Investment Archives

If you think that the value of your investment properties is relevant, then your thinking could well be skewed. The only number that really matters is the net rental income that each of the properties produces. And it is the net rental income from which you would calculate the value. Having said that, it is possible that you could sell the property for more than its real worth (based on rental), and that implies that it is a bad investment that should be disposed of, and replaced by one that gives a better return. This typically applies at the top…

For how many generations do you want to be remembered? Do you want to be like the guy on the left, or the guy on the right? They both built the same wealth up until they died. The guy on the left owned it in his own name and SARS took about a third of it when his spouse died. There wasn’t enough left to generate the passive income that he had promised his kids, so the…

I guess we all want to leave a decent legacy. It’s probably the only thing that we will be remembered for in a few generations’ time. D’you remember your grandparents? Sure you do. But what do you know of their parents? And their parents’ parents? Of course, you will not be aware of those people who have left a legacy to their descendants, because that’s a different family, but I’m sure you’ve heard of a guy called Nobel? He invented dynamite and left a legacy that…

Your trading company is high risk and makes surplus money. Your investment company is low risk and wants money to invest. How should they sit in a trust structure? Not so long ago, I would have suggested that you use a holding company to create the link between the other two companies, whilst protecting the investment company from the trading company risk. The trading company declares its excess money as dividends to the holding company and no Dividends Withholdings Tax is levied because the shareholder is a company and not an individual or trust. The holding company then…

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…

There are several taxes that you need to be familiar with if you invest or trade in fixed property. Income Tax The seller will pay Income Tax on the sale of property which was bought (and perhaps renovated) with the object of selling at a profit. The taxable income will be added on top of any other taxable income earned by the seller before calculating the total tax (at 28% for companies and up to 45% for individuals). Capital Gains Tax (CGT) The seller will pay CGT on the sale of property which was bought (and perhaps renovated) with the…

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…

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…

I am an avid reader of Financial Mail, but had to chuckle at their so called Special Report on funding your retirement (March 23 2017 issue). Firstly, it comprised a total of four articles and four large advertisements. Guess who wrote the articles! Then the advice. Below a picture of Richard Carter – “Investors need to make informed choices” Brilliant! Below a picture of Graham Thomas – “Client-centric offerings” Even more brilliant! Below a picture of Karl Liebenberger – “Investors should not consider anything less than an inflationary escalation” Wow! And below a pricture of Natalie Philips – “Packages should…

You get the cheapest properties at Sheriff’s auctions and they can earn fantastic returns, but there are significant risks. Firstly, the sheriff does not give you vacant occupation. This means that there is usually someone using the premises and you either have to negotiate a deal with them or get an eviction order and then have the sheriff evict them. The eviction is easy and only costs about R10 000. The problem is that once you’ve got them out, you’ve got to keep them out. The chances are they’ll simply break in the next day and you cannot ask the…

Let’s take a look at the money market (savings accounts, call accounts and the like) and see what terrible investments they are. There’s a very touching advertisement running on the radio right now. It’s an elderly couple saying “I wish my bank wouldn’t ignore me just because I’m getting older. I want a bank that really cares for me, a bank like …bank. They are offering me a great 7 1/4% interest on our money and our capital is guaranteed against inflation. Now we can take that world cruise that we dreamed of for so long.” It’s so soppy it…

Investment

How should I value my investment properties?

Build your legacy to last using a trust

How a trust protects your legacy

How to structure your trading and investment companies within your trust

Recognise what is not an investment!

Property Investment and Related Taxes

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

Cash is not king

Brilliant investment advice from fund managers!

Property investors beware the Sheriff’s auctions

Don’t invest Trust or personal capital in the money market