In this advice column Jamey Lipschitz from Sanlam Private Wealth answers a question from a reader who wants to know what to do with his share portfolio when he retires.
Q: I have a portfolio of blue chip shares worth around R7 million. I am 63 years old and will have to start using some of my savings to sustain me and my wife in three years time.
My concern is whether I should stay in shares or should I sell and invest in something else? I am worried about what the markets are doing, and need some peace of mind.
I will need around R700 000 a year, and I have some annuities as backup.
There are a number of important issues that someone in this position would need to consider.
Firstly, South Africa and most of the world is in a low-yield environment at the moment. Some countries are actually providing a negative yield on cash investments for the first time in history.
This has forced investors into higher risk asset classes like equities and property for the relatively higher yield they provide. At the same time, however, this has pushed up the valuations of these asset classes and many are now considered expensive. In turn, the relative yield on these asset classes have come under pressure as the prices have increased.
Secondly, even the current situation notwithstanding, equities are considered high risk compared to other asset classes. It is therefore important to establish what percentage exposure to equities is appropriate based on an investor’s risk profile and income requirements.
There are periods when equities do not perform and one must be able to stay invested for the long term and not be a forced seller for income purposes. This will ensure that one derives the full upside and value.
Thirdly, the dividend yield on South African equities is currently approximately 3%. That means that a R7 million equity portfolio would yield around R210 000 per annum. That is a shortfall of R490 000 every year on the R700 000 income required.
There are certain equities that provide a higher yield, but making changes will potentially incur capital gains tax and brokerage charges, which will lower the overall value of the investment. One must also consider the 15% tax on dividends when calculating the income that one will be receiving.
Fourthly, other asset classes like preference shares and bonds provide a higher income yield, however, their potential for capital growth is generally more limited than equities over longer periods. Bonds (fixed income) are also taxed at the investors’ marginal rate (potentially 41%) as opposed to the 15% tax on dividends for preference shares and equities.
The short answer to your question is that you will be paying R191 820.51 tax on a retirement fund value of R947 113. In other words, 20.25% of your retirement benefit will be paid to the South African Revenue Service (Sars).
How this is calculated is that your capital will be taxed on a sliding scale. The first R25 000 is tax free, the next R635 000 will be taxed at 18% and the balance will be taxed at 27%. Although not relevant in this instance, any amount over R990 000 would be taxed at 36%.
However, you can avoid this tax entirely by transferring the benefit to a preservation fund. This is an option you should seriously consider.
A preservation fund works in the same way as a retirement fund, except that you don’t have to keep contributing to it. You will be able to make one withdrawal from this fund before your retirement date, but otherwise you won’t be able to access the money until you turn 55.
Once you retire from the fund, the first R500 000, less any amount you have already withdrawn, will be paid out tax free. At this point you can withdraw up to one third of the capital as a lump sum if you like, but the rest must be used to arrange a monthly income during retirement. You will be taxed on your monthly income according to Sars income tax tables.
Why this is particularly important is because if you withdraw your retirement capital now, the R500 000 tax-free benefit that you would receive when you actually retire will fall away. So you will be suffering a double tax penalty.
Apart from the tax you will have to pay now, you should also consider the important differences between putting the money into a preservation fund and taking it out to invest yourself.
A lot of people who get a bonus or once off additional income for whatever reason, tend to ‘blow it’ as you have pointed out. It is therefore a very good idea to try to think of better things to do with the money. I would, however, suggest that you consider not only your immediate or short term needs but also the long term potential of any extra income you receive – no matter how small.
If you have a need for extra monthly income, which might be the case if you are currently using a credit card or overdraft because your expenses are close to or more than your current monthly income, then I support your idea of putting the money in a vehicle that will allow you to supplement your income for the next two years.
A two year term, however, is a very short time horizon for an investment and I assume you intend to be drawing the full amount over the two years. In other words, you will be left with nothing at the end.
If so, you will need access to the money and very little, if any, risk. With these constraints in mind, I would suggest either multi-asset income unit trusts – the top funds produce between 8% and 10% per annum historically – or a bank savings, call or money market account with cash immediately available. These bank accounts produce between 5.5% and 7.5% per annum, depending on the amount.
