income tax is levied on your taxable income, which includes all streams of worldwide income. Some forms of income that an individual can receive: salaries, commission, bonuses, fringe benefits, director’s remuneration, investment income, annuity income, pension income, rental income or losses, profits or losses from a business or trade, income from royalties, certain capital gains and so forth.

Individuals are liable to pay income tax based on their annual taxable income and will fall within certain tax brackets – the more you earn, the higher your tax bracket will be.

From a tax savings point of view, it is important to note that there are certain exemptions, deductions and rebates available to individuals and capitalizing on these benefits will reduce the amount of tax you need to pay.

 
Capital Gains Tax

Capital Gains Tax forms part of income tax and is not a separate type of tax. When you dispose of an asset (that attracts Capital Gains Tax) on or after 1 October 2001, you will be taxed on the proceeds that exceed the asset’s base cost (which we refer to as the capital gain).

Capital gains are included in an individual’s income tax calculation at a certain rate and the effective tax rate pertaining to these gains will be lower than on ordinary income. It is also possible to make a capital loss if the base cost was higher than the proceeds from the sale.

 
Dividend Withholding Tax

A dividend is any payment made by a company to a shareholder (beneficial owner) as a return for holding a share in that specific company. Tax is levied on the dividend payments at a certain fixed rate and usually withheld by the company before paying the dividends over to the shareholders. The company will pay the tax over to the South African Revenue Service.

Dividend Withholding Tax is applicable to dividends paid by companies that are South African tax residents or foreign companies that list on a South African Exchange.

 
Donations Tax

Donations Tax is payable on the value of property disposed by way of a donation. A donation is defined as a disposal free or at no charge (receiving nothing in return) and includes any renunciation of rights or gratuitous waivers.

Under normal circumstances, the donor must pay the donations tax, but the donee can also be held jointly and severally liable if the donor fails to pay the tax.

Certain exemptions apply, for instance donations made between spouses are completely exempt from donations tax and a fixed minimum amount are exempt in each financial year where a natural person donated property.

 
Estate Duty

An “estate” in this case refers to the deceased estate of a natural person who was ordinarily resident in South Africa for tax purposes, as well as on the property of non-residents situated in South Africa.

All the property and deemed property of the deceased person will form part of the estate and certain deductions, as well as a prescribed abatement amount will reduce the value of the estate. The estate duty will be calculated on the dutiable amount and must be paid by the deceased estate (and / or by the beneficiaries in some cases).

 
Transfer Duty

Transfer duty is payable by any person who has acquired any immovable property, by way of a transaction or otherwise. Property, for the purpose of Transfer Duty, is defined as land and fixtures thereon and includes: real rights in land, shares or member’s interest in a residential property company, a share in a share-block company and rights to minerals / the right to mine for minerals.

The tax payable is levied on the fair value of the property, referring to a fair market value between a willing, non-related buyer and seller in an open market. Rates on a sliding scale apply and a fixed prescribed minimum amount is taxed at 0%.

Estate planning entails the organising and distribution of individuals assets and liabilities during their lifetime and once they have passed on.Estate planning involves arranging and managing your financial affairs in such a way that you can benefit from your estate during your lifetime and that it will be dealt with in accordance with your wishes in the unfortunate event of your death.

 

Effective estate planning will assist to protect the value of your growth assets and from those assets being sold to provide for liquidity purposes in your estate. It will furthermore reduce exposure to Estate Duty and Capital Gains Tax, limit additional estate expenses and ensure a smooth transition of your estate upon death. Your will, trust(s), assets and liabilities, deemed property and liquidity requirements all form part of estate planning.

 

Making use of other structures and strategies, like setting up inter vivos trusts (created while you’re still alive), play an integral part to protect your assets and the financial security of your loved ones, whilst simultaneously ensuring that your wealth is preserved for generations to come.

 

Having a valid will ensures that your assets are handled and distributed by the executor in line with your requests. Special instructions regarding the establishment of testamentary trusts, protecting the needs of your beneficiaries and setting up funeral arrangements also form part of this invaluable document.

