Retirement Annuity

[supersunbird]

My conservative picks performed so poorly, how do you think the more riskier ones would have done?

I am extremely happy with the performance of my share transactions and I am extremely disappointed with the performance of my conservative RA.

I have already been burnt by RA's once and I haven't even belonged to them for four years. One should be extremely careful of something where it's practically impossible to get your money out of.

To answer your first question: Better!

Thats exactly why conservative is called conservative. The risks are small but so then is the potensial for growth or loss. Your own share transactions are "risky" just because they are equities, so you cannot compare their performance to your conservative RA, which probably has lots of bond and money market assets and little equity or property.

[supersunbird]

So your advice is that I should just keep on pumping money into a sinking ship with the hope that someday it's going to come right? My parents did just that and they were burnt, most of the people from the previous generation were burnt.

My advise is that people should keep a hawk eye on every single financial transaction that they have, and decide for themselves. Brokers have no bloody idea what they are talking about.

You are probably revering to old style life RAs and not unit trust RAs in that experiencial regard, the latter are MUCH better and flexible.

And your advice is correct.

[lholhos]

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I would rather advise that you pay off any loans, put it in a money market account or open a trading account and buy Satrix type shares. At least there you can decide when you've had enough and regain some of your funds.

I have been reading up on RA, I will be 26 in 5months,...I'm "obsessed" with savings worried about retirement...I haven't seen a 'positive' story when it comes to RA, makes me wonder why ppl still take RA....shares are the way to go, I think...

I hv one of those FNB online share investment account..bought MTN shares for R5000 in 2010, I wish I had bought more....shares were almost _R120 Nd now they are R145

[Wyzak]

I have been reading up on RA, I will be 26 in 5months,...I'm "obsessed" with savings worried about retirement...I haven't seen a 'positive' story when it comes to RA, makes me wonder why ppl still take RA....shares are the way to go, I think...

I agree, I have also seen excellent growth on my share portfolio. Shares or Satrix is the way to go.

I chose a conservative RA because I have a more risky share strategy that I'm following. But 2.1% per 4 years is not conservative, that is a money sink. If I had put the money into the bank I would have had more over 4 years.

[supersunbird]

I agree, I have also seen excellent growth on my share portfolio. Shares or Satrix is the way to go.

I chose a conservative RA because I have a more risky share strategy that I'm following. But 2.1% per 4 years is not conservative, that is a money sink. If I had put the money into the bank I would have had more over 4 years.

But who chose those multiple conservatve funds in that RA? Blame that person. Not the RA. Or put it into the bank if you think if will be better (but highly unlikely to beat inflation just as the that RA)

Your age and planned retirement date also impacts an what you should choose to invest in with your RA.

[Rkootknir]

I agree, I have also seen excellent growth on my share portfolio. Shares or Satrix is the way to go.

I chose a conservative RA because I have a more risky share strategy that I'm following. But 2.1% per 4 years is not conservative, that is a money sink. If I had put the money into the bank I would have had more over 4 years.

You can invest in a JSE Top 40 index tracker in almost all RAs (up to 75% of your portfolio as per Reg 28 of the Pension Funds Act). So you get the benefit of the equity index's performance as well as the marginal tax (e.g. 40% if you're in the top bracket) saving from the RA structure. Granted, the 75% limit on total equity investment might be a problem for people with high risk appetites, but the tax benefit can compensate for this.

Always get the provider to give you a full breakdown of the fees (brokerage, commision, administration, investment, etc). Most of the times (especially with the big insurers) it's the fees that nail your investment performance (and they almost never disclose investment fees explicitly). I've seen some fee schedules that imply "effective" fees of up to 4% p.a. which is just pure gouging on the part of the provider.

[supersunbird]

A recent article on RAs:

http://business.iafrica.com/personal...04793.html?p=1

[Wyzak]

But who chose those multiple conservatve funds in that RA? Blame that person. Not the RA. Or put it into the bank if you think if will be better (but highly unlikely to beat inflation just as the that RA)

Those aren't the funds that my RA was always invested in. They changed the law last year sometime and we had to move to different ones. Those are the ones who had the best returns over the last few years - in the region of 20-30% is always thrown around, but real performance is never that.

At least in the bank I would have gotten more than 2.1% in 4 years.

The problem is that you can never judge a book by it's cover. You won't know how an RA will perform until you have one, and then if you are disappointed you are stuck and can never get out.

[Fuma]

You are probably revering to old style life RAs and not unit trust RAs in that experiencial regard, the latter are MUCH better and flexible.

And your advice is correct.

How long have the new generation RAs been introduced in SA? Been with Sanlam since '05.

[supersunbird]

How long have the new generation RAs been introduced in SA? Been with Sanlam since '05.

Cant seem to find at exact date and I didn't follow the industry before 2010 (I'm in IT, my interest in finance stuff is purely so I can retire comfortably because I've seen bad stuff with friend parents who are retiring/retired). But from what I can figure out seems around 2008 to 2009 date but I might be wrong. Someone in the industry needs to tell us.

[Rkootknir]

Cant seem to find at exact date and I didn't follow the industry before 2010 (I'm in IT, my interest in finance stuff is purely so I can retire comfortably because I've seen bad stuff with friend parents who are retiring/retired). But from what I can figure out seems around 2008 to 2009 date but I might be wrong. Someone in the industry needs to tell us.

It started at different dates with different companies, but as far as I remember it was mostly driven by the publication of the "Statement of Intent" in December 2005.