Let’s use an example and say the amount is R50 000. If you can achieve returns of 10% per annum for the next two years, this will produce an income of R2 307 per month for 24 months before being depleted. At 7% per annum, the monthly amount will be R2 194 per month, so there is only a small difference, which means it is probably not worth taking the extra risk.
The question is whether you actually need additional income or if you are just going to be spending it over 24 months instead of one month. If you don’t really have a requirement for the additional income, you may want to consider investing the amount for a longer term so that it can produce even more for you.
You could consider putting the money into a tax-free savings account or retirement annuity (RA). By contributing to an RA, you would be reducing your taxable income. This means you could get something more back from the South African Revenue Service next year, depending on what retirement contributions you are already making.
Let’s use the same R50 000 we used for the example above and assume that you are below the maximum deductible contributions to your retirement funding. This is currently 27.5% of your remuneration or taxable income, or R350 000 per annum, whichever is lower.
Let’s also assume that you are in a 36% tax bracket. If that is the case, you would get an additional R18 000 back from SARS or have to pay in R18 000 less for income tax when you submit your next return. In other words, you receive your R50 000 dividend, you invest it into an RA which results in you having an extra R18 000 next year, and the R50 000 also grows until you retire. You can only access the money in an RA once you turn 55.
The tax free savings account option wouldn’t allow you to deduct contributions for tax, but it also doesn’t tie the money up until retirement. Taking into account that growth and income in the investment is not taxed, you can benefit hugely if you think of it as an additional retirement savings plan.
Tips On How To Choose A Lawsuit Loan.
When you are looking into finding lawsuits, you will find that there are those that will just be able to fit you so well and in many cases they will not be easy to find. You will find that there are a number of the firms in the market which are able to give the plaintiffs some lawsuit loans but not all will be right for you. It will be important to find the lawsuits that will be fast and not of high interest. It will be very important to consider the kind of a company that you will use to give you the kind of qualities that you are looking for. Always have it mind that the lawsuit should always be the last option that you operate in. When it comes to taking the lawsuit loans, there are a number of factors that you will need to consider.
You should always know why you need a lawsuit in the first place. The loan is meant to help with the financial crisis that can happen to someone before their case is settled. You will find that the people will be able to give the plaintiff some cash before the court decides on settling their cases. This helps in the case that the court takes too long to settle that plaintiffs who are unable to cater for their daily living due to the accident they were in.
There will be no collateral required for these loans and the application is as quick as possible. This is why most people will end up going after them. There are cases that you will find them being applied on the wall as we’ll as being applied also through the many online platforms. You will not be asked for any credit card information in this case. In that case you will find that the kind of interest they charge is quite on the higher side. You will find that they will be able to cover for the risks involved in giving out the loans. The basic term of these loans is that the payment is done once the client is settled from the case and if they lose the case then the money will never be paid.
We have two kind s of the interest rate charged on the loan. The very first choice is adding some money to the principal given. The second one has to do with charging a certain amount of money to the people involved which will take some time to complete if you are not sure of how long your case may take.
Ensure that the terms of the lawsuit will be well understood too well. This is mostly when it comes to the repayment details.