Frequently Asked Questions

A trust is an accumulation of assets, held and managed by the trustees for the benefit of the trust beneficiaries.

 

The donor / founder of the trust must transfer full control and ownership of the assets to the trustees who will hold the trust’s assets in their capacities as trustees (not in their personal capacities). They have the duty to manage the assets solely for the benefit of the trust’s capital and income beneficiaries and must act in accordance with their rights and responsibilities as set out in the trust deed.

 

Trusts are mainly used to protect personal or business assets and are widely included in estate planning strategies to ensure a seamless transfer of wealth and to reduce tax.

Your deceased estate will be distributed in terms of the Intestate Succession Act. This piece of legislation sets out the rules of intestate succession, describing how your deceased estate must be distributed to your heir(s), as there is no will to draw your wishes from. This means that you effectively have no control over who will receive your assets after you pass away, as the rules will determine the order, starting with your closest relatives first. If there is no one that could inherit from your deceased estate, the proceeds will be place in the Guardians’ Fund and if no legitimate heirs come forward within 30 years, it will be forfeited to the State.

Comprehensive estate planning is beneficial when you have a large estate and significant estate duty may be payable when you pass away, your financial affairs are complicated due to being for instance a business owner, you have difficult family dynamics, distributing your assets may be very complex and so forth. If your financial matters are not very complicated, you can focus on drafting a valid will and making use of trust structures as needed. An important aspect to keep in mind, no matter what the size of your estate is, is to ensure that there’s enough liquidity to cater for all the fees associated with your death.

An inter vivos trust is created by the founder, when he / she is still alive and the trust deed is the document that contains the terms of the trust. Inter vivos trust are usually set up to protect the trust property during the founder’s lifetime or for future generations, to support the beneficiaries financially, to be used as a tool for estate planning purposes and so forth. A testamentary trust is only established upon the testator’s / testratix’s death and the terms of the trust are written into his / her will. Testamentary trusts are suitable to protect the interest of minors or beneficiaries that are particularly vulnerable (a disabled or elderly family member) when the testator / testatrix is not around anymore.

An executor plays a vital role in the winding up of your estate as he / she must carry out the instructions and wishes contained in your will. Acting as an executor requires a certain level of knowledge and skill as this person must report the deceased estate to the Master of the High Court, give notice to the creditor(s), take control of the estate, draft the liquidation and distribution documents, ensure that the assets are correctly rounded up and transferred to the heir(s) and pay the creditors. Nominating a family member as an executor, who has no legal or financial background, may cause unnecessary issues and delays in the administration of the deceased estate. Consider nominating an attorney, trust company or accounting firm to assist. 

Estate duty is a type of tax that is levied on the dutiable portion of your deceased estate. Once deceased, all your property and deemed property will form part of your deceased estate and certain deductions, as well as a prescribed abatement amount will reduce the value of the estate. Estate duty is calculated on the dutiable value of the estate at certain fixed rates.

When you pass away, you will be deemed to have disposed of your assets and Capital Gains Tax will be levied. Furthermore, the executor is entitled to a fee for winding up the estate, based on the gross value of the assets that he / she will deal with, plus a fee calculated at a certain rate on the income the estate has earned after your death. In addition, fees must also be paid to the Master of the High Court, to the newspapers for publishing the notices, for providing the Master with security (if necessary), transferring fixed property, cancelling bonds, arranging the funeral and any other charges (bank accounts) that may apply.

Budgeting is the starting point, as this is where the organisation of an individual’s finances takes place and a greater understanding of their assets, liabilities, income and expenses is derived.

 

Unpacking spending or having a monthly financial blueprint for your income, savings and expenses is the very foundation of financial success.

