WealthWise August 2011

www.wealthwisemag.com

WealthWise magazine Vol I/No. 6

FREE

South Africa August 2011

Black or White?

RAFI速 Investment Methodology

Living annuity A better Long term future?

21 Bad Habits in SMEs Stress and Finances

New! Ask Shaun:Your questions answered

Happy Women's Day! Win e-training sessions and Zamar music albums! Details on page 53.

In this edition...

On the Cover 20

Black or White? RAFIŠ Investment methodology

25

Living annuity - a better long em future?

20

LifeWise 11 16

39 12 28

Business Column: 21 Bad Habits Stress and Finances

Ask Shaun: Your questions answered

QuickRead: Be persistent!

How to deal with change

30

16

MoneyWise 19

QuickRead: Free up some money!

30 32 2 WealthWise

Women and Spending Lack of...

BusinessWise 35

QuickRead:The number one marketing mistake

36

Common mistakes start-ups make

36

CareerWise 43

QuickRead: How employees get noticed

44

E-training made in South Africa

44

Agenda 47 48

This month we inspire you to...

moyo - Modern, Sophisticated, African

54 56

On the bookshelf Events, workshops and seminars

48

Regulars:

8

2 Contents 53 Competitions 5 Foreword 58 Last Word 7 Mailbox 59 In our next issue 8 Contributors WealthWise 3

Foreword Mistakes Winter is almost gone and our team is looking forward for the spring season and

the time to put some order in your finances! Until then, we are proudly bringing you our August digital issue.

It’s Women’s Day in August, so we have dedicated a special feature on “Women and Spending” (page 30) to all ladies who read us, plus a final heart-warming message for all women out there (page 58) and fabulous competitions where you can win e-training sessions and fabulous music CDs! Speaking of training, we look closer at Kobus Neethling’s new e-training, “Taking You Beyond”, and the benefits it brings to South African businesses (page 44).

We could have easily made this edition of WealthWise magazine the “mistakes” issue, albeit business mistakes. Our business section this month tells you what not to do when starting or growing a small business, from business plans to marketing issues (see pages 36-42). We hope the practical advice will inspire some of you to re-think your business strategies before it is turns out for the worse. I myself can honestly admit to some of these mistakes and I am looking forward to make the right correction by implementing every day small steps.

On the investing front, this month we have the active and passive investor dilemma and the risks of living annuities. And if you find yourself in dire straits when it comes to finances, do read our “Stress and Finances” article (page 12) and don’t miss the equally helpful “How to Deal with Change” (page 16). If you do want our expert advice, ask Shaun (page 28) to answer your most burning financial questions and he might just solve your money problems!

We hope that our publication will inspire you to make every day, long-lasting changes to a wealthier future. Wishing you all the best,

Denisa Oosthuizen Managing Editor WealthWise magazine

WealthWise 5

Mailbox

WealthWise

magazine

Publisher REO Media Solutions

Thanks for a really interesting read, learn quite a few tips here, trying hard to improve my credit , I did a consumer proposal 7 years ago and just now I am starting to rebuild my credit slowly but surely and trying to avoid that credit card trap - Carol Ouderkirk, comment post

Outstanding stories once again, looking forward for next posts Edward Clumpner, comment post Awesome! Thank You for the time you put into this post. Keep the great information coming! - Nerrisa Rietschlin, comment post

Hi there, have you actually used the personal budgeting online tools or did you merely copy and a paste a review from another publication/blog? I ask because one cannot use any of the above tools if you’re South African barring the .co.za one. So what’s the point of giving us info that cannot be utilised? I am not being difficult – but I really don’t see what the point was and what use anyone has gained from giving them weblinks that cannot be used by South Africans - Ndosi, comment post

Managing Editor Denisa Oosthuizen denisa@wealthwisemag.co.za editor@wealthwisemag.co.za Contributors Shaun Latter, Shelton Kartun, Carla Rossouw, Nikki Viljoen, Bob Powers, Paul Stewart, Laurens Coetzee Sales and Marketing denisa@wealthwisemag.co.za Graphic Design REO Media Solutions Distribution www.wealthwisemag.co.za www.wealthwisemag.com Copyright All content and information within WealthWise publication is property of the Publisher and should not be reproduced, copied or entirely quoted without the prior approval of the Publisher, being protected under copyright laws.

Should you wish to make use of any of the content displayed Each month we showcase your best please contact us at comments, feedback and suggestions for denisa@wealthwisemag.co.za WealthWise magazine. Have your say! or Write to us at editor@wealthwisemag.co.za. editor@wealthwisemag.co.za! The best

comments will be published in our next edition.

WealthWise 7

Contributors Shelton Kartun (left) is a specialist in the

field of anger management and a counselor in stress management. Having trained overseas and co-founded the British Association of Anger Management, he is the founder and director of The Anger & Stress Management Centre of SA, the only centre of its kind in South Africa. He has over 20 years of experience in anger management, conflict resolution and stress reduction. Read Shelton's article on stress and finances in our LifeWise section, page 12.

Paul Stewart is the managing director of

Plexus Asset Management. Founded in 1995, the Plexus group of companies is an independent financial services provider that specializes in providing innovative, unique and holistic financial solutions for both corporate and individual clients.

As of 2010, Plexus Holdings (South Africa) incorporates Plexus Wealth Management (financial planning) and Plexus Asset Management (investment management services and solutions).

Read Paul's opinion on RAFIŠ Investment Methodology in our MoneyWise section, page 20.

Shaun Latter is the Director and Wealth

Manager of Quaestor Wealth Management, where he specialises in Estate Planning and Investment Advice. He is a Certified Financial PlannerÂŽ and was recently announced as a finalist for the coveted FPI Financial Planner of the Year Award 2011. He will be regularly answering your most burning questions on wealth in our new monthly column "Ask Shaun" in the MoneyWise section, page 28.

8 WealthWise

Lourens Coetzee is an Investment

Professional at Marriott Asset Management. He is responsible for both primary and secondary research in the securities market, as well as monitoring broad macro-economic variables.

Lourens has been part of the investment team since 2006 and is a member of the Investment Analysts Society of Southern Africa. Read Lourens's article on the shocking living annuities reports in our MoneyWise section, page 25.

Bob Power is presently CEO of Power Corporate

Consultants, which specialises in facilitating mergers and acquisitions, security and management consulting, coaching and training in the M&A spectrum, especially assisting those entering the SME market. Bob wrote our business column on 21 business mistakes often made by small businesses in our BusinessWise section, page 39.

Carla Rossouw is a Professional Conference

Organiser based in South Africa. She writes reviews on Venues, Hotels and Restaurants as well as International Destinations. She regularly writes for our Agenda section reviews of fabulous places. Visit her website www.carlarossouw.com and read her review on page 48.

Nikki Viljoen is an Internal Auditor and Business

Administration Specialist and owner of Viljoen Consulting. She is passionate about assisting SMME’s to grow sustainable businesses. Read Nikki's reflection on lack of money and an overview of the most common business mistakes in our MoneyWise and BusinessWise respective section, pages 32 and 36.

WealthWise 9

LifeWise Quick Read: Be persistent!

Are you a quitter or do you prefer to stick with your plan, even in the most

atrocious times? Here’s some good advice on cultivating your persistence factor:

Assess if you have the “quitter” gene. There’s no denying that most

people will quit in life when the going gets though. As a result of our inbred “fight or flight” response to external pressures, it is easy for humans to flee or quit rather than face the hardship. Think about situations in your past life where you have rather quit or exit without even considering the other options.

Acknowledge why you quit. Ask yourself in the most sincere manner why

you often adopt the quitting stance – is it because you’re afraid of the outcome once you decide to stay put? Is it because you are not fully committed? Is it because you are losing your enthusiasm? Find out the underlying cause behind your quitting response.

Anticipate the obstacles. Persistence is the ability to stick with a task, action, plan no matter what happens. People are not quitters from the beginning, they mostly lose their persistence when new obstacles appear in sight. Whatever you are starting now, learn to anticipate the obstacles that you might face in the future. A plan B always helps. And knowing what you could expect makes you ready for confrontation – not fleeing.

Know when to walk out. There are certain situations in life when you are

better off with quitting. Knowing when to quit is not an easy task. Some people will walk out when things are about to get better, really. This is where persistence pays off – acknowledge that some things take slower to show results. But if it’s the time to quit, are you doing it for the right or wrong reasons?

Lose the instant gratification. People expect instant results and it’s not

surprising why quitting is preferred when faced with a disappointment. Forget about the quick result or “want it now” mindset. To move towards your goals and improve your life, you need persistence, repeated effort , time and work. There are no shortcuts.

Be patient, ambitious and driven. Persistence involves patience, taking the time to stick with your plan and move one step at a time. Or as Johnnie Walker would say, “Keep walking”. Keep going, stick to your plan and the desired outcome will show.

WealthWise 11

Stress and finances

by Shelton Kartun

With the ongoing economic climate and global recession, financial stress is at an all-time high and quite wide-spread, particularly amongst middle and lower income groups, the unemployed and those in small businesses. It is not uncommon to find in localised studies that around 75% of individuals surveyed are very stressed about money.

A more recent study in SA revealed 85% of lower income groups were in debt, and consequently would be experiencing ongoing stress both in the workplace and at home. This is likely to increase further as the cost of living increases higher than the rate of inflation, especially around petrol, electricity and food.

These high percentages of individuals experiencing negative stress in relation to finances is worrying as financial stress is linked to a large number of health problems which can range from poor sleep patterns, fatigue, high blood pressure, raised cholesterol levels, coronary heart disease, skin or digestive disorders, loss of libido, irritability and even depression. At an emotional level anxiety is most prevalent and impact health negatively as well in these ways:

1.

Escapism – increasing intake of alcohol, cigarettes, food or other

2.

Self-medicating – those under financial stress have less money in the

substances, or addictive behaviours in order to ‘cope’ and numb their anxiety and stress. Unfortunately as these don’t address the source of the problem, the stress usually gets worse and the body becomes less healthy. The immune system gets challenged and the person can become more susceptible to other conditions. budget and are less likely to go for professional help to counsellors or doctors.

Corners are cut as people self-diagnose and start living on over-the-counter medication for headaches, poor sleep etc. More serious conditions could go unnoticed.

3.

