Personal Finance Magazine Vol. 83 - 2nd. Quarter 2020

Five years ago, Bill Gates, in a now-famous TED talk, warned of the dangers of a worldwide pandemic. He was not the only one who foresaw such a catastrophe, but for most people, including world leaders, a pandemic of the magnitude of Covid-19 was nowhere on the radar. A small outbreak of Ebola or bird flu, perhaps, which could quickly be contained, but nothing like this, which claimed a quarter of a million lives (at least, as figures are probably understated) within four months. Humans have spent trillions over the years on defence against other humans. But precious little has funded the fight against an invisible common enemy, potentially more lethal than any human threat save a nuclear war. More worrying than the disease itself is its economic impact. Companies…

RA TAX BREAK I am 67 years old and in retirement. Can I still take advantage of the 27.5 percent allowance as a tax deduction? How and when will I have access to the funds so acquired? – Name withheld Dulcie Weyks, a financial adviser from PSG Wealth Pretoria Irene Sovereign Drive, replies: Retirement annuity (RA) payments do not have an age limit. Contributions can be claimed for tax at any age and tax certificates will be issued by the RA provider. The 27.5 percent allowance is based on your annual taxable income (limited to R350 000). This can include income from various sources, including income derived from annuities or rental properties. Please take note of liquidity restrictions that apply to RAs as indicated below. You are allowed access to…

Financial Freedom Through Property Author: Laurens Boel Publisher: Zebra Press (Penguin Random House) Retail price: R220 The investment world is divided into people who believe property (in the form of physical property from which you earn a rental income, as opposed to listed property) is a worthwhile investment and those who believe you’ll do better investing in the stock market. Most financial advisers I know are in the latter camp, but the proponents of property investing are a passionate bunch whose arguments are compelling. Their guru is Robert Kiyosaki, author of Rich Dad, Poor Dad and subsequent books, whose property investing programme is hugely popular globally. The underlying premise is very appealing: you buy an apartment or house and let it out, using the rental to pay off the bond.…

Capital and Ideology Author: Thomas Piketty Publisher: Belknap/Harvard Retail price: R625 This is French economist Thomas Piketty’s second book on inequality, the first being the widely read and influential Capital in the 21st Century, published in 2013. It expands on the first by delving into history and looking at political regimes that have either exacerbated the gap between rich and poor or had some success in reducing that gap. Piketty argues that the roots of inequality are ideological. It is a society’s political, educational and legal systems that determine the nature of its economy and how wealth generated by economic activity is distributed among the population. He also states that the underlying ideology governing an economy seeks to justify why the wealth is distributed in the way it is. Unlike…

Sweat, Scale, Sell Author: Pavlo Phitidis Publisher: Macmillan Retail price: R290 It’s fair to say that there are two types of small business owners. The first group comprises those who have had careers in the corporate world and who have left this secure environment to start something on their own. They may remain in a field related to their career or they may branch off in an unrelated direction, for which they may have long held a passion - for example, an accountant starting a boutique winery. This group includes those “reluctant entrepreneurs” who have been forced out of the corporate world through retrenchment or compulsory retirement, who need to do something on their own to continue earning a living. The second group comprises the true entrepreneurs. These are the…

THE MARKET downturn caused by the Covid-19 pandemic will be the worst downturn in our history. The only time South Africa faced a similar crisis was between 1918 and 1920 when the Spanish Flu ravaged the country, but in those days we did not have a statistical agency that compiled national accounts. That is why this downturn will go down as the worst so far, as it will be deeper than the recessions of 1983, 1992 or 2009. There are also no gross domestic product records for the Great Depression of the 1930s. As a result of the United Kingdom and other countries going off the gold standard in the early 1930s, South Africa’s gold mining industry boomed, partially offsetting the decline in exports from other sectors. In the mid-1930s…