An Introduction to Lawsuit Loans. Legal processes may be very challenging to individuals who lack enough funds bearing in mind that many accidents get the victims unprepared since they are often caused by negligence of reckless individuals making it essential to take a legal action for compensation. In the essence of helping plaintiffs in hiring the best attorneys, a wide range of financial institutions have commenced quality platforms where the complainant is able to access enough funds through lawsuit loans so as to finance all the procedures involved in seeking compensation which improves the probability of winning the case. Thus, it is very important for those who are willing to access the best lawsuit yet lack enough funds for the whole process to make a point of identifying the best financial lenders with proven records of providing good lawsuit loans. The best lawsuit loans are often accessed in a wide range of selections for the complainants to identify the interested option which may include; funding for settled case, commercial lawsuit funding, medical expenses loans, verdict funding, pre-settlement funding, law firm funding and loans to fund expert witness. It is undoubtedly true that the fascinating lawsuit loans are preferable to low income earners since the plaintiff is required to make refunds following compensation while nothing in return is required on losing the case not forgetting that no monthly charges are imposed on the loan. The beauty about the highly reliable lawsuit loans is the fact that the plaintiff is able to access the funds within twenty four hours making it essential for emergency incidences since the loan is processed very fast after signing for approvals. It is incredibly true that the highly regarded lawsuit loans are easily obtained in desired amount for the complainant to fund all the relevant processes and to hire the best attorney with assurance of free applications and lack of unexpected costs. Highly pleasing lawsuit loans are often given though convenient methods of payment where the plaintiff is able to receive the funds either through direct deposits or mails since the complainant is allowed to choose between installments form of payments or in lump sum for full satisfaction. More so, the appealing lawsuit loans are usually accessed through simple procedures where the plaintiff is required to provided little information on personal background since no employment and credit history is required. The amazing thing about the caring lawsuit loans is the truth that relatively competitive prices are offered for the plaintiff to access quality litigation which depend with the kind of the case presented along with many other determinants with assurance of low fees on the loan given Furthermore, lenders of the promising lawsuit loans make a pint of developing their websites with cut-edge technology to provided customer oriented icons for easier identification of the right loans, create an account and book appointments conveniently. In a nutshell, the appealing lawsuit loans are often provided by licensed financial lenders who as well hold accreditation with reputable standardizing bodies that conduct frequent tests and examination of the services for quality assurance.
The Best Way to Easily Bring Riches in Your Life Everybody desires to live a secure life, which explains why folks will go to great lengths to make sure they collect enough riches to keep a specific desirable lifestyle. That is why folks work challenging and occasionally do additional items to get enough riches. So a lot of people will go to great lengths to bring riches in their own life provided that it guarantee them an improved lifestyle. The following suggestions can help you attract wealth into your life without struggling so much. Comprehension cash is the primary trick. This implies that you need to understand everything there’s to learn about money. Understand how to get money, how to keep adding your amount and how to maintain it within reach. This means that you have to find ways to increase your income even if it means that you should get another job or start a business. The secret o getting more money would be to find new strategies to make more. Do not be content with merely one source of income if your target is to collect money. Believe investment. Examining wealth has been another secret that works for all wealthy people. This means that you should be willing to learn from those that have been there before. Ask around what other people do to accumulate riches. This may mean interacting with people that are like-minded and willing to act as mentors as far as this is concerned. Learn as much as you can and be open-minded if you want to grasp all the tricks to make you a success. Take extra classes on courses such as economics if you have to but more importantly learn from people who are already thriving as this will give you a more practical solution.
Smart Tips For Finding Funds
Focus on your happiness. To amass riches you have to take a situation where you might be worry free. What this means is that you simply need to be clear headed and never affected in almost any way which you could possess a problem with being productive. Work with all the proper target at heart and keep focused. be grateful for your small wins and get back up when you fall and face challenges.
Short Course on Tips – Covering The Basics
Respect your job and hustles. No matter how small your job appears make sure that you stay on track. It’s from constructing these little jobs which you really get to grow a larger company. You need to be patient and able to construct your wealth slowly and eventually you are going to grow right into a dynasty which you have planning and expecting for. Above everything else never give up even when you appear to be making no money. Constantly remain on class and possess a plan.
Lots of individuals wish to begin buying stocks but are concerned about acquiring the right stocks. Anytime they will acquire one that eventually ends up not succeeding, they might lose all the cash they’ve already invested. However, there is the potential for a person to make a tremendous amount in addition to their original investment provided they pick the right stocks. This does not need to be a guessing game. In fact, there are a number of things that might help somebody decide precisely what stocks to buy.
Research is going to be vital. Somebody should never obtain any stock without completely looking into the business. They will want to check out the past and also existing fiscal reports in order to be sure the company will be making money as well as in order to make sure they’re continuing to grow. They should additionally read just as much as is possible about the company in order to make certain they aren’t investing in a business that is taking way too many risks or even which has recently taken a large risk whilst not having a profit on it yet. By thoroughly researching, a person might truly feel more confident in the stocks they choose to obtain.