Ongoing Insomnia – not only stress at work, but also financial stress can impact one’s ability to have a good night's deep sleep. This sleep deprivation causes a lack of concentration, memory, irritability and moodiness, ongoing tiredness and fatigue as well as impairing immune functioning and clarity of thought.

4.

Escalation of emotional and stress states – a string of unhealthy

emotions arise such as frustration, anger, insecurity and a sense of hopelessness and these can take a toll on a person, especially if the debt is increasing. This compounds the stress where one can feel over-whelmed, desperate, lacking in confidence and may resort to reckless behaviours such as lying or stealing.

12 WealthWise

LifeWise Financial stress can be managed and needs to be managed. It is likely to require that you put pen to paper in order to clearly see your current financial situation and enable you to put together a strategy and plan so that you feel more in control of your finances, your health and your life.

This should in turn help you to reduce stress and help you build a more secure future. You may not like changing certain things too such as lifestyle, but you have to make these changes to get through these times. They may only be for a short period until you feel that you are in control of your financial stress.

First establish where you stand at the moment and note all the areas related to finances that are causing you stress.

•Do you have major money problems e.g you haven’t paid your rent or bond for more than a month?

•Do you have debts on credit and store cards that you can’t clear and the interest keeps accumulating?

•Have you taken out loans to pay debts and you are still not in the clear?

•Have you had a big expense that you did not plan for that has affected your cash flow, such as a car repair or medical expense?

‘85% of

Keeping up with your debt payments is only part of the problem. Just because you can afford to fit these payments into your budget, you’re still putting added strain on your finances.

lower income groups are in debt and experience ongoing stress

’

Money that is used towards paying debt can’t be used elsewhere.

That means if you’re spending money each month on credit card or other unnecessary debt, you’re taking money away from other areas of your budget that can be used for other requirements or ideally for savings.

Here are some warning signs that can help you identify the problem before it becomes too serious to address.

If any of these statements apply to you, it is time to stop and take action to remedy the problem.

WealthWise 13

LifeWise

10 Warning Signs of Too Much Debt 1.

You don’t have any savings or aren’t able to save each month for a rainy day.

2.

You only make the minimum payment on your credit cards each month so interest gets added.

3.

You carry on purchasing more on your credit cards while trying to pay it off.

4.

You have at least one credit card that is near, at, or over the credit limit.

5.

You are occasionally late in making payments on bills, credit cards, or other expenses.

6.

You don’t even know how much total debt you actually have.

7.

You use cash advances from your credit cards or take out loans to pay other bills.

8.

You bounce checks or overdraw your bank accounts.

9.

You’ve been denied credit.

10. You lie to friends or family about your spending and debt.

A good starting point once you have a picture of your debt, who you owe money to, when and how much plus what your outgoings are you need to create a household budget that fits with your current or adjusted down lifestyle. In this you need to list every possible expense you can think of.

It is easier if you think of categories such as children and schooling, medical and chemists, cars and travelling, food and entertainment, utilities (electricity and rates), store cards, credit cards, bonds and loans, instalments and so on.

You then need to look at your net income and begin allocating what you have coming in to what you have to pay out each month. If there is not enough, then you need to prioritise the most critical payments first as well as determine which areas you need to cut down on, for example, eating out, alcohol, driving, buying things you don’t really need, shopping more wisely.

Your budget needs to be updated as you go along. If you are disciplined and record all expenses, you can reveal wastage of your resources where you may have spent on things that you did not budget for.

14 WealthWise

LifeWise You will begin to have a sense of being more in control when you follow your budget and hopefully you will be more money-conscious and less likely to spend unnecessarily. You begin to see yourself as being able to come out of debt and a lot of the severe stress begins to reduce over time. Over time you may even be able to start a savings plan which will make you feel more positive.

One of the greatest challenges is the discipline required to not buy things you don’t really need. We are so influenced by adverts offering special deal or enticing you to have the very latest, but in reality, you really don’t need these as all they serve to do is put you back in debt again and under stress. A good tip is to always ask yourself “Do I really need this?”

Also develop specific plans to address certain debts like credit card debt or store card debt. Stop using the cards and pay off as much as you can as soon as you can, based on your budget. If you only pay the minimum, you will land up paying much more than the value of the items because of the very high interest rates.

This could be three times what you paid!

Speak to your credit card issuer to see if they would be prepared to give you a lower rate if you hand your card back in order to stay out of debt. If you have a policy you may be able to cash in the policy to pay off your debt or you may decide to terminate certain policies as they are costing too much. Perhaps you could benefit by seeing a debt counsellor, but do make sure they don’t rip you off.

As you work on improving your financial situation, you can reduce stress by practicing stress-reduction techniques and making other lifestyle changes. Some of these include: 1.

Deep breathing relaxation exercises – breathe in for 5 seconds, breathe out for 5 seconds and keep doing this for a few minutes to relieve tension.

2.

Quieten the mind – follow the breathing and consciously let go of the stress and anxiety with every out breath.

3.

Do some exercise such as going for a walk and get out into the fresh air.

4.

Develop a more positive mindset by telling yourself you are taking control of your financial situation and things will get better.

Catch those negative thoughts!

5.

Cut down on cigarettes and alcohol, eat healthier and aim to get 7 hours of sleep each night.

Shelton Kartun is the founder and director of The Anger and Stress Management Centre of SA. Contact Shelton on +27(0)21 554 3661, email info@anger.co.za or visit www.anger.co.za.

WealthWise 15

How to deal with change

by Denisa Oosthuizen

Change is often disruptive, uncomfortable, challenging and destructive at times,

yet it is the most important pillar of personal growth. Change is part of our life cycles as much as it is part of nature’s cycle. We need to be able to accept and deal with change to improve ourselves and our lives. Often, this is easier said than done.

Do we welcome change in our lives? Yes and no. The need to grow, reinvent or progress doesn’t come without challenges. It is in these challenges that we recognize we have to leave the designated comfort zone. We know change has to happen, yet we are reluctant to it because of the strangeness, unknown, discomfort or pain we are experiencing.

Giving up a familiar situation, quitting a safe-perceived but unrewarding job, breaking up a relationship that doesn’t work anymore is painful and launches our minds in a post-mortem “what ifs”. It is natural to feel that change is painful as it involves the loss of a current situation. The truth is that not changing is even more painful.

“Life is about growing. If you don’t change, you don’t grow. If you don’t grow, be prepared to feel massive amounts of pain. You see, life wants the best for us. It wants us to be the best we can be”, writes personal development coach, Dean Cunningham, in his book “Pure Wisdom”. In other words, life wants us to change and to experience the painful transition to change.

Most of us will yearn (even secretly) to change. This is either because we are already in a situation we don’t like or we want to improve aspects of our lives for the better. “If there’s no pain, there’s no impetus to change”, explains Cunningham.

Change is therefore motivated by pain - not the pain we are facing when we transition to change, but the pain of staying in the same situation, accepting, knowing we cannot move forward. We don’t want things to stay the same, clearly.

But which one of these pains will be less bearable?

The lesson we should all partake in is to not resist change. As the personal development coach says, “the pain of changing now will always be less than the pain of staying the same”. It’s better to be proactive, then, and seek change before it finds us.

Changing from a worse situation to a better one is actually what humans aim for.

Therefore, there should not be any moments of panic, fear or despair preceding change. The reality is harder to swallow, though.

16 WealthWise

The same human weakness that makes us want the best or more in life brings in the doubts over the result of change – will it really be better? However we shouldn’t even bother with the question. “All change is for the better, no matter in what direction is heading”. So we should better accept it.

So far we have acknowledged the need to change, but we must understand that change has many facets. Sometimes we change by chance or because we are forced into change, other times we decide to change and take control over our destiny.

I believe it is better to face change by yourself, having already made the choice and before you find yourself forced into change. Being forced to change is different and this often triggers aversion, stress, reluctance, indecision, pain, unease. Whenever I think of change, I envision a self-desired and created change, the kind of change that would bring the best improvement and results over time.

‘Most

LifeWise

of us will yearn (even secretly) to change

’

10 Steps to Change 1. Decide to change. If you are still unsure or in doubt about change, despite of your willingness to change, ask yourself these questions: • Why am I doing it?

• What is it holding me back?

• Why am I in doubt?

• Do I feel better/superior/happier if I stay in my current situation/job/relationship?

• Is it worth it? How compelling is the other alternative?

• Will you be at peace with the decision?

If the situation itself does more harm than good, it’s time to change.

2. Identify what you need to change. Whether you decide to add small changes or start from scratch, remember to take it slow and get support through the process. Losing an income, a certain lifestyle or a relationship in favour of a new start is a major milestone and you would need to face the realities that come with it.

3. Consider your choices. Take time to think about and write down your choices and the desired response you want change to bring in your life.

4. Take responsibility for your decision. Ask “What should I do now?” or “How can I grow from here?” instead of blaming anyone or the situation itself.

WealthWise 17

LifeWise 5. Understand the process of change. Change is necessary, but don’t expect it to happen overnight. There is a step by step transition process you have to go through, from accepting your loss (current situation) and confronting your doubts to discover new opportunities and fully integrate the change in your life.

6. Accept loss and move on. In order to change, you will have to remove yourself from the current situation. The earlier you accept this and take responsibility for this important step, the better.

7. Conquer doubt, fear and discomfort. It is natural to ask yourself whether this is the right choice to make. Remember, all change is for the better. This step should be easily overcome when going through the self-questionnaire above (see: decide to change).

8. Take action. Open yourself to the challenge. Forget the past, move forward and act towards the change you want. There is no better person than yourself who can get motivated to work towards the goal, whether small changes or a new fresh start altogether.

9. Stop, re-assess and move on. Once the hardest part of accepting and acting towards the change is done, the journey itself unfolds. Break down your goals in smaller steps to take and use them as a guidance and checklist to see if you are going forward as planned.

10. Embrace and believe in change. Finally, you must believe in yourself and the effects of the change in your life. Embrace change as a normal, natural part of life’s progress. And, most importantly, believe in change before you even decide to do it!

18 WealthWise

MoneyWise Quick Read: Free up some money!

Is your income often running out by the end of the month? With increasing living

expenses and debt repayments as much as half of your monthly salary, can you still save up some money?

Minimize your debt. Most of us will have to keep up with a home loan, vehicle finance repayments and credit cards. If you have already too much debt, think about reducing it by securing a better deal with your creditors.

