20 Voelgoedlewenslesse

Het jy dalk so ‘n bietjie inspirasie nodig om die jaar volstoom aan te pak?

DEUR: Ansja Ferreira

Rozanne Raath, ‘n lewensafrigter, gee ‘n paar goedvoelbeginsels, wat deur enigiemand van enige ouderdom toegepas kan word.

1. Voor jy enige van die wenke hieronder aandurf, gooi eers jou motor vol brandstof. Dus volg ’n lae-GI-dieet vir volgehoue energie en drink minstens twee liter water per dag. Jou liggaam gaan nie sonder “brandstof” doeltreffend kan funksioneer nie.

Rozanne deel ‘n paar beginsels van die Skool vir NLP (Neuro Linguistic Programming) vir suksesvolle en positiewe denke:

2. Elke optrede word deur ‘n positiewe bedoeling gedryf. Almal doen altyd wat hulle dink reg is of die enigste keuse vir hulle is, gegewe die omstandighede vanuit hul oogpunt, reg of verkeerd. Hou dit in gedagte voor jy oordeel, want die persoon bedoel dalk goed.

3. Die betekenis wat iemand anders aan jou kommunikasie heg, is die respons wat jy gaan kry. Wanneer jy dan kommunikeer, let op die gevolge van wat en hoe jy dit sê en onthou dat mense vanuit hul oogpunt daarop reageer.

4. Daar is geen mislukking nie, net terugvoering. Die woord “kritiek” laat sommige sweet en min mense hou daarvan. Hou jou kop hoog, want terugvoering is bruikbare inligting om jou meesterplan te verbeter en jou tot sukses te motiveer.

5. Wees buigsaam en pas by verskillende situasies aan.

6. Weerstand is ‘n teken van te min rapport (die skep van ‘n vertrouensverhouding of atmosfeer van vertroue). Wanneer jy rapport het, het jy massiewe invloed, so doen moeite om na ander te luister – by jou werk en by jou huis.

7. As een mens dit gedoen het, beteken dit dis menslik moontlik. As dit menslik moontlik is, kan enige mens leer hoe om dit te doen. Leer in 2016 ‘n nuwe vaardigheid aan.

8. Alle uitnemendheid en ongelooflike prestasies het ‘n struktuur en ‘n strategie, en juis om daardie rede kan dit aangeleer word. Sonder rolmodelle uit en leer by hulle. Jy hoef nie die wiel te herontwerp nie.

9. Ons het al die hulpbronne wat ons benodig, inherent in ons eie fisiologie en neurologie. Delf diep binne jou, jy het die antwoorde op jou groot vrae en jy weet presies wat om te doen.

10. Fokus eerder op uitkomste as probleme. Probleemraamwerke fokus op wat verkeerd is en hoe om verkeerde dinge reg te stel en skep ‘n negatiewe ingesteldheid. Uitkomsgebaseerde raamwerke fokus op die resultaat wat jy wil hê en die beste manier om dit te bereik en skep, is ‘n positiewe ingesteldheid.

11. Vra eerder “hoe”-vrae as “hoekom”-vrae. “Hoekom”-vrae lei tot ‘n stroom verskonings en redes wat die probleem net erger maak. “Hoe”-vrae gee jou begrip van die struktuur van die probleem en die dieper gedagtegang en motiverings wat dit in plek hou.

12. Fokus op moontlikhede in plaas van ‘n moet. Dan glo jy dat enigiets moontlik is en niks is ‘n moet nie. Dit laat kreatiwiteit vloei en nooi vryheid in.

13. Neem ‘n houding van nuuskierigheid en fassinasie aan in plaas van om uit die staanspoor aannames te maak en aan feite vas te klou. Vra uit en maak seker jy verstaan die ander persoon.

14. Wanneer jy jouself of omstandighede wil verander, moet jy op geestelike vlak begin (die diepste deel waar gedrag ontstaan), dan na identiteit oorgaan (dit wat jy oor jouself en ander glo), jou vermoëns, jou gedrag en laastens jou omgewing (waar jou gedrag manifesteer).