 

The benefits of financial blueprints are endless and will change your outlook on money forever:

  • It helps you to align your lifestyle with your values
  • Provides a plan of action for everyday spending
  • Highlights the pitfalls in your spending patterns
  • Assists in creating healthy money habits
  • Enhances your relationship with money

Educational Material

Life insurance offers financial protection for you and your loved ones in the event of loss of income, death, disability or severe illness. Although Fairtree does not offer life insurance, it remains an important part of holistic financial planning.

 

Income Protection

Your ability to earn an income is the most valuable asset you’ll ever own. Being unable to work due to sickness, injury or trauma can have a devastating effect on your finances and future aspirations.

An income protection product will provide you with a regular flow of income to provide financially for yourself and your financial dependents.

 

Death

Your premature death may place your loved ones under serious financial strain, especially if you are the breadwinner of the household or high levels of debt exist.

Life cover policies will pay out the insured amount upon your death, to cover any financial obligations and to provide financial security for your nominated beneficiaries.

 

Disability

Disability comes in many shapes and forms: the level of severity will differ in each case and your disability could be either temporary or permanent.

A disability policy will pay you a lump sum if you’re unable to continue working, due to a permanent illness or injury that renders you disabled. The proceeds can be used to pay for disability related expenses, settling debt or providing you with future income.

 

Severe illness

Severe illness cover will pay out should you be diagnosed with one of the specific illnesses as defined and listed by the insurer. Most insurers provide extensive and comprehensive cover, including cover for cancer, heart attacks, strokes, certain trauma events and so forth.

Receiving the proceeds will prove to be extremely helpful in these financial and emotional challenging times, affording you financial peace of mind whilst being treated for or recovering from your condition.

Life insurance companies provide a range of different policies to cater for your unique needs and circumstances. Speak to a financial adviser to assist you in selecting the most suitable products, ensuring that you’re well covered when you need it most.

Investment planning includes an individual’s entire investment portfolio which caters for a variety of financial goals ranging from saving towards a child’s education to buying a home, wealth creation and growth, retirement, and so forth.

 

Investment planning is the process of identifying appropriate and tax-effective solutions which align to your financial objectives. A sound investment plan will set out your objectives in a clear, structured manner, the action steps on how to reach them, as well as track your progress. In addition, it will improve your self-discipline, commitment and motivation to achieve better investment outcomes.

 

At Fairtree, we specialize in professional investment planning and offer investment solutions that are as unique as you and your financial needs and goals.

 

To read more about key investment principles and selecting appropriate investment products, visit our Investment Planning Section.

 

To find out more about our unique investment solutions, visit our

Investment Management Section.

Retirement planning includes an individual’s entire investment portfolio which caters for a variety of financial goals ranging from saving towards a child’s education to buying a home, wealth creation and growth, retirement, and so forth.

 

Skilful retirement planning will ensure that you have enough money to provide you with a sustainable income throughout your retirement years.

 

It’s never too early or too late to start saving for retirement – whether you have recently started your first job or have been part of the work force for many years.

 

At Fairtree, we approach retirement planning differently. Visit our Retirement Planning Section to find out why we don’t believe in “simply retiring”, but rather planning for another phase of your life.

The objective of tax planning is to arrange an individual’s financial situation in a tax-efficient manner.

 

Different types of tax influence all aspects of financial planning. Tax planning should therefore not be treated in isolation, as it plays a fundamental role in your journey to financial success.

 

Tax planning can be defined in short as: analysing and arranging your financial situation in a tax-efficient manner, taking full advantage of lawful exemptions, deductions, rebates and allowances to reduce your tax to a minimum.

 

It's important to note that trying to save tax should never be the starting point of your financial plan, but rather to enhance reaching your financial goals.

 

By employing tax-efficient strategies in this process, you will inevitably save a substantial amount of money over your lifetime. Each country has tax-friendly structures and products available to help individuals to reduce their tax liability and the secret is to make the most of these opportunities.

 

Types of tax that impact personal financial planning the most:

  • Income Tax
  • Capital Gains Tax
  • Dividend Withholding Tax
  • Donations Tax
  • Estate Duty
  • Transfer Duty
 
Income Tax

Personal income tax is levied on your taxable income, which includes all streams of worldwide income. Some forms of income that an individual can receive: salaries, commission, bonuses, fringe benefits, director’s remuneration, investment income, annuity income, pension income, rental income or losses, profits or losses from a business or trade, income from royalties, certain capital gains and so forth.

