Email your questions to [email protected] or fax them to 021 4884119. This feature is sponsored by PSG Wealth.


Are the ‘gold bugs’ right?

There is a section of the investment community (or perhaps they could better be described as prophets of doom) that constantly advocates investing in gold. According to them, world equity markets are about to crash and assets such as cash and bonds will be worthless, too. They would have us believe that the gold price will soon be US$2 000.

The wild and extremist predictions aside, do gold (as opposed to gold-mining shares) and other precious metals have any role to play in a diversified portfolio? If so, what proportion of one’s assets, on average, should be allocated to gold? Should the holding be in the form of actual physical gold (such as Krugerrands) or exchange traded funds (ETFs) ?

M Skosana


Pierre Puren, a financial adviser at PSG Wealth in Jeffreys Bay, responds: The first part of your question is quite speculative and could be interpreted in many different ways. The fact is that any portfolio constructed on the premise of fear, speculation or a prediction should come with a warning. It is better to consider your personal financial needs, your current and future goals, and the returns you require from your portfolio.

Gold is generally held by investors who want protection against rand weakness (the gold price is quoted in United States dollars), political uncertainty and stock market movements.

When considering an investment in gold, you are probably better off investing in an ETF, such as NewGold, as opposed to owning physical gold, because the risk associated with holding gold in the form of Krugerrands is much greater.

Remember that, in the case of ETFs that invest in gold-mining companies, other factors, such as operational risks to the business, may affect the price.

Never risk more than three to five percent of your capital when considering adding a new position to a diversified portfolio.


Where must African Bank units be declared on an L&D account?

Under which heading in a final liquidation and distribution account must one include African Bank units? The units were part of my late father’s Stanlib money market account.

Andre Lambrechts


Ronel Williams, the chairperson of the Fiduciary Institute of Southern Africa, responds: The units must be recorded under the heading “Movable assets” in the liquidation account.


Can I open tax-free savings accounts with different companies?

I have the following questions about tax-free savings accounts (TFSAs):

1. Can I open more than one tax-free account with different companies without tax consequences?

2. Which investments are better for TFSAs in terms of fees and returns?

3. If I open a TFSA with Company X, must I stay with that company for the next 17 years (assuming I invest R30 000 a year until I reach the lifetime limit of R500 000)? Or can I be with Company X for, say, five years, Company Y for three years and Company Z until I reach my lifetime contribution limit?

Name withheld

Marius Cornelissen, a financial adviser at PSG Wealth in Menlyn, Pretoria, responds: You are allowed to open tax-free accounts at multiple investment companies in a year, or over a number of years. You are not restricted to retaining your investment with one company over the period of your investment.

It was not permitted to transfer a TFSA from one provider to another in the first year after National Treasury launched the products in March 2015. Treasury has postponed the implementation of inter-provider transfers until March 1 next year, to allow more time to consult with product providers on the rules and procedures.

The optimal investment vehicle depends on the level of risk you are prepared to take.

Risk-averse investors might prefer a money market or an interest-bearing unit trust fund, whereas aggressive investors might want a pure equity unit trust or exchange traded fund. Although low costs can enhance returns, the composition of the investment will be the deciding factor over time.


What’s wrong with investing in penny stocks?

I understand that, because “Your questions answered” is sponsored by PSG Wealth, the answers to readers’ queries will be biased. However, the advice to Bill Davidson that he needs R250 000 to trade on the stock market is completely false. I have been trading in penny shares for many years and am doing quite well. Francois van Wyk could at least have advised him about penny shares. I feel that your readers have been badly misinformed in this case.

Karen Jones


Francois van Wyk, a portfolio manager at PSG Wealth in Stellenbosch, responds: My advice was intended for the average person, not the few well-informed risk-takers. Yes, you can trade with small amounts, and you can do well if you have the skill. Penny stocks can be great investments, provided you trade them successfully. It’s a matter of matching your investment with your risk profile.


Can I contribute more to the GEPF?

I am an employee in a state hospital. I am a member of the Government Employees Pension Fund (GEPF) and of a retirement annuity (RA) fund. Can I increase my contribution to the GEPF? If so, by how much? Will the additional contribution be tax-deductible? If so, do I have to claim for it separately, as I do for my RA contributions? If I cannot increase my GEPF contribution, by what amount can I increase my RA contribution to benefit from the changes to the tax-deductibility of retirement fund contributions introduced on March 1?

Dr RR Chetty


Mack Lewele, the senior manager for communication at the Government Pensions Administration Agency, responds: In terms of the Government Employees Pension Law, members are not allowed to increase their contribution above the stipulated amounts that are deducted from their salaries monthly. All GEPF members pay 7.5 percent of their pensionable salary towards the fund. The employer’s contribution is 13 percent of the member’s pensionable salary. The employer’s contribution is 16 percent if the member is employed by the South African National Defence Force or a government department in the intelligence community.


Braam Fouche, a financial adviser at PSG Wealth in Umhlanga Rocks, Durban, responds: In accordance with the amendments that took effect in March, you are allowed a tax deduction for retirement fund contributions up to 27.5 percent of the greater of your remuneration or taxable income, with the deduction capped at R350 000 a year.

The deduction thus applies to other sources of income apart from your pensionable remuneration, such as overtime pay. Your current combined contribution to the GEPF amounts to 20.5 percent, which means that you can increase the contribution to an RA to the sum of seven percent of your pensionable income and 27.5 percent of the additional taxable income you earned, less your and your employer’s current contribution.

It would be advisable that you consult with a registered tax practitioner to calculate the exact amounts.


Must I pay tax on inherited money?

Does money inherited from a close relative have to be declared on an income tax return, and is it regarded as taxable or non-taxable income?

Margaret Sands


Kari Lagler, a tax consultant in private practice, responds: Heirs who receive an inheritance are not liable for tax. Any estate duty or capital gains tax that may arise will be payable by the estate or in the last tax return of the deceased. Where the inheritance is money, there should be no tax consequences for the heir. It is, however, necessary to declare the receipt in your annual tax return.

If you submit your ITR12 via eFiling, when you create the tax return, tick the box for “Amounts considered non-taxable”. When the tax return is generated, there will be a field for “Inheritances” under “Amounts considered non-taxable”.


Note: Readers will be sent the unabridged answers to their questions. Published responses will be edited.