15. Lees eerder ‘n tydskrif voor jy gaan slaap as om met tegnologie besig te bly. Navorsing toon dat om na ‘n helder skerm (selfoon, rekenaar of TV) te staar jou korter, asook ligter laat slaap.

16. Doen een ding op ‘n slag en doen dit goed. Jy dink dalk jy’s baie produktief om jou e-posse en Twitter dop te hou terwyl jy in Excel werk, maar eintlik deel jy jou aandag in klein stukkies op en laat dit jou nog minder doeltreffend werk.

17. Handhaaf ‘n goeie postuur. Kom in die gewoonte om selfone, tablette, TV’s of rekenaars op jou lessenaar op ooghoogte te hou. Jou oë moet reguit vorentoe kyk, jou nek en rug moet reguit en regop wees en jou arms moet gemaklik rus.

18. Wees ‘n gesonde sosiale-netwerk-gebruiker. Sit jou “notifications” af en gebruik sosiale media doelgerig. Verskeie studies toon ‘n verband tussen die gebruik van sosiale media met verhoogde vlakke van stres en gevoelens van eensaamheid soos mense hulself met ander vergelyk. Neem dalk ‘n paar uur of ‘n dag “af” van sosiale media en kyk hoe jou gemoed verbeter. Onthou die beste verhoudings word in persoon of oor die telefoon gebou, so gaan drink eerder daai koffie as om na foto’s daarvan te staar.

19. Voorkoming is beter as genesing. Dis waar vir ons fisieke sowel as digitale lewens. Om die skok, angs en wanhoop, wat met die verloor van jou data, werk, media of aanlynrekeninge gepaardgaan, te vermy doen hierdie dadelik: Maak seker als is op verkieslik drie plekke gestoor: aanlyn (op ‘n “wolkie”), op jou rekenaar en op ‘n eksterne hardeskyf.

20. En as jy nie weet hoe om een van hierdie bogenoemde wenke aan te durf nie, laat ‘n professionele persoon jou help. Ek betaal eerder iemand wat van beter weet as om die verreikende skade ná die tyd te probeer herstel.

Rozanne Raath is ‘n lewensafrigter en kan gekontak word by rraath.coach@gmail.com of gaan lees meer by inspired2coach

How to work with someone who’s negative, unimaginative, and defensive?

Today’s post is by Michael Hyatt, just brilliant.

And Here’s a Hint: It’s Not Talent, Skill, or Expertise

Is there anything more frustrating than trying to accomplish a big goal with someone who’s negative, unimaginative, and defensive?

Thankfully, it’s been a while since I’ve tried. But I’ve had my share in the past, and I can tell you that nothing will kill an organization’s productivity and vision like a can’t-do person.  But if this kind of cynicism brings a team down, what can lift it up?

Several weeks ago my team and I met to review our business and make plans for the coming year. The whole process was exhilarating, but one part that stands out for me was when we discussed our values.  We identified what matters most to us about the way we work and collaborate. It was important for us to identify not what we wanted to be, but who we really are.  People began throwing different qualities on the board, and we built out a good list. But it didn’t feel complete. Something was missing. Finally someone mentioned the infectious enthusiasm of a fellow teammate.

Bam! That was it. Infectious Enthusiasm.

Everyone on our team has this quality, but sometimes the fish don’t notice the water they’re swimming in. We needed to identify it, highlight it, underscore it, and put it in BIG LETTERS.  Infectious enthusiasm is a key ingredient in a team worth working for. Talent, skill, expertise are only part of the picture. If you’re not bringing energy, optimism, and creativity to the party, it won’t be much fun. Why?

