Don’t sabotage your future self

Bad market performance, government lockdowns, global epidemics and loadshedding aren’t what threaten our investing and financial behaviour.

Our biggest threat is ourselves.

Studies have shown that people improve substantially in financial and investment decisions as they get older. When we are young — and perhaps less secure in our financial situation — we have a tendency to be controlled by emotional biases; strong impulses that can be detrimental to our investment habits.

Behavioural economists refer to some typical flaws that are commonly seen in investment decisions as failures of rationality. In order to achieve long-term financial goals, it is, therefore, important to identify and wrestle with some of our personality-driven investing mistakes.

Even more so when we’re going through a crisis and it’s confrontational!

It’s hard, but it’s not impossible.

The first step is to accept that a problem exists in the way that we approach our decision making – before we sabotage ourselves. It is then a question of devising a set of strategies to control, or at least mitigate, harmful decisions.

It’s important to be kind to yourself at this point – sabotaging your future self DOES NOT mean overextending yourself now to keep up with premiums, but it also means not selling off investments out of fear if it’s not in your best interest. The goal is to slow your decision process down so you avoid making errors you will regret.

According to a survey conducted by Barclays Wealth, many wealthy investors realise their tendency to make emotional decisions, and would be happy to have some help dealing with certain issues.

The ability to exercise control plays a vital part in financial decision-making, especially when investment climates can be volatile, confusing, and nerve-wracking. It is important to feel confident in your financial plan, so that you can resolutely commit to whatever investment strategy you decide will benefit your future self best.

For example, research suggests that there is a psychological phenomenon referred to as the trading paradox. A high percentage of investors feel they need to trade frequently in order to maximise their investment gains but, at the same time, many of the same investors feel that their overall returns suffer because they trade too much. Even though certain investors have this realisation and see the downfalls of their actions, they still give in to emotionally-triggered temptations and often miss out on optimal returns as a result.

Behavioural coaching, in this instance, could help someone to focus on methods of changing this behaviour for good.

Behavioural Coaching

Behavioural coaching employs a range of professional techniques to help you to make changes to certain patterns of behaviour. Behaviour comprises actions and reactions, and behavioural coaching has been defined by the Behavioural Coaching Institute as “the art of facilitating the learning and development of an individual, so as to increase their effectiveness and happiness”.

It emphasises that much of human behaviour is, in fact, learned, and that all behaviours result in positive or negative consequences for the individual and those around them.

This model of coaching, therefore, involves identifying and measuring certain learned behaviours and their impacts. To do this requires an exploration of core values and motivations, as well as assessing covert behaviours (such as anxiety or self-defeating beliefs) in relation to overt actions (such as public speaking).

Once you have identified an issue and sought professional guidance in establishing a personal set of effective coping mechanisms, it is important to consistently exercise your newfound good habits. These need to be practiced on an ongoing basis, and regular monitoring and evaluation will help you to achieve long-term success.

Fight the fear

When life doesn’t go according to plan, our first response will often be one of fear. Unfortunately, life generally never goes according to plan – so we encounter fear a lot!

Since fear cannot be avoided, we need to develop tools to cope with it so that we can allow it a constructive space in our lives, and not let it be a destructive force if left unchecked.

Hopefully, this brief article can spark conversations that will help us all learn to fight the fear in our daily lives and begin to explore our own unique reactions a little closer.

This blog is how we recognise our stress responses to fear, accept them and move past them.

If you ask most people what the typical responses to fear are, they may reply with ‘Fight or Flight’. But what many of us don’t know is that there are two more responses, these are Freeze and Fawn. None of these are good or bad, they’re just typical responses that we lean towards to cope with our fear.

With the help of trauma-informed treatment specialist, Patrick Walden, (LICSW), here are some brief overviews that he shared in an interview with The Mighty.

Fight (anger)
Those of us who tend toward the fight response innately believe power will guarantee the security and control that we may have lacked in childhood.

“Fight looks like self-preservation at all costs,” Walden told The Mighty, adding that this trauma response can manifest in explosive outbursts of temper, aggressive behavior, demanding perfection from others or being “unfair” in interpersonal confrontations.

He also noted that while we typically associate the fight response with men, women can also struggle with anger, though in many cases they direct their anger inward at themselves instead of toward others.

Recognising our default response to be angry will help us temper this response and create space to calm down before making any decisions or hurting people around us unnecessarily.