 

Individuals are liable to pay income tax based on their annual taxable income and will fall within certain tax brackets – the more you earn, the higher your tax bracket will be.

 

From a tax savings point of view, it is important to note that there are certain exemptions, deductions and rebates available to individuals and capitalizing on these benefits will reduce the amount of tax you need to pay.

 
Capital Gains Tax

Capital Gains Tax forms part of income tax and is not a separate type of tax. When you dispose of an asset (that attracts Capital Gains Tax) on or after 1 October 2001, you will be taxed on the proceeds that exceed the asset’s base cost (which we refer to as the capital gain).

 

Capital gains are included in an individual’s income tax calculation at a certain rate and the effective tax rate pertaining to these gains will be lower than on ordinary income. It is also possible to make a capital loss if the base cost was higher than the proceeds from the sale.

 
Dividend Withholding Tax

A dividend is any payment made by a company to a shareholder (beneficial owner) as a return for holding a share in that specific company. Tax is levied on the dividend payments at a certain fixed rate and usually withheld by the company before paying the dividends over to the shareholders. The company will pay the tax over to the South African Revenue Service.

 

Dividend Withholding Tax is applicable to dividends paid by companies that are South African tax residents or foreign companies that list on a South African Exchange.

 
Donations Tax

Donations Tax is payable on the value of property disposed by way of a donation. A donation is defined as a disposal free or at no charge (receiving nothing in return) and includes any renunciation of rights or gratuitous waivers.

 

Under normal circumstances, the donor must pay the donations tax, but the donee can also be held jointly and severally liable if the donor fails to pay the tax.

 

Certain exemptions apply, for instance donations made between spouses are completely exempt from donations tax and a fixed minimum amount are exempt in each financial year where a natural person donated property.

 
Estate Duty

An “estate” in this case refers to the deceased estate of a natural person who was ordinarily resident in South Africa for tax purposes, as well as on the property of non-residents situated in South Africa.

 

All the property and deemed property of the deceased person will form part of the estate and certain deductions, as well as a prescribed abatement amount will reduce the value of the estate. The estate duty will be calculated on the dutiable amount and must be paid by the deceased estate (and / or by the beneficiaries in some cases).

 
Transfer Duty

Transfer duty is payable by any person who has acquired any immovable property, by way of a transaction or otherwise. Property, for the purpose of Transfer Duty, is defined as land and fixtures thereon and includes: real rights in land, shares or member’s interest in a residential property company, a share in a share-block company and rights to minerals / the right to mine for minerals.

 

The tax payable is levied on the fair value of the property, referring to a fair market value between a willing, non-related buyer and seller in an open market. Rates on a sliding scale apply and a fixed prescribed minimum amount is taxed at 0%.

Estate planning entails the organising and distribution of individuals assets and liabilities during their lifetime and once they have passed on.Estate planning involves arranging and managing your financial affairs in such a way that you can benefit from your estate during your lifetime and that it will be dealt with in accordance with your wishes in the unfortunate event of your death.

 

Effective estate planning will assist to protect the value of your growth assets and from those assets being sold to provide for liquidity purposes in your estate. It will furthermore reduce exposure to Estate Duty and Capital Gains Tax, limit additional estate expenses and ensure a smooth transition of your estate upon death. Your will, trust(s), assets and liabilities, deemed property and liquidity requirements all form part of estate planning.

 

Making use of other structures and strategies, like setting up inter vivos trusts (created while you’re still alive), play an integral part to protect your assets and the financial security of your loved ones, whilst simultaneously ensuring that your wealth is preserved for generations to come.

 

Having a valid will ensures that your assets are handled and distributed by the executor in line with your requests. Special instructions regarding the establishment of testamentary trusts, protecting the needs of your beneficiaries and setting up funeral arrangements also form part of this invaluable document.

