Cape Town – One of the keys to stress-free living in the holiday season is to make a financial checklist, suggests Olivier Barbeau, managing partner of accounting and advisory firm, Moore Stephens.
He offers six smart planning tasks that will give you peace of mind.
Review your will
We don’t like talking about death and taxes, but ensuring that you have a valid and current will can alleviate further hardship for the loved ones that you leave behind, avoiding some unintended consequences, not to mention unnecessary hardship for surviving family members during an already difficult time.
Have you considered changes in your personal circumstances and the impact they may have on your will?
Donate to charity
What charities have benefited from your generosity this past year? Contributions to qualified organisations help lower your tax bill. Ensure you get an S18a certificate for your donation.
Top up your retirement annuities with your bonus
Even if you contribute regularly to your retirement savings plan, take a few minutes to see whether you can make an additional contribution before the end of the year.
Think about it this way: An extra contribution of R5 000 each year for 20 years could add up to R230 000. (This example assumes a 7% annual rate of return and no withdrawals during the period.) It also reduces your taxable income for the year.
Review and revise your insurance policies
Review all policies: car, home, health and life insurance. Be sure that you have the correct amount of coverage, including personal liability protection in these litigious times.
Review your investment portfolio
Keep track of your investment risk. Now is the time to think about what you own and the general asset allocations in your account. If you have a financial adviser, make an appointment now. Are you happy or is there something that needs to be rebalanced? Should poorly performing investments be dumped now?
Check the beneficiaries on investment policies
While reviewing your investments, also make sure you have designated a beneficiary for each account. It can be as important as writing a will, but isn’t as complex. It is especially important if you have had some changes in your life, such as a birth, a death, or a change in marital status.
One important point to keep in mind is that retirement accounts pass directly to named beneficiaries, rather than becoming part of your estate. This can provide significant tax advantages for your heirs.