Grow Your Wealth & Investment Portfolio #GrowYourPortfolio

1. WELCOME!
#GROWYOURPORTFOLIO

2. February Session – ManVsMachine

3. SEND YOUR QUESTIONS
Twitter: @eToThePoint

4. Our Speakers
#GROWYOUPORTFOLIO
CRAIG GRADIDGE
KAGISHO MAHURA

6. Vision on Day 1
GMI’s vision is to be the leading PRIVATE wealth management company in South Africa.
The GMI of 2020 will have fully operational offices in JHB, Cape Town, Durban and Pretoria.

7. Investment Management
 Unit Trusts
 Share Portfolios
 BBBEE Public Share Offers
 Offshore Investments
 Private Equity
 Hedge Funds
 Exchange Traded Funds
 Cash Management
Fiduciary and Tax Services
 Trusts
 Wills
 Estate Planning
 Tax Planning
Retirement Planning
 Preservation Fund
 Retirement Annuity
 Post-Retirement Income
Risk Management
 Life Insurance
 Disability Cover
 Severe Illness Cover
 Retrenchment Cover
 Medical Aid
 Short term Insurance
Wealth
Creation
Wealth
Protection
Scope of Services

8. Growing diversified team (2017)

9. Team (2018)

10.  B.Com (Wits), B.Com Honours (UNISA), Post Graduate
Diploma in Financial Planning (UFS), MBA (UCT)
 23 years experience in investment research, business
development and investment marketing
 Independent Investment Expert and interim Chairperson of
the Medshield Finance & Investment Committee, overseeing
reserves of over R1.7bn
 Chairperson of the FPI Investment Competency Committee
 Operational, management and executive level experience
with Old Mutual, Nedgroup Investments and Fedsure
Craig Gradidge, CFP®

11.  B.Bus.Sc (UCT); MBA (Stellenbosch); PG Dip. in Fin. Planning
(UFS)
 Winner – NBMBAA Case Competition 2006, Atlanta USA
 2008 University of Stellenbosch MBA Student of the Year
 Top 4 Finalist – AMBA International MBA Student of the Year
 Independent non-executive director the board of Catalyst Fund
Managers
 Chairperson of the FPI: Gauteng
 23 years experience at operational, management and executive
level with Coronation and Old Mutual
Kagisho Mahura, CFP®

12. Virath Juggai, CFP®
 Higher Certificate in Financial Planning
 National Certificate in Wealth Management
 Post Graduate Diploma in Financial Planning
 Advanced Post Graduate Diploma in Financial
Planning (Risk Management and Estate Planning)
 23 years industry experience
 Top Old Mutual Consultant countrywide on
numerous occasions
 Top Student – Post Graduate Diploma Financial
Planning Board Exam 2012 at the University of the
Free State

13. Our journey summarised (AUA)

14. What sets us apart?

15. 1. Independent
 We have contracts with:
 Allan Gray
 Cadiz
 Discovery
 Hollard
 Investec
 Liberty Life
 Momentum
 Old Mutual
 PPS
 Sanlam
 Stanlib
 And can therefore, offer tailor made
solutions to clients, and take advantage of
special fee offers

16. 2. Professional
Our expertise, experience, philosophy and process are the cornerstone that imbue professionalism in
delivering a quality wealth management service. All investment advisers have passed the relevant
Regulatory Examinations. Members of Financial Planning Institute and subscribe to the Code of Ethics
and ongoing Professional Development requirements.

17. 3. Confidential
We believe that confidentiality is an important aspect in building trust and creating open,
honest, sustainable and working relationships

18. GMI is:
 100% black managed
 95% black staffed
 95% black owned
 53% female staff
The majority of our suppliers are black owned
businesses
Approximately 85% of clients are black individuals
BBBEE Level 2 Contributor
4. Empowered

19. Professionalism
Masthead – FAIS Seal of Compliance. Min 85% for every compliance
audit in the year
Only 14 of over 5,000 practices have this accreditation. GMI is the only Black owned
practice in SA with this accreditation.

21. Top Private Banks & Wealth Manager Survey: 2018
Category 2016 Ranking 2017 Ranking 2018 Ranking
Overall: Wealth Manager Not Ranked Not Ranked 1st
Boutique Wealth Manager 3rd 2nd 1st
Lump Sum Investor 8th 7th 1st
Up and Coming Professional 6th 2nd 1st
Successful Entrepreneur 10th 6th 4th
Wealthy Executive No submission No submission 6th
People’s Choice: Top Wealth Manager 2nd 1st 1st
First time a Boutique Wealth Manager has ever won the overall award!!

23. Long term investing is tough!
Russell 3000: up 5,700% since 1980
The median stock underperformed by 54%
Two thirds of all stocks in the index underperformed the index
40% of companies in the index lost money over the period
7% of companies outperformed by more than 2,000%
"All you need for a lifetime of successful investing is a few big winners, and the pluses from those
will overwhelm the minuses from the stocks that don't work out.“ --Peter Lynch

24. Choosing an adviser
The quality of advice is determined by:
Experience
Qualifications
Corporate Structure
Experience: relevant experience
Qualifications: mathematical, legal, tax and/or specialised
Corporate setting: independence and remuneration structure is critical
Ask questions and watch out for the sales pitch!