Frequently Asked Questions

A trust is an accumulation of assets, held and managed by the trustees for the benefit of the trust beneficiaries.

 

The donor / founder of the trust must transfer full control and ownership of the assets to the trustees who will hold the trust’s assets in their capacities as trustees (not in their personal capacities). They have the duty to manage the assets solely for the benefit of the trust’s capital and income beneficiaries and must act in accordance with their rights and responsibilities as set out in the trust deed.

 

Trusts are mainly used to protect personal or business assets and are widely included in estate planning strategies to ensure a seamless transfer of wealth and to reduce tax.

Your deceased estate will be distributed in terms of the Intestate Succession Act. This piece of legislation sets out the rules of intestate succession, describing how your deceased estate must be distributed to your heir(s), as there is no will to draw your wishes from. This means that you effectively have no control over who will receive your assets after you pass away, as the rules will determine the order, starting with your closest relatives first. If there is no one that could inherit from your deceased estate, the proceeds will be place in the Guardians’ Fund and if no legitimate heirs come forward within 30 years, it will be forfeited to the State.

Comprehensive estate planning is beneficial when you have a large estate and significant estate duty may be payable when you pass away, your financial affairs are complicated due to being for instance a business owner, you have difficult family dynamics, distributing your assets may be very complex and so forth. If your financial matters are not very complicated, you can focus on drafting a valid will and making use of trust structures as needed. An important aspect to keep in mind, no matter what the size of your estate is, is to ensure that there’s enough liquidity to cater for all the fees associated with your death.

An inter vivos trust is created by the founder, when he / she is still alive and the trust deed is the document that contains the terms of the trust. Inter vivos trust are usually set up to protect the trust property during the founder’s lifetime or for future generations, to support the beneficiaries financially, to be used as a tool for estate planning purposes and so forth. A testamentary trust is only established upon the testator’s / testratix’s death and the terms of the trust are written into his / her will. Testamentary trusts are suitable to protect the interest of minors or beneficiaries that are particularly vulnerable (a disabled or elderly family member) when the testator / testatrix is not around anymore.

An executor plays a vital role in the winding up of your estate as he / she must carry out the instructions and wishes contained in your will. Acting as an executor requires a certain level of knowledge and skill as this person must report the deceased estate to the Master of the High Court, give notice to the creditor(s), take control of the estate, draft the liquidation and distribution documents, ensure that the assets are correctly rounded up and transferred to the heir(s) and pay the creditors. Nominating a family member as an executor, who has no legal or financial background, may cause unnecessary issues and delays in the administration of the deceased estate. Consider nominating an attorney, trust company or accounting firm to assist. 

Estate duty is a type of tax that is levied on the dutiable portion of your deceased estate. Once deceased, all your property and deemed property will form part of your deceased estate and certain deductions, as well as a prescribed abatement amount will reduce the value of the estate. Estate duty is calculated on the dutiable value of the estate at certain fixed rates.

When you pass away, you will be deemed to have disposed of your assets and Capital Gains Tax will be levied. Furthermore, the executor is entitled to a fee for winding up the estate, based on the gross value of the assets that he / she will deal with, plus a fee calculated at a certain rate on the income the estate has earned after your death. In addition, fees must also be paid to the Master of the High Court, to the newspapers for publishing the notices, for providing the Master with security (if necessary), transferring fixed property, cancelling bonds, arranging the funeral and any other charges (bank accounts) that may apply.

Frequently Asked Questions

The FAQs marked with a (*) includes engaging material to help you navigate this phase and make wise financial decisions that your future self will thank you for

Yes, reputable financial advisers can add great value by helping you to simplify and take charge of your finances. It is prudent that you choose a financial adviser who carries the CFP® designation, as they are Certified Financial Planners who are suitably qualified to provide advice. They are required to maintain technical competence and fulfil ethical obligations as set out by the FPI (Financial Planning Institute of Southern Africa) and these strict requirements ensure that they provide sound, professional advice to clients.