  • Motivation. Enthusiastic people bring their own battery pack. You never have to worry about motivating them because they’re already plugged into the business and fully engaged.
  • Solutions. Problems and obstacles are part of business. A former colleague of mine used to say that if work was easy, they wouldn’t pay us. But enthusiasm unlocks innovative thinking. Instead of seeing the roadblock and turning around, enthusiastic people find workarounds. They’ll go over, under, around—or just build a new road.
  • Ownership. Can-do people own whatever part of the process and outcome they’re responsible for—and they’re usually willing to assist on the rest. That means they don’t need heavy management. They just get going and get things done.
  • Achievement. Achievement takes energy. If you have motivated team members who are eager to find solutions and own the outcome, guess what happens? You start accomplishing goals.
  • Culture. Whether good or bad, attitudes are communicable. Enthusiastic people are fun to work with, which means they can bring up the mood of the whole team. It’s infectious. The net result is a positive team culture. And here’s the great thing. It’s practically self-perpetuating.

Some people might object and say this is really a question of personality. What they mean is that people can’t help it. They’re either positive or not. But that’s not true. Enthusiasm is a choice. Our circumstances may be outside our control, but the attitude we bring to our circumstances is entirely within our own power.  The only question is what kind of team do you want to work with?

Special thanks to MICHAEL HYATT http://us2.campaign-archive1.com/?u=52d5c7778a3adfda535c3b349&id=5d414f07a4&e=4796a7454d

What will make your event successful and memorable? By Rozanne Raath

Book Rozanne for your next event, workshop

Book Rozanne for your next event, workshop

I have been a speaker at numerous events as well as bought my tickets for a fair share of them.  They all seem to have the same program:

Someone opens the event for 15 minutes.  Two or three others also have something to say.  Some dance group or artist delivers a few items and eventually food is served and the main speaker gets his/her chance.  The speaker is sometimes famous, but isn’t a professional.  They tell a nice story, but tomorrow your guests have forgotten all about it.  After two hours you finally get your chance of chatting with your friends and eating away.  But no-one does an event differently because this is the status quo.

Here’s a few pointers that will make your event successful and memorable:

  • Facilities should have good lighting, sound, comfortable seating and be easy to find.
  • Give your audience enough time to visit the stalls beforehand, but start your event punctually. It shows respect of others schedules.
  • Have the food and drinks on the table for guests to enjoy from the get-go. Most are starving because they fed the kids and the pets, but not themselves.
  • Ask the MC to keep the opening short.
  • Have activities where your guests can interact, take part and have fun, like a photo booth with instant pictures they can take home.
  • Book a really good artist or none at all.
  • Then play nice background music and give your guests some time to take a comfort break, stretch legs and chat (that’s what they came for).
  • Then introduce your main speaker. When booking a speaker, keep the following in mind:
  1. They should be a professional in their field.
  2. They should offer sound, practical advice.
  3. They should be able to teach your audience about a specific challenge in their lives.
  4. People take advice from others who are just normal people that have to work and manage a family.
  • Keep the thank you’s short and sweet.
  • End off with good music and time to shop and chat.

Good luck and blessings with your event.

To book Rozanne for your event send a request to rraath.coach@gmail.com   Click on the link to Inspired List of Workshops to read about Rozanne’s topics.

Die kruising in die pad: Effektiwiteit of uitnemendheid, inspirasie en vervulling – Rozanne Raath

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Jy sit met ’n breë glimlag en dink, Mapstieks, ek het dit! Jy het in jouself belê, selfs ’n lewensafrigter gesien en na al die selfhelp kursusse gegaan. Jy het nou selfkennis bekom en het goeie gewoontes aangeleer. Jy verstaan nou jou unieke menswees en doel. Omdat jy nou so uiters effektief is, raak jy oral betrokke, jou populariteit groei en jou lewe raak vol. Tog wonder jy hoe dan nou verder? Is dit nou dit? Dit, meneer of mevrou, was net die eerste pad gewees. Daar is twee paaie in selfontwikkeling:

1. Die pad na effektiwiteit en doelgerigtheid,

2. Die pad na uitnemendheid, inspirasie en vervulling.

En vandag neem ek jou op die pad na uitnemendheid.

