How To Teach Your Child About Investing

 

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How To Teach Your Child About Investing
By Andrew Beattie

Have you taught your children about investing? As they become aware of money and other financial concepts, it is vital that you arm them with investment tools that can last a lifetime.
Children mature at different rates so it may take time before they’re ready to tackle concepts like portfolio creation and asset allocation. However, the basics of investing can be taught quite young. Before your kids start cruising the Internet to check company profiles, you should explain risk and reward. Risk is the possibility that an investment loses some or all of its value while reward is the gain that an investment earns over time.
Let’s sketch a brief picture of two common investments: debt securities and stocks.

Stocks & Debt Securities
Stocks are variable risk, variable return investments. On the whole, they are categorized as high risk and high return. Make it clear that many risks involved in stocks can’t be predicted because corporate records can be tampered with or CEOs can lie but, despite those outliers, the stock market has risen consistently in the last hundred years, offering healthy returns.
A bond is a low-risk, low-return investment. Typically, bonds pay a small amount over the prime interest rate and are backed by stable institutions (usually banks or governments). You can buy lower rated bonds that offer better returns but they can default and you can’t necessarily count on getting the income when expected. Given the complexity of these instruments, you may wish to start your child with stocks and explain that bonds become more important later in life.

Keeping Your Child’s Attention
Show your child what stocks you own. Interesting companies might get their attention – plane manufacturers like Boeing, sports gear specialists like Nike, technology companies like Apple – look at the company’s investor relations page with your child to learn how much they earned, what they make and how many people work for them. Then ask your child what company he or she would like to buy. Kids have favorites even if they are not aware of them. For example, Facebook and Disney are popular with most children.
Once you have introduced your kids to basic concepts, sit down and let them select a company. If you have the money, buy the stock and look at it at least once a week to show how investments can rise or fall. If you don’t have the money, make an model online portfolio and track stocks for fun.
When your child is older, you can provide a more in-depth explanation of stocks and other investments. Eventually, you want to let your children buy their own stocks. Your child may have enough cash diligently saved up in a savings account by the time he or she is interested in investing. Don’t put it all into a bond or the stock market, but invest a third in each and keep a third in savings. This will allow your child to compare the returns of different types of investments.
You have two options if your child doesn’t have money to participate in the learning process. You can use your own cash to open a small brokerage account for your child to make investments or build a model portfolio of stocks that your child wants to buy some day. In the latter case, you will need to find innovative ways to maintain their interest.
Allow your child to make real decisions and take real risks. Money may be lost but the purpose of the exercise is to familiarize them with investing and part of this process is learning that investments have advantages and disadvantages. Whatever the outcome, the experience of gaining and losing money will be valuable.

The Bottom Line
If you pick stocks with your children when they are young, they will get a sense of the financial market’s up-and-down cycles. This understanding will prepare them for dealing with market fluctuations and making informed decisions when they grow up.

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Read more: How To Teach Your Child About Investing https://www.investopedia.com/articles/pf/07/childinvestor.asp#ixzz5Jd43H1jN

Undeniable benefits of working with a broker.

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Technological innovation has meant that consumers have far wider choice and far more information at their fingertips than they have ever had. Coupled with this is the stellar growth in recent years of direct insurance, which harnesses technology and connectivity to provide consumers with near-instant insurance covers and greater convenience. Both of these factors have impacted brokers heavily, with consumers no longer necessarily needing to use their services. With a drop-off in intermediated business, as well as the regulatory changes that cap the fees brokers may earn.

I disagree. In fact, we believe more than ever that brokers are a necessity. While consumers have access to more information, navigating it to arrive at the best possible cover can be a nightmare for them. And that is where brokers really come into their own: they provide expert advice, which one will never get with direct insurance; they are able to arrange proper, relevant cover for individual customers; and they are able to assist customers when it comes to submitting a claim.

As the world becomes more generic, more ersatz, even dumbed down, we need specialists more than ever; this applies especially to the insurance industry. We need people who know insurance intimately, who know their clients and their needs personally, and who can help them navigate the sometimes very complex insurance landscape.

When it comes to eyeballs and handshakes, we are saying that there is still no substitute for good old-fashioned face-to-face, human interaction. When you look someone in the eye and grasp their hand, you are ultimately seeing that person and telling them that you have their best interests at heart.

