1. Presented by: Eugen Lebo Mokoena
Financial management N6 (Pretoria)
Financial planning law degree(UFS)2015
Currently: honours Financial planning (UFS)
2. 1. financial planner/advisor
Provides advisory regarding the management of
financial resources.
Provides analysis of individual client needs.
Provide special recommendations for the client
action.
Assist the client with implementations of the
recommendations
It is therefore the responsibility of the advisor to
disclose his or her qualification to the client for
them to know that they dealing with a qualified
advisor.
3. Financial planning involves much more than your money and asset acquisition but
also:
- wealth preservation
- wealth creation
- values and objectives
- individual lifestyle
- provide security for self and descendants.
It is therefore important to attend to your financial matters while you still have your
health and time, this two happen to be the most important factors that can lead you to
plan your finances well.
It should also never be forgotten that financial planning focuses on your dreams ,
aspiration , and goals once this are identified then a strategy to achieve these is
devised such strategies will address the time frame issues , legal implications,
taxation issues. Changing circumstances of an individual is also important.
*AT PPS FINANCIAL PLANNING IS STRUCTURED TO ASSIST CLIENTS TO MANAGE THEIR
FINANCIAL AFFAIRS EFFECTIVELY RATHER THAN TO FOCUS ON THE SALE OF A
FINANCIAL PRODUCT.
5. - The 1st step of doing financial planning
before we can continue with other things is the
finances of the individual.
- Most people tend to spend more than what
they can afford and then they end up being in
debts that eventually start to depress them.
- A proper monthly budget plan must be
drafted together with a daily diary which will
record.
- In a nutshell a proper budget helps you to
track all your savings and spending.
- - one has to learn to discipline themselves
when it comes to their finances but in reality
this is not we always see.
- People would rather spend money knowing
that they having credit cards but they
forgetting that it has interest charged on it.
- As a young professional is vital to know that
a debt is like a hand break merely because
to much debts will keep you from making
regular savings or investments. CHECK IT
OUT***
6. - Social addition
- Materialistic and greet
- Have now pay later syndrome
- Keeping up with the Bakoenas
- The unforeseen job loss
We can fall into debt trap very
easy. Consider the following:
7. Good debt Bad debt
House purchase
For example you buy a
house for R500 000 you
keep the house for 10
years, the interest payment
to the bank of R100 000
You then sell the house for
R 800 000 – cost of the
house R100 000 and you
make a profit of R200 000
Clothing accounts, credit
cards short term loans
and pay day loans,
furniture and appliance
loans.
The cost of credit:
you want that flat TV
screen
purchase price =
R10000
interest is at 20% =
R2000
New purchase price =
R12000
9. Risk planning is considered the foundation of any financial plan.
A risk plan should cater for risk events such as loss of earning
ability due to illness , disability premature death , loss of
employment and personal loss due to destruction of property
e.g. fire theft etc.
Risk planning = this is the process of identification , analysis and
prioritisation of risk followed by a process of implementing
strategies to minimise , monitor and control the probabilities of
unforeseen events.
Risk avoidance - taking action to avoid risky solutions.
Risk reduction - the purpose must be to reduce the magnitude
of a possible loss.
Risk transference - death or the loss of damage to an asset the
ability to ruin a client financially. This can be avoided by taking
out a long or short term insurance.
Probability (death =100%
10.
11. Importance of a life and a disability cover.
- The policy holder can use his or her own policy as a security for a debt but the right of the cessionary( bank) is limited to the amount of the
outstanding debt
- An absolute cessionary happens when the owner of the policy transfers all rights to the creditor and the creditor receives all the benefits.
- A disability cover or a sickness cover can be seen as income protector benefit.
- I advice professional students to always know what they are getting in return for covering themselves
- A ceded policy can help in case the individual got disabled or died while his house, cars , other debts has not been paid it also leaves a legacy
for the descendants
12. Risk – in your twenties you are
statistically more at risk of being
involved an accident that may result in
death or disability (20-34 of age. The
first risk cover that a student must buy
is a disability cover because not only are
you at the highest risk of becoming
disabled but you also have the most to
lose in terms of your earnings= the
younger you are when you become
disabled the higher lump sum benefit
you require to survive financially.
Cheaper premiums – people in their
twenties are far less likely to have
developed illnesses or conditions that
many drive premiums or result in
exclusions on their cover. For example
at PPS a 23 year old female student can
get a life cover( R200 000) cover for
only R15 a month and disability(200
000) at R7 a month to which the
student is going to enjoy the benefits
until the age of 29 (premium stays the
same)
13. Debts – since you in your twenties your starting
your life, you are unlikely to have saving to cover
debts if you die or become disabled, therefore if
you die the weight of this debts could fall on
your loved once and if you are left disabled you
would have added a burden of medical expenses
and loss of income.
