Page 24 - Waterfall City_Issue 11_2022

Waterfall City News

legacy make a consoling gift to their
SHARE OF INDIVIDUAL INVESTORS WHO beneficiaries when they pass away (and
SOLD ALL OF THEIR EQUITY HOLDINGS thus leave the details of their estate
as a surprise), many financial planners
35% prefer to include future beneficiaries
in planning reviews to ensure that
30.5% 30.9% a consistent and clear message is
30% delivered and agreed to before the

26.3% transition of this wealth.
25%
IS IT ONLY FOR THE
WEALTHY?
20% An estate below the current R3.5m
17.8%
abatement level may not seem like
15% much, and if instant gratification were
to get the better of such assets, they
might soon disappear into goods with
10% embedded obsolescence and declining
value. However, with a clear strategy to
5% build a sustainable intergenerational
financial plan, an amount of R3.5m
invested over a period that allows for
0% 60-64 65-69 70+ All the creation of intergenerational wealth
Age group (and minimising any withdrawals), will
Source: LPL Research, Fidelity Investments 6 June 2020 grow into a substantial sum. The table
here shows how R3.5m invested into
the JSE FTSE ALSI 25 years ago would
Economic and market-linked crisis HAVE CLEAR INTENT OF have grown, with and without taking
events tend to cloud investors’ YOUR LEGACY dividends. Even if an individual were
judgment. To minimise panic Unpacking the legacy you would like to living off the dividends paid out as
surrounding paper losses on growth leave, and ensuring there is clarity and illustrated below, they would be what is
assets, investors should ensure that efficiency in transitioning this legacy considered a ‘high net worth individual’
they use the services of an accredited when the time comes, requires a clear (commonly defined as an individual with
financial planner to co-craft and plan that incorporates estate-, tax-, liquid assets of at least USD 1 million).
implement a holistic financial plan and investment planning at the very
that also caters to other goals they minimum. Further, it is crucial that your The intention of such a legacy will
may have (like sabbaticals) and intended legacy be understood, as every require buy-in, however. A trusted
curveballs that life may throw at individual has a personal relationship financial planner can assist in defining
them (including retrenchment, with money. The latest research has the intent of legacy assets and
divorce, or additional dependents). shown that the way children are raised ensure the scrutiny of the intent. This,
By considering the investment plan heavily influences their relationship combined with values and relationships
in its totality and ensuring that other with money, so it is advisable to instil with money nurtured in beneficiaries,
needs are met, the growth assets will healthy habits in your children that will will go a long way to creating
be best placed to reliably achieve the enable them to continue your financial substantial intergenerational wealth.
returns expected of them within an legacy in a sustainable way. While many
appropriate time frame. investors believe future inheritance and Finally, it is important to make sure
you have a valid will in place that is
unambiguous, creates a clear map
R3.5m lump sum invested Annualised For 25 years 25 years for the next journey of your legacy,
in JSE FTSE ALSI return over ending July 2022 adjusted for and ensures that intergenerational
25 years (Based on inflation wealth becomes that gift that keeps on
annualised return)
giving. Ensure that your will is reviewed
Incl. dividends 13.21% R 77 837 307 R 63 508 510 regularly, as your circumstances may
change. Enlist the services of a trusted
Excl. dividends (i.e. 9.43% R 33 302 591 R 18 973 794
beneficiaries live off financial planner to partner with you
dividends paid out) on your financial journey and help you
create lasting intergenerational wealth.

22 Waterfall City Issue 11 2022