 

They can assist you to reach your financial goals, identify ways to save costs, minimize tax, capitalize on the best investment strategies, ensure that you and your loved ones are taken care of in case of an unfortunate life event, guide you through difficult economic cycles, help you to avoid costly mistakes, provide peace of mind during and after your lifetime and the list goes on.

The popular saying goes: “If you fail to plan, you plan to fail” and there’s no exception when it comes to financial planning. Having a financial plan will set out your financial goals in a clear, structured manner, as well as the action steps on how to reach those goals.

 

These measurable goals will help you to make better financial decisions, increase your level of commitment and motivation, improve your mental and emotional wellbeing, as well as track your progress. In financial terms, you will save and preserve, reduce risk, achieve better investment outcomes and strengthen your relationship with money.

Although financial plans have a certain structure to it, there is no right or wrong way to set it up. If your financial affairs are simple, you can start by identifying your goals and doing research on how to achieve each goal. If one of your goals is to set up an emergency fund, you can do research on the best investment vehicle to use and available funds / solutions to invest in. We have a wide range of material available to guide you on this journey – be sure to explore our website and social media platforms.

 

Should your finances be complicated and you’re not sure what the best way forward will be, please be sure to reach out to a financial adviser.

We have developed a Financial Goal Grid to assist you with setting clear and measurable goals. In 10 easy-to-follow steps, you will be able to identify and refine your objectives.

View Your Financial Goal Grid PDF here.

Review your budget, or financial blueprint as we like to call it, on a regular basis. “Review” does not refer to inserting your income and expenses monthly, but going through each line item to ensure that your target amounts are still realistic and align with your current financial position and values. In our material on “cash flows and financial blueprints” you will find some helpful pointers on how to adjust your spending patterns, whether it’s inviting friends over for dinner instead of eating out or getting creative when it’s your friend’s birthday.

 

Educational Material

Yes, as it all starts with you and protecting your most valuable asset: your ability to earn an income. Remember, life insurance also refers to income protection, disability cover and severe illness benefits, not only cover for when you pass away. Even if you don’t have any financial dependants, ask yourself the following question: whose financial dependant will I become if I’m unable to work? If the answer is your parents – would they be able to support you financially, whether temporarily or permanently? The younger you are, the higher the risk as you still have your entire career / life ahead of you.

Tax avoidance is legal, whereas tax evasion is illegal.

 

Avoiding tax is making use of the country’s tax regime to reduce the tax you have to pay. Each tax regime has certain tax benefits that taxpayers can employ, whilst fully disclosing all information to the revenue service in the process. For instance, deducting your contributions to a Retirement Annuity is legal, and so is making donations to a Public Benefit Organisation. 

 

Tax evasion undermines the government’s efforts to collect tax, by concealing information and / or misrepresenting it, in order to escape paying tax. Evading tax is a serious crime and offenders will be fined or imprisoned. Some examples are: renting out a property without disclosing the rental income, claiming personal expenses as business expenses, wilfully fails to pay tax, using a fake identity and many more.

South Africa residents, subject to certain exclusions, are taxed on all streams of worldwide income, regardless of where this income was earned. For individuals, this will include salaries, commission, bonuses, fringe benefits, director’s remuneration, investment income, annuity income, pension income, rental income or losses, profits or losses from a business or trade, income from royalties, certain capital gains and so forth. There are certain exemptions, deductions and rebates available to individuals and making the most of these benefits will reduce the amount of tax you need to pay.

Allowable tax deductions are one of the most common ways to minimize your tax liability, for instance: contributing to retirement funds (pension fund, provident fund, retirement annuity), deducting expenditure incurred for carrying on a trade (under certain circumstances) and donations to Public Benefit Organizations. You can also claim for a medical tax credit if you’re a member of a registered medical aid scheme. Lastly, ensure that your investments are structured in such a way that you will benefit from exemptions, like the partial exemption on interest earned and the fact that dividends received from South African companies (and JSE dual-listed non-resident companies) are exempt in your hands as the taxpayer.

