Process

Financial Planning

Have you planned for tomorrow ? Our Financial Planning process and consulting service includes;

  • Estate Planning
  • Retirement planning
  • Education Planning
  • Investment Planning
  • Risk Management
  • Tax Planning
  • Cash-Flow management

My-Fin caters for all levels of clients ,those who require simple financial needs addressed as well as customers who require an in depth analysis of their affairs. Our financial consulting service division offers DIY tools and calculators for astuste customers who know what they want as well as a consulting service for those who need advice ;

Six Steps in the Financial Planning Process

  1. Establishing and defining the client-planner relationship – The financial planner explains or documents the services to be provided and defines his or her responsibilities along with the responsibilities of the client . The planner explains how he or she will be paid and by whom. The planner and client should agree on how long the relationship will last and on how decisions will be made.
  2. Gathering client data and determining goals and expectations – The financial planner asks about the client’s financial situation, personal and financial goals and attitude about risk. The planner gathers all necessary documents at this stage before giving advice.
  3. Analyzing and evaluating the client’s financial status – The financial planner analyzes client information to assess his or her current situation and determine what must be done to achieve the client’s goals. Depending on the services requested, this assessment could include analyzing the client’s assets, liabilities and cash flow, current insurance coverage, investments or tax strategies.
  4. Developing and presenting the financial planning recommendations and/or alternatives – The financial planner offers financial planning recommendations that address the client’s goals, based on the information the client provided. The planner reviews the recommendations with the client to allow the client to make informed decisions. The planner listens to client concerns and revises recommendations as appropriate.
  5. Implementing the financial planning recommendations– The financial planner and client agree on how recommendations will be carried out. The planner may carry out the recommendations for the client or serve as a “coach, ” coordinating the process with the client and other professionals such as attorneys or stockbrokers.
  6. Monitoring the financial planning recommendations – The client and financial planner agree upon who will monitor the client’s progress toward goals. If the planner is involved, he or she should report to the client periodically to review the situation and adjust recommendations as needed.

Risk Management

Simply put, risk management is a two-step process – determining what risks exist in an investment and then handling those risks in a way best-suited to your investment objectives. Risk management occurs everywhere in the financial world. It occurs when an investor buys low-risk government bonds over more risky corporate debt, when a fund manager hedges their currency exposure with currency derivatives and when a bank performs a credit check on an individual before issuing them a personal line of credit.

Risk profile defined; An evaluation of an individual or organization’s willingness to take risks, as well as the threats to which an organization is exposed. A risk profile identifies:

  1. The acceptable level of risk an individual or corporation is prepared to accept. A corporation’s risk profile attempts to determine how the corporation’s willingness to take risk (or aversion to risk) will affect its overall decision-making strategy.
  2. The risks and threats faced by an organization. The risk profile may include the probability of resulting negative effects, and an outline of the potential costs and level of disruption for each risk.

In general, the greater the risk associated with any investment, the greater the return required. Either risk profile – whether used to describe the willingness to accept risk or an evaluation of the risks to which an entity is exposed – can be expressed in graphical form. Risk is often measured in terms of risk probability – the likelihood that a risk will occur and risk impact – a measure of the consequences (such as project costs and schedule) if the risk occurs. Investors, for example, can evaluate the risk to which a portfolio is exposed and make buy and sell decisions based on this risk and their willingness to accept risk.

Estate Planning

Estate planning is an ongoing process and should be started as soon as one has any measurable asset base. As life progresses and goals shift, the estate plan should move to be in line with new goals. Lack of adequate estate planning can cause undue financial burdens to loved ones (estate taxes can run higher than 40%), so at the very least a will should be set up even if the taxable estate is not large

While many of us like to think that we’re immortal, the old joke is that only two things in life are for sure: death and taxes. Not only is it important that you have a plan in place in the unlikely event of your death, but you must also implement your plan and make sure others know about it and understand your wishes – as Benjamin Franklin’s famous quote goes, “by failing to prepare, you are preparing to fail”.

