Adding to RA - which option is best

lkpat said:
Would you move the fund, or start a new one?
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If it were me, I’d move the fund to Allan Gray myself without the broker. You just call Allan Gray and they move it for you and keep you informed via email.

There is no reason to not have multiple RA’s.

If you decide to go with the broker then make sure you know what fee they will charge.

They can take an initial advice fee of up to 3.45%. And then an ongoing advice fee of 1.15%.
There is absolutely fck all reason you would want to pay that for an RA.
 
Pegasus said:
If it were me, I’d move the fund to Allan Gray myself without the broker. You just call Allan Gray and they move it for you and keep you informed via email.

There is no reason to not have multiple RA’s.

If you decide to go with the broker then make sure you know what fee they will charge.

They can take an initial advice fee of up to 3.45%. And then an ongoing advice fee of 1.15%.
There is absolutely fck all reason you would want to pay that for an RA.
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My broker didn't charge to move to sygnia.. He charges a 0.5% monthly broker fee
 
Some RA notes (as in my personal experience).

You can make a RA paid up (but dont keep it with any off the BIG life insurance firms, as in Sanlam, Old Mutual, Momentum or Liberty. FEES will eat the value UP! So in that breath, do a section 14 (which means, you are moving providers from OLD to NEW).

Secondly, if Allan Gray, you can move it, BUT you cant top it up. Which means, you are making it paid up. In my case, I started a new RA with Sygnia and moved my OLD RA to Allan Gray (to have some diversification.

Sygnia's currently fees for the Skeleton Balance Fund 70 is 0.54% (which is a real bargain).
 
20 years ago I created a paid up RA at Old Mutual with R125 000. Today they pay me a pension of R15 000 a month from that RA and every year there is an increase.
I created a similar RA at Sanlam at the same time and they pay me a pension of R15 200 per month with an increase every year.
It is six of the one and half a dozen of the other.
You always lose money when you move an RA from one financial institution to another. Stay where you are.
 
Stonemason said:
20 years ago I created a paid up RA at Old Mutual with R125 000. Today they pay me a pension of R15 000 a month from that RA and every year there is an increase.
I created a similar RA at Sanlam at the same time and they pay me a pension of R15 200 per month with an increase every year.
It is six of the one and half a dozen of the other.
You always lose money when you move an RA from one financial institution to another. Stay where you are.
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What is the value of that R125000 today?

Is it around R1.75 million?


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Stonemason said:
20 years ago I created a paid up RA at Old Mutual with R125 000. Today they pay me a pension of R15 000 a month from that RA and every year there is an increase.
I created a similar RA at Sanlam at the same time and they pay me a pension of R15 200 per month with an increase every year.
It is six of the one and half a dozen of the other.
You always lose money when you move an RA from one financial institution to another. Stay where you are.
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You are comparing two old school products. Pointless comparison. And no, there aren't any fees to move providers
 
I moved mine to Sanlam and now get Wealth Bonus as well.
 
Speedster said:
You are comparing two old school products. Pointless comparison. And no, there aren't any fees to move providers
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The exact same products are still available. There is always an initial (hidden) fee that is paid in advance to the agent. That money is then recovered by reducing the returns reported. Try cashing in the investment after a year and you will quickly see how much is deducted for 'penalty fees'. The penalty fees cover the money paid to the agent in advance.

Pegasus said:
What is the value of that R125000 today?

Is it around R1.75 million?
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It was actually a little less - your calculator works in reverse and this was actually a return on investment.

What I did was I took the cash value of the investment in the RA and bought a pension with it. This is not always the best method but is very effective as a fixed base as long as you have property and other investments in your retirement mix.
 
Stonemason said:
The exact same products are still available. There is always an initial (hidden) fee that is paid in advance to the agent. That money is then recovered by reducing the returns reported. Try cashing in the investment after a year and you will quickly see how much is deducted for 'penalty fees'. The penalty fees cover the money paid to the agent in advance.



It was actually a little less - your calculator works in reverse and this was actually a return on investment.

What I did was I took the cash value of the investment in the RA and bought a pension with it. This is not always the best method but is very effective as a fixed base as long as you have property and other investments in your retirement mix.
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The calculater I used is to work out what lumpsum you need right now to earn 15 000 a month off an annuity.

That is why I asked you what the current value is of your investment. It should be about R1.74 million.
You said you started with R125000 20 years ago. so that must have grown to R1.75 million.

The 8.5% growth value I used is what OM Balanced earned over the last 10 years. They don't show 20 years, but I am perry sure it wasn't higher than 8.5%.

So I assume you invested in something at OM that returned 14.11% over 20 years?

1686557641999.png
 
Pegasus said:
The calculater I used is to work out what lumpsum you need right now to earn 15 000 a month off an annuity.

That is why I asked you what the current value is of your investment. It should be about R1.74 million.
You said you started with R125000 20 years ago. so that must have grown to R1.75 million.

The 8.5% growth value I used is what OM Balanced earned over the last 10 years. They don't show 20 years, but I am perry sure it wasn't higher than 8.5%.

So I assume you invested in something at OM that returned 14.11% over 20 years?

View attachment 1539591
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The current value of the investment is 0. The RA was worth about R1.35 million when it matured. I used that money to buy a pension from OM. Based on the amount and their calculations on how long I would live, they pay the monthly pension. When I die, they take any money that is left or if I live beyond their calculations, they obviously lose money.
Your calculator computes the withdrawal amount on an investment over a fixed period and that is something completely different.
Also when calculating the growth on a fixed investment, do not forget the power of compound interest if no funds is withdrawn during a long term investment.
 
Stonemason said:
The current value of the investment is 0. The RA was worth about R1.35 million when it matured. I used that money to buy a pension from OM. Based on the amount and their calculations on how long I would live, they pay the monthly pension. When I die, they take any money that is left or if I live beyond their calculations, they obviously lose money.
Your calculator computes the withdrawal amount on an investment over a fixed period and that is something completely different.
Also when calculating the growth on a fixed investment, do not forget the power of compound interest if no funds is withdrawn during a long term investment.
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So you bought a LIFE annuity (as in OM guaranteed you an income) and they are taking all the risk on you
 
Stonemason said:
The current value of the investment is 0. The RA was worth about R1.35 million when it matured. I used that money to buy a pension from OM. Based on the amount and their calculations on how long I would live, they pay the monthly pension. When I die, they take any money that is left or if I live beyond their calculations, they obviously lose money.
Your calculator computes the withdrawal amount on an investment over a fixed period and that is something completely different.
Also when calculating the growth on a fixed investment, do not forget the power of compound interest if no funds is withdrawn during a long term investment.
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I had to calculate in reverse as I got only two figures to work with.

Anyway… You got a great deal from OM then. (Unless they think you won’t last long.)
 
Pegasus said:
I had to calculate in reverse as I got only two figures to work with.

Anyway… You got a great deal from OM then. (Unless they think you won’t last long.)
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I got the same deal from Sanlam. That means that in the RA field returns are basically the same.

I should last a while still :)
 
Stonemason said:
I got the same deal from Sanlam. That means that in the RA field returns are basically the same.

I should last a while still :)
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The actuaries on both sides will do similar calcs.
 
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