Gifts that will outlast socks and chocs
Presents which improve the state of one's personal finances may be the best things to give loved ones this Christmas,
write LEIGH ROBERTS and LUCIENNE FILD
We've put together a wish list of presents that can go some way to improving one's personal finances and wealth.
On the first day of Christmas, my true love gave to me. . .
R1 000 cash to pay into my credit card. At 26% interest, not paying the full amount spent each month costs you dearly.
On the second day of Christmas, my other half gave to me. . .
Units in a quality unit trust fund. BT Money's top five local equity funds for long-term wealth creation are: BOE Growth, Syfrets Prime Select, RMB Equity, Standard Bank Industrial and Investec Emerging Companies.
On the third day of Christmas, my spouse gave to me. . .
A bank debit order form for putting money away each month into unit trusts. Research shows this type of enforced saving - the money is taken directly from your bank account - is more effective (and seems to hurt less).
On the fourth day of Christmas, my special person gave to me. . .
R1 000 to put into the mortgage bond. Paying extra into your home loan shortens the payment term and saves you a fortune in interest. It's also a great tax-free investment.
On the fifth day of Christmas my best friend gave to me. . .
A personal budget plan (downloaded from the Business Times Internet web site at www.btimes.co.za). A budget of monthly income and expenses pinpoints overspending and builds saving goals into your monthly accounts.
On the sixth day of Christmas my lover bowed to me. . .
And confirmed my appointment with a qualified financial adviser (my lover wisely tested the waters by first phoning 10 of the adviser's clients to check on the independence, integrity and competence of the adviser).
A good broker will look at your financial affairs in terms of three main areas - life assurance, disability cover and retirement income - and advise you on how best to make good any shortcomings.
Your adviser will check that you have an up-to-date will which accurately reflects your financial circumstances and last wishes.
Even though your adviser looks after your financial affairs, remember that at the end of the day, you are responsible for your money (victims of the Masterbond and Supreme scams learnt this lesson the hard way). It's a case of delegation, not abrogation.
On the seventh day of Christmas my true love gave to me. . .
A consultation with a qualified tax consultant. Income tax rates are sky-high; a good consultant can structure your affairs so that you pay the least tax legally possible.
While tax is certainly not the only factor in deciding where to invest your money, it does negatively affect interest-earning investments.
Your consultant should work with your financial adviser in structuring an investment portfolio which is efficient in terms of income tax and estate duty.
You can brush up on your tax knowledge by buying Pay Less Tax 1997 by Deloitte & Touche (Fernwood Press) from leading bookstores.
On the eighth day of Christmas, my sweetheart gave to me. . .
A modem for my personal computer and a year's subscription to a reputable Internet service provider.
Since knowledge is power - especially when dealing with finances - access to the Internet offers not only information but financial services (and great shopping, too).
The World Wide Web holds a myriad of personal finance web sites providing advice and financial tools; here are a few good ones:
On the ninth day of Christmas my sparring partner gave to me. . .
R1 000 worth of gift vouchers from the chain store where I hold an account. Much to the joy of chain stores, account balances soar over the silly season. A gift of vouchers - which you can pay into your account - will reduce your debt.
This gift will be especially useful if you have fallen prey to the 12-month account option, which is touted as "low interest" but is not at all - the interest you pay may be as high as 32%.
On the tenth day of Christmas, my beau gave to me. . .
One shiny Krugerrand - admittedly gold is for the adventurous sort because it's a risky investment with an uncertain future, but you can buy a one ounce coin for R1 420 today, about R150 cheaper than last year.
On the eleventh day of Christmas, my wise one gave to me. . .
Units in a top-performing offshore unit trust fund. Spreading your wealth between home and overseas makes sound financial sense, especially with the expected further fall in the rand.
On the twelfth day of Christmas, my true love gave to me. . .
A big hug and 20 kisses - after all, love renders higher returns than money.