Shop around. Minimize medical aid and insurance payments by getting a second opinion. Don’t stick with a creditor just because you have been doing business for decades, often it’s more rewarding – and cheaper – to switch to a more costeffective option. Shop around for the right quote!

Consider debt consolidation. You save money on interest payments,

minimizing your expenses. It works by combining all the debt into a home loan account with a lower interest rate. If properly done, this can free huge amounts of money from your salary that were previously used for debt repayment. Owning a home and having a good credit record is essential.

Balance transfers on credit cards. More than one credit card? To minimize

the expenses associated with credit cards, consider a balance transfer by moving all credit card debt in one account with the lowest interest rate and cancelling the others (if you find it hard to do it, cut the other credit cards – sounds harsh, but it might work). Get professional advice if you constantly find yourself falling behind repayments.

Always budget. By writing down your monthly income and expenses, you can

assess the areas in which you can cut down unnecessary expenses or minimize them. Don’t forget the large or seldom occurring expenses – the holiday you have been waiting for and the unforeseen car repairs, amongst others, should be included!

Re-think your expenses. The most money draining items in the budget are

often entertainment costs, food - frequent take-aways too – and petrol. Buy in season food items to avoid extra costs and see how you can cut down on your entertainment without feeling the blues! Giving up completely something you love won’t make you happier or wiser about your finances (in fact, guilt and resentment might wake up the emotional shopper in all of us). Keep an eye on petrol expenses – if you have a bicycle or bike, use it!

WealthWise 19

Investment doesn't have to be black or white

by Paul Stewart Paul Stewart, MD of Plexus Asset Management looks at the pros and cons of the active versus passive investment strategies and then looks at a third option: RAFI® methodology.

For too long the debate on active and passive investment strategies has focused

on their specific characteristics and mutual exclusivity, rather than on the common areas that undoubtedly exist between these strategies. The discourse has been binary, placing these two approaches at opposite ends of the investment philosophy spectrum.

So, by industry decree, the active versus passive discussion has largely become a black or white outcome. And placing oneself in either the active or passive camp says much about how one views the investment world and about one’s own instinctive personality and behavioural biases.

Passive managers are generally a frugal bunch – they remember being told by Dad that, “if you look after the pennies, the pounds will take care of themselves”. They may even have a scientific bent to their psychological make-up.

For a variety of reasons they tend to take a dim view of active managers, specifically the latter’s ability to forecast future cash flows and identify mispriced assets. They may even view active managers as modern-day snake oil salesmen, and are sceptical of the big brand asset-gathering machines that are so prevalent among today’s mainstream fund managers.

Conversely, active managers are the swashbuckling risk takers. Their mantra may be, “you have to spend some money to make some money”. They would claim to possess the skill and nous to beat the market (and their peers) over time. And surely, if one is able to identify − in advance − the best active managers, they certainly can earn you fantastic returns over time.

The active group views passive investors with disdain. Some even see them as “leeches” feeding off the investment body and doing nothing to improve market efficiency and price discovery. Their main objection is that by trading irresponsibly at times and exacerbating market bubbles and busts, passive investors actually cause the volatility of stocks to increase.

Protagonists of passive investing will show global statistics demonstrating that over time (five years or longer), few active managers − only about 22% to 28% − will, after costs, beat the equity hurdles they set as their benchmark.

20 WealthWise

MoneyWise In South Africa making this claim is somewhat more difficult, at least on the surface. Over the past 10 years to 31 May 2011, we looked at the general equity, large cap, growth and value categories of ASISA’s equity fund classification as the fund universe and the FTSE/JSE All Share (ALSI) Index as the benchmark.

Over this time, 30 of 53 funds (57%) beat the benchmark − a very impressive outperformance ratio by global active manager standards.

That is until one looks more carefully into the database of funds that were in this universe in May 2001 and discovers that 51 of the funds that were there in 2001 are no longer present.

Fund mergers, manager changes, mandate changes and fund closures (often due to bad performance) have removed nearly half the funds that were around in 2001. T his loss of data has massively impacted the outcome and the resultant survivorship bias renders these statistics useless for any serious comparison purposes.

‘oneself Placing

in either the active or passive camp says much about how one views investment

’

Over the past five years to 31 May 2011 (where far less survivorship bias exists), we see a more predictable picture emerging where only 21 of 84 funds in these combined categories managed to beat the ALSI. Based on these results, the pro-passive team may puff out their chests and say, “I told you so”.

But is passive investing the answer? On closer inspection, over this same five-year period, of the eight index tracker funds in the category (some ALSI and some Top 40 trackers) not one beat the ALSI and the average underperformance of the ALSI was 1,08% per annum. Stated another way, your average passive portfolio will deliver at best broad index returns minus 1%.

So what common ground, if any, exists between the active and passive disciplines? The most obvious common ground is that, on average, both active and passive strategies underperform their benchmark indices. But perhaps that’s a defeatist observation.

They underperform for different reasons. The best way to analyse the specific causes of underperformance is to look at a brief list of the pros and cons of each discipline.

WealthWise 21

MoneyWise

Passive investing

•

Pros access to a diversified portfolio low turnover

• •

low transaction costs large investment capacity

•

Cons • misallocates capital structurally • participates fully in bubbles and busts • little portfolio flexibility

Active Investing • • • •

Pros flexibility security selection • flexibility in asset allocation • identifies mispricing • opportunities risk management (downside risk)

Cons higher turnover higher fees reduce net returns investment capacity limited

It seems obvious that an investment strategy that could take advantage of the benefits of both passive and active strategies could put investors in a better position in the long run. In the final assessment, the cost control and lower fee aspects of passive strategies are their best characteristics, while the better capital allocation in the active strategy is by far its largest benefit. But is a synthesis of these two world views practical?

Passive investing traditionally uses market value as the means to allocate its capital. This market value is determined utilising a market capitalisation* weighted methodology. To calculate the weight of each share in the index, each individual company’s market cap is divided by overall markets’ capitalisation.

The share price in this methodology becomes the critical variable in determining this market value since the number of shares in issue does not change regularly. It follows therefore that if the share price is not correctly estimating the company’s value (too high if the company is in demand and loved or too low if the company is out of favour and loathed), one would be over allocating to the relatively loved companies and under allocating to the relatively loathed companies – all relative to their intrinsic value, which is clearly unknowable at a point in time. * - Market capitalisation is the share price multiplied by the number of shares in issue of that security.

Obviously this implies that cap weighting offers a relatively inefficient capital weighting mechanism since in good investment practice, we should ultimately try to allocate more of our money to the cheaper and less to the more expensive companies over time. This is precisely what active managers try to achieve; by analysing a company’s financial results they are theoretically able to exploit these market inefficiencies. Their processes aim to identify companies that offer better financial positions, better profit stability and future growth prospects. But due to the higher costs of this analysis, higher portfolio turnover and poor sell discipline this benefit is most often lost. On average therefore, active managers are not able to extract the value that undoubtedly lurks in the market.

22 WealthWise

MoneyWise Fundamental indices® (RAFI® indices) were first suggested in a ground-breaking academic paper published in 2004 by Rob Arnott and Jason Hsu of US-based Research Affiliates. They demonstrated that passive indices with enhanced risk/return characteristics could be constructed by utilising other means of estimating company value rather than its market capitalisation.

The outstanding characteristic of these RAFI® indices is that they are able to marry the benefits of passive with the benefits of active strategies. Over a full business cycle, consistent return enhancements over traditional cap-weighted indices have been demonstrated while still retaining the benefits of indexation mentioned, i.e. diversified exposure, lower turnover and lower transaction costs.

The RAFI® methodology has stirred up some controversy. John Bogle, founder of world-leading passive investment firm Vanguard, recently described RAFI® as “witchcraft” in an interview. But the results are indisputable. The world’s largest index providers (FTSE, Russell and MSCI), leading global investment consultants and academics are now swiftly adopting “smart index” methodology as core strategies. Bogle is perplexed as his firm is losing market share to fundamental index® or price-indifferent strategies.

RAFI® indices all over the world are demonstrating consistent outperformance of cap-weighted benchmarks and impressive performance relative to the active manager peer groups too. They provide a neat synthesis between the active and passive strategies of old and can be used in isolation or in combination with other strategies to provide enhanced risk and return benefits to both retail and institutional investors.

Graph: FTSE/JSE ALSI and Plexus Overall eRAFITM Index gross of any implementation costs – past performance is not a guide to future performance

WealthWise 23

MoneyWise Over the past three, five and ten years respectively, the Plexus eRAFI® Overall SA Index has delivered 7,7%, 0,3% and 7,9% per annum outperformance of the ALSI (gross of fees). On a three-year basis, the Plexus Enhanced RAFI® SA Strategy Fund, a CIS which tracks this Plexus eRAFI® Overall SA Index, is easily in the top quartile of equity funds (19/104 funds). This was achieved with a volatility of 18,1% compared to the ALSI volatility of 21,5%. eRAFI®’s total expense ratio (TER) is around 1,08% for the full retail share class and substantially less for larger institutional investments. eRAFI®’s outperformance comes at a cost in line with market cap-weighted index offerings that are guaranteed to produce returns of less than the index they track. eRAFI® provides investors with a portfolio that is a cost-effective proxy for expensive top-quartile active managers while being an index strategy very likely to beat market cap-weighted indices by some margin over rolling seven-year periods. So there is no need to be black or white any longer, RAFI® is the new gray!

Paul Stewart is the managing director of Plexus Asset Management. Contact Paul at +27(0)21 970 2400 or pstewart@plexus.co.za.

Founded in 1995, the Plexus group of companies is an independent financial services provider that specialises in providing innovative, unique and holistic financial solutions for both corporate and individual clients. As of 2010, Plexus Holdings (South Africa) incorporates Plexus Wealth Management (financial planning) and Plexus Asset Management (investment management services and solutions). For more information, visit www.plexus.co.za.

24 WealthWise

Living Annuity: Take the pain now for a better long term future

by Lourens Coetzee Lourens Coetzee, an investment professional at Marriott Asset Management looks at the impact of various draw down rates on ones living annuity and notes that the survival rates with high draw downs are extremely low.

Retired investors commonly face the dilemma of either maintaining a certain

lifestyle or lowering it in order to preserve their capital for longer. The more income one draws and spends now, the less is available to create future income. When inflation is added to this quandary, it becomes important to grow that income over time, so as to retain one’s buying power.

