The Lighthouse Issue 3

the
lighthouse
Issue 3 | May 2012
welcome
It’s autumn already, a
season that is significant
for its reminder that change
- and the passing of time
- is inevitable. The changing
colours of the falling
leaves serve as a beautiful
prompt to make any
lifestyle changes you’ve
been thinking about. Now
is the time to put together
a will; accept the advice
of a financial advisor; go
on that special trip you’ve
been thinking about. In the
famous words of the Nike
slogan, just do it!
First Things First
for a happier lifestyle
As our everyday lives continue to speed up exponentially, so the
importance of living a balanced existence becomes clearer. However,
successfully balancing all of those responsibilities and commitments
and still finding time to ‘play’ is tricky - if not downright impossible!
Perhaps though, the key is to try to create a life where you manage
to fit in a little bit of everything. To begin, you need to prioritise.
To live a more balanced existence, you have to recognise that not
doing everything that comes along is okay and there is actually no
need to over-extend yourself. Rather, you need to realise that it’s
often alright to say no so that you can focus on your highest priorities.
Life management
This is where the third habit in Stephen R. Covey’s ‘The Seven Habits
of Highly Effective People’* comes in: “Put first things first.” In other
words, prioritise. Habit Three is where habits one and two ‘come
together’. Habit One explains the importance of being proactive
and making choices – it says that you’re in charge, you’re the creator
of your own destiny; Habit Two guides you to begin with the end
in mind – having a vision. With Habit Three, it’s less about time
management and more about life and self management, in terms
of your purpose, values, roles and priorities.
continued over the page
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Those priorities!
But what does it mean to put first things first?
‘First things’ are those that are most important
to you personally and, when you put those things
first, you automatically organise and manage your
time and events according to the personal priorities
you established in Habit Two.
Putting yourself first
Acting in your own best interests does not
necessarily make you selfish. Rather, it’s a way to
ensure that you’re making the best of your life, so
that you can offer the best of yourself to those
around you – helping them, in turn to make the
very best of their own lives.
Perhaps one of your priorities is to start taking
time out for yourself, but you’re put off by the
thought of spending money on travel, health or
beauty treatments or the odd dose of retail
therapy. Why not look at joining Groupon (for
free) to take advantage of excellent discounts in
a wide range of categories? See opposite page
for more details.
As Covey says, “Keep in mind that you are always
saying ‘no’ to something. If it isn’t to the apparent,
urgent things in your life, it is probably to the more
fundamental, highly important things. Even when
the urgent is good, the good can keep you from your
best, keeping you from your unique contribution.”
Today, make the decision to put first things first!
*In ‘The Seven Habits of Highly Effective People’,
Covey presents a seven-part model for effective
performance in business and personal life.
2 | a professional approach to preparing your future
If you find that prioritising is easier said than
done, call on the help of a life coach, a
therapist or even a friend who seems to live
a more organised life than you do. The
objective eyes of an outsider can make it
far simpler to identify what’s really
important and why.
To find a life coach, go to:
www.coachdirectory.co.za/life_coaches_
southafrica.asp
To find a therapist, go to:
www.therapistdirectory.co.za or
www.psychologists.co.za
Issue 3 | May 2012
What’s the
big deal about
Groupon?
www.groupon.co.za
Groupon is growing in popularity and it’s not
difficult to see why: It’s hard to resist a discount
coupon for something that you really need, or
really want. When you have the option of
redeeming an online coupon, it’s even better.
Groupon is an online ‘coupon’ concept that is
changing lives and saving budgets. If you haven’t
already discovered the great deals offered by
Groupon, keep reading and sign up!
What exactly is Groupon?
Groupon offers fantastic discounts on many
different products, services and treatments in
various categories, such as shopping, travel and
leisure. The deals sometimes give you, the
consumer, up to 70% off the normal price. Because
every main city of South Africa has its own
Groupon page, the deals you see are all relevant
to businesses offering services and products in
your city. However, if you’re planning to travel,
you simply shop for coupons in the different cities
– or countries – to which you will be travelling.
How does it work?
Groupon brings the consumer to the seller in large
numbers, which allows the seller to lower his
price. Every deal has to be bought by a minimum
number of people in order for it to happen.
What kind of specials are offered?
Groupon offers a wide choice of deals, with one
of the most popular being beauty (such as cosmetic
procedures, beauty treatments and even hairdressing
appointments). Healthcare deals include general
medicine and dentistry, while leisure deals range
from concert tickets and travel specials, to restaurant
discounts and even shopping. You might even find
a discount on driving lessons or house cleaning.
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Issue 3 | May 2012
Economic and Market Overview: Quarter 1, 2012
For the period ended March 2012
The following market review looks at the
performance over the past quarter of local and
global asset classes, as well as currencies, and
puts this into perspective relative to longer-term
performance. The purpose of this review is to
provide a context in which the performance of
the investment solutions in which you are invested
can be assessed.