Convenience is wonderful, but it is trumped every time by great advice and service from an intermediary who knows and cares about his or her client. We need to actively look after the wonderful resource that is the intermediary.

Success is better, shared – PPS allocates R3.7 billion in profits to members in 2017

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PPS – Built on the ethos of mutuality, PPS, a financial services company focused exclusively on graduate professionals, showed a strong performance in the 2017 financial year, allocating R3.7 billion in profits to its members. This is in addition to the R2.9 billion in total benefits paid.
“Success is better, shared,” says CEO of PPS, Izak Smit. “PPS members enjoy more than just professional cover. In 2017, our members were able to enjoy their share of R3.7 billion allocated to their unique Profit-Share Accounts, further reinforcing our passion for mutuality.”
The company’s ability to perform in a tough economic environment was achieved through leveraging technology for cost-efficiencies, tight expense management and a significant rise in investment profits.
There are currently 4 400 PPS members who have over a million Rand in their PPS Profit-Share Accounts. Profits are allocated to members’ PPS Profit-Share Account annually. These profits accumulate over members’ working lifetime and at retirement, can be transferred to PPS Investments for further investment growth.
Smit is pleased with the company’s robust growth in 2017, which saw gross premium revenue exceeding R4 billion for the first time – a 12% increase year on year. The Group’s total assets, (excluding unit trusts for third parties), increased to R35.3 billion. PPS Investments increased assets under management to R28.6 billion with new investment flows rising 14%. This is partly attributed to members reinvesting their money with the investment business at retirement. Smit adds, “PPS has evolved to an end-to-end financial partner for our members.”
Smit attributes this healthy performance to graduate professionals’ growing appetite for PPS’s unique solutions and the ongoing support the company receives from intermediaries.
“We have seen a strong surge in support from intermediaries and were delighted to win the Long-Term Insurer of the year: Risk Product category, at the prestigious Financial Intermediary Association (FIA) awards last year. Intermediaries are key business partners and we will continue to work closely with them in the future.”
A focused strategy and strong growth have underpinned the company’s evolution into a fully-fledged financial services company, offering a wide range of solutions tailored exclusively around the needs of graduate professionals. The PPS offering now spans long and short term Insurance, investments, financial planning, fiduciary services and healthcare administration.
Looking ahead to 2018, the company will continue to focus on growth across the full range of financial solutions. PPS also plans to roll out digital tools and initiatives which will further enhance the service experience for members and intermediaries.
Additional information:
PPS members enjoy access to a comprehensive suite of financial and healthcare products that are specifically tailored to meet the needs of graduate professionals.
PPS is the largest South African company of its kind that still embraces an ethos of mutuality, which means that it exists solely for the benefit of its members. Thus, PPS members with qualifying products share in the profits of PPS Insurance via annual allocations to the unique PPS Profit-Share Account and those who have qualifying PPS Provider products can also share in the profits of PPS Investments.
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The junk-food,lazy generation

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Fin 24 – A sedentary modern lifestyle and increasing levels of obesity will more than likely lead to today’s children being less healthy than current adults over 65 when they reach the same age, startling results from a global healthcare survey have revealed.

The report, compiled by The Economist Intelligence Unit (EIU) and commissioned by science and technology group Merck, has suggested that modern lifestyle-related problems are already triggering health problems among children, including a rising incidence of obesity.

Polling the opinions of educators and parents in Germany, South Africa, India, Brazil and Saudi Arabia, while respondents consider the current generation of children as “generally healthy”, 58% of educators believe today’s children will be less healthy than today’s over-65s.

A further 81% of educators surveyed say that children run a high risk of being physically unfit later in life, while 57% believe children are at high risk of developing chronic diseases such as diabetes.

According to the World Obesity Federation, over 223m global schoolchildren are currently overweight or obese, with recent figures estimating that 15% of South African children fall within this category. Of the five countries surveyed, however, SA brings up the rear.

Saudi Arabia leads the obesity stakes, with 37% of its children classified as obese, followed by Brazil (34%), India (22%) and Germany (20%).

Paradoxically, decreased average health levels and increased rates of global obesity are expected to occur in conjunction with a jump in expected average life expectancy, with today’s generation of children, according to World Health Organization (WHO) statistics, expected to live beyond 100 years.

This means that, while the current generation of children are expected to live longer than their parents, their quality of health, particularly in their later years, is likely to be below that of the prior generation.