Investors in a living annuity may draw up to 17.5% of their capital each year as income to maintain their lifestyles. However, if they opt for too much income now, they risk eroding their capital over time and possibly even wiping it out. By preserving capital, investors will be able to provide for their retirement for longer periods.

Capital preservation is ultimately dependent on two variables: the performance of the underlying assets (capital and income returns); and the extent to which income is drawn from the annuity. Through maintaining exposure to the two asset classes which provide the best hedge against inflation – equities and bonds/property – investors will be in the best position to keep income levels increasing. These assets need to be blended to achieve an optimal asset allocation within a balanced portfolio, whilst considering risk.

Marriott Asset Management has undertaken research based on the historical returns of each asset class in order to determine how an averaged balanced fund would have performed historically. We examined how a blend of 60% equities, 30% bonds and 10% cash would have performed over rolling 30-year periods – all 81 of them – since 1900.

Asset class returns improved dramatically from 1960, but this coincided with a fourfold rise in the average inflation rate. Historically, elevated levels of inflation have meant higher returns from all asset classes. On a real basis (stripping out inflation), there was no material improvement in the returns (see Table 1, page 24).

In calculating the impact of various drawdown rates, we assumed an all-in fee of 2.3%, the current approximate market fee for living annuities, and we used the previous year’s inflation rate to determine the annual escalation of income, in order

WealthWise 25

MoneyWise

‘Bycapital, preserving investors will be able to provide for their retirement for longer periods

’

Table 2 (see page 26) shows three different scenarios, with a retiree drawing 7.0%, 5.0% and 3.0% of the initial capital value invested. For every R1 million invested, this would mean an annual income of R70,000, R50,000 and R30,000 respectively. These amounts were then escalated from 1900 at the previous year’s inflation rate, for 30 years.

If investors drew an initial 5.0% income and then tried to keep that income growing in line with inflation, only 38% of the living annuities tested would have survived (not breached the upper limit of 17.5%, forcing the annuitant to draw less). If one were to draw 7.0%, the survival rate drops to a low 5%.

If only 3.0% of the initial investment was drawn, the survival rate increases markedly to 91%.

This is due to the fact that the investor was drawing roughly the same amount of income that the underlying balanced fund investment was producing.

The results since 1960 (during which there are 18 rolling 30-year periods) were similar. Where an annuity of 7% was likely to fail, an annuity of 5% had an even chance of success, and an annuity of 3% was likely to succeed. The slightly improved result for the person drawing 5% was due to higher average real returns from equities.

At Marriott, we suggest that investors examine their situation carefully when contemplating using their capital to supplement income. We strongly urge investors to preserve capital until they reach a stage in their retirement years when it may become safe to reduce it.

For this reason, Marriott established an investment-linked living annuity (illa) called the Perpetual Annuity that invests in three underlying Marriott funds of funds.

Years

Equity

Bonds

Cash

1900-1959 1900-1959 (Real Return)

10,35% 8,29%

4,06% 2,00%

2,27% 0,21%

1960-2010 1960-2010 (Real Return)

19,24% 10,71%

10,98% 2,45%

10,77% 2,24%

26 WealthWise

Inflation

Table 1: Nominal and

2,06%

Real Average Total Returns

8,53%

MoneyWise The Perpetual Annuity is structured to enable investors to draw the level of income that their underlying funds produce, thus ensuring that their capital is preserved. This does not necessarily guarantee that income will grow at the same pace as inflation, rather that it grows at the rate chosen.

The three Marriott funds of funds are currently offering income rates of approximately 8.9%, 4.6% and 3.3% with income growth rates of 2%, 6%, and 8% respectively over time.

Each fund has a different income and growth objective – the trade-off being the higher the income required, the lower the anticipated growth in income. n addition, Marriott has created an online Living Annuity Tool for its annuity investors which can be used to set an annuity at a level which ensures that it matches the income from the underlying investments. It also provides an estimate of income which can be drawn and the growth of that income which can be achieved without selling units in the fund.

This approach is designed to ensure that investors’ capital is preserved throughout retirement. While investors may find it challenging to restrict their annuity income to the income produced by the investment choice, it is preferable to finding that one’s capital has been completely (or even partially) eroded. Rather be conservative now, than risk having to find another source of income (such as going back to work) or having to reduce one’s standard of living at some point in the future.

Table 2: Survival of living annuities using different drawdown rates from 1900 to date and

Drawing 7% Income could be sustained Capital lasted

1900-2010

1960-2010

5%

9%

15%

14%

38%

45%

47%

64%

91%

100%

99%

100%

Drawing 5% Income could be sustained Capital lasted

Drawing 3%

Income could be from 1960 to date sustained Capital lasted

Marriott is a differentiated asset management house that provides solutions for retirement using an income focused approach to investing.

For more info contact Bronwen Barclay at +27(0)31 765 0735 or visit www.marriott.co.za.

WealthWise 27

Ask Shaun Shaun Latter, Director and Wealth Manager of

Quaestor Wealth Management and Certified Financial Planner® will answer your most burning questions on wealth management, estate planning and investments.

Send your question(s) to Shaun at editor@wealthwisemag.co.za and read his answer(s) in our next edition!

Question: I have recently started working and the thought of saving for retirement seems premature – when should I start considering this?

James, Centurion

Shaun says: We are living in times where the concept of retirement is being

strongly contended and one wonders when this ‘institution’ may be put out to pasture. That said, although many of my clients differ in their opinion of retirement, they all agree on one thing – they all have a desire to one day become financially independent and all want it sooner rather than later. What this does is remove the outdated focus of retirement as an event and draws attention to financial independence as a journey. A journey that should start today!

So many people get caught up in some of the more technical aspects of investing such as investment wrapper selection, tax efficiency, fund manager selection etc that they miss one of the greatest tools available to every investor - that of TIME. Now although the technical aspects are critical as your wealth begins to grow, by missing the time aspect you run the risk of having to save a lot harder later in life as a result. The sooner one starts investing (whatever the amount), the better and, by doing so, you get to tap into the powerful effect of compounding.

Essentially, compounding interest refers to the cumulative effect of interest (or growth) being accrued on growth already earned.

Perhaps the best way of illustrating this is by means of an example: “Tale of two twins” One of them (let’s call her Amy) contributed R1000 each month to an investment for a period of 10 years while her brother (Allan) contributes R1000 every month for 30 years. By the time they both retire, Amy finds herself with a final investment value of just over R2.8-million versus Allan’s R2.2-million. One might argue that Amy must have had incredible insight and investment prowess to have achieved this. Now although this may be true, it does not come in the form you might imagine. What if you were told that both Amy and Allan enjoyed the exact same investment return of 10 percent?

Confused? Don’t be! All Amy did was harness the incredible power of compounding interest by investing earlier than her brother Allan.

28 WealthWise

MoneyWise Where Amy started at age 25 and stopped 10 years later at 35, Allan chose to wait until he was 35 to begin and had to contribute for the remaining 30 years of his active employment bringing them both to age 65 where Amie’s value was approximately 25 percent more than Allan’s despite Allan contributing triple the amount in 'premiums'.

After the initial 10 years, Amy’s fund value was a touch over R200 000 and with a return of 10 percent it is not difficult to calculate that the interest she earned was already in excess of Allan’s premiums. In short, her money had started working for her while Allan was still working hard for his.

This scenario often highlights the cost of delaying one’s saving and therefore supports the adage that the best time to start saving is yesterday.

In short, when building your financial independence be sure to start early, be disciplined and allow time and compounding interest to work in your favour.

‘Bythemissing time aspect you run the risk of having to save a lot harder later in life as a result

’

Shaun Latter is Director and Wealth Manager of Quaestor Wealth Management where he specialises in Estate Planning and Investment Advice. He is a Certified Financial Planner® and was recently announced as a finalist Shaun was a finalist and rated in the top 3 countrywide for the coveted FPI Financial Planner of the Year 2011.

In addition to this, he has recently become a Certified Life Coach, has hosted the popular money show “Financially Speaking” on CNBC Africa , holding a wide media presence with regular contributions on radio, in print and online. Shaun can be directly contacted at +27(0)11 575 3159 and shaun@quaestorwealth.co.za.

WealthWise 29

MoneyWise

O

n 9th August South Africa celebrates Women’s Day. We thought it would be a good idea to give a more in-depth look to women’s consumer habits in today’s South Africa and reflect on what women should really be “talked into” by their peers, partners, companies and marketers.

Women and Spending

WealthWise magazine is not exclusively aimed at women, unlike other publications on the market today. However, as a woman publisher, I do understand that WealthWise must speak louder to our women audience, particularly because, as we will see further below, we are the heart and soul of today’s economy.

I have recently read an article in the South African edition of a well known world-class women’s magazine about women being misunderstood or even worse, completely overlooked by advertising, marketers, brands and companies. The author, a single women,

by Denisa Oosthuizen with plenty of spare cash to spend, was clearly feeling that local businesses failed to talk to her, or similar women, into spending (wisely I might add) her hard-earned money.

Although we are all different women, whether we’re climbing the proverbial corporate ladder, start businesses, raise kids, take care of home or all of these together (because we can), the fact that some companies don’t understand the needs and wants of women is, unfortunately, a valid statement. And if businesses claim to understand, few of them know how to talk to women without the glitzy pink packaging and “dumb” labeling.

Here is the truth about women and their spending habits, coming from a woman and endorsed by other. I am sure I am not the only one who shares this view though.

1.

We take the most buying decisions in the country. Some studies place women’s decisions to purchase at over 80% of the nation’s buying decisions in the country – so no wonder that we should be “targeted” as the main demographic that spends – and we are not talking only about dishwashing liquid or groceries. Cars, property, cellphones, electronics are on the list too.

2.

We don’t like to be stereotyped. Initially I wanted to refer of this point as “we are not all mothers”. But in fact, we are not all wives, housekeepers or blondes, as often portrayed in the advertising we digest every day.

3.

We don’t like being told what do to. Often labeled as dumb or soft spoken, women are more than that. We do think about our needs, demand our rights and speak about our wants in the absence of a man. It is a harsh reality that, even in most advanced societies, paternalism is still strong and women are often

30 WealthWise

MoneyWise seen as weak, emotional, unable to do a “man’s job”. Progress has been done to integrate women in every level of society (hence the reason we celebrate Women’s Day in the first place), however the “old views” won’t just disappear overnight – it is a process that a society such as ours should understand and not discriminate against.