Easy guide for an Estate Plan -Here is a list of items every estate plan should include:

  • Will/Trust
  • Durable power of attorney
  • Beneficiary designations
  • Letter of intent
  • Healthcare power of attorney
  • Guardianship designations

Wills and Trusts -A will or trust should be one of the main aspects of every estate plan, even if you don’t have substantial assets. Wills help to ensure that property is passed according to an individual’s wishes (if drafted according to state laws). In addition, some trusts help limit estate taxes or legal challenges. However, simply having a will and/or a trust isn’t enough. The wording of the document is critically important. A will or trust should be written in a manner that is consistent with the way you’ve bequeathed the assets that pass outside of the will. For example, if you’ve already named your sister as a beneficiary on a retirement account or insurance policy (assets that typically pass outside of a will to a named beneficiary), you don’t want to bequeath the same asset to a second cousin in the will. It could lead to a will contest. Not to mention that both individuals could be bitter toward each other (and you) for involving them in a legal battle. (For further insight, see our affiliate Wills Factory- Why You Should Draft A Will. ) – See more at: www.willsfactory.co.za 

Does your estate plan measure up? A simple, pre-packaged will kit may not be enough.

Create an Estate Plan with My-Fin that will
give you peace of mind.

Retirement Planning

Retirement is one of the most important life events many of us will ever experience. From both a personal and financial perspective, realizing a comfortable retirement is an incredibly extensive process that takes sensible planning and years of persistence. Even once it is reached, managing your retirement is an ongoing responsibility that carries well into one’s golden years.
While all of us would like to retire comfortably, the complexity and time required in building a successful retirement plan can make the whole process seem nothing short of daunting. However, it can often be done with fewer headaches (and financial pain) than you might think – all it takes is a little homework, an attainable savings and investment plan, and a long-term commitment.

Investment Planning

Before you invest a dime, it is imperative that you come up with a plan for your money. A written investment plan, known as an Investment Policy Statement (IPS), can be helpful in getting organized.

An IPS should address the purpose of your investment, such as:

  • Paying for a child’s college education or funding your retirement.
  • This information will determine the amount of return you want on your investment and how soon you’ll need it.
  • The IPS will also address your risk tolerance.
  • Investors that need their money in the short term should shy away from volatile investments that tend to fluctuate up and down. If your goals are more long term, you can enjoy the rewards of riskier investments while having time to recover from the inevitable downturns in the market.
  • There are several types of investment products available and each has its own set of benefits, risks and fees.

Budgets & Cashflow

A description of this plan will follow here.

  • Could
  • Have
  • Bullet
  • Points

Tax Planning

There is no prohibition in South African tax law on minimizing your tax payable. The principle is actually well part of our common law. We have a section enacted in our Income Tax Act that deals with transactions that are solely entered into for the purposes of tax evasion. However, SARS has lost a couple of cases on when applying this section as tax saving plans often passes a business or substance test. In the 2005 Budget Speech it was announced that the anti-avoidance section may be re-drafted to give it more teeth.

Proper tax planning is not something that one can really do when you submit your tax return. People who really save a lot of tax are those that consider the tax consequences of every transaction or investment they make. It is a continuing process and the help of a knowledgeable tax advisor can really save you money.

Although it is impossible to provide examples of tax planning that applies to everyone, below are some basic ideas. Should you be serious about saving a bit of tax (40cents in every Rand earned is actually a lot!) we should best consider your personal circumstances.

Income splitting: The husband earns a large salary and the wife effectively nothing. All investment income that goes to the husband is taxed, after some exemptions, at 40%. There are legitimate means of letting the wife earn all income and therefore make her use her the tax exempt threshold completely and thereafter starting to pay tax, after using her own exemptions, tax at 18%.

Donations: Few people make use of the annual amount exempt from donations tax. Over years this reduced your estate significantly and also lessens your taxable income. The amount is currently R100,000 per taxpayer and where husband and wife uses this together to transfer wealth to children, we can start talking serious savings after a couple of years.

Retirement funding: Making investment decisions with after tax income when you can achieve the same investment decision with before tax income makes little sense. You should use your full retirement amount that is tax deductible every year. This really makes a lot of sense when you start seeing the effect over a couple of years.

Capital gains tax exclusion: The annual amount of capital gains that is exempt per person per year is R10,000. This is available to every taxpayer and people should use this even if it means buying and selling some shares to realize the gain. It starts costing one money when you sell all your shares after five years and make a R50,000 gain. After the R10,000 exclusion and with a 40% tax rate, you will end up paying R4,000 tax that is completely unnecessary.

Tax compliance: It pays to have your tax returns correctly and completely submitted every year. For some reason South Africans like telling about they get away with not paying tax. Many are caught as SARS has become a much more professional organization and they are becoming more efficient every year as their collection targets increase. We see many people get caught and there is nothing we can do to really help. For some reason South Africans do not like talking when they have these experiences.

Before relying on any of the above planning, see our terms of use. We would like to hear about your specific position and will sure be able to give some ideas on how to save.