Don’t let the ordinary, hail damaged leaves fool you. The vine is easy to grow and these flowers are extraordinary and have a strong scent.
If you’re in a corporate environment, you probably have ‘Group Benefits’ like life cover, provident funds etc added to your ‘Cost to Company’, and because they are ‘fringe benefits’ you get taxed on it too. Historically they have had a bad rap, with good reason. It isn’t the ‘life cover’ that causes the problem, it is usually ‘disability’. The old fashioned Capital Disability lumpsum was (and sometimes still is) problematic. Even if you can limp into work and plonk yourself down on a chair you may not be considered ‘disabled’ enough by the insurance provider. But should you throw the baby out with the bathwater and completely disregard these benefits when doing a financial plan?
CGT can create a liquidity problem in your estate
Capital Gains Tax, when it was first introduced in 2001, was mooted to ‘replace’ estate duty. 13 years later not only is estate duty still there, but the ‘inclusion rate’ has increased. Call it what you like, this is a wealth tax, and the longer you hang onto the asset, the bigger the liability. As the years tick by post 2001, that bill is getting bigger and bigger. Nasty. Recent estate plans I have done has brought this very painfully to light. If second homes and company shares are held in the names of individuals, and not trusts from the start, the liability can grow out of control.
7 things you should do when you change jobs
Sometimes the little decisions that we make, or procrastinate over when we change jobs can have a significant impact on your long term finances.
1. Never burn bridges. You never know when you might need a reference for your dream job, or even want to approach the company to be a client.
2. Tightly manage your social media profiles. If necessary close down profiles and request Google to remove anything that is particularly noxious. All the social media profiles have a different ‘niche’ – Facebook is for friends and family really, give colleagues access to LinkedIn. Twitter causes more bloopers than any other social media platform. Pause before you hit the send button. Never hashtag past, present or future companies unless that’s your job.
Shareholder’s agreement – Is it worth the paper it’s written on?
If you have more than one partner in your business, you’ll have a buy-and-sell agreement or clause in your MOI. Often that is the last time a shareholder will worry about it, consumed with the business of, well, running the business. Why the concern anyway? You trust your partner to honour the agreement right?
The single biggest concern is the potential lack of liquidity in the hands of the other partners so that they can pay the value of your shares to the estate. It isn’t that they don’t want to, it’s just that the bank might not lend the money when the company is ‘unstable’. A partner is unlikely to sell his house, or other major asset to hand over the cash to the estate. This can draw out the ‘winding up process’ to years, and potentially force the company into liquidation.
Meaty Filling or a mess?
Vilifying the middleman became a national pastime with the birth of the direct insurance industry, a hobby that seems to have quietened down somewhat recently, but the topic bears scrutiny – the mud has stuck. I like to think that one of the reasons this topic has quieted down is that the customer isn’t that gullible, and in response the massive advertising campaigns have switched to ‘service’ (excuse me while I choke on my coffee).
“We don’t charge commission!” Yay! So that means your premiums are going to be proportionately lower… Right? Nope. Well… maybe, I haven’t done enough comparative quote to put any kind of statistical certainty on it, but I haven’t found one apples-for-apples quote from a direct life insurer that can’t be beaten hands down by traditional insurers with full commission. It makes sense. They might not pay commission, but they have massive call centres to fund, prime time TV ads to run, print ads, events, sponsorships etc. That money has to come from somewhere – Yup… Your premium. It is merely a redistribution, not a saving.
Everywhere you go, every newspaper you open, is full of statistics, gently massaged to scare you, persuade you or change your mind. Throughout my career I have used statistics extensively, and it infuriates me when they are abused. The Financial Advisory industry is a major culprit – usually using subsets of carefully defined populations to make a disability sound have a higher chance of happening than is actually the case. There is only one absolutely sure statistic in the Life industry. We have a 100% chance of dying.
There are statistics that are really useful though, one of them is called Standard deviation. Long winded term, and not that easy to understand – but let me give it a bash…