4.

We don’t like sexist attitudes, jokes or dismissive advertising. The author of the above mentioned article revolted against pink ribbons or lettering and kitchen-setting ads where flying heroes save the poor distressed housewives (I can honestly say these are not just confined to South Africa only). Such tricks, images and labels are not working anymore (did they ever work though?) It’s not only the sexist attitude that annoys, but women are all different and this kind of communication generalizes on assumed facts about women. Some will find it insulting and degrading.

‘ Women take the most buying decisions in South Africa

’

5.

We have the right to good and ethical customer service. Most importantly, interacting with women should be fair. Women trust a brand’s loyalty and delivery with every little interaction and over-the-top ads are not enough to engage us at consumers. Rudeness, stereotyping, incompetency, dismissal and very bad service are a “no-no” with us. One thing that other people or maleoriented businesses and advertisers don’t get it is that women are very picky and if we are not happy about something, we will look elsewhere. Perhaps there is a women-friendly brand out there that can conquer our hearts.

Do you agree with this point of view?

Send your comments at editor@wealthwi semag.co.za.

Happy Woman's Day to all ladies!

WealthWise 31

Lack of...

by Nikki Viljoen

Ken Hakuta says “Lack of money is no obstacle.

Lack of an idea is an obstacle.”

I am not sure if “Lack of money” is not an obstacle – ask anyone who doesn’t have any (and I’m not talking about ‘having enough’ here) and I am certain that they will see it as a huge challenge. I do get the meaning of the quote though – it is about not having any money and having no idea about where/how you are going to get some or make some – now that is the biggest obstacle.

For myself, I guess, the biggest obstacle is all about having the dream and making the right choices in order to turn that dream into a reality. Taking something that you are really passionate about, that is fun for you to do and then turning it into a money spinner – now that is what I believe is the greatest challenge.

You see, whilst I am doing what I love, the last thing on my mind is money. I’m just enjoying the experience, loving every single minute of it. Think for a moment about an artist – drawing and painting is something that they have to do in order to fulfill themselves – their most basic needs. I doubt very much that they can stop the flow of their artistic endeavours, no matter how hard you tried. As they work on their canvasses or drawing books, all of their senses come alive as they watch the lines on the page or the strokes of the brush, turn whatever the picture they have in their heads into something that everybody can see – the beauty of art.

I guarantee you, that whilst they are reveling in the beauty of what they are busy creating, the last thing on their minds is money – it’s perhaps thinking about what to add to get that colour just right or how to shade that section in order to highlight the focus on that limb. No, it’s got nothing to do with money at all.

In fact, I would go so far as to say that many artists are so emotionally attached to some of their paintings and drawings, that it is almost physically impossible for them to sell their work – for them it is the same as selling one of their children.

Yet that is exactly what artists have to do, in order to make the money they use to purchase the supplies they need to once again use their talents, their passion and to convert their ideas and their dreams into a reality. And so the cycle continues.

32 WealthWise

MoneyWise

‘artists Whilst

are reveling in the beauty of what they are creating, the last thing on their minds is money

’

Sometimes, I really do think that it might be easier to just work in a job that is completely mindless, that pays a good wage and that I don’t have to be emotionally invested in – you know, the ‘other people’s idea/passion’ one.

Fortunately it always comes to my mind as a fleeting thought, because when I think about it carefully, I know and understand that the days I worked in the Corporate world are over. The days I worked making other people’s ideas and dream a reality are over. The days I worked and in so doing, fanned the flames of someone else’s passion, are over.

These days I find my own ideas, I work with my own passion, with love and the same kind of amazement that artists have when they look at the beauty of the painting or the drawing that they have just completed, thinking: “Wow – did I do that?”

Does money have a place in there? Absolutely! I have to make money in order to be able to indulge myself in doing the things that I love. As difficult as the lesson was, has been and continues to be, I do understand that I have to think about money and ‘sell’ the ideas.

Using my passion and love for what I do is immensely rewarding on so many different levels and one of them is being able to pay the bills too.

Nikki is an Internal Auditor and Business Administration Specialist who can be contacted on +27(0)83 702 8849, nikki@viljoenconsulting.co.za or www.viljoenconsulting.co.za.

WealthWise 33

BusinessWise Quick Read:The number one marketing mistake Marketing is every business owner’s tool to generate leads and convert them into

customers. It is obvious then that the more effort a business owner allocates to marketing, the closer he or she gets to attracting new customers and close those sales. In truth, there is one thing an entrepreneur might seriously overlook when marketing. Going out there just once, networking within a certain group of people or organization just once, attending events just once, sending an email or correspondence to a prospective client just once won’t get your business too far. The mistake some entrepreneurs make is to see marketing as a once-off effort.

Marketing is a process and not just an event.

Be sequential. Some marketing gurus claim that it takes six or even more repeated interaction with your business or brand for the prospective customer to get the message and buy in. Sending repeated communication, e-newsletters, emails or letters will get you easier in the mind of your prospective buyer. Don’t be too pushy though or you might just ruin the relationship.

Be everywhere. People are more inclined to do business with people they like and have a good relationship with (read: people they spend time with, speak to or see more often). Be present as often as possible, by taking advantage of regular events and networking sessions in your industry, either attending or better, speaking to the public; sending frequent communications to your customers, writing regularly for columns in newspapers and magazines; and the list goes on.

Be where your target market is. Channel your marketing effort to the right audience and do it frequently – chances are your message will be consistently heard by prospective customers whom you want to buy in. Not all prospect will turn into clients, however you might just be the one on their minds next time when they need what you have to offer.

Don’t get discouraged. Ramp up your marketing efforts and the response rate will increase accordingly. If a campaign shows minimum results in the beginning, continue your efforts. Repeated action does make a difference. Be smart enough though to realize when your marketing efforts need improvement.

Be consistent. Contact your prospective clients as often as possible; schedule times to do this and leave a one or two days breather between calls; don’t be too pushy, but don’t make the mistake of not contacting them for weeks after your most recent correspondence. They might have forgotten about you in the meantime. If you send emails often, don’t stop just after a couple of times. Be persistent and it will pay off in the end.

WealthWise 35

Common mistakes start-ups make and how to avoid them Part One

by Nikki Viljoen

More and more often I am coming across individuals who want to start up a

business. Most of these individuals have no clue about what they want to do and don’t have any kind of plan in place. Having an idea is great, that is actually what starts the dream, but quite honestly, not having any kind of plan in place is the same as committing suicide – business suicide!

A business that does not have any kind of plan in place will often have neither direction nor focus. If this is the way that you are starting up, it is also the quickest way to just close the doors. Many start-ups feel that the only reason to have a business plan in place is if they need to raise capital and they couldn’t be further from the truth. Having a documented business plan in place will help to direct the process of starting a new business and for those businesses that are already established, it will help them keep focused on what they want to achieve and by when they want it achieved.

Your business plan, however, is not a ‘once off’ kind of document. It needs to be updated and changed as the business grows and as your requirements and needs change too.

Being cocky and full of nonsense is definitely not going to endear you to anyone. So many newly started business owners, who are in the first flush of success (read: they are in their second month of trading and the glow hasn’t worn off yet) think they are invincible. My advice to them is “Get a grip!”. They often compare themselves to the great entrepreneurs out there and pull out their stuff, but as tempting as it is, they need to remember that they are still taking the first steps and adjust themselves to that.

Don’t get me wrong, there is nothing wrong with dreaming that you will get there one day, but you need to remain grounded, focused and with your feet firmly planted on the ground. Remember that all big businesses started out as little businesses and although every journey starts with a single step – you have taken that first step and now you need to take the next, and then the next and so on.

Trying to sell yourself to your clients and suppliers as ‘established’, when in fact you are not, will only make them see you as dishonest. It will not work in your favour in the long run – so just don’t do it!

36 WealthWise

BusinessWise Don’t try and be clever by extending credit to your clients when you have just started out – the reality is that you will end up with a lot of bad debt and clearly this will affect your cash flow in a negative way.

Getting money in quickly and efficiently will allow you to go to the next step of your plan a lot quicker and without as much risk. Having to continuously wait for your money puts your business at risk and will cause you untold unnecessary stress.

My story Under charging for products and services is certainly something I can relate to as it was one of the mistakes that I made when I started out and it became a really big problem. You see firstly, the way that you ‘charge’ (especially for services or hourly rates) tells people who you are and even what you think of yourself.

Secondly, it all goes to selecting, in part, who your target market is. Obviously, if your rates are too high or not in line with the rest of the industry, this could also have quite an effect on your turnover and obviously your cash flow.

My biggest problem when I started out was that I could not find anyone here in South Africa who was doing what I wanted to do – great opportunity for me, but a bit of a ‘thumb suck’ when it came to fixing prices and costs. So I used my ‘corporate monthly salary’ as a guide line! What a mistake that turned out to be.

I also did not factor in a whole bunch of stuff, such as (but not limited to) that although there are (there should be) eight working hours in a day, five days a week to get the work done (that’s what I got paid for in the corporate world) – the reality is different.

Some of those hours will be spent on marketing and finding those clients – you can’t charge anyone for that - and some of those hours will be spent on admin – you can’t charge anyone for that either.

So the bottom line is that you don’t have 22 days in a month that you can charge out at an hourly rate – more realistically it is around 10 days. Now that sure messes with your calculations.

‘Notanyhaving

kind of plan in place is like committing business suicide

’

The second problem was that, because I had come in at such a low cost (R200 per hour), I attracted pretty much all the wrong target market. It was the SME and start-up market, which was exactly where I wanted to be, and this market was in desperate need of what I was offering.

The problem was that they could not even afford to pay me at that low rate.

WealthWise 37

BusinessWise Instead of cutting my losses and walking away from the problem, I compounded it by becoming all emotional and feeling sorry for them, so I offered them discounts if they paid me cash and terms if they couldn’t! Bad move on both elements. By offering them discounts on charges that were already too low, I was not even breaking even and of course I was telling them that I did not value myself very much and quite frankly, if I didn’t value myself very much, why on earth would they value me?

Offering terms wasn’t my finest decision, especially as I continued to work for them, even while I was trying to get money for work that had been done months ago. I am sure you can see where that went – they disappeared and I never got paid and it got quite ugly. In my first two years of trading, I wrote off tens of thousands of bad debt.

