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Personal Insurance

For a businessperson, successful short-term planning is a cornerstone of overall success in financial planning.

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There is no point in having a wonderful retirement plan if you, your family and your business will not survive should something dreadful happen to you tomorrow. We are inclined to think that becoming disabled as a result of a serious car accident or falling terminally ill are things that happen to other people. The fact is that life holds no guarantees and we are all at risk of tragic events. This is why we need to plan.

Risk cover

Risk cover has nothing to do with savings or investments. Risk cover against dying or becoming disabled comes in two forms: whole life or term cover.

  • Whole life cover means that you have life cover from the day you take out the policy until the day you die.
  • Term cover means you have life cover from the day you take out the policy until the end of a specified term, for instance 20 years. At the end of the 20 year term, the policy stops and so does your life cover. In both instances, you will not think of it as important until you need it – and then it is usually too late to get it. You buy risk cover to ensure that, whether you die or become disabled, the flow of cash will be sufficient to see you and your family through. It helps to ensure that your dependents will not be left destitute. If you don’t have any dependents, you may not need life cover against dying. But you might still want assurance against becoming disabled. As a business person, you might want to assure the life of your partner so that you will not be so cash strapped, in the event of his or her death or disability, that your business will not be able to continue functioning.

Disability Cover
These policies provide you with an income or lump sum if you become too ill to work or if you are badly injured and cannot continue to earn your living. You can buy disability assurance for certain periods of time and for specific amounts. If you belong to a retirement plan, you may automatically have some disability cover. But you can also get additional disability cover from a life assurance company like Sanlam. You can also choose to add disability cover to an assurance policy on your life.

Funeral cover
This is another financial product that you might want to consider. For a small amount a month, you can ensure that the cost of your own funeral does not leave your family out of pocket. Some companies, like Sanlam, offer funeral insurance at a nominal cost of R35 a month that also covers your parents, your parents in law and other family members who can be considered your dependents. The Sanlam product covers you and your spouse for R15 000, your parents for R10 000 and other dependents for R5 000. What’s more, if you are the principal member of the policy, you can choose to have the funeral policy continued in the event of your death. That way, your family will have continued peace of mind regarding their own funeral costs – even after your death.

Accident cover
A crucial component of your financial planning, accident cover offers financial compensation should you die as a result of an accident. Sanlam has a unique accident cover policy which not only pays out in the event of your death, but also pays out certain percentages should you suffer serious loss as a result of an accident, for instance the loss of a limb or an eye. You can buy accident cover from Sanlam for as little as R35 a month.

Trauma cover
Usually a component of a life policy, however some companies are starting to offer trauma cover independently of life cover. As a business person, you cannot be without it, because it offers you financial compensation should you, say, suffer a heart attack or be diagnosed with a serious illness like cancer.

Key Man Insurance: Protect your Business

In many small businesses, the continued success of the business largely depends on certain employees. By making use of a key person insurance policy, you can ensure the continued prosperity of your business should this person die or become disabled. The policy will pay out to cover you against the financial losses your business will sustain during this time.

Identifying key players
These are people who largely determine the productivity and profitability of your business. The key person could also be the owner of the business.
They are the ones who:

  • Draw clients
  • Are effective in crisis
  • Think innovatively
  • Handle important tasks
  • Build business prestige
  • Act as leaders and keep up the morale of the staff
  • Develop healthy public relations

What the loss of a key person could mean to your business:

  • A temporary or even permanent profit loss
  • Less creditworthiness
  • A weakened cash flow
  • Delays with the execution of orders
  • The end of expansion plans
  • A lack of leadership and low morale among remaining employees
  • The cost of finding and training a replacement
  • Loss of productivity sole proprietors

Insure against these three possibilities that could arise in the event of the disablement and death of the owner:

  1. Liquidation. This could mean a reduced price owing to a forced sale.
  2. The sale of the business as a going concern. In this case, it could be difficult to find a buyer with the necessary capital.
  3. Transfer to heirs. If the business devolves upon heirs, they could experience difficulties because they do not have the same credit facilities and/ or management expertise as the previous owner.

