Harbour & Associates

As most of you know, I have hundreds of meetings a year with people from all walks of life. One thing that repeats and repeats: “I’m nearly 60 y’know! I need to slow down.” Most of them are aged between 55 to 65. And most of them look about the same age as me. I always laugh, say something like “Shame, I feel so sorry for you. Age is a terrible thing, isn’t it?” Then I tell them my age. Why do they look so old? Because they think so old! My belief is that thinking old is one of…

I’ve already written two articles on owning your home vs. renting it. Here’s one and here’s the other. But now we have a new take on the subject. We sold our house about 5 years ago and have rented on an annual basis ever since. The result is that we are now living in our 5th rented property, a beautiful house in Knysna. Our garden flows into a forest and because the trees are on a steep downward slope, we look over them to the lagoon and, further away, the Outeniqua mountains. Paradise! However, there are three downsides…

Whenever we form or amend a trust for a client, we write a Will for the client and their spouse at no charge. This is essential because the trust and the Wills are closely linked and refer to each other. I am usually appointed as the executor and should, therefore, be holding the originally signed Will. Yet I estimated that 80% of the Wills that I prepare and send for signature are never returned. Let’s look at the consequences – The client will die intestate. That means that his or her assets will be distributed according to the rather complicated…

I had a 4 1/2 hour meeting with a guy who had about R50m investments and was worried that taxes on death would wipe out the investment income that he hoped would support his wife and daughters upon his death. He had received all sorts of investment advice and simply couldn’t get his head around it until he found us through an internet search. What he didn’t realise was that he did not have any investments! As part of this wealth management exercise, the first thing we had to do was list his assets : A residence that a daughter…

“I’ve made millions on my BitCoin investment!” “Really? Have you sold yet?” In the lead up to 1929, property prices in the States were skyrocketing. It didn’t matter what you bought, you could sell it next week and make a killing. Swamp land in Florida was changing hands at huge profits. Then Bam! The bottom fell out of the market. Wall Street crashed. “Investors” lost fortunes overnight. Here’s the graph – In the lead up to 2000, so called dot com shares were skyrocketing. It didn’t matter what you bought, you could sell it next week and…

There are three things in life that are certain – death, taxes and uncertainty! I spend lots of time advising about the first two, but what can we do about the uncertainty? I’ll frequently find myself in a meeting with a youngish entrepreneur, say 28 years old. We’ll be setting up a trust, planning his or her investment strategy, avoiding taxes on death, protecting assets against creditors and generally trying to avoid making the numerous mistakes that I’ve made in my life. Actually, planning…

How do you figure out how long it will take for the Rand to halve in value at a particular inflation rate? Use the Rule of 72! This remarkable “Rule” is very accurate, but is not mathematically exact. Let’s say that you expect inflation to average 7%. You have R1m under the mattress. How long before it is only worth R500K in buying power? You divide the number 72 by the inflation rate 72/7 = 10 years. Isn’t that clever? Say you expect inflation to average 9%, then your R1m will be worth only R500K in 72/9 = 8 years…

Did you hear that heartrending advert on the radio? It was a recently retired couple who finally found a bank that cares for them. Now they can take that dream cruise that they’ve talked about for years and they can retire comfortably knowing that their capital is guaranteed safe. Why? Because the bank guarantees them a whopping 7 1/4% return. Now, if real inflation was 6% (wishthink) that would mean that they have 1 1/4% available to spend, so if they want to retire on, say, R60 000 before tax (and the way they are talking about cruises etc. they…

So you are getting married. Congratulations! What are the essential things you need to know relating to tax, estate planning and asset protection? The first thing to consider is the nature of your marriage. There are a number of options – 1) A traditional marriage. In law this is a marriage in community of property. 2) Community of Property. The effect of this marriage is that the two separate estates (wealth) merge into one which is the shared property of both parties. On dissolution of the marriage, the two parties have equal claim to their joint estate and have to…

How can you plan to retire one day if you don’t know how much income you’ll need? You need to write a retirement budget. It’s actually pretty straightforward, but, in my view absolutely essential, unless you’re another Donald Trump with a few billion US$ to play with. Here’s how you get started. Ignoring inflation, picture yourself ready to retire. You have no debts and the kids are off your hands and supporting themselves. So all you need is enough after tax income to support your lifestyle and replace things like computers, motor cars and washing machines as and when they…

Why plan to live forever? We’re all going to die sometime surely? Well, yes, but when? That’s the million dollar question isn’t it? Could be tomorrow, could be when you’re 110! By the way the oldest living people ever all seem to have finally called it a day between about 113 and 117 years old, seems like that really is the limit, although one dear old duck in France made it to 122 (source: Wikipedia). The women seem to beat the men by about 2 years. Don’t Google “Images”, they will…

For most people, it doesn’t matter what they earn, they will always be short. Why is this? Why do so many of us go through life always worrying about money? One of the causes is what is called “standard of living”. All that means is that when you earn more you choose to spend more. Another is that the more we earn, the more we commit to spend and this is the kicker. If there was no commitment (to pay the bond, the rent, the car instalments, the private school fees), then if we found ourselves a bit short one…

This was part of the headline on the news after the last meeting of the reserve bank. The rest was “Bad news for pensioners” Now why would holding the Repo Rate steady be bad news for pensioners? It can only be because they fell into the grips of a financial advisor who sold them product which produces passive income based largely on interest. A bank, for instance. Do you hear those bank adverts? “My baby”, “Watch your money grow”, rubbish like that? If a bank pays you 6 1/2% interest (and most of them don’t), then they are offering you…

I explained in an earlier blog that we need to plan to live forever, because we don’t know when we are going to die. So what can go wrong? Quite simply, no investment is 100% secure, there is always an element of risk. It is a well known fact that the higher the return, the higher the risk, but even investing in a bank isn’t guaranteed to be safe (check what happened in the USA recently). You won’t remember the great depression which was triggered by the Wall Street crash of 1929 (I wasn’t around either).

Let’s stand back a bit and take a look at your life from a financial big picture point of view. I’ve already mentioned active and passive income. Active income is the stuff you have to work for (you know – eat, to live, to work, to sleep, to eat ……..). What should your active income be used for? Three things – to pay your way (food, kids’ schooling, the rent, …..) to enjoy yourself (movies, holidays, sport, ……..) to build your passive income! Why do we need passive income? (that’s the stuff we don’t have to work for, it just…

Intestate Succession If you die intestate (without having written a Will), your estate will be distributed “per stirpes”. This means that your spouse and children get one equal share each. In the absence of spouse and children, there are per stirpes formulae that will eventually find beneficiaries amoungst your siblings, parents, grandparents, grand children etc. Your minor children’s shares will go into the Guardian’s Fund to be administered for their benefit by the Master of the High Court. Wills You can get a will from your bank at no or very little charge. The reason they do this is to…

Personal Wealth

Don’t talk yourself old.

Own your home, or long term rental or AirBnB

You simply must sign your Will

Recognise what is not an investment!

The Bitcoin gamblers

Five things you can do to plan for an uncertain future.

Inflation and the Rule of 72

Cash is not king

I am getting married. What should I know about tax and finance?

Write a Retirement Budget

Plan to live forever

Manage your personal finances

Good news for householders

So why can’t I afford to live forever?

Your financial walk through life – passive income

Wills

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