Flight (anxiety)
This fear response usually shows up in people who are chronically busy and perfectionistic. They may believe “being perfect” is a surefire way to receive love and prevent abandonment by important people in their lives.

“Flight can look like obsessive thinking or compulsive behavior, feelings of panic or anxiety, rushing around, being a workaholic or over-worrying, [and being] unable to sit still or feel relaxed,” Walden said.

Taking time to meditate and reduce anxiety is helpful for those of us who tend towards this type of response.

Freeze (avoidance)
Some of us who experience the freeze response are often mistrustful of others and generally find comfort in solitude. The freeze response may also refer to feeling physically or mentally “frozen” as a result of trauma, which people may experience as dissociation.

“Freeze looks like spacing out or feeling unreal, isolating [yourself] from the outside world, being a couch potato … [and having] difficulty making and acting on decisions,” Walden said.

If you feel like this when fear hits, having a few people you trust and can encourage you to take action would be helpful to overcoming your fears.

Fawn (accommodating)
Fawning is perhaps best understood as “people-pleasing.” According to Walker, who coined the term “fawn” as it relates to trauma, people with the fawn response are so accommodating of others’ needs that they often find themselves in codependent relationships.

“Fawn types seek safety by merging with the wishes, needs and demands of others. They act as if they unconsciously believe that the price of admission to any relationship is the forfeiture of all their needs, rights, preferences and boundaries.”

If you’re a ‘YES’ person and struggle to enforce boundaries, remind yourself that it’s okay to say ‘NO’ and put yourself first. If you don’t work on yourself you will have nothing to give others in times of crisis.

Remember, we will all experience fear – every day in fact. Most of the time the fear that we experience is easy to cope with, but when fear becomes debilitating we need to bring it in check so that we can move forward and not find ourselves stuck in our fear or reacting in fear.

For the full article on The Mighty – click here.

Understand what you need in your adviser

Here’s the thing about a 20-minute DIY job: it never takes 20 minutes.

Either you don’t have the right tools, or the right skills… or the materials turn out to be too hard, too soft, too big, too small etc.

On the rare occasion, it might take you 20 minutes or less. You might be perfectly suited to it, and have all you need on hand. For most of us – it doesn’t turn out that way.

The same is true for our financial planning. It’s not about relinquishing control, it’s about maintaining a fresh perspective on how you manage your money and making sure it’s being done in the best possible way.

A mentor once said that it’s easy to build a bridge – just pour an excessive amount of cement into the valley where you want to cross. When we think about this ridiculous idea, we realize how important engineers are.

Again – the same applies to accepting the need for a financial adviser, planner or coach. You can spend your money on whatever you want, but is that going to work out well for you? You can choose any risk or investment products you want online, but will those work out well for you?

If your money was cement, and you had to build a bridge to your future self, wouldn’t you want to have plenty of cement to make it across safely without running out of supplies in the first four meters?

A financial adviser will help, but you need to know what kind of adviser will suit you best.

Independent vs tied financial advisors
An independent financial advisor is someone who offers advice on products from multiple service providers. They usually work for themselves or are part of a group of independent financial advisors.

On the other hand, tied financial advisors will only provide advice on products their company offers. They typically have a deeper knowledge of a narrower set of products. There may be convenience or rewards related benefits when dealing with a single provider.

It’s important to identify which type of financial advisor you’re dealing with before signing any contracts with them.

Commission-based vs fee-based rates
Commission-based advisors are paid a commission on the products they sell. They are paid when the investment is made or the insurance policy is taken out and their advice is tightly coupled to the products they sell. However, they don’t charge a fee for meeting you.

Fee-based advisors charge a fee for advising you regardless of whether you purchase a product. There are advisors who operate a hybrid of these two structures and will benefit from both giving advice and selling products.

Fees will have an impact on the value of the investments you make and the insurance premiums you pay. Although they may sound burdensome, they are usually negotiable, so it’s worthwhile having a conversation about.

Don’t wait until you have lots of cement… uh, money.
You don’t need to be wealthy to have a financial advisor – this is a common misconception. You do however need a solid stream of income and a positive commitment towards making your money grow over time.

(Definitions from 22seven)

Please can you help me

PS: If you are not getting my WhatsApp Broadcast messages (one-way communication only) and want me to add you, please let me know now. If you are getting them, and they becoming too much for you, please let me know and I will remove you with no hard feelings. The same goes for these email messages below. They must offer value-add if they do not, or you too busy, let me remove your name with pleasure.  