When they may have bought stocks, an individual will want to keep an eye on the news and also the fiscal records for the companies they are investing in along with paying attention to the stocks. This can assist them to forecast virtually any troubles before they will arise and also ensure the company they’ve invested in is continuing to grow. Just because they have done the analysis before they obtained the stock won’t indicate they can disregard it and hope for the best. Instead, they are going to need to keep an eye on all their stocks to be able to make sure they’re continuing to earn money from them and also to make certain they really are continuing to be a wise investment.
In case you’d like to discover far more with regards to investing and exactly how to choose the correct stocks, make sure you check my blog. More about the author is additionally available. Take a look at far more facts about exactly how to decide on the right stocks now so that you can locate ones that are most likely to prosper and that will enable you to make a tremendous amount of cash on the investments. Along with the right information, you can start looking at which stocks to pick now.
How Credit Card Readers Can Enhance The Finances Of Your Businesses
Before, the only method of payment that customers use when purchasing items from stores is cash. But today, there are several transactions that are now being made in various choices, and aside from cash, people can now pay with their debit cards and credit cards through cashless transactions that are more convenient.
Today, experts believe that businesses should have these methods for payments, namely credit card payments and debit card payments, as well as cash payments. Therefore, it is just imperative that these credit card payments and debit card payments will be processed by the best credit card readers that businesses should have.
For these businesses to thrive, it is rather important that people can be able to have these credit card readers and scanners for their operations. It is important for business owners to note that they have two major choices when it comes to these credit card readers, and these readers can come either in wired devices or wireless devices depending on the need and specifications of the businesses, with the wireless credit card readers providing more benefits for those on the go. These kinds of credit card readers will be bonuses for business owners when catering to the requirements of the clients, as they provide them with better customer services and better payment methods for all their needs. There are also several credit card readers that are known for their portability, ease of use and they are also affordable for these businesses, such as the mobile credit card readers.
What mobile credit card readers can offer you
The latest addition in the family of financial processing systems are called the mobile credit card readers since they can provide the best convenience and easier payment options for these people. These credit card readers are built with their phones and they just need to tap their phones on a particular device on the check out counter and this process can come as a good payment options already. The best thing about these mobile credit card readers and scanners is that they have the capacity to accept all the credit card companies that are provided just like the usual payment. The mobile credit card readers can also serve as a virtual terminal that can process all the details that are embedded within the magnetic strip of the credit card and do the same process as with the other payment processes.
There are several uses and good things about these credit card readers on the mobile scale, because they can be very affordable and can be adapted by both smaller and larger businesses alike. The mobile credit card readers can save you a great deal of money as well.
Why You Should Use A Credit Card Swiper
In order for business to be able to gain success, there are many things that the owner can do. Gaining success can be done when he will use credit card swipers. By using any telephone, these devices can be linked to a bank. Due to the increasing number of credit card owners, card machines has also been starting to gain popularity. It is in retail stores that you will be able to commonly see these devices. The moment that you will not have these machines, then there is a chance that you will lose customers especially those that are paying with credit cards. It is a must that you will have a credit card swiper especially of you are running a business. The many advantages of a credit card swiper is what we are going to talk about in this article.
The first advantage that you can get is that you will be able to avoid fraud. A validation is needed when you make a credit card transaction. It is one way for the system to secure itself.
It is by using this device that you will have a reliable system. The moment that you will be receiving credit card transactions, then people will see your business as something reliable. For many people, the moment that you will receive credit cards payments, they will think that you are in the industry for quite some time.
The sale that you have will increase the moment that you will have a credit card swiper. For business that receives credit card payment, the customers that they have tends to spend more than the usual. That is why with only a minimal fee, you will get more than what you are paying. It is your flexibility to accept payments that will improve once you will be able to accept credit card payments.
With a credit card swiper, you will be able to facilitate e-commerce. It is by accepting credit card payments that your store will be able to do business with e-commerce websites. There are already a number of customers that wants to shop online than going to a physical store. That is why when you can accept credit card payments, then you can accept online transactions.