25. Physical Address:
First Floor,
17 Melrose Boulevard
Melrose Arch
Email: info@gminvestments.co.za
Tel: +27 (0)11 448 5113
Fax: +27 (0)86 567 5155
Web: www.gminvestments.co.za
Contact Details
Affiliations: Masthead Distribution Services; Financial Planning Institute of South Africa

26. Independent.Professional.Confidential.
Entrepreneurship To The Point
27 March 2019

27. GMI and Entrepreneurs

28. What they say…
“I am the only one that can execute this idea.”
“I am tired of reporting to someone who has no clue what they are doing.”
“My business is my retirement plan.”

29. Why small businesses fail

30. Wisdom
“If I had six hours to cut
down a tree, I would spend
the first four sharpening the
saw”
- Abraham Lincoln

31. Poor planning
“GV Syndrome”
Tired of incompetent boss
The business plan
As much for the entrepreneur as it is for the investors
Test your assumptions
Build scenarios: low road, middle road, high road
Then take the low road and minus 20%
The capital structure
Debt vs equity
Insufficient capital – to start and stay in business
Fortifying your personal balance sheet
The business will not grow according to the spreadsheet
The “sure-thing” clients will not necessarily follow you

32. Unprofitable business model
“The Vanity Trap”
Falling in love with your own idea
Overconfidence
Undermining the competition
Inflexibility
Funding structure
Product modifications
Pricing strategy

33. Disgruntled employees
No staff benefits
Myth: we are too small to have benefits
Employer is first and often only source of assistance
Inconsistent HR policies
No policy results in different treatment between employees
Misalignment between success and benefits
Staff feel very connected to the success of the business
Morale is affected by perceived lack of share in the success

34. Poor financial management
“IHA Syndrome”
Seeking visual signs of success
Cash flow trap
Separate business from yourself
Poor corporate governance
Alternative sources of debt
Banks are not the only option
Enterprise development funds from suppliers
Pressure from creditors
Stringent repayment plans
Poor management of debtors book
Taking too long to collect cash

35. Rapid expansion
“Big Business Trap”
Mistaking size for success
Undifferentiated service
Wanting to service every client
Poor acquisitions
Rescuing unprofitable businesses
Insufficient investment in current operations

36. Attributes for success

37. Attributes
Passion
Mental fortitude
Physical fitness
Patience
Independence
Adaptable personality

38. Entrepreneurs
and Financial Advice

39. Before: The planning phase

40. Personal risk management
Challenge:
Loss of risk benefits from previous employer
Leaving the family exposed to effects of unforeseen events
Increased stress levels
Uninsurable or significant loadings

41. Personal risk management
Solution:
Replace Group Benefits
Exercise conversion option on Group life cover
Supplement with Group Benefits from new business
Severe Illness Cover
To mitigate against increased stress

42. Personal investment plan
Challenge:
Loss of regular income to finance personal needs
Reduction in standard of living (temporarily)
Family instability
Regular holidays reduce
Extravagant gifts disappear

43. Personal investment plan
Solution:
Fortify personal balance sheet
Determine short-term income requirements
Design discretionary investment plan to finance personal needs
Implement short-term and medium-term investment strategy

44. Example: fortify personal balance sheet
Cash required:
R50 000 p.m.
For 2 years of no or limited income from the business
Total = R1 200 000
Low-risk unit trust investment portfolio:
Annual return = 9%
Years before start of business = 3
Monthly investment required = R5 082 pm

45. Business investment plan
Strengthen Business Balance Sheet
Determine at least 5-year cash flow needs
Raise sufficient capital
Design low-risk cash management portfolio to investment excess capital

46. Example: stronger business balance sheet
Business account at leading bank:
0% on cheque account
4% p.a. on 12-month fixed deposits (no liquidity)
Low-risk cash management portfolio for excess capital*:
45% in Money Market Fund
1-year return = 7.7% p.a.
30% in Income Fund
1-year return = 8.49% p.a.
3-year return = 8.43 p.a.
25% in Multi-asset Low Equity Fund
3-year return = 5.98% p.a.
*returns to 31 January 2019. Portfolio fully liquid.