PAYE (Pay-As-You-Earn) is tax that is deducted by the employer from an employee’s salary. The employer will pay it over to SARS every month, as an advanced payment. This tax will then be off set against the final tax liability for that individual at the end of the tax year.

 

Provisional tax is a method of paying income tax during the tax year in which income is earned by an individual. Taxpayers pay two instalments in advance, based on estimated taxable income for that year of assessment. This is usually paid by people who receive income other than a salary as they have to declare their income to be taxed. If you receive a salary and PAYE is deducted, but you also have other sources of income (like rental income), you will have to register as a provisional taxpayer as well.

Each scenario will be different and restrictions apply, but in general: if you’re an employee working from home and you use a room that is regularly and exclusively occupied for your employment, you may be allowed to deduct certain expenses. Expenses that will qualify include: rent, cost of repairs to the premises and other related expenses, rates and taxes, wear-and-tear, office equipment, cleaning, internet and stationery. These expenses must be adjusted on a pro-rated basis (square metres of home office area versus total square meters of home) as the tax deduction is only allowed for the area utilised for your employment.

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Setting Your Investment Goal

There are various goals that an investor may be desiring to achieve. The important thing to note about goal setting is the element of time . Goals can range from short, medium and/or long term. Whether your reason for investment be for capital growth, for capital preservation, to save toward retirement, for income withdrawals, saving to buy a house, saving to go on a holiday or even investing towards your children’s education, no matter the reason, choosing the correct investment vehicle and fund is key. Fairtree Invest, specializes in multi-managed solutions that are strategically designed to meet their client’s bespoke investment goals. Would you like to start your journey?

Multi Asset Funds

The objective of the fund is to create long-term wealth for investors by investing across a diversified range of alternative investment strategies across multiple asset classes.

The fund is focused on South African capital markets.

The objective of the fund is to create long-term wealth for investors by investing across three asset classes; equities, fixed income and commodities.

The fund is focused on South African capital markets.

The Fund is an actively managed multi asset class fund. The fund aims to provide a moderate to high risk and return profile, from a balanced range of local and global equity and fixed income markets.

The Fund is a largely domestic, high yield, fixed income portfolio which aims to return STEFI + 3% after fees through the interest rate cycle.

Offshore Funds

The objective of the fund is to generate a high level of current income through investment in debt and debt-related securities.

The Fund is a sub-fund on the Prescient Global Funds Plc UCITS platform.

The objective of the fund is to provide investors with capital appreciation and to generate income over the medium to long-term through exposure to international real estate assets.

The Fund is a sub-fund on the Prescient Global Funds Plc UCITS platform.

Listed Real Estate Funds

The Fund is an actively managed equity fund, investing in listed real estate securities in developed markets across the globe. The fund’s objective is to provide our clients access to high quality, international real estate assets that should benefit from capital appreciation while also delivering solid dividends in USD.

Fixed Income Funds

The Fund is a largely domestic, high yield, fixed income portfolio which aims to return STEFI + 3% after fees through the interest rate cycle.

The objective of the fund is to create medium to long-term wealth for investors by taking advantage of valuation discrepancies that emerge in the credit market.

The fund is focused on South African capital markets.

The Fund aims to maximize current income while preserving capital and providing daily liquidity to investors by investing in high quality, short-term money market instruments.

The Fund aims to provide superior risk adjusted returns above ALBI to our clients regardless of market conditions. The fund will aim to return 1% per annum above its benchmark, the ALBI, on a 3 year rolling basis.

Equity Funds

The objective of the fund is to create long-term wealth for investors by taking advantage of valuation discrepancies that emerge within sectors and industries.

The fund is primarily focused on South African equity markets.

The objective of the fund is to create long-term wealth for investors by extracting alpha from equity markets.  

The fund is focused on South African equity markets.