With a credit card swiper, you will be able to improve revenues. Since people with credit cards are not limited compared to those that brings cash, ten they tend to shop more. Customers will just keep on shopping once they will know that you will accept credit card payment as they will not be thinking about how to pay you. It is a must to have a credit card swiper as many clients do prefer stores that have one.
There is better competitiveness on your part the moment that you will have a credit card swiper.
Choosing a Reliable Provider for Credit Card Processing
Today, the e-commerce businesses are increasing and people are using various ways so that they can provide the customers the convenience when it comes to shopping. Credit card processing is the best way to bring the online business forward. This is not only helping the business to grow but this attracts customers to purchase services or products from the online store.
When you are interested about expanding your small business and you wish to be a business giant, then it is really important that you look for a reliable payment method for the credit card. If you are not able to manage online sales management, then you must find out what is the problem with this. You can’t manage online sales maybe because of inefficiency of the service provider which you selected. Before you would encounter any bigger issues, then what you must do is that you have to look for a different service provider. You can surely have a secure credit card processing when the service provider is genuine. What you will just have to do is to ask those simple questions when picking the service provider. You must check out the question that you must ask.
Get more information regarding their fees. Know that the fees of those merchant services for the website would include the application as well as set up fees, the interchange fees, monthly statement fees and also early termination fees. The service provider must clear all the doubts about the fees and know whether they have hidden costs.
Get to know more regarding the type of payment that they accept. When you are the owner of a retail business, then you would like to make sure that the chosen payment process would accept cards like MasterCard, Visa and others so that no customer would face any issue when paying for the orders.
You should also know how long the entire process is completed. So many service providers of the online merchant accounts would complete their job in a quick turnaround time. Get to know more about their account set up time and the installation so that you can plan things properly. When you are able to choose the right service provider, then they will definitely help you out in every step of the way.
There are various credit card processing companies and there are those which have major players. But, you must be very critical in choosing the processor. Ensure that you are able to find one that provides the solutions to low-risk as well as high-risk merchants. Moreover, you can also find those companies that are offering offshore and onshore services.
Deciding On the Best Merchant Service- Things To Search For
Almost all the firms today accept credit cards. If your business doesn’t, then it’s high time it started receiving debit and credit cards, as they are being significantly employed by buyers to make purchases on account of the convenience component.
The credit card sector has changed the way in which individuals make payments and therefore are continuously developing fresh improvements like cash back bonuses, mileage credits, and many others to make them more appropriate for clients. The small, online business entrepreneurs are prudent about handling purchase of a credit card, as they are undecided about selecting the most appropriate vendor processor. Given here are a few recommendations that could enable you to select the right vendor processor.
Your search for a great merchant processor may end with the bank you are employing. Nevertheless, not all banks provide merchant services to start-ups or new companies. The standard practice on most banks is always to avoid offering merchant services to an enterprise that has been in operation for less than one year. However, when you can convince the financial institution, you can’t pick a better merchant processor than where you are doing your company banking.
Select a vendor processor recommended by people you know. A peer might have been utilizing the services of unique merchant processor company for a considerable time period, and hence may give you his feedback and let you make the proper selection.
You’ll realize that there’s not really a single purchase fee and percent across all banks. The transaction fee and percent for credit card expenditures along with bank card acquisitions differ from one bank to another. Do substantial study to the specific costs provided by each bank relevant to particular cards.
Sometimes different organizations come together via a trade association to negotiate rates with a business processor. Herein, the processor may indeed demand less, in comparison with the prevailing industry costs. Discover this chance to enjoy great benefits.
Try not to choose business processors who act as agents for a completely independent sales firm (ISO). Choose an ISO who works together with main banks. You will not go wrong there. Your local chamber of commerce may be able to assist you out in this regard or the local panel of trade.
Choose a merchant processor who is associated with a big-time primary lender. This assures excellent services and regular funds to your credit checking account, that is an absolutely must for any organization.
Learn how long your merchant processor has been doing business. This will not be your only parameter of selection, nevertheless it does offer you a good indication of what you can expect in the vendor processor. Additionally, it will be much simpler to make use of a well-recognized merchant processor. You have to also attempt to acquire some concept concerning the customers who’ve worked with him. The more the clients the better it’ll be. More significantly, if the processors has some large customers up their sleeves, then you’re much better.