The email below is abnormally long, but we are in abnormal times. Only read it when you have time, and in the next 21 days you may look for something to read, and this would be the time to read my email. If you only click on this link for 1 and a half minutes, I would already be happy. https://youtu.be/0t4zrqAnntc

I can only imagine how everyone must feel when they see another email with the heading “Covid-19 or Coronavirus”. It is hopefully not one of those emails which everyone is sending around but a much more critical and informative email and not per se on the virus itself, but about life-changing events when LIFE-HAPPENS!

For ease of reading, I am going to use the bullet format, and as I will be covering a couple of issues with no order of priority and will not be numbering them:

  • The virus is a significant threat to our health and economy and is disrupting our daily lives, South Africa and the world as a whole. There is no hiding place from it in terms of our finances and most of us with investments and policies would be “infected” in some form or other, and especially in the short-term, but long-term we should be ok. As many of you have experienced the market collapse in 2008/2009 and impacted economically with a severe long term recession, it should not be a new experience. What makes this experience, however, completely different this time around is that both our health and finances are “infected”, and a double jammy of note with the perfect storm coming down on us.
  • It will, therefore, impact severely on both our wealth protection and wealth creation efforts in the short-term until the virus is under control globally and even more so in first world countries which drives economies and markets. How we deal with this phenomenon and the life-changing event will make the difference over the long-term to our families and us.
     
  • President Ramaphosa is going about it all very presidential and compared, for instance with Donald Trump and Boris Johnson, is a shining star with all the right decisive decision taken well in time with care for people’s lives and with not only thinking about the economy. The Lockdown of 21 days, could be extended if the Covid-19 infection curve does not flatten over the period, but it would embrace social distancing, which by far is the virus’s best friend and our enemy. Social distancing is, however, not intended to mean social disengagement at all, and keeping engaged and interacting with each other through technology should become the norm. I hope I will receive your support where possible.
     
  • It is at crisis times like this one with a severe threat to our health and lives when protection comes to the fore, and many people, unfortunately, would have to make use of their risk protection like death, disability, critical illness, GAP Cover, retrenchment protection and funeral benefits. Others would have to make use of their long term savings and investments to cope with financial hardship through the virus period and beyond during the recovery period.
     
  • The short 1.35-minute video clip at https://youtu.be/0t4zrqAnntc  is a must watch to appreciate the noble value of our policies in times of need and when life-happens. It is, unfortunately, one of those grudge purchases and expenses that receive first attention during financial hardship times, and we review our budgets.

  • Now usually I can appreciate it and would always be helpful to discuss your benefits and contributions. When economic and financial hardship is brought about by a global pandemic, and which could infect any of us (around 60 % of South Africans could be infected), then we need to be prudent on where to cut the budget to still protect us and our families. It would allow us not to throw out the baby with the bathwater.
     
  • The belief is that large corporates and inclusive of all financial institutions like the banks and insurance companies would want to support the Government efforts to help South Africans, and we have already seen Standard Bank coming to the help of SME’s and individuals. Other banks followed suit in the last week. We can, therefore, expect companies like Liberty, Old Mutual, Sanlam and others to see how they can help individual policyholders to protect risk cover. In many cases, the companies mentioned have financial hardship support build in through premium holiday periods, financial protector or similar, and these options I would discuss with any client who needs to review affordability.

  • When I do this, I look at the whole portfolio as to look at every opportunity to combine wealth protection and wealth creation while maintaining the critical security in place and with tax implications. I have copied and pasted a typical example of one such proposal I have done over the weekend, and have removed names etc. for confidentiality. It is worth scanning through for a minute. In red is the client’s responses. I have removed the Assurances company’s names as well, as we would review all policies on record.

  • During this critical period, your annual reviews become more important. As I have discussed some of the options available already on the previous email, I will keep this one concise. With the lockdown, we would not be able to meet in person, but we geared to meet online with either Zoom or WhatsApp or Telephone. However, if you do not feel you need our scheduled annual recurring review, we would request you to leave the appointment in your diary, to allow us to do a short email review. It would help us to stay compliant under the FAIS act with our annual review schedule. We will then do a brief update and let you sign our annual review waiver form for our files. When we call to confirm our meetings until the end of April 2020, your support would be appreciated. We will keep these online sessions brief.

