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The Budget and Retirement Savings

The recent budget has had quite an effect on retirement planning. Are you aware of the changes and how they affect you?

Bryan Hirsch




At the beginning of this year there was an outcry when Bishop Tutu suggested there should be a wealth tax for whites only. But, from my perspective, this budget has proved tantamount to a wealth tax for all.

I fully understand that Pravin Gordhan had to make some difficult calls. He needs to protect our country and ensure he keeps the budget deficit as low as possible. He also had to satisfy a broad range of competing exigencies. So on this I’m giving him a gold star.

My clients expect me to advise them appropriately, based on their individual needs and investment portfolios so, here, macro issues play no part. It’s also a fallacy that the high income earners in this country have a great deal of disposable cash as they shoulder the burden of most of the country’s taxes. This doesn’t come cheaply and it’s not hard to understand why many big earners have very little money left.

Reality check

I believe that the cornerstone of a prosperous country, apart from its citizens being economically active during their working lives, is that they save for their golden years and don’t become a burden on the State.

Let’s examine what has been implemented and what will impact on savings.

  • Capital gains tax was introduced on 1 October 2001 remaining unchanged until now. Currently, with the increase for individuals from 25% up to 33,3%, the marginal tax rate has increased from 10% of the gain to 13,3%. Companies now pay 18,6% and trusts 26,7%. This will affect retirement savings outside formal retirement plans because the gains will be taxed at higher levels.
  • Local dividends will be taxed at 15% (not 10%). This increase places investors in a totally different position from prior to its introduction as, initially, it was thought that the increase would be neutral. Investors’ dividend income will now be reduced by 5% and, again, this will have a negative effect on retirement savings. There is also no guarantee that companies will pass on the previous STC as a dividend.
  • On the positive side for all investors with funds offshore, foreign dividends will now be taxed at 15%. Previously offshore dividends were taxed at your marginal rate.

Additional changes

I was surprised that for the first time in many years, there was no increase in the interest abatement tax which still stands at R22 800 for under 65s and R33 000 for over 65s. Surely an inflation adjustment should have been granted.

Changes in medical deductions to tax credits for those under 65 will wipe out minor increases in tax savings at higher earnings levels. For this reason, there isn’t going to be much more available from tax savings to invest for retirement and, even the slight savings you may make, will be absorbed by the increase in petrol prices and tolls. Unfortunately, if the changes to medical aids for those over 65 are implemented, people in retirement will need to have yet more money saved to pay for some of their medical expenses, which may not be tax deductible. We will receive more information about this in the 2013 budget.

There’s one other big positive in the budget relating to formal retirement plans, including retirement annuities. Prior to the budget, the advantages of a retirement annuity were as follows:

  • Tax deductibility on contributions up to 15% of taxable income
  • Retirement annuities don’t form part of your estate
  • No capital gains tax — paid by the fund
  • No tax paid on interest earned
  • No fixed retirement date.

Following the budget, dividends received by retirement annuities will not be taxed and, although outside retirement annuities CGT has gone up, it has no impact on the retirement fund.

On a final note, I am greatly concerned that SARS appears to have opened the door to increase various taxes in the coming years, and this could impact on future savings for retirement.

BRYAN HIRSCH has been in the financial services industry for 47 years and is a director of Bryan Hirsch Colley & Associates. He has written two books, the first Bryan Hirsch’s Guide to Personal Finance and more recently, Steps to Financial Freedom. Bryan has written for many of South Africa’s top financial and business publications, has been a weekly guest on Radio SAFM for 18 years, and has his own weekly TV show You & Your Money on Summit TV.

Personal Finance

6 Ways To Develop A Millionaire Mindset

Chasing money has remarkably little to do with getting rich.



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If you truly want to have a million dollars, you must first be and think like a millionaire. By doing so, you will attract the necessary resources to you.

So, you want to become a millionaire entrepreneur? You’re not alone. Many dream of leaving their job and becoming their own boss, enjoying the various millionaire lifestyles we watch on TV. But there’s a difference between those who dream of becoming millionaires and those who do. And it begins and ends with mindset. If you don’t develop that mindset, you will continue to spin your wheels, working just as hard, but never going anywhere.

Developing a millionaire mindset requires you to stretch your thinking. Start by developing the following six attributes.

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Personal Finance

4 Ways To Become A Millionaire Even When You Start With Little

It costs nothing to take advantage of the limitless opportunities online.

Timothy Sykes




The hardest part of becoming successful is getting started to begin with. But despite the challenges ahead of you, there’s a way to become a millionaire when starting with little. I’m going to show you four reasons why you can become a millionaire with just a small investment.

1. First focus on learning, not big gain

Education is your greatest weapon. Focus on learning in the beginning. Don’t make the mistake of focusing on making huge gains in the beginning. Learn everything you can because this is how you build the foundations for long-term gains.

Related: 21 Choices Millionaires Make That You Aren’t Making But Should Be

They say that if a millionaire goes bankrupt they’ll nearly always be able to get it back. And that’s because they might have lost their money, but they have the knowledge of how to get back to where they need to be.

2. You can learn loads about any topic online


I’m grateful for the internet. It’s the single biggest library in the world. You’re reading this article right now and you’re acquiring knowledge you wouldn’t have been able to acquire 40 years ago.

Use the internet to its fullest extent, whether that’s through reading books, browsing articles or watching video tutorials. Set some time aside every day to learn something online. It could be a video series or a favorite blog.

When you get into the habit of learning regularly you’ll find that you advance much faster.

3. Focus on the niche you love

These days you can learn about anything and target the niche you’re passionate about.

This is what I was able to do with penny stocks. I found a gap in the market and provided knowledge to people who wouldn’t have otherwise being able to access this sort of information.

You can do that with absolutely any niche. When you find a niche you’re passionate about and you use the reach of the Internet you start to make huge gains.

4. Prove your expertise by creating free content

Your reputation as an authority is the new business card. There’s a reason I created a penny stock guide and made it free for all. You may have already seen ads for it on social media. The way to succeed with little is to create a reputation through your content.

Related: How To Become A Millionaire, Explained In 1 Minute

It’s the gateway to success because through free content you start to build relationships with others who value your work. And from there everyone gets richer.

You can do lots with a little

The days when you needed a huge investment to become successful are long gone. These days you can do so much with just a little. Find what you love, advance your knowledge in that area, and create a product that fulfills a need. Finally, work on building up relationships through portraying yourself as an authority on your subject.

Combine everything together and you can accomplish anything.

This article was originally posted here on

Related: 13 Habits Of Self-Made Millionaires You Could Adopt Today

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Personal Finance

10 Tips To Become A Millionaire This Year

Becoming a millionaire requires changing your mindset and implementing some changes.

Murray Newlands



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Becoming a millionaire may seem out of your reach, but it’s possible with the right attitude and guidance. The fact of the matter is your income can only grow as quickly as you do, so you need to change your mindset to achieve your goal of becoming a millionaire.

Once you have a millionaire mind, you can’t lose it, no matter what financial or business mistakes you make along the way. To get yourself there, you’re going to need some structure. To help you, I’ve outlined the top ten tips you should follow to become a millionaire this year.

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