Family – life and disability cover will start to kick
in your life full force when you start a family
because it will provide financial support for your
partner and you children. Disability places a
bigger burden on a family than death because
not only does your income fall away but leaving
with disability Is also expensive.
14. Single and no dependents- your priorities will be
disability planning, health care planning ,
investments and savings retirement.
Married –healthcare planning, estate , death and
disability, retirement planning, investment
planning
Divorced – health care planning , estate death
and disability planning , protection of your ex
partner and dependents , maintenance and
education
Retired – health care planning , income and
estate planning.
15. let us use a 24 year old male who just started
working as a medical doctor.
PPS Provider Benefits premiums
Sickness and permanent
incapacity
Permanent incapacity
R32 959
R 32 959
R 363.36
145.21
Life cover
Occupational disability cover
Professional health provide
R 1 000
000
R 1 000
000
R 500 000
R 166.42
R 41.10
R 114.90
TOTAL PREMIUM AT PPS R 830.99
16. Decription % covered Total
insured/covered
Monthly
premium
Life cover R 1 000 000
R 500 000
R 192.60
Trauma cover R 134.49
Disability cover R 1 000 000 R 64.24
Income
protector
R 24 718 R 501.53
Partial
incapacity
R 8 239 R 67.09
TOTAL
PREMIUMS
R 959.97
17. PPS is cheaper than other insurance
companies for young professionals.
The younger you start the cheaper its going
to be for you.
PPS will cover you for any sport or hazard
perused that you participate into
automatically but other insurance companies
will need you to disclose if you partake in
some of the sports e.g. bungee jumping.
It always pays to keep the right company.
(profit share account).
18. Investment planning involves factors
such as the time horizon of an
investor, purpose of the investment,
risk profile, risk tolerance.
The main aim of investment planning
is to create wealth so that an
individual can retire financially
independent and will be able to meet
those short an long term goal.
Often I say an investment without a
goal is not a proper investment
therefore you must know why you
investing and for how long(set
goals).
Once again investing while you still
have a bigger debt that you have to
settle is not the way to go you need
to pay off that debt before you can
start investing
Good investors know that the quicker
you start the more you will get
,therefore its important to start
saving and investing now.
19. Time (age)
Returns (guaranteed or fluctuating once)
Risk the client is willing to take
Investing for short or long term
Growth or income?
20. The important thing is getting started right
now whether you start if wit R50 a month or
R200 or R500, for every month that you delay
you are losing thousands of Rands.
A little money invested consistently over a
long time makes a lot of money
One the next slide lets look at what happen if
you invest R100 every month for twenty years
with a return of 9%:
21. 240 Months
(20years)
360 months (30
years
480 months (40
years
R 100 invested R24 100 R 36 100 R 48 100
Investment pool
(what you get at
the end)
R67 890.52 R 185 920. 46 R 475 254
Difference R 43 790.52 R 149 820.46 R 427 154
22. Diversification means that an
investor when planning his portfolio
he or she should spread the
investment to lower the risk while
smoothing and increasing returns.
As an investor you must not invest all
you money in one asset class for
example shares in a company. What
will happen if the company does not
perform ? You lose your returns and
sometime capital.
When we say spread your wealth we
mean do not out all your eggs in one
basket. Therefore one must spread
investment across different
countries, asset type, fund managers
23. Cash
Bonds (corporate and government)
Property (retail , industrial or residential
Shares (SA(JSE) , international
24. Savings in a bank
Endowment policy
Pension and provident funds
Retirement annuities
Property assets (property unit trusts , residential.
Unit trusts (general one which invest in all
shares over a wide spectrum of sectors in the JSE
this insures diversification. Stable medium and
long term growth obtained.
Income units trust ( bonds- interest is insured.)
Direct share market.
25. ‘’debt is a humiliation by day and worry by
night’’ the koran
‘’ if you cannot buy it cash’’ you cannot
afford it’’ unknown
‘’let your money work while you sleeping’’
unknown
‘’If you want to make it in life you need to fall
in love with hard work’’ E. Mokoena
26. This is the arrangement , management and disposition of a
person’s estate so that the descendants that you leave behind
will enjoy the maximum benefits from the deceased's worldly
possessions that was possessed during life time
The creation of a trust account will be important.
Estate planning will become important when the professional
individual starts having kids and is married also owning assets
The drafting of a will is off importance so that a person will not
die intestate than confusion starts happening and families start
fighting over money
Capital gains tax is also important when it comes to financial
planning . A client must know that he will be taxed on any
property or capital asset that he sells and makes profit.
Income tax play a huge role in estate planning