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Personal Finance

(Infographic) The Financial Advice Millennials And Gen Zers Want To Know

Having a grasp on your financials is tricky, but it’s crucial if you want to be successful. And that starts with getting the right advice.

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Whether it’s saving for retirement or paying off credit card debt, money management can be a challenge. Of course, different people have different concerns – and that often comes with age. While a 60-something baby boomer might be organising their savings for retirement, your 20-something millennial might be focused on paying off student loans.

In a recent study, financial intelligence company Comet surveyed more than 1 000 people to uncover the top financial concerns of various age groups, as well as the financial advice millennials and Gen Zers want to know and what they hear instead.

Overall, saving for retirement was the top concern across all age groups, with saving for an emergency and affording monthly bills following in second and third. However, it’s no wonder these are some of the most pressing worries – according to the research, 23 percent of people admit they don’t have a savings account, and 43 percent reported not being on track towards their retirement goals. Perhaps that’s because they didn’t hear the right advice growing up. At least that might be the case for Gen Zers and millennials.

According to the research, these young people want to learn things such as how the stock market works, how to manage an investment portfolio, how to invest in real estate and how to build credit. Instead, they’re simply told how to create a budget, save for retirement and pay credit card bills in full every month.

Related: 7 Critical Things Your Financial Advisor Must Meet

Having a grasp on your financials is tricky, but it’s crucial if you want to be successful and comfortable. To learn more, check out Comet’s infographic below.

1532099434_2-cents-worth-infographic

Related: Financial Wellness Coach Nelisiwe Masango Shares Retirement Wealth Advice

This article was originally posted here on Entrepreneur.com.

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Personal Finance

14 Ways To Make Quick Cash On The Side

If you need money quickly, here are some solid ideas.

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Need to make some fast money on the side, whether it’s to pay off a credit card or to make your rent?

Keep in mind, making quick side cash isn’t about making a lot of money or getting rich. It’s about getting a shot of capital to help tide you over and put something extra in your pocket. However, some of these side-income ideas can build up your wealth over time. There’s many ways to accomplish this: By participating in the gig economy, the sharing economy, online sales networks, passive income techniques and more.

If you’re looking to make extra money in a relatively short period of time, check out these 14 slides.

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Personal Finance

Take Advantage Of Financial Democracy Made Possible By The New Stock Exchanges

Why should financial democracy matter to entrepreneurs?

Etienne Nel

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Because it creates a society able to afford products and services. Without it, even the innovative products and services that are entrepreneurs’ bread and butter will fail.

What is financial democracy, exactly?

It’s both the right and the ability of the (wo)man in the street and business people to make the decisions that affect their financial circumstances.

Financial democracy does not automatically follow political democracy. For almost 25 years after South Africa’s political transformation, the exclusiveness of our financial markets continued to deprive the vast majority of South Africans of the means to invest, save, and build wealth. South Africa has, therefore, never developed a retail stock exchange environment. So, it has deprived the majority of small and medium sized business of access to capital.

For entrepreneurs to truly flourish, they need a mechanism that easily and seamlessly connects the investor pool with every size of business. And, they need affordable ways to enter both the retail and institutional market.

In short, they need stock exchanges. Ones on which listing takes weeks rather than years, doesn’t break the bank for listing fees, and provides the shortest route to the largest possible potential investor base.

That’s not been possible in the stock exchange monopoly that existed for six decades. Now, it is.

What’s changed?

We now have four new stock exchanges. The resulting competitive environment will significantly reduce the cost of listing – and the cost for investors of buying and selling shares.

Instead of restricting share trading to people or organisations who already have tens of thousands of rands to invest or millions to spend on listing, by licensing four new stock exchanges, the Financial Services Conduct Authority (FSCA, formerly the FSB) has recognised that most financial decisions do not call for high levels of education.

