Take the hassle out of your property investment

When investing in property on your own the classic approach is to buy a place and rent it out. You basically use the rental income to pay off the property over time leaving you with an appreciable asset. It sounds easier at the outset but there are many factors which affect the investment:

The price you pay

The rent you receive

The maintenance costs

The costs of buying and selling the property

The tax payable


If you get it wrong you could be stuck with an investment which returns way below what you could have done with your money in a bank account. Add to it the hassle factor of running the project and the legalities which favour the tenant you could be in for a long rough ride.


There is an easier way to invest in the property market. A fund which invests in property companies which are listed on the stock exchange. You can choose either a Property Unit Trust (PUT) which will be managed by a fund manager or an Exchange Traded Fund (ETF) which tracks the property index on the JSE. The advantages going this route are:


You can sell your investment at the market price on the day. Unlike a fixed property where you have to find a buyer to pay the price you are looking for. This could take months, and then even longer to process the transfer and registration of the new buyer before you get your hands on the cash.


The Unit Trusts and ETF’s offer a spread of shares in property companies offering a diversification across commercial, residential and industrial properties. This significantly reduces your risk as your investment is spread across companies and sectors in the property market.


Easier to manage

The investment is managed by a range of professional companies. They contend with the purchase issues, maintenance, rental agreements, legalities of running properties. Their business models are well run to the point that they can forecast their future growth and returns with reasonable confidence allowing you to anticipate your future returns.

Like any shares there are inherent risks of losing capital. You will need to invest over a longer period to compensate for the risks.

You will need to study the factsheets and do your homework. www.etfsa.co.za is a good starting point.

For the investor who wants exposure to property PUT’s and ETF’s are worthwhile alternative.


3 pay days to go to get through the festive season

So let’s do something different this  year.

Your mission is to get through to the end of January without going further into debt. A starting point is to plan for the festive season now while you have a chance.


With only three pay days to go before the end of the year time is running out to get a mini iu-8plan in place to cope with the financial demands of festive season. Typically, many of us spend far too much over the period and then take most of the new year to repair the financial damage.


It follows that prevention is better than cure. So why not do something different this time around.

Here are 3 areas which will help you through:


Create a mini budget

Calculate what you can afford to spend without going further into debt. The total of your expected income for the next three months less your normal living expenses for the period is the amount you can target for the festive season.

Set aside the savings from each pay day into your credit card or access bond so that the money is freely available when you need it.


Get creative on your spend

Spend on gifts that are meaningful rather than expensive. For example, a mall shopping voucher is very practical as you offer a wide variety of options from the various stores in the mall. Furthermore, most stores go on sale after the 25th December, soyour voucher will go a much longer way.

Keep January firmly in mind

Many of us are paid early in December which means that you will need to stretch yourself for a longer period until the January payday. You will need to make sure that you cover debit orders, and all the “must have” expenses for January.

You will be a hit if you manage to stay away from extra debt by the time you receive your January pay slip. Furthermore, you will start 2017 ahead of the curve.


Don’t blow the pension claim from your “Ex”…..

In what is know as the “Clean Break Principle” recent regulations entitle divorced spouses to claim from the pension fund of the ex before retirement. These rules apply to government pension funds as well which have left members with interest bearing debts which have to be repaid to the fund. The problem rests with the time it will take to put the fund back in a position to honour its obligations to pay future pensions.


A defined benefit pension fund takes on the obligation to pay a member a specific pension at retirement based on the number of years that the member has contributed to the fund. It is a very onerous task for the fund as it needs to be in a sound financial position at all times to ensure that all members during retirement receive their pension benefits. The problem is compounded by the fact that members are living longer which puts enormous pressure on the present and future values of the fund. The sustainability of many funds is questionable as it is, so these premature payouts in divorce claims will cause serious problems for actuaries and trustees.

The claims against pension funds is on the rise and there is even a suggestion that many members  are arranging their divorce just  to get their hands on the cash.


Ideally, the funds should not be cashed in and, instead it should be preserved. It takes time to catch up on the value accumulated through compound interest on the investments made in the fund and quite often there isn’t enough time left for most to make catch up before reaching retirement.


So the message is clear. Your entitlement to the pension fund should you get divorced, should rather be preserved and included in your retirement provisions for the future. As a divorcee your financial independence is even more crucial into the future as you are all on your own. Your pension claim should therefore be protected at all costs and should not be seen as a windfall.


Keep a close eye on the future value of your pension after a divorce claim and make adjustments sooner than later. The defined benefit funds in the latest changes charge the member interest on the debt and in many cases members won’t have enough months left before retirement to pay back the money. This is a dilemma for the trustees on defined benefit funds and serious adjustments will have to be made for future benefits.


3 Don’ts to avoid getting scammed….


 In the face of the current explosion of scams reaching you through emails, sms’s and advertisements it is evident that many unsuspecting people are getting lured into webs leading to financial disaster.
Scamming or phishing, as it is also called, is a plot aimed at getting you to hand over your banking details by falsely tempting you into believing that you are dealing with an authentic and genuine company or person. A common scam doing the rounds is the SARS Phishing Scam which advises you on an email that you have a refund due to you and you should set up your banking details with the sender to claim the funds. The email uses the SARS logo and looks credible. However, it is a fraudster trying to convince you that you are dealing with the Receiver of Revenue.
Here are three “Don’ts” which will keep the criminals at bay.
Don’t be so trusting
You need to be more suspicious about your financial transactions. Especially, having received a communication from out of the blue congratulating you on some fantastic win which you never expected!
Many scams promise things that are too good to be true. You should the attitude that there is no such thing as a “Get Rich Quick” scheme.You should too aware that there are criminals in this world eager to take advantage of you. Sad but unfortunately true. So if in doubt opt out!
Don’t give out your details
It sounds so obvious, doesn’t it? Yet the continuous bombardment of scams reaching us for all angles suggests that scammers realise that there are many of us that are willing to give out our banking details without batting an eyelid.
Banks and Financial Institutions will never ask you to provide your banking details on an email or an SMS. So, the moment you find yourself being persuaded to providing these details you should stop the process. The internet creates an opportunistic platform for criminals to use your bank account. They can be in and out of your account in seconds, long before you even realise that your money has been stolen.
Don’t leave it
When you come across a scam you should report it to the institution that the scam is pretending to be. You can also post it on a useful website at www.scambuster.co.za which creates awareness of scams in South Africa. Don’t fall over when you see what scams are going on out there.
Let your own social network know about scams that you come across so that more of us can be made aware of what is going on. Talking about scams should sharpen our senses and make us more diligent then next time someone tries to steal our money. Being aware is probably our best defence towards being scammed.