  • When it comes to the investment part of your portfolio, we would take a longer-term view as I have said before on email and the WhatsApp Broadcast messages. Any client with investments with a two year plus view should not be too concerned with the market crash (correction is under 20 %, and a crash is over 20 %). If we, as in 2008/2009 show patience, the markets will recover, and the units in the investments would still be there and catch the expected upswing. Markets will recover and grow at acceptable rates over the next 3-5 years, as we have seen after 2008/2009, where we had the longest bull run ever of over ten years. Most of the downside currently is pure “paper losses” and can only become “real losses” if the units are sold. The only short-term concern we have now is with pensioners with living annuities, and especially with drawdown rates above 5%. If your anniversary date falls over this down period, it would mean the income would become less due to lower capital. If the income were maintained at the same level as before the anniversary date, it would mean a higher percentage drawdown for the next 12 months, which would harm both capital and income going forward. With these annuitants, the conversations will be tough at best and sacrifices could be part of the conversation for the next 12 months. Again the units would still be there as we would be drawing down from a conservative fund only, to protect units, to catch the upswing.

  • It is difficult to predict where the bottom is of the current downside, as it is entirely dependent on sentiments and fear and not market fundamentals. I would say for three months and a maximum of 6 months, and once we over this period, we should see some exciting upswings, in similar format as we have seen with the downswings. Just today the JSE has seen a positive equity upswing at + 7.53 %, and this with a Lockdown looming on Thursday and no good news on the Coronavirus. I believe it is mainly due to an incredible speech by Ramaphosa and the fact that the USA Senate has approved a $2 trillion stimulus package. Will it be a lasting upward swing, unfortunately not, as until the virus is under control the good news will be far in-between. The markets are already down with 30 % approximately today. It does not mean your investment is down with 30 %. Fortunately, my investment philosophy, has been set up with a diversified and balanced portfolio structure and with offshore exposure, with various fund managers like Allan Gray, Coronation, Stanlib etc. I also include different asset classes, and thus mitigate the downside and enhance the upside of markets. I had a look at a significant investment today, for instance, and when the markets were down around 34%, the portfolio was down with 14.5%, but all the units were still protected. Still a lot, but it shows the buffer impact.

  • Obviously with volatile markets like these, the asset classes move around as a % of allocations much quicker than usual. If you have capital invested in compulsory products under the Pension Fund Act, like RA’s and Preservation Fund, you would have received automated letters from various insurance companies with who you hold such products. It would state that your products may be Regulation 28 non-compliant and could have to be adjusted to reset asset class % allocations. If you do receive such a letter, please forward them to me, and I will review them and recommend adjustments at no additional cost or fees to bring them in line but we have time so I recommend to leave things as they are till things recover.

As I said upfront, this is a lengthy email for a good reason and thank you for spending time on it if you got this far. All I can ask you is to stay calm, stay safe and healthy, and look after your family while we worry on your behalf when it comes to your investments and long term wealth creation. Most of us will get through this phenomenon, with a fatality rate between 3% to 7%, depending in which country you are living in and we do not have control of this situation for now. Still, hopefully, the powers that be, will get control back. 

PS: If you are not getting my WattsApp Broadcast messages (one-way communication only) and want me to add you, please let me know now. If you are getting them and they becoming too much for you, please let me know, and I will remove you with no hard feelings. The same goes for these email messages below. They must offer value-add if they do not, or you too busy, let me remove your name with, pleasure.  

Financial wellness mindsets for life’s autumn

Autumn is a precious time of year and is perhaps an altogether more positive metaphor for another special time: the tail end of middle age when we are far from elderly, but far from young.

You look up one day and realise that while you were busy building a life with your family, or perhaps pursuing a fulfilling career, the years rolled by more quickly than you thought. There’s still time on the proverbial clock, but you’ve now reached the autumn of life. What can you do to ensure financial stability?

Just like autumn, this age is a time of rich maturity and transformation, pausing to enjoy the comforts of life you’ve stacked up for yourself and settling in for the winter.

The ‘autumn of life’ also, however, requires a completely different financial strategy and mindset. Here, some top tips for navigating your own ‘autumn’:

Hold to a relatively firm budget

By the time you’re in your mid to late fifties, the kids have most likely flown the nest to build futures of their own and if you’re fortunate, you may have already paid off your bond. This newfound financial freedom might tempt you to spend more extravagantly but now more than ever, a level head will be your best asset.

