Beware of panic-driven decisions. Connie Bruwer from PC Bruwer and Partners gives advice on this important topic.
When the time for retirement draws closer, there is a danger that one can start making panic-driven decisions. Beware of this.
You have a job that provides income. Hold on to it, because it brings money in that an investment cannot or will not bring to you.
It’s just stupid to resign to get your pension money and then to just invest it in another investment.
The reason for this:
- you lose income and
- you restrict further growth of that pension money.
Consider your job, any job for that matter, as an excellent investment because it is. (By the way, drawing pension money has a tax disadvantage for you).
Likewise leave the pension fund money that you have saved from your previous employer rather as it is.
You could help someone to make sure that it is in a good fund in light of your particular risk profile.
But don’t tamper with it too much, just make sure you are not in high-risk investment – your investment horizon is too short for that.
You already own property. This is good because in a sense you’re in a diversified investment portfolio.
Use the additional revenue you get to bring down your mortgage. The economic horizon is currently threatening a rate hike. You can relief the possible beating that this will bring for many people by now paying off your debt.
When you cheat on tax , you only cheat yourself. In addition, you cannot create wealth with being dishonest. Yes, you can cash in on the short term, but long-term financial growth will not happen.
You cannot, for example, save for old age, because the Financial Intelligence Centre Act (Fis) is going to catch you out when you want to invest money. With any investment today, you have to declare where the money came from.
Financial planners must also write statements adhere to the Fis-requirements.
All expenses in such an enterprise that do not pay taxes, is going to the pocket of the owner.
Salaries of workers, operating expenses, benefits for workers and even contributions to your retirement nest egg, is all deductible, and this in turn lowers the tax burden. A friend once said that if your business depends on you evasion of tax, then you are not a business.
