Silke Financial Monitor, Issue 9

"Kissing The President's Wife"

Who you may ask... Mrs Zanele Mbeki, the wife of our State President, Thabo Mbeki. What a great honour it was for me - to momentarily have stood alongside her. Imagine, other men the likes of Thabo Mbeki; Desmond Tutu and Nelson Mandela have done the same. What a humbling experience for me.

Well that’s what happened. I kissed her on the cheek! Why you may ask? We (Silke Financial Services) recently were nominated for the below award and WON. The Awards were handed out by Mrs Mbeki! So that’s how :-)

Silke Financial Services is very proud to have won a BASA Award for Ikwezi Art Centre in the category "Increasing access to the Arts."

One of the panelists, Andrew Human stated 'Ikwezi Art Centre deserves an accolade because the project truly aims to make a difference by offering creatively talented artists the chance to develop their talents. Added to this is the fact that the project aims to create a financially viable solution in the long term...'

Apart from this; (mmmmmm like this was not enough) we have taken on a new "project manager", Carolyn – who we managed to outmaneuver directly from Nedbank GTSS (Group Technology Support Services) at a very reasonable price. So a hearty warm welcome to my wife. I have it in the know that she is campaigning for us to convert to real coffee - I thought Nescafe was!

Additional Gadgets at Silke Financial Services include the introduction of a Tropical Aquarium. Increasing our menagerie in miniature animals. Stars of the tank, Ghost Knife Fish. Please pop in to see these guys "fly" in reverse!

So, I leave the rest of the article for you to gastronomically soak up in an assortment of literal tastes or read on and enjoy! I liked the latté.

Kind Regards
Shane Thom

In this issue

1. Articles Use Trusts To Safeguard Children's Future Align Your Investments With Your Time
2. Silke Range of Professional Financial Services
3. Silke Sponsorship Program – Ikwezi Art Centre

Articles

1a Use Trusts To Safeguard Children's Future

– Ken Silke

Trusts are used extensively in estate planning. What can be confusing though, is that there are two different types of Trusts. An Inter Vivos trust is created while you are still alive in order to peg one's estate for estate planning purposes. A "testamentary" trust is created in a Will in order to protect inherited assets for the benefit of, typically, one's minor children. This type of Trust is created in your Will and only comes into effect upon your death.

The reasoning behind creating a testamentary trust for minor children is that persons under the age of 21 may not inherit assets directly. Failure to create provision for a testamentary trust will result in the Master of the High Court controlling these assets and all monies are placed in the Guardians Fund. In essence, when you create a trust in your Will, you appoint trustees to look after the assets you leave behind until your beneficiaries (heirs) have reached the age stipulated in your will.

Ken Silke says: "It is very important to choose your Trustees carefully in your Will as these people must have knowledge of prudent investment and must also use their discretion judiciously in looking at the best interests of minor children."

Most testamentary trusts provide that minors can be paid income until age 21 and that the full capital shall only pay out when the child turns 25 and the Trust dissolves. However, you can stipulate any age at which you would like your children to receive their assets from the Trust as long as it over the age of 21. If a child is, for example, physically or mentally impeded, the Trust can be worded to expire on that child's death.

In the normal course of events, a child's guardian will inform the trustees what money is needed for, such as school fees or monthly maintenance costs. The trustees pay out the money at their discretion after due consideration.

It's a good idea to appoint a family member as co-trustee for the "personal touch".

There's nothing to stop your child's guardian from being a Trustee; and the Trustee needn't be the executor of your estate. Having too many trustees, however, can make the running of the trust cumbersome.

It is normally advisable to set up a separate trust for each of your minor children. This will depend on how your Will is worded.

Below is a typical example which sets up a trust for each child:
"I direct that, should any beneficiary be under the age of 25 (twenty-five) years, such beneficiary's inheritance shall be held in trust by my Administrator who shall utilise as much of the income as he, in his sole discretion, may deem necessary for the maintenance, education, general welfare and benefit of such beneficiary. Any surplus shall be capitalised.