Op hierdie pad sal jy uitdagings kry wat jou integriteit en gesindheid toets. Dit is sodat jy gestroop kan word van dit wat jou weghou van ware geluk, vreugde en vrede. Dis moeilik om te onderskei, want jy gaan jouself besig hou met dinge wat meestal mooi en reg is. Rein gedagtes, jy weet. Soos komitees, posisies, of alledaagshede, maar wat nie jóú werk is, of binne jóú doel val om te doen nie. Met jou vol lewe, veeleisende werk en geld wat jou jaag, probeer jy nog almal om jou gelukkig hou. Is jy dalk ’n formidabele aktrise wat met jou mensekennis enigiemand in enige situasie kan manipuleer? Of dalk hou jy nie van almal wat gereeld in jou dag inwals nie en stink jou gesindheid teenoor hulle. Pleit jy dalk skuldig aan hierdie klagte? Die oplossing hiervoor is keuses wat jy vandag moet begin maak. Dit is keuses wat nou gefokus is op uitnemendheid, inspirasie en vervulling.

Stap 1: Besluit: Ek gaan nie langer tyd fisies, emosioneel of geestelik spandeer aan mense of take wat my dreineer, ignoreer, stilweg beledig, my wil gebruik of vergelyk, speletjies speel en veral nie respekteer nie. Ek het ’n zero toleransie vir enigiemand of dinge met hierdie intensie. Dis ’n mond vol, lees dit gerus weer voor jy aangaan. Om hierdie mense of take te herken is nie maklik nie, maar maak jou lysie. Dink mooi of dit inpas by jou doel. Hierdie is nie die moeilikste stap nie. Om die oorsaak met wortel en tak uit te roei en die grense dik te trek, is konfrontasie nodig.

Stap 2: Begin jou lysie uitsorteer en uitfaseer op ’n respekvolle en volwasse manier. As jy daagliks hierin volhard sal jy ’n ongekompliseerde en vry lewe kan leef. Maak die moeilike keuses met visie, dissipline, passie en integriteit. Dan sal jy ook kan sê: Ek is op ʼn goeie plek. Ek is gelukkig. Ek is net.

Stap 3: Inspireer ander om hul doel te vind en te bereik deur ’n rolmodel te wees. Ons moet die volgende modelleer: Invloed, betroubaarheid, bekwaamheid en strategie. Vind geleenthede om jou gesinslede, werknemers en jou gemeenskap te bemagtig. Om hulle te bemagtig beteken om aan hulle verantwoordelikhede toe te vertrou en in hulle te glo. Nie om te mikro-bestuur nie.

En daar is jy nou verby die kruising en op die pad van uitnemendheid, inspirasie en vervulling.

Vir nog artikels in Afrikaans, laai die volledige e-boek gratis af by Lewenshulp-vir-n-nuwe-begin

Property investments versus Retirement Annuities (‘RAs’)

Written by Henri Raath B Acc (Hons), CA (SA), CFP®

Introduction

Even with the massive growth in property values the last couple of years now a distant memory, some investors still favor property over RAs when they save for retirement. However, it is a very risky approach to be invested overweight in a single asset class over the long term.

With this newsletter we will evaluate some of the advantages and disadvantages of buying a property of R1.5million versus investing it as a lump sum in a new generation unit trust-based RA.

For both types of investments we will look at entry and maintenance costs, the taxation implications and the other risks and considerations involved.

Entry- and maintenance costs

Entry costs can be as much as NINE times more for property than for RAs, and this is illustrated with the following table:

Description Property RA
Gross investment value R1.5million R1.5million
Transfer fees R65,000 –
Attorney fees R5,000 –
Investment platform initial fee –
VRR initial fee (0.5%) – R7,500
Total initial costs R70,000 R7,500
% of gross investment value 4.7% 0.5%

With the property investment the maintenance costs can be unlimited due to various factors like the age, quality and finishing thereof, the quality of the tenants and regulations of the body corporate in a sectional title complex, including rates and taxes.