Formal interventions lacking

Investigating the nature of existing formal structures in place across schools to educate children on health matters, the survey found that while schools in all five countries targeted primary healthcare issues, such as a lack of exercise and nutrition, they largely ignored issues of mental health in children.

“The importance of education for child health is widely recognised, with educators ranking teachers alongside parents as the most important sources of health education.

“However, wider well-being issues, such as avoiding stress, are largely ignored, and neither parents nor educators report mental health problems as widespread among children.

“Evidence from Germany suggests that mental health problems, including anxiety and depression, rank alongside obesity as the major issues for child health, leading to physical and mental health problems in later life,” EIU research director Aviva Freudmann told the Merck Global Consumer Health Debate last month.

According to the German public health institute the Robert Koch Institute, 20% of German children suffer mental health problems – the same proportion as those that are overweight.

Freudmann added that there is little evidence that school education programmes are managing to stem rising rates of obesity and mental disorders. This is the result of a larger lifestyle issue.

“Outside of school, children in both rich and poor countries spend too much time on sedentary activities, such as watching television or playing computer games – more than half of South African parents report this as a problem,” she explained.

Moreover, parents and educators express widespread concerns over the poor nutrition of children and the fact that they make poor food choices.
Holistic solutions

While there are gaps in schools’ approach to educating children about health, the study believes the larger problem may lie elsewhere: in the failure to integrate efforts of families, schools, communities and policymakers in promoting healthier lifestyles among children.

Underresourced education systems in countries such as SA, for example, result in schools struggling to meet their primary educational tasks, let alone their responsibility to contribute to child health.

“Lifestyle problems begin and develop at home, with children combining sedentary lifestyles with poor diets – and in some instances acquiring smoking or drinking habits. Parents and communities could do more to counter such development.

“Considering the longer life years that today’s children can expect, it makes sense to focus on health practices that will increase the chances of making those longer life years healthy ones,” concluded Freudmann.

The writer attended the Merck Global Consumer Health Debate in Germany as a guest of Merck.

Source:

https://www.fin24.com/Finweek/Featured/the-lazy-junk-food-generation-20170627

How will the VAT hike affect property sales?

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Fin 24 – A question raised about the 1% value-added tax (VAT) increase to 15% as from April 1 2018, as announced in Budget 2018, is how it will affect fixed property sales currently in progress or under negotiation.

Leonard Willemse, senior tax consultant at Mazars, explains this question stems specifically from the application of the time of supply rules regarding the sale of fixed property.

If a VAT vendor – for example a property developer – has signed a sales agreement on January 1 2018, but both the payment of the sale price and the transfer of the fixed property is done on or after April 1 2018, it raises the question of which VAT rate applies to the transaction: 14% or 15%?

The VAT Act states that fixed property is supplied under a sale at the earlier of the dates on which registration of the transfer of the fixed property at the Deeds Office takes place or when any payment in respect of the sale price for such “supply” is made by the purch

Example

He gives as an example a situation where a VAT-registered property developer enters into a sales agreement with a purchaser on January 1 2018 for the sale of a unit with a price of R10m (inclusive of VAT). Both parties sign the agreement on January 1 2018, construction starts before April 1 2018, is completed after that date and the registration of the transfer of the property in the Deeds Office is after April 1 2018. Payment is made on the transfer date.

In terms of the fixed property time of supply rules, the time of the supply takes place after April 1 2018, effectively resulting in the transaction being subject to VAT at 15%. The seller ends up receiving less from the sale or, conversely, the purchaser ends up paying more.

Knight in shining armour

“Luckily, there is a knight in shining armour, namely section 67A(4) of the VAT Act. Almost hidden away at the end of the act, the section has not often been looked to for relief considering that the VAT rate has remained at 14% since 1993,” explains Willemse.

“In short, the section provides that, subject to certain conditions, the VAT rate that is effective on the date that a written sales agreement is entered into will apply.”

In terms of this interpretation, the 14% VAT rate would apply to the supply of fixed property where, before the date on which an increase in the VAT rate becomes effective (April 1 2018), a written agreement is concluded subject to certain conditions.

These conditions would be that it is a sale of a residential property (not a commercial property); that the price paid was determined and stated in the written agreement before the VAT increase date; that the agreement was signed by the parties before the increase date; and that the supply of the property is deemed to take place on or after the increase date.

Source: 

https://www.fin24.com/Money/Property/how-will-the-vat-hike-affect-property-sales-20180309