Finally I got over my emotional self, upped my prices considerably and found myself a better quality of client - one that could pay. Are my prices still reasonable? Of course they are, they have to be in order for me to make any impact in my chosen market, but they are no longer ridiculously low.

So this is very important: you need to make sure that your charges are reasonable enough to evidence good value for money, but you also need to cover all of your costs as well as leave something over as profit. This is certainly something that needs to be looked at very closely and very honestly and more often than not, very brutally.

Next time we will have a look at some more of the most common mistakes entrepreneurs make – until then, remember to have fun too.

Nikki is an Internal Auditor and Business Administration Specialist who can be contacted on +27(0)83 702 8849 or nikki@viljoenconsulting.co.za or www.viljoenconsulting.co.za.

38 WealthWise

BusinessWise

Business Column 21 Bad Habits and Practices in small businesses

by Bob Power, owner of Power Corporate Consultants (www.powerconsulting.co.za) on behalf of Optima (www.optima.mu)

During a recent TV programme I was asked to give my views on bad habits and/or practices in small businesses. I gave the matter a careful consideration. Trusting my concept of keeping it simple and practical, and after discussing the issue with some entrepreneurs whom I had coached in the past, I came up with the following points, accepting that there are obviously many more.

It was noted that many of the practices were in fact breaking the law, but, regrettably in business, when you are cash strapped and you are in a catch 22 situation, you often take chances, at your own and your business’ risk. So, be careful!

Misusing business consultants Although consultants often know their field very well, you need to make an informed decision when you decide to use them. Be careful for the following: 1.

Letting someone else prepare your business plan (at an unrealistic fee), which you do not understand. It may convince the bank, but you still need a plan for the future which you understand and feel comfortable with implementing.

2.

Not using them, when you’re in dire need of their expertise, is as detrimental as using them inappropriately. A good example is signing legal documents and financial statements, not understanding the content, and not obtaining good advice.

Exhibiting poor business ethics Establishing your business on solid ethics is the backbone of attracting return customers. Pitfalls of poor business ethics include the following: 3.

Still on the topic of business plans: exaggerating expenses is detrimental - accepting, where possible, you want to prove that you will make a profit to motivate the approval of a loan. Be honest, but realistic. Keep the plan simple and practical, especially the executive summary. If you are forecasting a loss in the first year, which is often the case: Will the bank still help you?

WealthWise 39

BusinessWise 4.

Thinking you can beat the Receiver of Revenue, and even worse: Not answering their letters. Not answering lawyer’s letters doesn’t help either.

5.

It is fraud when you are short of cash and you:

• • •

Over charge on your invoicing Exaggerate on hours spent; or Over charge on expenses.

6.

Using your company credit card for personal expenses. This would include using the company’s motorcar. Also going on overseas trips on the company’s account is against the law, unless genuinely on company business.

7.

Taking too much leave and leaving people who do not understand the business in charge. Conversely not taking any leave, which causes stress and family problems.

8.

Always being late for meetings, thinking the other side believes you are very busy and making a lot of money. Unfortunately, it soon becomes clear that it is bad time management on your side.

9.

In respect of habits, stress can result in heavy smoking, drinking and gambling which can have major problems with your health. Get advice!

10. Procrastinating excessively: The Oxford dictionary sets out the following definitions: • • • • •

Indecisiveness Delaying Dithering Dragging your feet Putting things off; etc.

We all do it sometimes, but, it is not the way to run a business.

Breaking down relationships A successful business requires building networks and lasting relationships which are easily jeopardised if you: 11. Neglect to build a good relationship with the bank manager which results in burning crucial bridges. Keep in with him, as he can easily put you out of business.

12. Portray poor communication skills by not answering phone calls, emails, letters etc. even if you are having problems with the sender.

Answer them. If you don’t, you will soon be losing business, especially if not answering your customer’s enquiries. Not switching off your cell phone at meetings - nothing else to be said here.

40 WealthWise

BusinessWise 13. Turning your mistakes into the customer’s problems. What happened to: “the customer is always right”?

14. Refrain from investing time to get to know and understand your team members. A bad habit is to continually threaten employees with losing their jobs to get them to do what you want.

Then loyalty disappears.

15. Doing all the talking during negotiations, trying to impress the other party.

Practice being a good listener. Let the other party speak first to find a common ground to negotiate from.

Not understanding business mechanics Being good in only one facet of the business is a mistake made by many business owners. A business owner needs to have/build a solid foundation of how all the facets of a business works, or risk falling into the following traps:

’Establishing your

business on solid ethics is the backbone of attracting return customers

‘

16. Thinking product not profit. In the same arena: Watch ‘entrepreneurial excitement’ when they rush into products without testing the market. Thinking you have a niche market and finding out too late that there are hundreds of competitors.

17. Neglecting advertising and marketing when running into cash flow problems is a dangerous practice. Even security should under no circumstances be seized.

18. Pushing debtors to pay, but delaying payments to creditors. It can help when you have a cash flow problem, but if you overplay, creditors can cause you major problems.

19.

Overcapitalisation when you are not ready for it like:

• • •

Leasing premises Hiring staff; and Buying equipment.

20. Perhaps a little contentious, but, raised by entrepreneurs who assisted me with these comments, is overplaying the word “entrepreneur”.

They have found using “small business owners” as a better and more acceptable practice. There is more chance of obtaining finances, because it is often stated that entrepreneurs take too many risks and that a small business owner is more conservative. It is an interesting point for debate. I believe, however, that the entrepreneur takes calculated risks.

WealthWise 41

BusinessWise Changing these bad habits How do we stop these habits/practices? Much depends on these two factors: 1.

2.

Lacking the mind/mentality to own a business; and Lack of finances.

Lacking the mind/mentality to own a business If you cannot take the pace of business and stress increases, it may be better to go back into employment. That is, of course, after you’ve barked up all other avenues like self development and finding a suitable personal coach or mentor. If your health is suffering, so will your business.

Lack of finances With regard to lack of finances, it is a prerequisite to budget for and obtain initial training in: • • •

How to own and sustain a business Understanding and managing a business; and General management of people.

Although you could conquer all these bad habits, beware of holding onto other bad habits not mentioned here, thinking that the 11th commandments will apply: “thou shall not be found out” and being “penny wise but pound foolish”.

The worst is expanding your small business substantially organically or by acquisition, but continuing with your bad habits.

Bob Power is presently CEO of Power

Corporate Consultants, which specialises in facilitating mergers and acquisitions, security and management consulting, coaching and training in the M&A spectrum, especially assisting those entering the SME market. Bob is also the author of “A Guide to Buying and Selling Businesses” published by Butterworths, together with two books recently published for the SME market-on advice on entering business“Let the signer beware” and “How to buy a small business”.

Optima is a global specialist provider of

training and expert support to small and medium enterprises (SMEs), financiers of SMEs, business advisors to SMEs, entrepreneurs and other business leaders and managers in commercial organisations.

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CareerWise Quick Read: How employees get noticed In times of companies’ restructuring, downsizing and recession salary cuts and

dismissals, employees have to re-think on what keeps them irreplaceable. Here is a starting guide to make sure the company knows what you want from your career:

Get creative. Employers need to hear good ideas and be shown how these

ideas, if implemented, will work. Don’t wait for your employer to ask for feedback (some rarely do it, others never ask) and come up, kindly, with fresh, out of the box plans to improve the company’s bottom line. If major, your contribution will not be and should be not overlooked by management.

Do more. Think beyond your ordinary tasks and push yourself to prove you can

and will do more to help your department and the organization. Ask your superiors where you can get involved or better, take the initiative and surprise them with an action plan. It’s worth a try.

Communicate with management. Show what you are doing and how you

are progressing in your career. In many organizations, management is often too busy to notice individual performance or your brilliant ideas. Ask for a meeting and speak directly to them. This is a good moment to ask about any extra tasks that you can carry or that promotion (just in case you know where you stand).

Know how to respond. Don’t firmly dismiss negative or critical comments.

Show that you understand the management’s opinion and only then present , in the most polite way, your motivations and reasons for thinking otherwise. Rudeness or aggressiveness will most probably get you the least agreeable employee in the company or worse, dismissal. If the management itself has an aggressive approach (read: shouting, blaming etc), perhaps it’s better to ask why you are helping them in the first place and if you are happy with the company’s rules and approach in the first place.

Encourage others to succeed. Whether your work is on an individual level

or as part of a team, the bottom line is that you are never alone. You are seen as a part of an organization and you have to interact with others. Most employees will just interact because that is their business. Go beyond a simple chat and see how you can motivate and help others to succeed. This will have a good effect on other staff members and contribute to a more effective team, which may result in a more effective organization.

WealthWise 43

E-training made in South Africa

by Denisa Oosthuizen

American entrepreneur author and motivational speaker Jim Rohn said “Success is nothing more than a few simple disciplines practiced every day”. It was probably with this quote in mind - and years of experience as a corporate trainer and author – that South African acclaimed speaker, trainer and business owner Dr. Kobus Neethling launched in June this year his innovative e-training programme, “Taking You Beyond”.

If small steps performed every day is what one needs to succeed, then an everyday bite-sized motivational message might be just what staff and management need to perform better.

According to a South African study conducted in April last year, "South African Companies should not be sitting on their laurels...fewer than half are currently happy in their jobs; 47% say they are comfortable or happy and the remainder are frustrated and miserable" (JobCrystal Happiness Factor).

The aim of Dr. Kobus Neethling’s e-training programme is precisely to deliver stimulating and motivational content in order to take a company’s workforce to a more positive, creative and effective way of working. This is not something completely new: companies and mostly corporates had gone through extensive training of their staff for years, spending a large portion of their R&D funds on travel expenses, conference or seminar fees and having to bear with less employees while some of them were busy training in other locations.

What makes “Taking You Beyond” training so special is the easiness and convenience of such training, confined to every worker’s desk, at just a click of an email. A South African first, Dr. Kobus Neethling’s email-based training programme makes every penny spent on staff training worthwhile, without the huge financial expenses and the assurance that the managements knows at all times the information that every worker, not just a few chosen ones, receives via email.

“Taking You Beyond is not for a few selected people. Everyone in an organization has the opportunity and can be a part of it, but that doesn’t mean that it replaces other means of training”, explained Dr. Kobus Neethling, present at the June launch of the programme in Centurion, Gauteng.