At the time of writing, the unemployment rate
was sitting at 10.8%. The region also faces the issue
of sovereign credit de-ratings. Standard & Poor’s
reviewed the long-term sovereign credit ratings
of 16 Eurozone members. Nine countries out of
the 16 had their long-term sovereign credit ratings
lowered, with the rest having their ratings affirmed.
International
Much of the positive news on the international
front filtered through to the South African market.
Equity markets were up; the JSE All Share Index
gained 6% over the quarter. As was the case with
the international markets, most of the gains
occurred in January and February. South African
listed property continued to deliver superior
returns, delivering a 20% return over the one-year
period. The rand strengthened against major
currencies. It was up 5% against the US dollar and
2.5% against the euro over the quarter. Over the
past 12 months, the rand has depreciated by
13.5% against the dollar.
The year started off on a positive note for markets
influenced by several bouts of good news. In the
US, there were a number of economic data releases
that surprised market expectations. Most of them
indicated that the US economy is recovering
faster than was initially anticipated by market
participants. Despite this, Ben Bernanke has referred
to the recovery as being “frustratingly slow.”
From the Chinese, it was the better than expected
GDP data that stimulated markets, as data showed
that the Chinese economy had grown by 8.9% in
the fourth quarter of last year. The GDP number
put at ease concerns that the Chinese market was
due for a hard landing. However, later in the
quarter the Chinese government lowered its
official growth target for 2012 from 8% to 7.5%.
Historically, the actual growth rate has tended
to exceed the targeted growth rate by a significant
margin. The positive news flow pushed global
equity markets up by 11.7% during the quarter.
However, it was the property market that
delivered the largest gains over the past quarter
with the S&P Developed Property Index
strengthening by 12.8%.
The Eurozone faces issues of rising unemployment,
with a new record high being reached in January.
4 | a professional approach to preparing your future
Local
During the month of March, Standard & Poor’s
revised South Africa’s sovereign credit outlook
from stable to negative as a consequence of slow
economic growth and high unemployment, adding
that this could be reversed if prospects improve.
The Monetary Policy Committee maintained the
repurchase rate at 5.5% in an aim to support
economic growth. This is despite an expectation
by the South African Reserve Bank that inflation
will peak at 6.5% in the second quarter and remain
above the targeted level of 6% for the rest of the
year. This decision is in line with that of several
international central banks that have chosen to
maintain low interest rates in order to stimulate
their economies.
Economic and Market Overview: Quarter 1, 2012
market overview
The tables below provide a review of key local and international investment
indicators for the past quarter, as well as over longer periods.
South African asset classes (in rands)
(Performance over periods to 31 March 2012)
Asset class Indicator
3 months
1 year
3 years
5 years
LT-average*
Equities
All Share Index
6.0%
7.5%
21.3%
7.2%
12.5%
Property
Listed Property Index
8.0%
20.3%
20.8%
12.7%
11.4%
Bonds
All Bond Index
2.3%
13.2%
10.2%
8.8%
6.9%
Cash
STeFI Call
1.3%
5.3%
6.2%
7.9%
6.0%
Inflation
CPI (one month in arrear)
1.3%
6.1%
5.2%
6.9%
4.9%
1 year
3 years
5 years
LT-average*
Source: I-Net and Nedgroup Investments
Global asset classes (in dollars)
(Performance over periods to 31 March 2012)
Asset class Indicator
Equities
3 months
11.7%
1.1%
20.9%
-0.1%
10.0%
Property S&P Developed Property Index 12.8%
MSCI World Index
3.4%
31.8%
-4.1%
8.2%
Bonds
7.6%
8.2%
6.8%
4.7%
JPM Global Bond Index
1.1%
Cash
US 3-month deposits
0.1%
0.3%
0.3%
1.6%
4.0%
Inflation
US CPI (one month in arrear)
0.6%
2.9%
2.4%
2.3%
3.1%
3 months
1 year
3 years
5 years
LT-average*
4.9%
-13.5%
6.9%
-1.1%
-5.5%
Source: I-Net and Nedgroup Investments
Currencies
(Movements over periods to 31 March 2012)
Currency Value at 31/03/2012
Rand / Dollar
7.67
Rand / Sterling
12.26
2.3%
-13.2%
3.5%
2.9%
-3.9%
Rand / Euro
10.22
2.5%
-6.5%
6.8%
-1.1%
-5.7%
Source: I-Net, Morningstar and Nedgroup Investments
* Updated annually from 1900, or longest available period
Returns for periods longer than 12 months are annualised.
www.stonewealthmanagement.co.za | 5
Issue 3 | May 2012
Your Will
and why it’s critical
to have one
By Christelle Rodway
Stone Wealth Management Financial Advisor
Many of us are guilty of not revisiting our wills, or worse still, failing to have one – the reality is that
none of us likes to think about our inevitable demise. At Stone Wealth Management, we have seen the
devastating effect this can have on family and, as a result, see a will as a critical aspect of Financial Planning.
