Best way to spend R1 million

[Oopsie]

Just for argument sake would this offer better returns than to take that R1 million bucks and buy all the DivTrax you can. Your investment will grow so capital gains and then you get dividends.

View attachment 417762

That was for a capital expenditure of R100k and turnover of R180K pm. No expenses after 2 employees salaries and rent. A gold mine.
We spent 2 days counting cars parking there and it was chaos as it is underground parking with no control.

 

[Thor]

That was for a capital expenditure of R100k and turnover of R180K pm. No expenses after 2 employees salaries and rent. A gold mine.
We spent 2 days counting cars parking there and it was chaos as it is underground parking with no control.

Guess I'll need to pm you. Definitely sounds worthy of further research.

 

[Alton Turner Blackwood]

Dividends

Putting 1 bar into ECS would give you a lekke monthly amount to keep you busy while you're deciding. That's R11k per month

 

[JStrike]

I will answer that. DIVTRX had a gain of 17% over the past 12 months and that does not include the divies at all. So I can safely assume a gain of at least 21.8% with the divies reinvested.

Thats not too shabby at all

 

[Tomtomtom]

Irrelevant. Selling down capital on faster capital growth stock or receiving dividends on lower capital growth dividends stocks equate to the same thing.

Not quite -- tax for one thing complicates this. Also high-growth and high-dividend don't necessarily have the same risk profile.

 

[JStrike]

Not quite -- tax for one thing complicates this. Also high-growth and high-dividend don't necessarily have the same risk profile.

Risk profiles : Sure
Tax : 25% on Dividends. 16% on Capital Gains if I remember correctly (assuming you are in the top tax bracket)

 

[Tomtomtom]

Risk profiles : Sure
Tax : 25% on Dividends. 16% on Capital Gains if I remember correctly (assuming you are in the top tax bracket)

Yes, and the real component of that capital gain depends on inflation. So the 16% rate is actually a minimum (for a marginal taxpayer), with no ceiling. If a 100% gain was realised during a period in which CPI was up 50%, the real/effective tax is 32%. The effective rate can exceed the marginal tax rate: it's possible to make a loss in real terms but still pay tax on the (nominal) capital gains.

 

[JStrike]

Yes, and the real component of that capital gain depends on inflation. So the 16% rate is actually a minimum (for a marginal taxpayer), with no ceiling. If a 100% gain was realised during a period in which CPI was up 50%, the real/effective tax is 32%. The effective rate can exceed the marginal tax rate: it's possible to make a loss in real terms but still pay tax on the (nominal) capital gains.

Ditto for dividends stocks. Only difference is the tax rate is higher on the dividends.

 

[WaxLyrical]

Just to echo what's been hinted at in this thread, a million in 2017 isn't that much money if you really think about it. If I were faced with a million to spend on a business in the hopes of it sustaining me for the rest of my life then I'd probably buy a food franchise. Probably a Steers; KFC or Debonairs.
These types of franchises almost never fail.

Unfortunately the top of the range food franchises will set you back at least R5m.

Afiak you have to already own a KFC to get another KFC. No outsiders, newbies or noobs.

If you know Cyril Ramaphosa personally and have serious cash an McD is not far away.

In the right area this business pumps cash almost 24/7 thanks to the drive through concept.

Even the other boys are jumping on board with this.

I think Burger King missed a trick when they didn't start with drive throughs.

Even Wimpy and Nandos have latched on.

 

[Thor]

Risk profiles : Sure
Tax : 25% on Dividends. 16% on Capital Gains if I remember correctly (assuming you are in the top tax bracket)

Is dividends not 15%?

 

[JStrike]

Is dividends not 15%?

Apologies, you are correct

 

[Thor]

Apologies, you are correct

All good I almost had a mini heart attack like fck I need to run to SARS to explain.

 

[Diesal]

All of it into a Negotiable Certificate Of Deposit

 

[Slootvreter]

If you could see my bright green signature, you wouldn't need any explaining, unless you're a halfwit.

 

[Tomtomtom]

Ditto for dividends stocks. Only difference is the tax rate is higher on the dividends.

No, that's not the only difference. That was my entire point. Capital gains tax calculations are affected by inflation in a way dividend taxes aren't. A dividend can merely track inflation and the effective tax rate is constant. A capital gain that tracks inflation will land you with a tax to pay on no real return. That's precisely why the (nominal) rate is lower on capital gains -- to help compensate for the (real) effect of inflation. The question is whether the compensation is sufficient. Inflation-tracking CGT would be ideal but it's not politically expedient.

Again: the real tax rate on capital gains is potentially unlimited. Not so for dividends, or any other taxable income, for that matter.

 

[Thor]

No, that's not the only difference. That was my entire point. Capital gains tax calculations are affected by inflation in a way dividend taxes aren't. A dividend can merely track inflation and the effective tax rate is constant. A capital gain that tracks inflation will land you with a tax to pay on no real return. That's precisely why the rate is lower on capital gains -- to help compensate for the effect of inflation. The question is whether the compensation is sufficient. Inflation-tracking CGT would be ideal but it's not politically expedient.

Again: the real tax rate on capital gains is potentially unlimited. Not so for dividends, or any other taxable income, for that matter.

Very good point!

 

[JStrike]

No, that's not the only difference. That was my entire point. Capital gains tax calculations are affected by inflation in a way dividend taxes aren't. A dividend can merely track inflation and the effective tax rate is constant. A capital gain that tracks inflation will land you with a tax to pay on no real return. That's precisely why the (nominal) rate is lower on capital gains -- to help compensate for the (real) effect of inflation. The question is whether the compensation is sufficient. Inflation-tracking CGT would be ideal but it's not politically expedient.

Again: the real tax rate on capital gains is potentially unlimited. Not so for dividends, or any other taxable income, for that matter.

Very interesting

 

[JStrike]

I will answer that. DIVTRX had a gain of 17% over the past 12 months and that does not include the divies at all. So I can safely assume a gain of at least 21.8% with the divies reinvested.

Just noticed something. You were telling a bald-faced lie
https://www.moneyweb.co.za/tools-and-data/click-a-company/?shareCode=DIVTRX
In the last 12 months, DIVTRX it has gained 1.3%, which is 5 percentage points less than inflation. Excluding dividends, you have lost a significant percentage. Including dividends, you probably also lost money

 

[Tomtomtom]

Just noticed something. You were telling a bald-faced lie
https://www.moneyweb.co.za/tools-and-data/click-a-company/?shareCode=DIVTRX
In the last 12 months, DIVTRX it has gained 1.3%, which is 5 percentage points less than inflation. Excluding dividends, you have lost a significant percentage. Including dividends, you probably also lost money

Think you might be reading the year-to-date line. Shows the same graph though, which is odd.

https://www.bloomberg.com/quote/DIVTRX:SJ

One-year return 14.06% according to this. BUT, that's still not the past 12 months, which is more like 8.3%.

Or, you can take the 12 months from Jan 15 2016 - Jan 15 2017 and get 26%.

Easy to "lie"...

 

[JStrike]

Think you might be reading the year-to-date line. Shows the same graph though, which is odd.

https://www.bloomberg.com/quote/DIVTRX:SJ

One-year return 14.06% according to this. BUT, that's still not the past 12 months, which is more like 8.3%.

Or, you can take the 12 months from Jan 15 2016 - Jan 15 2017 and get 26%.

Easy to "lie"...

Ah my bad, that was the YTD. For 1 year it is 6.46 and Bloomberg says it is 14%. That is a very big discrepancy. I wonder why? Is bloomberg maybe looking at dollar value which takes into account the rand strengthening?