Income Fund update | Latest Court Judgement on Loans being enforceable between familial and co-dependent Individuals

Income Fund update

Yesterday our Reserve Bank cut SA interest rates by as 0,25%. This is positive for investment markets, as it reduces money market and fixed deposit rates going forward.

As an alternative, income funds are proving very beneficial, where I highlighted the benefits of these on 16 August 2024, and again on 7 March, in this distribution.

Without repeating the benefits of how these provide for some relief against interest rate cuts, the latest summarised results of the leading Income Funds to the end of June are:

*Returns for the 3-year period are annualised (per annum) returns. 

These rates are substantially higher than money market rates over the period (7,86% over one year, and 7,65% per annum over 3 years).   

Income Funds are not a homogeneous grouping; the different income funds carry varying degrees of risk.  On a risk-adjusted basis, the Old Mutual Income Fund, being the most defensively positioned, is showing very good results.

For a further option carrying even less risk than an income fund, our own PWM Extra Interest fund investing in deposits of various leading banks has returned 9,26% over the last year.     

All of these funds are available via us, and you are welcome to contact me if you require further information here.

Saving for Short-Term vs. Long-Term Goals

Not all savings are created equal, and understanding the difference between short-term and long-term goals is key to building a well-structured financial plan.

Short-term goals (within 1–3 years) may include things like:

· A holiday

· Emergency fund

· Home improvements

These are best supported by low-risk, easily accessible savings solutions.

Long-term goals (5+ years) might include:

 · Retirement

· Property investment

· Children’s education 

These require a different approach, strategic investing, compound growth, and time in the market.

At Private Wealth Management, we help you define your goals and create a personalised savings strategy that aligns with your timeline, lifestyle, and future aspirations.

R1million Loan between familial and co-dependent Individuals enforceable, even if the Lender is not Registered ito NCA – Capper vs Wasserman (18 July 2025)

In a recent court case where the court judgement was handed down last week, this application concerns a trust that was tragically misplaced.

The applicant, a 72-year-old female, loaned an amount of R1 million to the respondent, Wasserman, a 31-year-old male, whom she deemed to be like a son to her.

The loan was formalised in a written agreement drafted by Wasserman, which included a 10% annual interest rate.

The parties had developed a close familial relationship after meeting at the funeral of Wasserman’s grandfather, with the applicant and her late husband providing financial and emotional support to Wasserman over the years. Despite initially repaying smaller loans. 

Wasserman defaulted on the R1 million loan after the death of the applicant’s husband. Wasserman’s refusal to pay the amount was based on the provisions of the National Credit Act 34 of 2005.

According to him, the loan falls foul of the provisions of the Act because the applicant was not a registered credit provider, and thus void ab initio and absolves him from his liability to repay the loan.

It was examined whether the NCA applied to the loan agreement, considering the nature of the relationship between the parties. Wasserman argued that the agreement constituted a credit agreement under the NCA, making it void because the applicant was unregistered.

The applicant, however, contended that the parties were not dealing at arm’s length, as their relationship was familial and co-dependent, thus falling under the exemption in section 4(2)(b) of the NCA. The undisputed facts paint a picture of a close, loving relationship between the applicant and Wasserman. The relationship was akin to a mother-son relationship. Wasserman’s denial that a close relationship existed was contrary to good morals.

To add insult to injury, Wasserman, on all accounts a successful businessman, drafted and presented the loan agreement to the applicant, an elderly lady without any business acumen.

Wasserman had exploited the applicant’s trust, insisting on interest payments and drafting the agreement himself, despite their close bond. Wasserman’s argument was rejected, as the applicant did not seek maximum financial advantage and the relationship was one of mutual dependence.

Furthermore, Wasserman took umbrage with the fact that the applicant endeavoured through legal means to claim the amount that is due and owing to her. The averment is astonishing, to say the least.

The loan agreement was valid and enforceable, as the parties were not dealing at arm’s length and the NCA did not apply. Wasserman’s conduct was morally reprehensible, given the applicant’s vulnerability and the trust she had placed in him. Wasserman was legally obligated to repay the loan with interest.

Judgment was granted in favour of the applicant, ordering the respondent to pay R1 million plus 10% annual interest from 1 November 2023 until full payment, as well as costs on an attorney-and-client scale due to the respondent’s unethical conduct. 

This recent judgement provides further clarity around this aspect, which is welcomed. If you have loaned or borrowed money to or from family members, know this is not a concern.

• There is a place called happiness

• It's in the future

• If you hurry, if you work hard, if you get ahead of everyone else, you can get there

• It's worth sacrificing almost everything in life to reach this destination because, once you get there, your problems will be over

He believes 75% of people subscribe to this story and that it's a lie on which our society is based.

• Rooted in our misconceptions and limitations, usually adopted in childhood in response to circumstances

  • These are the scripts that are often running our lives, our attitudes and behaviour

• In the expectations and pictures sold to us by society of what will, or should, make us happy

  • We are cogs in a capitalistic marketing machine that makes us believe in the have, do, be philosophy - you have to buy a lot of stuff and pay for many experiences for that elusive moment of happiness

• Because we live in traumatised cultures 

  • Think about the fear induced by crime and terrorism, or lack of basic services. Having said that, it is amazing to watch people who live with who choose to be happy in the moment. It's a lesson for us all.

• Write a daily gratitude diary to rewire your outlook on life - five things every night or morning that you are grateful for

• Happiness can be experienced in between imperfect conditions

• A lone human is not a functioning unit - we need each other. The pain of life is too much to face alone, and we need to share the joys with others to amplify them. We need others to hold space for us, to hold our feelings

• We need to be able to laugh and love, despite life's difficulties

• Get off your upward race with its finite deadlines; otherwise, you will lose hope

• Refuse to let others determine your state of mind

Friday Finish Line