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Marie Antelme, an economist with Coronation, gives her post-election analysis and what it means for South Africa. To read the full article please click here.
Designed and managed for South African investors looking to maximise their retirement lifestyles without the risk of running out of capital, the Marriott Essential Income Fund is a simple, low-cost and effective solution for retirement.
Marriott’s unique Income Focused investment approach, combined with an optimal long-term blend of the highest quality South African dividend paying companies (both property and equities) and government bonds, enables investors to avoid capital erosion by matching their income requirements with the income produced by the portfolio.
Using the Essential Income Fund to “Spend the Income Not the Capital” provides the following benefits:
This Fund is ideally suited for clients who are seeking an income for life and are who wish to maximise their retirement lifestyles without the risk of running out of capital.
“Investing puts money to work. The only reason to save money is to invest it.” Grant Cardone
At retirement, investors are faced with two options when deciding on purchasing an annuity. Should I purchase a guaranteed annuity or a living annuity?
A guaranteed annuity is underwritten by a life insurance company who guarantee to provide the investor/life assured with a fixed annuity income for the rest of their life.
Guaranteed annuities can be structured so that the annuity increases annually by a fixed amount and investors can stipulate whether to attach an additional life to the policy to continue paying the annuity until the death of the second life. This is usually the case where there is a need to provide an income for a spouse.
With a guaranteed annuity, there is no investment risk attached to the annuity. The life company undertakes to pay the annuity until the life assured’s death. Upon the death of the life assured the company ceases all payments and the investment ends. With a guaranteed annuity, there is no ability to leave a legacy to any beneficiaries.
With a living annuity, the investor purchases an annuity and is then responsible for the level of income they choose as well as how the underlying funds in the investment are invested. Currently, investors are able to choose an income annuity between 2.5% – 17.5% of the capital value per annum. On the anniversary of each year, the investor can reassess their income level and increase or decrease the amount of income they receive.
With a living annuity, the investment risk becomes the investor’s responsibility. Should the investor withdraw a greater amount of income than the investment is generating then the capital value of the investment would decrease. If the annuity was less than the investment returns the investment would increase.
Investors in a living annuity are not constrained as to how the funds are required to be invested and can tailor their investment to best suit their retirement needs and risk profile.
With a living annuity investors are able to nominate a beneficiary and upon their death, the funds are transferred into the beneficiaries name and they can then choose whether to take the proceeds in the form of a lump sum, receive a monthly annuity or take a combination of both.
The advantages of choosing a living annuity are that if the funds are managed properly and a prudent level of income is withdrawn the investor can leave a legacy for future generations. Living annuities are not governed by the Pensions Fund Act which allows investors control over who they nominate and can also be used as an effective estate duty planning tool.
The Nedgroup Investments Property Fund is a specialist property fund that provides investors with income generation and capital appreciation over the long term. This fund is suitable for investors who can withstand increased volatility but are looking to maximise their returns over an investment horizon of 7 to 10 years. The Fund has a long term track record and has provided investors with a return of 12% since inception of the Fund.
The South African Property Index is currently down 20% for this year. This presents investors with the opportunity to buy ‘Low’. The expected income return on the Fund for the next year is forecast to be 13.2%.
By incorporating the Nedgroup Investments Property Fund into a tax-free investment, investors can make provision to ensure that when they require the income it is received tax-free! For more information on the Fund, its income yield or to open a tax-free investment please click on the link.
Despite all the doom and gloom in 2017, the JSE ALSI returned 20.95% last year. Heading into 2018 there was a sense of excitement with every South African feeling a sense of “Ramaphoria”. Sadly the rally around this new found sense of optimism has seemed to run out of steam. As at the 31st of May the JSE ALSI had declined by 4.4% giving back a large part of the gains from last year. Along with the drop in the market we have also seen the rather rapid decline in the value of the rand going from almost R12 to the dollar to now almost R14.
The South African market is heavily influenced by world events and all the uncertainty regarding Trade Wars has negatively affected the domestic market. Over the past three years we have been positioning our clients’ funds into more conservative portfolios. These more conservative funds have been far less volatile than that of the market and have given investors a return of between 7 – 10% over the last year. It is very hard to predict what the future; or Donald Trump has in store for us and so we remain of the view that investors should remain cautious in the current investment climate.
Please contact us should you wish to arrange a meeting to discuss your portfolio and its positioning. We will be happy to discuss this over a cup of coffee.
Critical illness cover offers you financial protection should you be diagnosed with or require treatment for an illness which is deemed ‘critical’. On average 80% of all claims are from the four major critical illnesses; heart attacks, strokes, coronary artery by-pass graft and cancer.
The benefits of having Critical illness cover in place are that it allows the insured to be able to fund one or more of the following:
Clients often forego Critical illness cover owing to the price of this cover compared with life insurance or disability insurance. However statistics show that a male under the age of 25 who is a non-smoker has a 24% chance of getting cancer, having a stroke or a heart attack before he reaches the age of 65. 34% of all critical illness claims made by males occur before the age of 55.
With the advancement of medical technology, more and more people are fully recovering from these critical illnesses, however the medical bills associated with these illnesses are not always covered by your medical aid. With this in mind it is important to consider how your life would be impacted should you or a loved one be diagnosed with a critical illness?
The Fund of this month is the Investec Diversified Income Fund. This is an income generating fund that is suitable for investors whose primary focus is on receiving an income but also looking to maximise capital. This Fund returned 9.5% over the last year and a return of 8.8% over the previous three years.
The link below provides a quick description and investment philosophy of the Fund.
Investec Diversified Income Fund Philosophy