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CareerWise The programme consists of repetitive, consistent practical exercises, motivational quotes and learning opportunities with the aim of improving happiness levels, effectiveness and performance of staff in various organizations, no matter their size or number of people involved.

“5 minutes a day, 5 days a week, 40 weeks a year”. This is how Dr. Kobus Neethling describes his revolutionary e-training programme and this is how a company’s staff member receives the etraining topics, ranging from personal development skills, emotional intelligence, communication skills, stress management to professional effectiveness: one email every day, for 40 weeks of a year, every week having its own thought-provoking theme.

The programme incorporates 200 of daily bitesized information, accessible, easy to read and most importantly, easy to follow-up, digest and reflect upon. The training includes a short video sent out every week, featuring a world-renowned creativity expert and a certificate hand-out after completion.

The training is not limited to employees though – the management can also subscribe to receive the information and know exactly what the training is all about. I would personally go myself so far as saying that this kind of training will benefit anyone who wants to get ahead, conquer stress, feel more motivated and happier in their work.

’training, Staff

even for the smallest organizations, becomes a necessity in today’s business world rather than a luxury

‘

The investment of only R1 a day per person, hence R200 per registration, is a costeffective approach to training, enabling small and medium businesses, not just the corporate sector, to seriously consider training as part of the company’s future development for improving the organization’s bottom line.

Since people (staff) are the soul of an organization, staff training, even for the smallest organizations, becomes a necessity in today’s business world rather than a luxury. With “Taking You Beyond”, training doesn’t have to be a luxury anymore and this is very appealing to businesses indeed.

WealthWise 45

“Taking You Beyond” is a welcome addition to the South African training arena and the promise “It will change the way you train forever” might just be what the industry needs to re-invent itself and produce better training results.

Meet the team behind “Taking You Beyond” e-training Dr. Kobus Neethling is an internationally acclaimed speaker and corporate trainer, focusing on growing companies and individuals to extraordinary levels of thinking and doing. He is the founder and director of the South African Creativity Foundation and holds six university degrees. Kobus has authored more than 80 books and has written and presented several television series.

Dr Raché Rutherford is the co-founder of the Creativity Foundation of South Africa and holds a doctorate in creativity to enhance wellness in the workplace.

Karen Hodges is a corporate training facilitator and motivational speaker who focuses on building self-esteem and establishing creative confidence by applying the whole brain training.

Liesl Schoonwinkel has 17 years experience in corporate training, tertiary education and learnership training.

For more information visit www.takingyoubeyond.co.za.

WIN one of 5 "Taking You Beyond" e-training programmes by Kobus Neethling!

WealthWise magazine gives you now the chance to experience Kobus Neethling’s unique e-training programme. Five of our WealthWise Club members stand a chance to win the “Taking You Beyond” programme! See page …. For details on this competition.

46 WealthWise

Agenda This month we inspire you to...

Know what is trending Twitter is fast becoming the "it" place to share and read hot topics. Find out what is happening in the world by searching via millions of Twitter feeds with the simple tool search.twitter.com. Follow WealthWise magazine on Twitter at @WealthWisemag!

Start a business the easy way Bplan.com has everything you need to know if you are looking to start up a business, plus samples of basic business plans for various ideas and industries. Get inspired and ready to enter the business world!

Use a one-stop social media tool Consider www.ping.fm to broadcast your posts and feeds to countless socia media networks with just one click! Choose among most popular networks such a Facebook, Twitter, LinkedIn, Digg or add your own favourite social interaction platform!

Get the right sales leads!

If you are a business owner, then driving more sales must be your top priority. Poor leads lead to poor sales and poor business choices. Try www.matrixmarketing.co.za to boost your sales prospects.

Registration is free and you receive a free demo tool to assist your company with all future forecastings.

WealthWise 47

moyo - Modern, Sophisticated, African

by Carla Rossouw

It has been 13 years since moyo started as a small restaurant in Norwood,

Johannesburg, later relocated to the now trendy moyo Melrose Arch. More than a decade later, moyo Restaurants have expanded on a national basis, with seven unique restaurants and function venues in diverse settings in Kwa-Zulu Natal, Gauteng and Western Cape. moyo, which is the Swahili word for soul, offers a unique African dining experience with a wide variety of North, South, West and East African cuisine. Together with their cuisine, the total moyo experience ranges from face painting and hand washing ceremonies to live entertainment and even a retail experience. All moyo venues offer a la carte menus, as well as a variety of set and buffet menus suitable for groups in a variety of multi-purpose function areas. moyo restaurants have a rustic, African style dĂŠcor adorned with Bedouin type canopies. The lounge areas are decorated with comfortable leather couches, day beds and the chill areas / cigar bars carry a variety of Cuban cigars.

The signature dishes include authentic cuisine from all over the African continent.

Some of the firm favourites include Lamb, fish or chicken tagines, an authentic Moroccan dish, slow cooked using spices such as tomato, coriander, cumin and turmeric and served with couscous; chicken Yassais from Senegal, which is chicken breast marinated in an olive, red pepper and preserved lemon; ostrich berbe, a fillet marinated in a classic Ethiopian blend of cloves, cayenne pepper, cardamom and ginger, served with Zimbabwean peanut pumpkin mash; Samakikavu or Tanzanian fish curry with a coconut milk, turmeric, spinach and groundnut sauce, served with sun-dried mango.

48 WealthWise

Agenda: Destination The extensive menu is further enhanced with delicious salads, interesting soups, and a variety of starters / snacks that can also be ordered as platters. Delectable desserts make for a wonderful conclusion. moyo Melrose Arch, Johannesburg Set in Johannesburg’s urban jungle and centrally located in the Melrose Arch precinct with easy access from the M1 freeway, moyo Melrose Arch offers a great vibe set amongst some of Johannesburg’s finest offices, retail and residential areas.

The restaurant, which opened in 2002, offers a variety of different dining areas on different levels, some of them underground, set around natural rock formations.

This is an area that offers a great space for functions, especially at night. The maximum seated and cocktail capacity is approximately 400 guests without additional infrastructure. Clients can utilise some of the cobbled square area outside with prior arrangement. Set menu options range from R235 to R360 per person, although other smaller lunch set menus ranging from R140 to R180 per person are also available. The top of the range Food from Africa set menu offers a wide variety of dishes at R385 per person.

Highlight: Being part of the bigger Melrose Arch development and all it has to offer, moyo Melrose Arch successfully pairs a wonderful shopping experience with a delectable food journey. moyo Stellenbosch, Spier Wine Estate, outside Stellenbosch, Western Cape Set in the wine lands just outside Stellenbosch since 2004, moyo Stellenbosch is located on the Spier Wine Estate, where patrons can enjoy the best of both worlds with delicious food and outstanding wine. The various function areas consist of two marquee options, the platforms of the tree houses, as well as the rose garden and palm bar.

WealthWise 49

Agenda: Destination The seated capacity ranges between 70 and 450 guests and cocktail functions can accommodate between 120 and 550 guests. Some of the venues are weather dependent. This facility is an excellent option for tour groups or corporate groups to be utilised in conjunction with the conference and accommodation facilities of the Spier Wine Estate. Concerts have been hosted very successfully at moyo Stellenbosch.

Highlight: The tree houses on a balmy summer evening are definitely worth a visit. moyo Zoo Lake, Parkview, Johannesburg moyo Zoo Lake is a tranquil haven in the midst of the urban jungle of Johannesburg.

Opened in 2005, the restaurant is suitable for huge corporate functions, as well as family gatherings, children’s parties and workshops. A variety of eight dining areas can accommodate from 30 to 500 and up to 1 000 guests if additional infrastructure is utilized. Similarly, cocktail functions can receive from 60 to 800 guests, increasing to 1 500 if additional infrastructure is arranged. A range of buffet menus is available to larger groups and the a la carte menu is ideal for individual bookings and small groups.

Highlight: The central location and the lake view make moyo Zoo Lake a firm favourite of Johannesburg-ers. moyo Ushaka and moyo Pier Bar, Durban Based at Ushaka Marine world since 2007, moyo Ushaka has great Indian Ocean views and mild to hot temperatures throughout the year. In 2010, the restaurant added moyo pier, built on an actual pier, at approximately 50 metres from the main restaurant. The structure is mainly glass and consists of two levels.

Both the pier bar and the beach bar can seat approximately 70 to 80 guests and can accommodate 150 guests for a cocktail function.

50 WealthWise

Agenda: Destination At the main restaurant, the entire facility is open plan and consists of seven dining areas on different levels with a seating capacity of 30 to 210 guests. For cocktail type functions, the capacity ranges from 50 to 250 guests.

The maximum seating capacity is 450 and can increase to 700 with additional infrastructure. On a cocktail basis, the maximum capacity ranges from 700 to 1000, with additional infrastructure.

Set menus range from R198 to R285 pp, the more expensive menus giving more choices.

All the menus consists of four courses starting with flat bread with dukkah spice and soup on arrival, followed by variety of starters, mains and platter type desserts.

Highlight: The Pier bar with its beautiful views of the Indian Ocean is enough reason to pay a visit. moyo Fountains, Pretoria In December 2009, moyo opened a restaurant in the Fountains Park, part of the Groenkloof Nature Reserve in Pretoria. moyo Fountains boasts huge lawns in front of the restaurant which makes it very suitable for large gatherings. The restaurant boasts seven different areas, with a seated capacity inside of 15 to 300 guest, which can increase up to 2 500 when the outside garden / lawn is utilized. Cocktail functions can be arranged for 30 to 500 guests and up to 4 000 with additional infrastructure provided. The lawns are perfect for corporate family days, sport activities, as well as exhibitions and car launches.

There is a variety of set and buffet menus available for R160 to R360 per person. moyo Fountains also recommend their divine platter menus suitable for groups. The platter menus include snacks such as moyo’s flat bread with dukkah spice and olive oil, chicken and herb wrap, flamed grilled chicken breasts, roast lamb with cumin and paprika served on pumpkin and sweet potato bread, mini ostrich burgers, crispy potato chips, a variety of samoosas, dips and a selection of must-try special desserts.

WealthWise 51

Highlight: With beautiful views especially in summer, moyo is set to become Pretoria’s favourite destination for real foodies. A huge bonus is the lawn space which comes at no extra cost, should you want to party in style. moyo Blouberg, Bloubergstrand, Western Cape The latest addition to the moyo group is moyo Blouberg, situated at Eden on the Bay lifestyle centre, overlooking the Atlantic Ocean, Robben Island and Table Mountain. The restaurant, opened in December 2009, has a very cosmopolitan feel and it is only a mere 20 minutes from the Cape Town city centre. The venue has a capacity of up to 350 guests.