Why a will?
A will ensures that your wishes are met after your
demise. Essentially, it is a written document that
can specify to whom you wish your assets to be
bequeathed and by whom you would like your
Estate to be handled. A valid will may also prevent
uncertainty and possible conflict between family
members.
It is basically your final check list.
Who will be responsible
for carrying out my wishes?
In creating a will, you will be required to nominate
an executor to wind up your estate. The executor
must represent you after your death. The executor
takes control of the assets which form part of
your estate, settles any liabilities and
administration expenses and distributes the
balance of your estate to beneficiaries in
accordance with your wishes. We recommend
nominating a professional who is conversant in
the Estate Duty Act, Income Tax Act and
Administrations of Estates Act, etcetera. Dealing
6 | a professional approach to preparing your future
with and understanding the Masters Office and
SARS can be onerous and time consuming. In our
experience, choosing the correct executor could
be the difference between an estate taking five
months or three years to wind up.
What if I don’t have a will?
Without a will, your assets would be distributed
in terms of the Intestate Succession Act 81 of
1987, which could provide an undesirable
outcome. For example, you may wish for your
brother to inherit a specific asset and your wife
the balance of your estate. Without a valid will,
Law of Intestate dictates that your entire estate
is to go to your wife (assuming you have no
children).
Another example of the danger of not having a
valid will is that, should you and your spouse die
simultaneously, leaving your minor children
behind, your estate will be administered by the
State. The State, in most cases, will sell your assets
and place the cash into the Guardian Fund, which
is administered by the Master of High Courts.
This is a State-controlled savings account which
is managed conservatively, and as such, will not
tie in with inflation. Thus the net result may be
that the children become poorer as inflation
erodes the capital invested. A valid will would
prevent this, allowing you to create a trust on
your death for the benefit of the children and
specifying at what age their assets are to be paid
to them. This will allow you to have some control
from the grave, as it prevents the assets from
being placed in the Guardian Fund and controlled
by the State. You will then have the freedom to
choose the trustees that you think would be
responsible enough to manage the Trust and its
funds for the interest of your minor children.
Molly is married in community of property to
Bill. Molly owns a property for R5,000,000 and
has a loan liable for R5,000,000 against the
property. Bill has an investment, with no
beneficiary nominated, worth R5,000,000. On Bill’s
death, both his and Molly’s gross estates will
attract executor’s fees of R350,000. This could
have been reduced to R175,000 by the correct
use of a beneficiary nomination as recommended
by a Financial Adviser.
What if my circumstances change?
Remember that, like your Financial Plan, a will
must be updated as your circumstances change.
It can make a significant difference to your
beneficiaries after your death.
We urge you to review your will on a regular basis
to ensure that it is kept up to date.
What is estate duty/executor’s fees?
Estate duty may be levied at 20% on a deceased
estate that exceeds R3 500 000. The Estate Duty
Act allows for certain deductions, hence the
importance of closely reviewing your will.
The fee that an executor can charge is 3.5 %
(excluding VAT) of the gross value of your estate.
Through efficient planning, this fee can be reduced
by the use of beneficiary nominations on policies.
It is therefore imperative that your Financial Plan
dovetails with your will, to ensure a cost effective
and smooth transition of assets.
Christelle Rodway
Christelle is a financial advisor who is
passionate about financial planning and
assisting clients in reaching their goals and
dreams.
She has a post-graduate Diploma in
Financial Planning, one of the highest
qualifications in the financial planning
industry.
The point is best illustrated by way of example:
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“Everyone has the sense that right now is one of
those moments when we are influencing the future.”
Steve Jobs, Co-Founder of Apple
talk to us
The Stone Wealth
Management team
welcomes your feedback.
If you have any queries,
suggestions, praise or
complaints, please email
[email protected] and we’ll
either get back to you
personally, or we’ll tackle
your topic in a future issue
of The Lighthouse.
Stone Wealth Management
a professional approach to
preparing your future
Ficus Building Sanyati Park
3 Abrey Road Kloof
PO Box 29275 Maytime Centre
Kloof 3624
Tel 031 764 5899
Fax 031 764 5647
[email protected]
VAT reg no 4930234093
CK No 2006/038071/23
Stone Wealth Management is a licensed
Financial Services Provider FSP 29494
you asked us...
Can I open unit trust accounts
for my children or other persons?
YES, you can open a unit trust account
in the name of a minor or another investor.
As the investor, you are required to sign all instruction forms. If the
account is opened in the name of a minor, a parent or guardian is
required to sign all instructions until the child reaches the age of 18.
Do you have any questions that you would like answered?
Email [email protected] and will post the answer in the next issue.
did you know?
Although Stone Wealth Management has a core focus on the retired
market (we are retirement specialists), we service a full spectrum
of clients, from clients approaching retirement, to retired clients,
trusts, public benefit organisations and business owners.
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