Financial planning made simple

 In News, Nuus

At BVSA we believe that comprehensive financial planning is one of the most important aspects of reaching your financial goals. The task is not as daunting as it might seem and there are professional people to help you navigate the road ahead.

The following is a brief but comprehensive explanation of the most important aspects of financial planning.

Risk insurance:

Risk insurance ensures that you and your family are financially protected in the event of untimely death, disability, serious illness, or loss of income.

The life cover portion pays out a lump sum in the event of death. It can then be used by your estate or loved ones to cover any financial obligations that may result from your death: anything from outstanding debt and home loans to funeral expenses.

In addition, benefits for serious illness, disability, and income protection can cover the financial needs in the form of either a lump sum payment or a regular income. You can even insure the future education costs of your children if you pass away, become disabled or suffer from a serious illness.

Life insurance products are designed to offer comprehensive benefits that can be adapted to everyone’s changing needs. You determine the need and then finding a financial advisor to do comprehensive planning.

Death Benefit (Lump sum)

  • Usually a need for a predetermined amount
  • To settle debts
  • Legacy (replacing breadwinner’s income, capital for children’s studies)
  • Funeral expenses
  • Estate administration
  • Estate and other taxes
  • Executor fees
  • Master fees

Disability benefit (Lump sum)

  • Adjust lifestyle
  • Debt settlement

Income Benefit (Regular Payments)

  • Replace monthly income
  • Maintain a standard of living

Feared illness (Lump sum)

  • Additional medical expenses
  • Coverage against serious diseases (heart, cancer, etc.)
  • Physical impairments etc.



There is a big difference between saving and investing.

Saving:  Putting money into a bank or money market fund that you may need tomorrow. This is not money you want to speculate with, but the typical emergency fund of old. Here a comfortable calculation of 3x one’s salary may seem fair. The Covid pandemic has proven this point not to be a thumb-suck statement. It is sensible that you can take care of yourself in various circumstances for at least three months. It may be an emergency, or between occupations, or severance packages offered by employers, and then the little foxes, accidental defects, and breakages at home.

For these situations and even more, each one of us needs some savings.

Invest: This is money that should be working for you. This is an amount you set aside regularly or once-off for a future purpose. Tuition fees, retirement, or a future goal are some examples. This capital is invested for a purpose and is not to be used in the short term. The “best” habit to form is to never withdraw funds earmarked for retirement or specific targets.

At BVSA we offer several options, but for most of our clients, unit trusts (collective investment schemes)  are the most appropriate.

One can invest directly in a unit trust fund or through financial services providers such as BVSA, an investment management company, or, in some cases, through a bank. You might need some advice as the options are far too great with regards to the vehicle for a specific purpose, plus choosing from thousands of funds available.

Your investment returns come from the unit trust fund in which you invest.

The fundamental premise of a unit trust is simple: a group of investors putting their money together to obtain a professionally managed investment. An important feature of a unit trust is that investors share the risks and benefits in proportion to their participating interests in the scheme. Unit trusts are currently the largest and most common form of investment in South Africa. It was originally designed to give ordinary people access to the JSE. Through a unit trust, an investor has the opportunity to participate in a diversified, professionally managed portfolio.

Here are the three most common options that have a place in everyone’s portfolio. You choose the most suitable investment options from a variety of investment solutions and funds.

Tax-free investment

Tax-free savings accounts are designed to encourage individuals to save. This makes them financially less vulnerable and less dependent on debt to deal with unexpected shocks within their normal income and expenses.


  1. Any return or profit on the investment is exempt from all taxes.
  2. The total value of the investment, including interest and investment returns, is not subject to any restrictions.
  3. The proceeds of death may be bequeathed to a beneficiary


  1. Individuals can invest money from after-tax income.
  2. Total contributions per tax year will be limited to R36 000.
  3. Annual contributions that exceed the limit will be taxed at 40%.
  4. A similar rule applies to contributions that exceed the lifetime limit of R500 000.
  5. Unused capacity from previous years can not be transferred.
  6. Withdrawals are allowed at any time and are tax-free.
  7. Funds with performance fees are not allowed.

Linked investment in unit trusts

It offers you the flexibility and freedom you need to invest without restrictions. You choose how you want to invest and how much you want to withdraw, whenever you want.

Is it for you?

  • Yes, if you want a flexible investment solution.
  • Yes, if you want access to your money.
  • Yes, if you want to invest a lump sum or a regular amount.
  • Yes, if you want the choice to supplement your income with regular withdrawals from the investment.


  • You can phase in your investment if you do not want to invest everything at once.
  • You can choose from a multitude of unit trust funds.
  • You can keep your money invested, take a portion or the full amount when you have reached your goal, or take a portion or the full amount when you need it.
  • You can take a percentage of the capital per year as a regular withdrawal to supplement your income.

When is it not for you?

  • If you find it difficult to keep your hands off your investment money.

Retirement annuity investments

A retirement annuity is a tax-efficient solution to provide for retirement savings. It is available to all individuals and even more so to those who do not belong to a pension or provident fund. It can also be used to supplement existing retirement savings.


1.     Tax efficiency:

  • Contributions can, up to the legal limit, be deducted from taxable income.
  • Investment returns are tax-free.
  • Tax-free lump sum in cash at retirement, up to the legal limit.
  • Proceeds from retirement annuity are excluded from the estate in respect of costs and estate duty.

2.     Credit protection:

  • Creditors can not seize it in the event of insolvency.


  1. Single and/or recurring contributions.
  2. Retirement from age 55.
  3. At retirement, up to one-third (1/3) of the retirement benefit can be taken in cash.
  4. The remainder (2/3) must be used to purchase a pension.


What is expected of you, the client:

As a client, you have the right to identify and focus on specific needs. We respect this right, but should you decide to consult with us only on specific needs, we ask you to take note and accept the responsibility regarding the following:

  • if focused advice is provided, there may be more urgent needs in your financial planning than exactly what you are requesting;
  • therefore, there may be limitations on the applicability of advice provided;
  • it is your sole responsibility to ensure that the advice provided applies to your current financial circumstances.

Comprehensive financial advice truly remains the best option and offers you a plan where you can build and manage your future. Like everything in life, plans and efforts always need to be reviewed and adjusted. A financial plan will take the pressure off of you so you can go ahead and do what you are good at.

You can get in touch with a BVSA advisor to learn more about our insurance and investment services. We can help manage your financial planning and reach your financial goals, both big and small.

Written by: Gert Kalis & Guillaume Oberholzer

BVSA Bellville & Swellendam


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