With a RA the ongoing maintenance costs consist of the annual management fees of the investment platform, the individual asset managers and the financial advisor fee for the administrative and advisory aspects pertaining to the investment. This can be between 2.0% and 3.0% per year, depending on the investment platform and the underlying investment funds.

Taxation considerations

Description Property RA
Estate duty Fully included in an estate for estate duty, except if it was purchased in a trust. Not subject to estate duty at all because it is regulated by the Pension Fund Act.
Income at retirement Fully taxable after qualifying expenses have been taken into account. Fully taxable as an annuity when the pension is implemented
Capital gains tax Capital gains are taxed when the property is sold, irrespective of which legal entity the property is registered in. No capital gains tax is applicable for any capital gains generated in the RA. Further to this an amount of R300,000 can be withdrawn tax free as a lump sum at retirement.
Deduction of payments or contributions Only the interest component of a mortgage payment is deductible for tax. This is beneficial at the beginning of the mortgage term, but not so beneficial as the term of the mortgage becomes shorter. Contributions is deductible for tax subject to certain limits. It is especially beneficial for people who do not contribute to an employer retirement fund.

Other risks

Both these investments have different risks. RAs have market risks while property incorporates indirect market risks, namely that prices can increase or decrease when interest rates fall or rise. RAs are interest sensitive in a positive way because as interest rates rise the return can be increase because it is not taxed within the RA at all.

The risk of tenants defaulting on rent payments is another significant risk which is associated with direct investments in property which is becoming an increasing problem. The balance of power has unfortunately swung from the owner of the property to the tenants, and to evict tenants have become increasingly difficult.

When the owner of the property is declared bankrupt the creditors can stake claims against the property, except where it was purchased in a trust. An RA is fully protected against creditors in terms of the Pension Fund Act, and this makes it extremely attractive for business owners who work in high risk industries.

Long term returns

The returns of the two investments will differ over the long term, but what matters is the net growth in the investments after all the costs and expenses have been taken into account.

The income on residential property and listed property is fully taxable. The property index does not take into account the cost for main residential property (in other words rates and taxes, maintenance, et cetera). Rental income on residential property is also not reflected in the Residential Property Index, and have to be added to the growth mentioned above.

Is it highly unlikely that the returns mentioned above will be repeated in any of the three sectors mentioned. Consumers and investors have to lower their expectations when they plan, irrespective of what investment vehicles they decide.

Conclusion

RAs provide the opportunity to diversify an investment between the different asset classes, namely shares, bonds, cash and listed property. A direct investment in actual property only gives exposure to one asset class and is very restrictive.

Diversification is a fundamental rule of any successful long term investment strategy. It is therefore acceptable to invest in direct property, but a well-diversified RA is strongly recommended. Changes in regulation and the introduction of low cost unit trust based RAs makes these investments extremely attractive.

Please contact us if you would like to have more information about the above article, or if you have any questions about investments in general.

Retirement Annuities (‘RAs’) in perspective

Written by Henri Raath B Acc(Hons), CA (SA), CFP®

Introduction

Despite all the bad publicity that RAs have had over the past few years they are essential investment vehicles for retirement planning.

Like many individuals who criticise sports teams and sportsmen from their armchairs, much of the criticism towards these products are usually because of individuals’ lack of insight and knowledge, as well as an unwillingness to accept responsibility for their own financial wellness.

The bad publicity surrounding RAs were the result of the following:

• the life assurance industry previously charged high costs on RAs; and
• life assurance companies imposed one-sided and unfair contract conditions on policyholders which often resulted in significant reductions retirement savings, such as the case with the penalties imposed on RA members’ savings when they have reduced or stopped their contributions.

Instead of deterring you from investing in RAs, the bad publicity highlights how important it is that you understand RAs and their inherent characteristics.

What is an RA?

