AllanGray RA + general financial advice

[semaphore]

Wouldn't paying them off quicker than the loan term while a good thing have adverse effects as the creditors aren't getting their money's worth?

Well i tested with 1 month loans not long term ones. Also creditors charge an early settlement penalty usually, does not reflect against your score as it has nothing to do with the bureaus.

 

[HavocXphere]

You will have an alert saying overuse of revolving credit. But if you pay it off its fine.

Was hoping to get a low limit card for online transactions & limit fraud potential that way.

What kind of percentage is considered overuse? Obviously it'll differ by provider but in general....

 

[semaphore]

Was hoping to get a low limit card for online transactions & limit fraud potential that way.

What kind of percentage is considered overuse? Obviously it'll differ by provider but in general....

If you're using it to the max every month, thats over use I have that alert, as i put all my money in to my credit card and pay for things via that.

 

[HavocXphere]

hmmm...new plan of action then. 1.5k limit 1k usage.

Thanks for the info.

Wish the credit shops would provide a bit more guidance...an FAQ of sorts.

Just bought a new report...it seems that 3 additional months worth of paying Telkom got me an extra 7 points. That was easy...

 

[semaphore]

Cool, i barely look at my credit report thou. I know its screwed up I use my ID number for testing lol.

 

[silver6933]

Things to be aware of.

1. RA tends to have built in premium escalation. That means by the time you are 40, it could be large. The better companies allow you to request no escalation for the coming year. However you have a small window within which to do this. And you have to do this every year.

2. The returns on policies are not that high at all due to the current economic climate.

3. Based on your age. You should be looking at a balanced portfolio. And you should be favoring the high risk investments. This should in theory get you better returns. Which allow you to invest them in lower returns, more secure investments in the future.When you become more risk averse(family man)

4. I would personally skip the RA policy and buy some blue chip shares. And look beyond the narrow definition of blue chips. Companies that have been around for a long time and show a upward trend in their share prices over more than 10 years.

You are looking at a 30 year investment. So you can take the long term view.

PAY off your current debt before you start saving. The returns on debt repayment are way more than any policy.


BTW after reading the above. Can you really trust someone on the internet with advice?

Find a registered financial adviser and get some advice from him. They will tailor it to your needs. All we are going to tell you, is what works for us.

 

[semaphore]

Yip never take advice here, get a proper person.

 

[HavocXphere]

4. I would personally skip the RA policy and buy some blue chip shares. And look beyond the narrow definition of blue chips. Companies that have been around for a long time and show a upward trend in their share prices over more than 10 years.

Not sure I agree. From what I've calculated the tax benefit alone provides a *risk-free* return that is significant especially on the higher tax brackets...and thats without taking any actual gains made by the RA into account.

Only downside is that you can't pull the money...

Find a registered financial adviser and get some advice from him. They will tailor it to your needs. All we are going to tell you, is what works for us.

If I could find a decent one that charges by the hour rather than selling products I'd do so...

 

[rorz0r]

If you have a credit score now, and your transport loan is still over 30k you might be able to sell your car to yourself and get vehicle financing at a lower rate.

 

[silver6933]

Not sure I agree. From what I've calculated the tax benefit alone provides a *risk-free* return that is significant especially on the higher tax brackets

As I said he is younger. Therefore on lower bracket now than what he will be when 40 yrs old

Have you also taken into account deferred taxation? Also if he has a pension fund, his RA tax credit is reduced.

Assume marginal tax rate 20%, RA max tax credit 15%. . therefore 20% of 15% = 3%. return on tax saving.

Then deduct 40% at retirement and in pension. Then reduce to PV.

Older people should invest in RAs. They are more risk averse.

 

[TheBadMadMan]

Really helpful thus far. At the moment I have nothing, no Pension, no RA, no savings as all extra $$$ is going into my debt. The capital remaining is under 20K already.

I am doing some groundwork to know which direction to go into once my dept is paid off.
So I am open to all suggestions, do you guys recommend that I not take out a RA without a pension fund? Or should I avoid both of these and play in the higher risk, higher gain areas such as SATRIX 40? What else would you recommend I look into. Note I will do my research and in turn refer to a financial adviser, I am of the type that likes to know why something is considered better than something else as opposed to just swallowing what I'm told by a person trying to get a nice commission kickback from me.

If you feel like playing "devil's advocate", please do. I would appreciate both positive and negative feedback.