When you’re out with friends, entertain modestly and resist the urge to pick up everyone’s tab for the sake of appearances. At this point, you shouldn’t feel the need to impress those in your social circle.

Another important thing to bear in mind is that while you’re still an active member of the workforce, you should increase contributions to your retirement fund as much as possible.

Be an adviser to your children, but not an endless safety net

If you have kids, your natural inclination will always be to help them in troubled times, no matter how old they get. While admirable, your parental instincts must be balanced with a pragmatic approach to the shifting realities of your own life.

The fact is that very few older parents are in a position to act as an eternal wellspring of material resources and even if you are, the better course of action is to raise children with the strength and independence to stand on their own feet.

Never be afraid to learn something new

If there’s one tip that older professionals should consider taking from their 20-something counterparts, it’s the value of being willing to adapt to change and acquire new knowledge. With the plethora of reliable educational resources available online (often at low or zero cost), self-driven learning has never been easier.

Retirement expectations are changing fast too. With a combination of well-earned experience and some freshly developed skills, you might even be able to bolster that retirement fund with an entrepreneurial endeavour that only begins in your sixties.

Make your life easier – Part 3

Don’t avoid digital help. Whilst there are many dystopian stories about how robots will take over the world, those projected realities are highly unlikely to ever manifest.

AI, big data and cloud storage can be our friend in making our life easier – which is what technology was always intended for!

Granted, we can easily become disconnected from the material and relational world around us if we immerse ourselves too completely in the digital world, so balance is always crucial – but still, we can be astute in how we use it.

These tips are all about how digital space can create more space in your life

USE CLOUD STORAGE

Everyone seems to talk about ‘the cloud’ as if we all actually understand what that means. If you’re feeling left out, here’s a quick explanation. Storing information in the cloud means that you’re using someone else’s computer (called a hosting or cloud server, like Google Drive) to store your information, and that computer is always online. This means that you can access your information through the internet, from any device, in any location at any time – provided you have internet access.

Google, Microsoft, Dropbox – these are all good examples of cloud servers but there are literally hundreds of options.

The ultimate advantage to you is that your information is kept off-site. So… when you spill coffee on your laptop, a power-surge blows your desktop or you drop your phone in the loo, you don’t lose your data. You can store photos and family videos in the cloud. You might want to scan and save important documents – the options are limitless.

It also helps if you run a business. Instead of having an expensive local server, you can share all information in the cloud so that your team can access what they need. And again – should anything happen to a device (or everything in your office), you can keep valuable business information safe and accessible.

USE A VIRTUAL DIGITAL ASSISTANT (VDA, VA or DA)

Most smartphones come with a built-in DA (Siri and Alexa are great examples), but we use them to do fun things like finding out the time in a different country and playing a specific song.

But, you can use your DA to set up tasks and reminders. This can range from phone calls that you need to make, emails you might need to follow up on in two to three months or everyday tasks like managing your shopping list.

If you couple this tip with cloud storage, you can create shared lists that anyone in your family or team can update. From shopping lists, monthly budgets and wish lists for holidays, birthdays and home improvements, integrating your use of Siri in your daily life will make your life WAY easier.

If there is something in your life that is causing stress because it’s clumsy or cumbersome, see how you can change it to make your life easier!

Make your life easier – Part 2

Every time we say ‘YES’ to something new, it seems to just make our life more complicated down the line; more events to attend, increased responsibilities and less time to relax and do what we really want to do.

Finding just the right amount of order in your life is one of the secrets to making your life easier (learning to say ‘No.’ is another secret…)

Whilst we can’t just stop growing and adding more to our lives, we can look at ways to make other things in our life easier. From planning our budget to organizing our laundry, no task is too mundane to refine and review!

There are so many great ideas on the web – but here are some of them from www.harvardhomemaker.com.

THE THREE BAG LAUNDRY SORTER

Whether you run a household of seven or live the single life, laundry has to be sorted. It seems completely pedestrian to ‘plan’ your laundry sorting – but it will save you time and frustration which ultimately opens up space in your life.

Set up three baskets or bags – one for whites, one for darks and one for colours. Label it and make sure everyone in the house knows what’s potting. This way – when one bag or basket is full – that’s the load you do. You’ll save loads of time on every load of washing!

THE DOUBLE-COOKING PLAN

When you’re cooking a pasta, rice or curry dish – prepare double the amount that you need and freeze the leftovers. This requires two levels of discipline – the first is in the planning and the second is in the eating!