Highlight: Sitting at a real surfboard table with your feet in the water is an amazing must-have experience.

More than just a restaurant Other than their restaurant chain nationwide, moyo also offers the moyo Retail experience, complete with authentic African and other trendy gifts, food and other culinary items. moyo Music and Entertainment is responsible for the live entertainment of all venues, promoting local and international artists from all over Africa. moyo kidsMoyo magic is available at moyo Zoo Lake only and focuses on kids’ activities and kids’ parties. With the assistance of moyo functions, one could fully utilise all the aspects that moyo has to offer in terms of a truly African experience.

For more information visit www.moyo.com or send e-mail to info@moyo.co.za.

Contact Carla on carla@carlarossouw.com to take your next function or conference to a new level. Also visit www.carlarossouw.com for more reviews on conference venues, accommodation and international destinations.

All photos courtesy of Moyo, except the two photos on the bottom of page 52, taken by Denisa Oosthuizen, publisher WealthWise magazine.

Competition

WIN one of 5 "Taking You Beyond" e-training programme

by Kobus Neethling!

WealthWise magazine gives you now the chance to experience Kobus Neethling’s unique e-training programme. Five of our WealthWise Club members stand a chance to win the “Taking You Beyond” programme!

To enter this competition, all you have to do is joining our WealthWise Club, by subscribing to our publication at no cost! Go to www.wealthwisemag.com and click on "Subscribe" or follow the link: www.wealthwisemag.com/wealthwise/subscribe. Subscription is absolutely free! For more info on Kobus Neethling's e-training programme, read our feature on page .... in the CareerWise section of our digital August issue.

WIN one of 5 Zamar "Best of Broadway" music albums!

Zamar, which means ‘to celebrate with the plucking of strings,’ was founded in the heart of Stellenbosch by energetic young musicians, equally passionate about their music, reflecting a style which is both traditional and cosmopolitan.

The vibrant group is Veronica (vocals & violin), Lyuda (vocals & accordion), Danica (djembe & percussion), Ignatius (bass) and Brian (vocals & guitar). During their performance they take you on a tour around the world, visiting many different countries - you will experience everything from Gypsy to Jazz!

Five of our WealthWise Club members stand a chance to win Zamar’s latest music album, “Best of Broadway”! To enter this competition, all you have to do is joining our WealthWise Club, by subscribing to our publication at no cost! Go to www.wealthwisemag.com and click on "Subscribe" or follow the link: www.wealthwisemag.com/wealthwise/subscribe. Subscription is absolutely free! For more info on Zamar, go to www.zamar.co.za.

WealthWise 53

Agenda: Books

On the bookshelf...

WealthWise recommends

Opinion Pieces by South African Thought Leaders, Penguin Forum, R280,00 from www.eclus1ves.co.za

Edited by Max du Preez, with Len

Verwey, James Myburgh, Dylan Wray, Neville Alexander, Leonie Joubert, Antony Altbeker, Carmel Rickard, Jonathan Jansen, Gillian Godsell, Kerry Cullinan, Eric Atmore, Anso Thom, Njabulo Ndebele South African veteran journalist and political commentator Max du Preez is the brain behind this compilation of critical opinions on various socio-economic and political aspects of modern South Africa. The book reunites some of the most insightful and well documented articles written by various contributors with significant impact in their field of research and industry, therefore offering an unbiased, raw and honest perspective on some of the greatest challenges in the country.

Opening with the controversial and satirical feature “Of Jacob, Julius, Jimmy and the dancing monkey” written by Max du Preez himself, the book continues on its debatable tone with writer and researcher Njabulo Ndebele’s “Toxic politics: Diary of a bad year” and Neville Alexander’s depiction of the post-apartheid South African nation.

Other highlights include a grim view of the crime and policing in the country, signed

by Antony Altbeker, a sought-after expert and author of various books on the topic, Carmel Rickard’s debate on the fairness of the current judiciary and its role to embody the constitution and Leonie Joubert’s call to action on environmental and sustainability concerns.

Perhaps the most burning issues are left to be discovered by the end of the book, encompassing Len Verwey’s perspectives on poverty – an eye-opening read , accompanied by statistics, an overview of the state of the health services and the national health insurance scheme by Kerry Cullinan and Anso Thom and the extensive portrayal of the development of education and what we still have to achieve as a nation to provide a better future for our youth, wonderfully illustrated

by Eric Atmore, Dylan Wray and Gillian Godsell. In “The content of their character”, Jonathan D Jansen, Principal at the University of Free State, is quoted on the transformation of race relations at the University of the Free State, following numerous incidents catalogued as “racist”.

“After Invictus: Thabo Mbeki and the breaking of the South African state” by James Myburgh, a presentation of the facts and events that shaped our current destiny, taken back to the critical period of 1995 – 1999, just after the 1995 Rugby World Cup won by South Africa, is an inspiring choice for ending the book and one that does leave plenty of room for questions.

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Agenda: Books Anthony Rice, Accounts Demystified – The Astonishingly Simple Guide to Accounting (sixth edition) Pearson Education, R245.95 from www.

The sixth edition of the best-selling “Accounts Demystified” is a real treat for everyone who wants to understand and digest accounting and its principles. Written specifically for those without a financial background or , dare we say, with just a brief but not impressionable encounter with accounting in high school and university (yes, even those with a business management degree), the book delivers on its promise, making it simple, easy to understand and straight forward.

A huge appeal of the book is guaranteed by the author itself. Anthony Rice is not an accountant – but a frustrated business owner turned into a self-taught accountant while keeping accounts for his own company.

The process of demystifying accounting gave birth to his very popular “Accounts Demystified” book, now revisited for the sixth time, and it is easy to understand why.

Readers should expect to understand the basics of accounting, the terms and jargon surrounding financial statements (assets, liabilities, debit, credit and so on), master and analyze company accounts and monitor a company’s financial performance (even investors would love this).

The quest for grasping accounting is substantiated by three fictional characters – Sarah, the owner and sole employee of a company, who wants to do her own financial statements instead of paying huge fees for someone to do it; Tom, a sales manager who suspects his boss is putting the company at risk and who wants to risk some of his own savings on the stock exchange, thus needing to understand and read company accounts; and Chris, a financial journalist who can now read and analyze balance sheets with confidence and not just profit and loss accounts.

By using the character’s thoughts and dialogues, illustrations, graphs, calculations and examples of annual reports, the author makes the accounting journey real, accessible and not so scary as usually perceived by most of us. The definitive guide for business owners, investors, trainee accountants, MBA students and managers, “Accounts Demystified” is probably the accounting book you need to read, whether you have no clue or just want to brush up your accounting skills.

A big bonus is the free content, tools, templates and support available at www.accountsdemystified.com.

Have you read an inspiring book recently? Share your experience and send us your review at editor@wealthwisemag.co.za!

WealthWise 55

Agenda: Events

Events, workshops and seminars

56 WealthWise

Agenda: Events The National Boat Show

Where: Coca Cola Dome, JHB When: 12 to 14 August South Africa's premier boat show and dive exhibition annualy entertains families, professionals, weekenders and outdoor enthuziasts. Dreamy holidays and seaside destinations (think Mozambique), power boats, fishing and diving equipment and luxurious yachts are just some of the offerings on display - go hungry for adventure! For more info visit www.nationalboatshow.co.za.

Retail Africa 2011

Where: Sandton Convention Centre, Johannesburg When: 23 to 26 August Known as South Africa's only retail conference offering innovation and solutions for retailers and merchants, Retail Africa 2011 is an expo dedicated to growing the retail industry and its exponents. managers, CFOs, merchandisers, buyers, marketers, branding representants and strategists are welcome to attend the panel discussions and the technologu showcase exhibition. For more details and bookings visit www.terrapinn.com/2011/retailafrica

Innovation and Technology Management Africa 1.0

When: 24 to 26 August Where: CSIR International Convention Centre, Pretoria ITMA 1.0 is designed for management, executives, team leaders, project managers and industry leaders with a passion for innovation and technology. The 3- day Conference and Workshop sees local and international speakers from ministries, universities and various companies such as Microsoft, HP, Gijima, with an all-day IT Management Expo opened to visitors. For more information visit www.ciipm.co.za/itm Do you have an event, workshop or seminar you would like to promote in WealthWise magazine? Send your suggestions to editor@wealthwisemag.co.za and we will publish your event in these pages!

WealthWise 57

Last Word Celebrate the women in your life!

Celebrate the women in your life this month and post your favourite quotes about women - famous or not - on our WealthWise magazine Facebook page!

Below we have selected (tough choice) some of our favourites: *** The great question that has never been answered, and which I have not yet been able to answer, despite my thirty years of research into the feminine soul, is “What does a woman want?�

SIGMUND FREUD, Ernest Jones' Sigmund Freud: Life and Work *** I'm supposed to have a Ph.D. on the subject of women. But the truth is I've flunked more often than not. I'm very fond of women; I admire them. But, like all men, I don't understand them.

FRANK SINATRA *** The strength of women comes from the fact that psychology cannot explain us. Men can be analysed, women ... merely adored.

OSCAR WILDE *** The best judge of whether or not a country is going to develop is how it treats its women. If it's educating its girls, if women have equal rights, that country is going to move forward. But if women are oppressed and abused and illiterate, then they're going to fall behind.

BARACK OBAMA

Go to www.wealthwisemag.com, like us on Facebook and post your favourite women quotes this August on our Facebook wall!

58 WealthWise

In next edition...

Estate Planning Special!

Estate Duty Principles Demystified An interview with Michael Stein, author of Estate Duty Principles and Planning and expert on estate planning and taxation.

Holistic estate planning: Professor Willie van der Westhuizen, head of Trust Law and Estate Planning Department of Millers Attorneys' George and Cape Town offices, explains the psychology behind estate planning.

Interest rates and property returns How does a rise in interest rates affect property returns? Paul Stewart, MD of Plexus Asset Management,takes a closer look.

The business behind a succesful music band Read how Stellenbosch-based music group Zamar manage to combine their passion for music with the realities of owning and managing a music band.

WealthWise 59

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