The Fund is a high conviction actively managed equity fund. The portfolio has a long-term focus invests in securities across all sectors of the JSE Securities Exchange which trade below intrinsic value or have capital appreciation potential.
The Fairtree Global Equity Prescient Feeder Fund aims to create medium to long-term capital growth. To pursue its objective,the fund invests in developed market shares, combining global screening models with the Fairtree active fundamental investment philosophy.

Invest Now

To start a New Investment is a three step process. We will guide you along each step.
Because with us, it is all about the journey.

This is an Individual Investor Online Application Process.

**Please Note:
Our Minimums are R1,000,000 for initial lump sum investments.

STEP 1:
Please provide us with your Name, Surname, Cell Phone Number and Email Address. A Fairtree consultant will contact you to discuss your interest in this investment. After this, we will send an email to you containing a link to our secured Online Application process. We make use of OTP (One-Time-Pin) technology for your verification security (This is why we require a valid cell phone number).

If this step is unclear kindly email us on clientservices@fairtreeinvest.com and we will assist you

Invest Now

We will guide you along the investment process.
Because with us, it is all about the journey.

This is an Individual Investor Online Application Process.

**Please Note:
Our Minimums are R50,000 for initial lump sum investments.


STEP 1:
Please provide us with your Name, Surname, Cell Phone Number and Email Address. . A Fairtree consultant will contact you to discuss your interest in this fund. After this, we will send an email to you containing a link to our secured Online Application process. We make use of OTP (One-Time-Pin) technology for your verification security (This is why we require a valid cell phone number).

If this step is unclear kindly email us on clientservices@fairtreeinvest.com and we will assist you.

Invest Now

To start a New Investment is a three step process. We will guide you along each step.
Because with us, it is all about the journey.

This is an Individual Investor Online Application Process.

**Please Note:
Our Minimums are R50,000 for initial lump sum investments and R1,000 for debit orders.

STEP 1:
Please provide us with your Name, Surname, Cell Phone Number and Email Address. A Fairtree consultant will contact you to discuss your interest in this investment. After this, we will send an email to you containing a link to our secured Online Application process. We make use of OTP (One-Time-Pin) technology for your verification security (This is why we require a valid cell phone number).

STEP 2:
Once you receive your email with a link to our secured Online Application process, click on the link. The template is set up to guide you through completing the application form. Along the way you will also be prompted to upload your FICA documentation: Proof of Identification, Proof of Residence as well as Proof of Bank Details (of which the latter two should not be older than 3 months)

If you are not sure what an acceptable Proof of Identification and Proof of Residence document might be, please click here for a list.

STEP 3:
Prescient is our administrator. Once they have received the application from us, processed it, confirmed that all is in order and the FICA verification has taken place, you will receive a Welcome Letter with your investor number and payment details from Prescient. You will also receive the link to the online Fairtree Portal where you can register to view your investments and submit future transactions online. Please allow 2-3 business days for their response.

If this step is unclear kindly email us on clientservices@fairtreeinvest.com and we will assist you.

Invest Now

We will guide you along the investment process.

Because with us, it is all about the journey.

This is an Individual Investor Online Application Process.

STEP 1:
Please provide us with your Name, Surname, Cell Phone Number and Email Address. A Fairtree consultant will contact you to discuss your interest in this investment. After this, we will send an email to you containing a link to our secured Online Application process. We make use of OTP (One-Time-Pin) technology for your verification security (This is why we require a valid cell phone number).

If this step is unclear kindly email us on clientservices@fairtreeinvest.com and we will assist you.

Invest Now

We will guide you along the investment process.

Because with us, it is all about the journey.

This is an Individual Investor Online Application Process.

STEP 1:
Please provide us with your Name, Surname, Cell Phone Number and Email Address. A Fairtree consultant will contact you to discuss your interest in this investment. After this, we will send an email to you containing a link to our secured Online Application process. We make use of OTP (One-Time-Pin) technology for your verification security (This is why we require a valid cell phone number).

If this step is unclear kindly email us on clientservices@fairtreeinvest.com and we will assist you.