Your investment, tax and insurance questions answered

Regularly review your investment strategy and asset allocation to ensure they align with your objectives and support your cash flow’s sustainability. Picture: Picture:

Regularly review your investment strategy and asset allocation to ensure they align with your objectives and support your cash flow’s sustainability. Picture: Picture:

Published Nov 22, 2023


Alexi Coutsoudis, Wealth Adviser at PSG Wealth, Umhlanga Ridge

I am planning on selling my home and renting an apartment to live in, instead. Do you have any advice for me on how best to use the money from the sale of my home to increase my income without making any harsh decisions?

When selling your home and aiming to generate income from the proceeds, it’s vital to consider potential tax implications. If you expect capital gains tax liabilities, it's wise to set aside funds in a high-yield money market account for payment during your next tax filing. Notably, if the property was your primary residence at the time of sale, the initial R2 500 000 in capital growth is tax-exempt.

To make sound use of the sale proceeds, it’s recommended you consult a certified financial planner. They will craft a personalised plan to guide your investment decisions in line with your financial goals. Recognise that there’s no one-size-fits-all approach; the right plan hinges on your goals and needs. To get started, establish the income you require monthly or annually and the duration over which it should be sustained. Assess the risk level needed to meet your expected returns, factoring in annual inflation adjustments, and ensure you’re comfortable with this risk level (your risk tolerance).

Drawing higher than the recommended income withdrawal could prematurely erode your capital, so be cautious. Your financial planner will suggest the most efficient products based on your circumstances. The strategic asset allocation of the investments should match your risk tolerance and long-term goals, balancing income provision and capital appreciation.

Regularly review your investment strategy and asset allocation to ensure they align with your objectives and support your cash flow’s sustainability. By implementing your financial plan and reviewing it annually, you will navigate the complexities of post-home sale financial planning and realise your financial goals.

Magdeleen Cornelissen, Wealth Adviser at PSG Wealth, Menlyn

I would like to know how I can minimise my tax liability while maximising my investment returns? How do I go about identifying tax-efficient investment strategies that align with my financial goals. Do you have any tips on how to structure my portfolio to minimise taxes and maximise returns?

There are several methods that investors can use to optimise their portfolio growth, while reducing their tax liability.

Tax-free investments have become popular over the past few years. Knowing that your investment returns are exempt from income tax, dividends tax and capital gains tax, gives you the opportunity to structure your investment without being concerned about the impact that tax will have on your investment. This can lead to optimised portfolio growth.

Investors may contribute R36 000 per tax year in a tax-free investment, with a lifetime limit of R500 000. Contributions in excess of the limits will be taxed at 40%. Do not underestimate the positive cumulative impact of the contributions on your portfolio.

Investors also have access to investment products that will provide them with an income tax benefit based on the contributions that are made to the products. This includes retirement annuities, provident funds and pension funds. Contributions to the products are tax-deductible, within certain limits. The maximum tax deduction you may make in a tax year is limited to 27.5% of the higher of your taxable income or remuneration from your employer, subject to an annual limit of R350 000. The products also come with the added benefit of tax-free growth.

Endowments also hold tax benefits for investors with a marginal tax rate higher than 30%. This product is taxable in the hands of the investment life company and taxable at a rate of 30%. On maturity, you will receive the benefit as an after-tax amount.

There are other ways to help reduce taxes and improve after-tax returns in investments. Asset allocation can be an effective tool as different asset classes may be taxed differently. It is, however, important to remember that tax should not be the only consideration when choosing an investment product. Your investment plan must first be in line with your personal financial goals.

Your financial adviser will also be able to assist in the construction of a tax-effective portfolio.

Robyn Laubscher, Advice and Product Specialist, PSG Wealth

We recently welcomed our first-born and as a young family, we want to take the rights steps to save for our child’s education as soon as possible. What can we do to develop a comprehensive education savings plan that will take into account our child’s age, future tuition costs and our current financial situation?

Congratulations, what an exciting time! There are a few aspects to consider:


From a savings perspective, one thing to bear in mind is that the sooner you start saving, the better! I would consider starting with tax-free savings account. A tax-free savings account has many benefits:

– You would be able to open the contract in your minor child’s name.

– There is no tax within the structure.

– There are a range of underlying investment options available, although certain restrictions do apply. For example, investments charging performance fees are not allowed.

– There are no limits on the growth within the portfolio, so the sooner you start, the better. There are however limits to the contribution amount, currently, the limit is R36 000 per tax year and R500 000 per lifetime (a penalty tax of 40% is charged on contributions above the prescribed limits). Bear in mind that if you open the contract in your child’s name, all contributions will count towards their own annual and lifetime limits.

Other considerations:

– Your will must be updated to include your nominated guardian for your child, should both parents pass away. It is important to discuss your wishes with your nominated guardian.

– Provision should be made in your will for the benefit of your child. It is important to create a structure that will provide for your child’s needs, should you pass away. A testamentary trust is often a good option to consider.

– There are also education benefits that you can add to your life cover that would pay for your child’s education should you pass away.

I would also suggest you engage with a financial adviser to discuss all the options available to ensure your goals are achieved.

Jacqui Mayne, Adviser at PSG Insure - Approved

I have just sold my house and I’ll be moving shortly. What I wanted to know is whether my goods will be covered while moving. I have home insurance that covers the building and contents – is this enough or am I required to take up additional cover?

Most household contents insurance policies offer limited cover for your goods while moving to a new home, but it is important to check with your adviser exactly what cover exists for the goods while in transit and what terms and conditions apply. If you understand these and the possible exclusions on your policy properly, you can decide if you need to take out additional household goods in transit cover.

It will be an insurance requirement that all reasonable steps are taken to limit losses and safeguard the items during the move. Most insurers will give cover only if the packing and removal is conducted by a recognised professional removal company, so it’s best to check before you pack the goods yourself.

Most professional removal companies also offer insurance for your goods in transit for an additional cost. This will allow you to compare and make an informed decision on whether to buy insurance through the mover, to buy additional cover though your insurer or go with the over on your household contents policy.

Whichever option you choose, moving is a good time to reassess that your contents are adequately insured. Make sure the household contents sum insured represents the full replacement value of all your household contents, so that you are correctly covered should anything go wrong.