I further authorise my Administrator to utilise the whole or part of the capital for the above purposes should he, in his sole discretion, decide that the income is insufficient.

At age 21 years (twenty-one years), my son, Daniel, shall be entitled to receive 25% of the then gross capital of the value of the Trust created above.

When my son, Daniel, attains the age of 25 (twenty-five) years, the Trust shall terminate and the capital, as it then exists, shall be paid to him.

Notwithstanding the above, I direct that my Administrator shall have the power and authority, in his sole discretion, to accelerate or postpone the termination of the Trust, either in whole or part, should circumstances warrant such action."

The correct wording of your Will is essential. Should you wish us to review your current Will, please give us a call.

1b Align Your Investments With Your Time Horizons

– Shane Thom

We all have different investing goals and different time frames for achieving them. Some are short-term, like saving for a vacation or a car, while others are long-term, like retirement. In addition, every investor has a different comfort level with investment risk.

Align your investments with your time horizons

The type of investments you choose will depend on whether you're saving for long-term or short-term goals.

• For your long-term goals, you may want to consider long-term, growth-oriented investments like general equity unit trusts. With this long-tern view of your investment there is no need to try and take profits should the market be at exceptionally high levels. While risk sounds like something to avoid, there can be an upside - greater risk may offer the opportunity for greater rewards over the long term. The longer your investment time horizon the greater you can afford risk.

• Your time horizon is the expected length of time you will be investing in order to meet your goal. Determining your time horizon will help you decide which types of investments are appropriate for you. If you have only a short time until you need your money, you will not want to invest in something that could cause you to lose your investment. If your time horizon is longer, you will be better able to recuperate from a bear market. A longer time horizon allows the investor to assume more risk. Hence, the length of your time horizon helps determine how much risk you should take.

1. In addition to looking at your time horizon, there are at least two other factors that you may want to consider.
2. First, there is the "sleep factor". How much risk can you assume and still sleep well? You need to decide how much risk you can stomach before investing.

• The second is the amount of capital you have available to invest. You should never invest more than you can comfortably afford to be without during your time horizon.

• Your short-term goals call for investments that are more conservative, and more accessible. For example, if you're investing to save for a deposit on a home, you'll want quick and easy access to your funds and you will not want to take on any major risk.

Monthly unit trust investors must take cognisance of rand-cost averaging and not try and “time the market”. Investing on a monthly basis will buy more units of a unit trust when prices are low and fewer units when prices are high. Provided the fund gains value over the long term, you will profit from your purchases during short-term declines.

Silke Financial Services offers advice on funds at all levels of risk. We research the market in order to find the most appropriate funds at all risk levels. But don’t make the mistake of disinvesting if you are a long-term investor.

Words from the Wise:
"If you are going to sell every time the stock goes down, you will never win, anymore than a general who always retreats when the enemy advances." – John Train

Our Range of Services

We offer the following range of services to provide a one–stop service:

• Financial Planning
• Retirement Planning
• Tax efficient investments
• Approved offshore investments
• Legal & Broker Protection Services
• Pensions and Provident Funds
• Collective Investments - Unit Trusts
• Wills, Trust and Estate Administration
• Tax Structuring – Private and Corporate
• Medical Aid Schemes – Private and Corporate (accredited consultants by the Dept. of Health)
• Life, Disability, Dread & Severe Illness Assurance
• Tax friendly investments for high tax bracket clients

Silke Sponsorship Program – Ikwezi Art Centre

We are proud to be the Main Sponsors to the Ikwezi Art Centre situated at the Montebello Design Centre in Newlands, Cape Town.

Please feel free to contact Joel Zwane, manager, should you require any further details. Cell: 073 608 9984.

Bring this Newsletter to get a 10% discount at the Ikwezi Art Centre.

Quote of the Week

"Whatever good things we build end up building us."
– Author Unknown

Authorised Financial Services Provider FSP No. 12462 Accredited Health Care Broker: BR 3440