Additional important factors to take into account include the contract length, manual handling of cards and customer-support. Your vendor processor should be identified for the remarkable customer care. The hours of work have to be commensurate together with the hours of operation of one’s organization. Additionally you should be in contact with the merchant service at odd hours at times, in case there is issues. Select someone by considering each one of these elements.
Why Credit Card Processing is Beneficial
If you own your own shop or store, you might feel very proud of it and very satisfied that, through your own hard work and effort, you have been able to accomplish something this wonderful. These business owners, then, might be eagerly searching for ways through which they can make these businesses better. One will be glad to know that because of modern technology and the things made possible through it, finding a way like this is not at all something which is difficult. A good example is in the case of credit card processing: when you decide to add credit card processing into your methods of payment, you can be sure that the advantages you will soon get to enjoy will be numerous and very satisfying.
Adding credit card processing to your business’s modes of payment will definitely be beneficial to you in many different ways, one of which is the fact that when you do so, you can be sure that a good relationship with clients can be forged, a relationship which is based on trust. The reason why this is true is because these people trust the cards that they keep in their wallets, and when they find stores in which they can use these cards, the trust will be extended to them. One who is able to create this strong relationship of trust with clients, then, will certainly have great chances to make his or her company grow steadily.
When one decides to add credit card processing into the methods of payment in his or her store, one will also be able to benefit through being able to boost sales up. If you know of the habits of people in the modern world of today, you might know that these people often don’t bring cash in their wallets, and if they decide to buy something, they use their credit cards. When business owners have credit card processing, then, they can assure themselves of a wider customer base and the chance to enjoy more sales each day.
Last but not least, people can benefit through credit card processing because through it, they can be sure to enjoy more flexibility and not have to deal with too much cash. What is more, credit card payments are made quickly and easily, giving business owners a lot of ease and convenience when collecting these payments.
Altogether, then, it is clear to see why any business owner should go into credit card processing, as it is a payment mode which has definitely increased in popularity in the modern world of today.
Best Mobile Order Processing: Increasing Awareness and Understanding About Mobile Application For Managers and Clients
Mobile order processing is the integration of advanced technologies into business ordering and tracking operations for faster and easy turnover of goods and services. The goals of mobile order processing are to stabilize and debug online order entry and processing system, integrate database with secure data collection and storage, and synchronize work offline and availability of internet connection.
Mobile order processing uses a card reader and a mobile application or software that record and track orders, creating order processing automation and embrace set of instruments for order entry, monitoring and management. This is an amazing operation solution that diverts the placement and subsequent acceptance of orders, facilitates tracking of order status, shows due invoices, provides ability for lodging quality claims with the company and more. The various applications offered by different IT industries for mobile order processing may differ depending on user roles, in that way clients and employees access only the data and tools relevant to their objectives and activities.
With the help of an established and reliable mobile ordering system, clients can submit orders through having a quicker access to either the previous order history or the company’s catalogue, check due invoices, monitor order progress, lodge quality claims with relevant information such as narrative description and photos, and easily track the status of the claims. receive client order and claims, track and process them as soon as possible and view complete and relevant client information. In a business operation, the technical support staff is responsible for reviewing orders and receiving quality claims, and eventually initiating proper actions in respect to the flaws of delivery. With the help of mobile order processing, each dedicated team will achieve remarkable results, such as optimization of application’s performance, enhancing its stability and reducing support costs borne by customers.
Order processing is the business workflow in which customers orders are obtained, packed and shipped, and it is regarded as one of the most important functions in any business, especially in a wholesale distribution business. A major component to customer satisfaction is order processing and the speed of its fulfillment, making sure that customers receives the goods or services on time. For a business to create a good impact when it comes to order processing, it is important to provide access to inventory levels, digitize order writing, automate submission, and consolidate order information coming from multiple channels. In a business, it will grow and succeed with the help of modern technology, creating an edge and aligning with industry standards, as well as customer needs.