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Financial Planning
- 1. Financial Planning (general)Financial Services Offered Financial Planning (Retrenchment) Money Management Capital Gains Tax Women Market Education Death & Disability Short Term Insurance Business Entities Investments Retirement (Personal) Financial Planning (General) Trust, Wills & Estates
- 2. “ If t he deal sounds too good t o be true – it probably is .” Seek objective advice BE CAREFUL!
- 3. Financial Planning Protectionof family and estate Wealth creation Life cover Health cover Disability cover Investment planning Retirement planning
- 4. Life cover Wesell LIFE assurance, not death assurance It does not interfere with financial plans, but helps to achieve them It is money for future delivery It’s parting with today’s earnings to buy rands for the future
- 5. Disability Cover Twothings produce income : People at work Capital at work If people cannot work any more another source of income Risk cover – the only way to have access to a large lump sum on death, disability or severe illness Investments take time to build up
- 6. Think about lifeand disability How will you – and your dependants – survive without your income? If you think you’re struggling to make ends meet on your salary, can you imagine your family trying to cope without it? How will you cope with the ever increasing cost of living?
- 7. Retirement Planning Planningfor a financially independent retirement Current situation at age 65 Working 31% Dependent on state pension 16% Financially independent 6% Dependent on family 47% REASONS : Income gap Infla tion Longer life expectancy Cost of delay
- 8. Cost of realisingpension fund benefits Financial peace of mind is not provided by contributions alone , but by compounding returns on contributions over time . Realising of pension fund benefits implies a loss of the compounding effect .
- 9. Realising pension fundbenefits (continued ) “ Income gap ” factor should be considered : Less years of service = smaller pension Money earned for , retirement should be invested for that purpose Income gap at retirement - Pension vs Salary 40% gap 60% gap 70% gap
- 10. Structuring your investmentportfolio Investment Planning Emergency fund Income- producing Investments Growth Investment Provide or supplement income Generate capital & protect existing capital Participation bonds Fixed deposits Anchor Income Plans Shares Endowment Policies Anchor Growth Plan Properties Kruger rands For day-to-day contingencies Cash on hand Savings acc. Cheque acc. Credit facilities Short term insurance
- 11. The advantage ofinvesting early Liesl saves R10 000 p.a. for ONLY 10 years starting at age 30 and leaves her investment to grow for a further 25 years David saves R 20 000 p.a. for 25 years starting at age 40 Growth rate: 10% p.a.
- 12. The advantage ofinvesting early 0 2 4 6 8 10 12 14 16 18 20 22 24 26 28 30 32 34 Year Fund Value Liesl David Illustrative Value R1,912,400 Illustrative Value R2,179,200
- 13. Planning to meetyour needs A – Qualified financial advice B – Analysis of needs: now and in the future C – Well structured portfolio
- 14. Expertise in financial planning Excellent support A Qualified, objective financial advice O LD MUTUAL INTERMEDIARY Client Services Legal Advice Actuarial Support O ld Mutual/ Associated Companies
- 15. Tax Advice Minimisetax on your benefits Make tax-efficient investments Exempt from tax Average rates Marginal rates
- 16. Financial Planning Protectionof family and estate Wealth creation Life cover Health cover Disability cover Investment planning Retirement planning B Analysis of needs
- 17. Analysis of Needs ( continued ) Professional and/or computer-based financial planning analysis Structuring a package and adjusting it at the touch of a button Reviewing your will
- 18. Contingency fund Income-generating investments Growth investments Life, disability and health cover C Well Structured Portfolio
- 19. Liquidity (Contingency fund ) Selling redundant assets Realising assets Role of your bank manager Realising retirement fund benefits – income tax implications
- 20. Income R6 000 interest exempt from tax Maximise after-tax income Investment of R75 000 Monthly income Fixed deposit R906 R543 Participation bonds R953 R561 Income plan * R718 R642 Before tax After tax ( Guaranteed ) * Assuming a tax rate of 40%
- 21. Making your moneywork harder for you … helping you every step of the way
- 22. Thank you FinancialPlanning (Retrenchment) Money Management Capital Gains Tax Women Market Education Death & Disability Short Term Insurance Business Entities Investments Retirement (Personal) Financial Planning (General) Trust, Wills & Estates
Editor's Notes
- #4 A full needs analysis will be done by the FA to determine your needs and appropriate advice will be given in response to your needs as determined.
- #5 LIFE ASSURANCE REMINDERS REMEMBER We sell life assurance, not death insurance – the policy sold will mean life to your family upon your death. Life assurance is concerned with the business of living and not dying. Life a ssurance does not interfere with your financial plans, but helps you to achieve them – whether you live or die. Life a ssurance is simply money for future delivery Buying l ife a ssurance does not mean spending money – it’s parting with today’s earnings to buy rands for the future. Life a ssurance is a sure way of solving problems. It does not create them.
- #7 While you cannot prevent pain or loss, you can soften the blow to those who depend on you. And even if you don’t have – or plan to have – dependants, the option of disability protection for yourself is often overlooked.
- #8 Graph shows stats on the percentage of the population that cannot retire financially independent. Some of the reasons are mentioned. Can explain the reasons and ask for other reasons that audience can think of and discuss implication on retrenchment on retirement planning. That is, retirement benefits pay out and probably get used because of shortage of income whilst looking for another job. You can never get back those years of savings that have now been used up. Thus a shortfall on retirement.
- #9 The effect of compound interest is phenomenal. Once years of savings are realised you lose that growth that compound interest would have given you. Use Mr Smith and Mr Jones example to show effect of compound interest. Also reason why you cannot retire financially independent. Shorter time for new retirement provision, if any, to grow.
- #10 Self-explanatory - from previous slide.
- #11 A balanced investment portfolio consists of 3 distinct parts: An emergency fund is needed to cater for those unforeseen circumstances which, failing the availability on this cash on hand, may result in a person having to liquidate certain other investments, to the detriment of the investment portfolio. Income producing investments (or fixed interest investments) are generally investments which generate interest income for the investor. Depending on the size of the investment and the interest income earned, there may be an income tax implication in the hands of the investor. They are generally low risk investments. Growth investments are generally term orientated and the funds are not easily accessible-if access is required, there are generally penalties payable. An investment of such a nature is used where the investor does not need to access to the capital, and is looking for capital growth.
- #13 The effect of compound interest over the term results in the amazing fact that Liesls investment is worth more than David's although he contributed more and longer Amazingly, at age 65, Liesl’s nest egg is worth more than David’s (although by age 65 he has invested R500 000 more than Liesl). But that’s not all. Even if David continues investing R25 000 p.a. until age 90 (a further R625 000) his nest egg would still not be as large as Liesl’s!
- #14 The importance of financial planning by a qualified financial adviser.
- #15 Self-explanatory - the backing of the brand Old Mutual.
- #16 Look at tax-efficient ways of investing your retrenchment package - qualified financial adviser will do the job.
- #17 A full needs analysis will be done by the FA to determine your needs and appropriate advice will be given in response to your needs as determined.
- #19 A well structured portfolio will include growth of your wealth via investment products as well as protection of that wealth via insurance products.
- #20 This is also the emergency fund which requires a liquid type of investment, usually a bank product. Look at other assets that can be converted to cash in times of need without negative tax implications.