Cooking double what you need DOESN’T cost you double. In fact, it costs you less: buying ingredients in bulk, using electricity once, and cleaning up pots and pans once. It does require some forethought, it’s not something you can easily do at the last minute on a Tuesday night. Many people who employ this trick will plan and cook meals on a Sunday for the week ahead.

When it comes to dishing up, only put out half of the food to avoid the temptation of having seconds simply because the food is there. Once in the freezer, you can easily enjoy that savvy meal up to a week later.

THE FILING CABINET

These are not just for work! When you receive statements in the mail, have important documents (IDs, passports and certified copies) or information packs that come with your digital devices (these also often have important codes that you may need later), have a filing cabinet or draw where you can store them vertically (like a concertina file).

When you have easy access to this information and the space to store it you will be more likely to file it away safely instead of piling it on the nearest counter to fall over and cause frustration in your life.

Making your life easier is not about changing one thing, it’s about learning how to adjust to the constant change in your life.

Offshore investing and the new expat tax

As of 1 March 2020, an amendment to the South African Income Tax Act will have definite ramifications on the lives of South Africans living and working abroad.

Now that this infamous ‘expat tax’ is in effect, SA expats are now obligated to pay up to 45% of their foreign income to the taxman when it exceeds R1 million per annum, which includes any fringe benefits provided as part of the job.

But what about investors? How does ‘expat tax’ change your investment strategy and how should you approach offshore earnings being taxed from an investment perspective?

Please remember that the following does not constitute financial advice.

Offshore investments and the expat tax

First, the somewhat good news: investment income is still considered passive income and, if you are residing in South Africa and a citizen but have offshore investments, dividends and the like will be taxed just as they always have been and not under the new ‘expat tax’. Same goes for rental property owned overseas, shareholder earnings and so on. As long as it’s passive, you should be fine.

Active income and expat tax

But what if you do work overseas, at least some of the time? Even for those with stable and reliable employment, maintaining one’s life in a second city can be costly.

In this situation, your choices are frustratingly few. You can either return to SA, find an offshore structure in which to invest those earnings, or formalise the process of financial emigration. Each of these options comes with significant consequences.

For many expats, particularly those who have lived elsewhere for an extended period and thereby assimilated into the culture of their host nation, the idea of returning to South Africa and all its social and political instability is not a welcome one.

If you are a skilled professional with good standing in the other country, the concept of financial emigration may best suit your needs. At a very basic level, this is making the official decision to sever your connection with South Africa and surrender your status as an ordinary resident. Beware though, because doing so will impose strict limitations on what you can do with locally remaining assets, impede your ability to acquire more in the future, as well as having serious implications on capital gains tax. Furthermore, depending on how and when you choose to relinquish citizenship, your actions may be assessed with a distrustful attitude. Especially now, after 1 March.

Two of the main reasons for choosing this route are if you are certain you have no intention of returning to South Africa, or if you stand to receive a substantial inheritance in the years ahead – R10 million or more. Once you’re no longer an ordinary resident, any inheritance should potentially be paid to you directly in the foreign jurisdiction, without the need for approval from the South African Reserve Bank or clearance from the South African Revenue Service, both of which apply to South African citizens.

Investment solutions

Other ways to protect your foreign earnings would be to establish a formally recognised company in a tax-friendly location, through which to invoice your employer, though taking such a path would mean you’ll need to pay very close attention to the specific conditions and requirements, in order to comply with international law.

Finally, it could be an option to put those earnings into an offshore investment platform somewhere the tax codes aren’t so harsh, thereby limiting your exposure to penalties and estate duty. Whichever option you pick, none will be particularly easy or stress-free, but decisions must be made to ensure you have legally compliant structures in place to protect your current lifestyle and future prospects.

Ultimately, the laws surrounding taxation are a quagmire at the best of times, and become infinitely more complex when different countries’ laws are at play simultaneously.

The ‘expat tax’ situation highlights the need for sound professional financial advice within a good understanding of South African offshore investment vehicles, fiduciary laws of the countries in which you earn and what your particular financial goals and needs are.

Make your life easier – Part 1

Every day our lives get a little more complicated. That’s the reality of the world that we’re currently living in. It’s not easy to keep order in your life – even if you’re one of the few who excel in keeping things in line!

Finding just the right amount of order in your life is one of the secrets to making your life easier (learning to say ‘No.’ is another secret…)

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

There are so many great ideas on the web – but here are some of them from www.harvardhomemaker.com.