Related: The Role Of Foreign Exchange In The Economy

Most people know how to spend their own grocery money. Most know that it’s better to keep their R1 000 monthly income in a coffee jar than spend R50 of it on bank account fees. People who can barely read and write are immensely skillful at manipulating air time deals to their advantage.

There is significant financial savvy in all social strata.

In the same way, although the mechanics of bookkeeping and accounting may be unfamiliar territory to many entrepreneurs, most have a clear understanding of the difference between profit and loss.

The FSCA has therefore enabled democratisation of the financial markets by enabling the broadest possible spectrum of entrepreneurs and investors to use stock exchanges to participate in and contribute to the economy – on their own rather than prescriptive terms.

How do you take strategic advantage of this democratisation?

  1. Base your business strategy on people’s instinct for making decisions in their own best interests. Trust financial decentralisation, such as one sees in crowd funding and in digital environments such as block chain, where people would far rather trust one another than institutions and governments. This is democracy innately at work in the financial environment and it’s accelerating organically as digital technologies give people more means and the confidence to help themselves – to information and opportunities. Ride the wave.
  2. Tap into people’s desire to innovate. Consumer organisations have proved that letting people interactively help them develop products is a powerful growth engine. Apply the principle by letting people grow your business by buying shares in it, giving you capital and themselves a platform on which to build wealth.
  3. Remember, the ultimate loyalty reward is equity.

Your financial democracy business plan

Look to list on an entrepreneurial stock exchange; one that was founded by entrepreneurs on entrepreneurial principles.

That means: A stock exchange that is already built on financial democracy and decentralisation. One that has, at its core, a single operational concept that keeps things simple for you, automatically gives you an immediate competitive advantage, and, ensures that no matter what your business needs in terms of attracting capital, the exchange can provide all the options in the same, consistent way.

What does such an exchange look like?

It has fintech capabilities. So:

It slashes your listing costs. It achieves this, among other things, by enabling you to populate an electronic prospectus, demonstrating your financial viability, and self publish.

It gives you control by having the granularity and agility to impose relevant governance right down to the individual investor. You get to decide the types and quantities of investors you want to attract. This also enables you to achieve black economic empowerment in perpetuity.

It leads the world by clearing and settling trades in T+0. No-one in the value chain has to hold large sums of money for days following a transaction. Small transactions become profitable. Investors don’t have to risk their life savings on a single large trade. A retail market is opened. An investment and savings culture is entrenched. The economy expands. Your business grows steadily.

It enables anywhere, any time trading via a mobile app that allows investors to see share value in real time. See economy expansion point above.

It integrates processes and procedures, simplifying them and ensuring rapid onboarding of issuers and, therefore, speed to market with new concepts and alignment with the digital economy.

It operates a principles-based regime. So:

It treats you, as an executive, with respect. It’s not prescriptive. It does not insist on excessive oversight, allowing the Companies Act to guide you to sustainability.

It does not attempt to squeeze your company into a pre-defined business or listings format. It recognises and works with your uniqueness.

It obviates the need for expensive specialist listings advisors.

It focuses on financial inclusion and access. So:

Shares can be bought and sold for no more than R1 000. See economy building point above.

Related: 27 Of The Richest People In South Africa

The new world of stock exchanges is integrated, synergistic, holistic, organic, self-fulfilling

Decentralisation of financial control, democratisation of opportunity leads to a whole new economy. One in which, for instance, a taxi operator can finance a minibus through a company in which his purchase gives him shares. A single purchase gives him two benefits: a vehicle on which to found his business and a longer-term investment in shares that he can trade. The funding company gains liquidity through access to a wider base of investors while being able to control who buys and sells and the conditions on which trading takes place. Increasing black equity in business becomes an organic, natural, self-perpetuating process.

Everyone wins in a decentralised, democratised financial market. And it’s the stock exchanges that drive the process.

As an entrepreneur, can you afford to ignore the acceleration that listing could give your business growth?

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