An RA is often referred to as a “policy” which is not entirely accurate. In a legal sense an RA is not a policy. When you take out an RA you are in fact signing up for membership of a pension fund which is administered in terms of the rules of the fund and governed by the Pension Funds Act (‘PFA’).

An RA fund makes investments on an investor’s behalf, normally purchasing a life assurance policy from the life company that set up the RA fund. Usually the life company that established the fund also administers the fund. The life assurance policy bought on an investor’s behalf is not the same as a normal endowment policy because it is structured to take advantage of the tax incentives provided by the government to encourage an investor to save for retirement.

RAs were introduced in South Africa in 1960 to give self-employed individuals similar tax incentives to save for retirement as those enjoyed by members of employer-sponsored pension funds. However, this does not mean that only self-employed people can use RAs to save for retirement and people who are members of employer-sponsored provident or pension funds can also join RA funds.

As most employer-sponsored retirement funds will not provide an individual with sufficient income in retirement to maintain his/her pre-retirement standard of living it is advisable that every member of an employer-sponsored retirement fund also contribute to an RA to supplement the shortfall.

As the state gives individuals tax concessions as an incentive to save it also places limitations on what investors can do with that money when they retire. Therefore, when an RA matures, an investor has to buy a monthly pension with at least two-thirds of the fund value of the RA.

Tax advantages of an RA

1) Tax on contributions to a RA

Up to certain limits, an individual do not pay tax on his/her contributions to an RA, whereas contributions to endowment policies are made with after-tax money. Contributions can exceed these limits, but the individual will not get the tax advantage on the amounts above the limits.

Under current legislation you can claim as a tax deduction the greater of:

• 15% of your non-pension funding income before other tax deductions; or
• R1,750; or
• R3,500 less your current contributions to a pension fund; or

If you contribute more than these limits, you may claim the amounts that exceed the limits in future tax years limited to R1,800 per year, provided your contributions in the years in which you claimed remained within the limits. Excess contributions which are not tax deductable may also be added to the tax-free portion of the lump sum you receive at retirement.

Retirement-funding income is normally your basic salary excluding any allowances, such as a car allowance. Most employers use only your basic salary to calculate how much they will contribute to your pension savings. Very few employers make pension contributions based on their employees’ gross pay packages (basic pay plus all allowances).

Non-retirement funding income is any income you earn that your employer does not take into account when contributing to a company-sponsored pension fund. Non-retirement funding income can include allowances paid by an employer, such as your car allowance (but only the portion not claimed as a deductible expense for business travel) and taxable income from other sources (for example, rental income from a second property).

2) Tax on income and capital gains in a RA

The accumulation of income aand capital gains in your RA is totally exempt from income tax and capital gains tax which is a massive advantage over unit trusts where an investor pays tax on income and capital gains, irrespective of whether the income is distributed or not.

This has the result that the after-tax returns on RAs over the longer term are materially higher than returns on unit trusts, endowment policies and fixed deposits. You can also refer to our newsletter entitled “Tax efficient structuring of investments” for more information regarding this.

3) Tax implications when you retire

3.1) Tax on the lump-sum payout

When you retire you may extract a maximum of one third of the fund value as a lump sum and you have to purchase an annuity with the remaining two thirds. You can however take no lump sum and use the full fund value to purchase an annuity.

As a general rule, individuals take the entire tax-free portion of the lump sum, even if they do not need the liquidity because they want to take advantage of the interest and dividend exemptions which SARS makes available to individuals. Individuals’ views on this differ substantially and it is therefore necessary to get proper advice when you retire.

3.2) Tax on your monthly pension (annuity)

There is no tax applicable to the build up of income in the investment (interest, foreign dividends and net rental income) and you are only taxed on the income that you withdraw from the investment on a monthly basis in the form of a pension.

The term of an RA

You cannot access your funds in your RA until you are 55 unless you become disabled before that age. In other words 55 is your earliest retirement date. However, you can extend the period beyond 55 if you wish. If you stop paying premiums (make the RA “paid-up”) the funds will remain invested in the funds specified until you are at least 55 years old. This is to ensure that your money is kept for retirement.