USE ONLINE GROCERY SHOPPING

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

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

Both Pick ‘n Pay and Woolworths offer great options.

USE HANGING SHOE HOLDERS – NOT FOR SHOES THOUGH…

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

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

USE A TASK SCHEDULER THAT IS DIFFERENT TO YOUR EMAILS

This is great for your work ethic!

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

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

Asana and Monday.com are great tools to use – the former has a free version whilst the latter is a paid-for solution.

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

Hopefully these ideas help to make your life a little easier and less complicated!

The NHI: What we know so far

South Africa has just had its annual Budget Speech, with one of the many controversial topics not addressed being the National Health Insurance scheme. Yet President Ramaphosa stated very recently that he expects it to be fully rolled out within the next five years.

The NHI was initially to kick off on 1 March 2020 but is currently years away from full implementation, with much still unknown about how NHI will actually work.

So, what do we know? Here’s a list of answers to common questions about the NHI in order to keep you up-to-date with the latest facts.

What happens to my medical aid and insurance when NHI kicks in?

Much has been made of the fact that medical aids may not legally cover anything the NHI will cover. While this doesn’t necessarily mean the end of medical aid schemes in South Africa, it’s a major disruption and medical plans will be significantly restructured or made obsolete.

What about other insurance? Currently, there isn’t any obstacle for insurers, particularly life insurers, covering what they already do. So, financial protection in the event of a temporary or permanent disability, a critical illness like cancer or a fatal accident or condition will most likely all still be covered in exactly the same way.

Should I even bother with insurance then?

Government has insisted that NHI will be “comprehensive”, but no list of services has yet been released and, with “comprehensive” being very much open for interpretation, this is unclear. So, at this stage it’s really too early to tell.

Sophisticated treatments such as oncological treatment for cancer patients would likely not be covered (again – this is not confirmed). This is where life insurers would step in, especially as medical aid schemes may have their hands tied by the NHI. A dread disease benefit, for example, would pay out 100% for something like cancer or a heart attack to pay for or contribute towards that person’s oncology bills and the other financial strains associated with critical illness.

Will I have to go to a government hospital under NHI?

In theory, the aim of NHI is exactly the opposite of this – for those who have been forced to make do with government hospital experiences to be able to now access private medical healthcare practitioners.

In practise, all South African citizens will be required to register at their nearest NHI-accredited primary healthcare facility and be limited to primary healthcare only at that facility. Whether those will be private clinics like Netcare, your usual GP or state hospitals is currently anyone’s guess.

Going anywhere other than this has to be officially recommended by the doctor or medical staff at that registered facility and approved – which may make seeing specialists like orthodontists, gynaecologists, oncologists and paediatricians a lengthy red tape experience.

When is NHI coming into effect?

No one knows when exactly NHI will come in. It is currently expected to be fully operational as soon as 2022. This is still the target date for more vulnerable citizens like the elderly, disabled and children.

The National Health Insurance Bill states that the NHI fund must be in action some time in 2026. It remains to be seen whether this will be the case, though. Many medical aid schemes, like Discovery for example, maintain that NHI will take far longer to come into full effect.

How much will I be taxed for NHI?

Again, we don’t yet know. The biggest portion of funding is likely to come from an increase in personal income tax. As medical aid contributions come to many via their jobs, payroll taxes for employees will also likely foot the bill. On the government’s side, what Treasury currently allocates to provinces through provincial equitable shares and conditional grants under the system as it stands now will probably be reallocated to the NHI Fund.

There may also be another bitter tax pill to swallow where the NHI is concerned: no medical aid tax deductions.

While much is still murky when it comes to NHI, many experts believe that the insured population, who are already members of comprehensive medical schemes, will keep paying private medical aid fees anyway to avoid the long waiting lists, queues and restrictions on specialists and GP visits likely to manifest once the NHI does. However, they won’t get any tax deductions for it anymore.

So, the average policyholder will likely pay twice – for NHI and medical aid – and get none of the money back they currently are.

Can I choose my participation in National Health Insurance?

Unfortunately not. All South African citizens and permanent residents will be mandatorily enrolled from the state’s side once NHI comes into effect. There will be no choice involved.

At present, as much is unknown about National Health Insurance as is known – which is understandably worrying for the average policyholder. All of this is even more reason to pay regular attention to your portfolio.