47. Retirement Plan
Challenge:
Retirement benefits often used to finance business
Withdrawal tax is applicable – what you see is not what you get
Aggregation is applied if you have withdrawn retirement benefits before
The returns on the business must compensate for the tax loss and capital growth foregone -
opportunity
Statistically you have a 63% (ABSA) or 50% (SBK) probability of losing retirement capital
invested in the business in the first 2 years

48. Retirement Plan
Solution:
Start with the end in mind
Design sensible retirement plan – preserve as much retirement capital as possible
Decide when you wish to retire
Determine future value required to finance retirement needs
Estimate how long you will require post-retirement income
Estimate what the sources of income will be
Dividends
Capital received from business sale
Rental income
Income from Retirement Annuities and company pension fund

49. Example: retirement plan
Scenario:
Age at start of business: 35
Desired retirement age: 60
Years in business: 25
Life expectancy: 85
Required post-retirement income: R50 000 p.m. (in today’s money)
Years of drawing post-retirement income: 25
Inflation: 6% and investment return: 9% p.a.
Required Capital = R41 152 105 (after tax) or approx. R48 500 000 before tax
Required profit at 5 X PE = R8 230 420 or approx. R9 700 000 before tax
CGT - R6.6 million at current individual inclusion rate and zero base cost

50. During: The management

51. Disgruntled employees
Challenge:
Business pays cost-to-company
Employees do not set up their own benefits
Unsatisfactory industry retirement funds
Employer is expected to assist when family and personal tragedy strikes
Inconsistency in how employer assists employees
Business continues to feel like a small business – difficult to recruit new talent

52. Disgruntled employees
Solution:
Set-up umbrella pension or provident fund as soon as possible – from as little as 5 people
Cost-effective
Usually no medical underwriting required so even uninsurable employees get some cover
Extended family may be covered by funeral benefits
Easier to recruit new talent
There is consistency of benefits for all staff

53. Example: employee benefits
Number of employee: 10
Annual payroll: R2 500 000
Group Life cover: 3 x Annual salary per employee
Income Protection (Disability): 54% of salary (after tax) per employee
Funeral Benefit: R25 000 (including member, spouse and kids over 14, parents and parents-
in-law).
Total cost = R4 500 p.m. for the whole business
Deducted from cost-to-company remuneration

54. Business risk management
Challenge:
Loss of skilled individuals due to unforeseen events can set the business back significantly
No capital to replace key person with someone of similar skill and experience
No capital to cover overheads while business is interrupted
Entrepreneur’s personal assets are often used as security for loans raised

55. Business risk management
Solution:
Key person cover
Key employee insured by the business
For death or disability
Funds used to recruit new talent and absorb overheads due to business interruption
Contingent liability cover
Shareholder (guarantor) insured by the business
For death and disability
Funds used to off-set the loan and protect the entrepreneur’s assets

56. After: Avoiding the value trap

57. Avoiding the value trap
Challenge:
Greatest value often lies in the property portfolio and business value
These are illiquid investments
Difficult to extract the value for the family - especially in the event of death or disability
Surviving shareholders are loathe to deal with non-contributing spouse
Surviving spouse often does not know the true value of the business
Surviving spouse at the mercy of the surviving shareholders
Significant CGT and Estate Duty costs payable immediately by the often illiquid estate

58. Avoiding the value trap
Solution:
Create generous dividend policy not exorbitant salary increase. Dividends provide more tax-
efficient income
Reduce shareholding to realise value and create liquidity
Sign a Buy and Sell Agreement and back the contract with life and disability cover
Proceeds go to counter-party and then to entrepreneur’s estate
Transfer shareholding to Family or Investment Trust
Reduces CGT and Estate Duty costs
Protects legacy created
Trustees can represent the deceased interest at the company

59. Group Risk Benefits
Life
Income Protection/Disability
Severe Illness
Funeral
Business Assurance
Pension Fund
Member Engagement
Financial Education
Investment Management
Corporate Services
Umbrella Pension/Provident
Funds
Medical
Aid
**Short-term
Insurance
Group
Retirement Annuities
Corporate
Finance

60. The journey of
a GMI client

61. Independent. Professional. Confidential.
Entrepreneurship To The Point
March 2019

62. Investment Management
 Unit Trusts
 Share Portfolios
 BBBEE Public Share Offers
 Offshore Investments
 Private Equity
 Hedge Funds
 Exchange Traded Funds
 Cash Management
Fiduciary and Tax Services
 Trusts
 Wills
 Estate Planning
 Tax Planning
Retirement Planning
 Preservation Fund
 Retirement Annuity
 Post-Retirement Income
Risk Management
 Life Insurance
 Disability Cover
 Severe Illness Cover
 Retrenchment Cover
 Medical Aid
 Short term InsuranceWealth
Creation
Wealth
Protection
eTTP Master Class Session

63. Topics
The Financial Planning Landscape
The foundation of good money management
The financial planning journey
Dealing with Black Tax
Risk Management
Why Risk Planning is important
Understanding Risk
Options for mitigating risk
Fiduciary and Tax Planning
Estate Planning
Trusts
Tax Planning
Investment Planning
Psychology of Investing
Designing an investment strategy that works for you
Retirement Planning
Understanding key retirement planning variables
Why retirement planning remains today’s biggest financial planning challenge

64. QUESTION AND ANSWER SESSION
Twitter: @eToThePoint

65. Next Session: 25th of April
#TownshipEconomics
What and where are the opportunities in townships?
What kind of enterprises would work in this setting?
What should the entrepreneur consider before getting in?
Real life case studies
How do township enterprises contribute to socially inclusive wealth creation,
and sustaining community livelihood vs development through mainstream economy support?

66. PLEASE TAKE OUR SURVEY

67. INSERT LBB VIDEO

68. THANK YOU