Individuals can contribute to RAs even if they are older than 70. From a tax point of view it is often worth delaying retirement from an RA as late as possible because individuals can continue to claim their contributions to an RA against their taxable income after they have reached the age of 69.

Previously the penalties that life assurance companies levied if you retired early or ceased your contributions were considered to be too high. If you took an early retirement benefit (before a premium period of 20 years has expired) your fund value could have been reduced with a 30% adjustment levy. If you ceased your contributions (before a premium period of 20 years has expired) the fund value would have been reduced by a 20% adjustment levy.

Under new legislation these penalties have been substantially reduced. If you take an early retirement benefit (before a premium period of 10 years has expired) your fund value will be reduced with a maximum 15% adjustment levy. If you cease your contributions (before a premium period of 10 years has expired) the fund value will be reduced by a maximum 15% adjustment levy. These percentages reduce by 1.5% per year as the term of the product continues.

Investors should still however establish the exact criteria in writing for any penalties that may be applied if they have to reduce or stop paying their premiums.

Investment choice

Consumers are being offered more and more investment funds to choose from. The choice can range from a simple managed portfolio with capital guarantees, invested across asset classes and in which you have no say in the investments, to a wide variety of unit trust funds which you must select from fund managers like Allan Gray, Coronation, Nedgroup, Sanlam, Old Mutual, etc.

These investment funds come with various levels of investment risk. Most of these offerings also come with simple calculators to assess your risk profile which can be misleading. Often these calculators are based more on your psychological approach to risk than your actual financial ability to withstand investment risk. Consequently, people who are not psychologically prepared to take high investment risks can land up without sufficient money on which to retire.

There are regulations, issued under the PFA, which attempt to limit investment choice and therefore limit the risk to individual investors. These regulations are called the Prudential Investment Regulations (“PIRs”), and they restrict how much can be invested in the various asset classes, offshore and in specific sectors of the market and/or companies. For example, no more than 75% of certain funds are allowed to be invested in shares and no more than 15% may be invested offshore.

The problem with these guidelines, however, is that they only apply at fund level and not to individuals. While some RA funds insist on applying the PIRs at fund and at individual level, others do not. In other words, as a member of an RA fund, you may be able to choose an extremely high-risk portfolio, and invest 100% of your money offshore or 100% in shares. These regulations are currently under review and there is a strong possibility that the PIRs will be applicable on both the fund level as the individual level in future.

Before you opt for an RA that gives you a wide range of investment choice, you should consider the following factors:

• Costs: The greater the choice, the more it is likely to cost you, particularly if you switch between options on a regular basis. Most RA platforms allow 2 free switches per year and thereafter they charge a standard fee for switching the funds in your investment.

• Expertise: Many people have lost huge amounts of money by continually switching into the investment flavour of the month, often because of poor financial advice as well as behavioural finance patterns. On the other extreme, some investors opt for the most conservative portfolio, which reduces potential returns and the possibility of having a financially secure retirement.

Protection from creditors

A limited number of institutions or people may claim against your RA. They include SARS in the case of unpaid taxes and a previous spouse, but then only in terms of a court-approved divorce settlement.

The only time a creditor may lay claim to the money in an RA, or any other retirement savings vehicle is when you retire, and then only from any lump-sum amount you are paid. A creditor may also not claim money that is paid to you as an annuity bought with the benefits of an RA. For this reason, you cannot borrow against an RA or use it as security for a loan.

What happens when you die?

When you take out an RA, you should name a beneficiary or beneficiaries. However, the nominated beneficiaries will not necessarily receive the benefits. This is because, in terms of section 37c of the PFA, the benefits from any registered retirement fund, including an RA fund, must be distributed first to your dependents and then to nominated beneficiaries.

If you do not nominate a beneficiary the money will go into your estate and estate duty will become applicable.

Conclusion

Please feel free to contact us should you wish to discuss anything regarding the above or if you want to review your existing RAs.