EasyEquities TFSA query

[redarrow]

Heya,

I recently decided it was time to start my TFSA, I picked EasyEquities because I like the option of being able to pick and choose which ETF I want..

Now if I understand the TFSA account regulations correctly, any dividends which are paid into my account I can re-invest into my ETF's and that won't count against my yearly R30k limit, am I correct in this?
Secondly, what I'm really wondering about is selling share in those ETFS to buy in another, would that count against my limit seeing as the money never leaves the EE account?

I have no particular intention of doing that as obviously I just want to leave the money there as long as I can (within reason ), I'm just wondering if I have the option, say I later on decide that a certain ETF was a bad idea and I'd rather have the money elsewhere? I hope I'm making sense here.. :erm:

Thanks.

 

[Piesank]

Yes to both questions.

 

[redarrow]

Yes to both questions.

Thanks.

I guess I just need to choose my ETFs carefully right from the start..

 

[Deleted member 83147]

From my understanding, I might be wrong here, haven't started my TFSA yet:

1. From what I've read all dividends will be reinvested automatically. They will not be paid into your account, you will have no control over them. This might vary based on your provider. I'm not going to use EE for my TFSA.

2. Apparently you can "reorganize" the ETFs inside your fund and that isn't a problem. So you should be able to buy and sell freely within your TFSA. Waiting for more clarification on this.

Hope I helped. Tryng to learn as much as can about TFSA's, but there isn't much actual info about them out there as it's still a new product and not everything is finalized yet (such as transferring your TFSA from one provider to another).

 

[redarrow]

1. From what I've read all dividends will be reinvested automatically. They will not be paid into your account, you will have no control over them. This might vary based on your provider. I'm not going to use EE for my TFSA.

I'm pretty sure with EE they do, dunno how they'd know which to reinvest them into otherwise.

2. Apparently you can "reorganize" the ETFs inside your fund and that isn't a problem. So you should be able to buy and sell freely within your TFSA. Waiting for more clarification on this.

Yea this is what I was really wanting to know, though you worded it better than I. From Piesank's answer he seems to think no, so now I have 2 opposing opinions, it's always nice to have a choice.

 

[Piesank]

From my understanding, I might be wrong here, haven't started my TFSA yet:

1. From what I've read all dividends will be reinvested automatically. They will not be paid into your account, you will have no control over them. This might vary based on your provider. I'm not going to use EE for my TFSA.

2. Apparently you can "reorganize" the ETFs inside your fund and that isn't a problem. So you should be able to buy and sell freely within your TFSA. Waiting for more clarification on this.

Hope I helped. Tryng to learn as much as can about TFSA's, but there isn't much actual info about them out there as it's still a new product and not everything is finalized yet (such as transferring your TFSA from one provider to another).

1) NEWFUNDS SWIX 40 ETF reinvests the potential dividend according to their distribution announcement and others like SATRIX INDI PORTFOLIO will announce a date on/before 19 January. So it depends on the ETF - has nothing to do with EE

2) Dont forget about costs - these ETFs are designed that you dont tinker too much with them. Trading within this will dissolve some of your profits.

 

[Piesank]

Yea this is what I was really wanting to know, though you worded it better than I. From Piesank's answer he seems to think no, so now I have 2 opposing opinions, it's always nice to have a choice.

You get the dividends and they dont count as your R30k limit.
You can trade within your TFSA and sell some ETFs you feel arent up to it and buy others.

Aka Yes to both questions.

 

[redarrow]

You get the dividends and they dont count as your R30k limit.
You can trade within your TFSA and sell some ETFs you feel arent up to it and buy others.

Aka Yes to both questions.

Ah I see, thanks for clarification, I read your "yes" as being to my "would that count against my R30k limit", my bad.

 

[zorro5614]

You can freely sell within the TFSA and buy different ETF's, as long as you don't withdraw the money from the account.

If you invested R30k and it went up to R31k, you can sell the R31k and reinvest in different EFT's without penalties.

Once the money is deposited into the the account you can buy and sell as you wish. Just don't withdraw money to your bank account or deposit more than R30k per year

 

[whatwhat]

So can something happen to EasyEquities? Lets say they close shop tomorrow, what happens to all your investments?

Or is that not a possibility?

 

[xumwun]

So can something happen to EasyEquities? Lets say they close shop tomorrow, what happens to all your investments?

Or is that not a possibility?

You still own the shares so there shouldn't be a problem.

 

[Papsak]

Well, you are registered as the owner of all whole shares - not so sure about any fracional shares. And to an earlier question - because of the very low costs - some might trade ETF's inside the TFSA - it's pretty easy and cheap to switch

 

[Toothless]

Yeah, I wonder if they do in fact register the shares on your name. I also have an account with PSG and there you have the option of them sending you the share certificates or keeping it on your behalf. This is something not mentioned by EasyEquities, nor did I have the option to request one or the other.

I wonder if the shares are not registered on their name and later changed if you require certificates? If so, you will lose everything invested if they go belly-up.

 

[Deleted member 83147]

Yeah, I wonder if they do in fact register the shares on your name. I also have an account with PSG and there you have the option of them sending you the share certificates or keeping it on your behalf. This is something not mentioned by EasyEquities, nor did I have the option to request one or the other.

I wonder if the shares are not registered on their name and later changed if you require certificates? If so, you will lose everything invested if they go belly-up.

From their FAQ:

How are my assets protected?
Modified on: Wed, 11 Nov, 2015 at 11:41 AM

EasyEquities has to comply with certain regulations regarding the requirement to have adequate net capital and asset protection.

GT247.com segregates your securities holdings and cash in your account, meaning it keeps your assets separate from the company's own assets.

In addition, EasyEquities will hold all client assets in First World Trader Nominees (Proprietary) Limited, which is a ring fenced, private, limited liability company with registration number 2013/091397/07, registered in accordance with the company laws of South Africa and approved as a nominee company to hold assets in its name on behalf of clients by the FSB.

When you purchase Whole Securities, you become the beneficial (true) owner of all those Whole Securities, which will be held by FWT Nominees on your behalf. FWT will ensure that you are reflected as the beneficial owner of your Whole Securities in our books of account.

 

[Toothless]

From their FAQ:

Yep, like I thought, the shares will be registered in the name of the company. They will only mention you as true owner in their accounting records.

Legally, you are not the owner of these shares you invest in through them. If the company goes belly up you will lose your investments. You will need to go through expensive litigation to fight them, but if the company goes belly-up, even a billion rand worth of litigation may not be of help to you.

It is exactly the same you guys pay me R1000 a month to invest on your behalf. I buy shares and register them in my name and keep them for you. If I go bankrupt, chances are 100% this money will be attached, as I am the legal owner, it will be distributed amongst all debtors and claims against me.

Like I mentioned above, PSG registers shares in your name. Not on their own. You have the option of them sending you the share certificate or keeping it on your behalf.

With EE, not only is the trading itself a risk, but also the company you deal with.

Fact is, there is a reason you pay so cheap with them...

 

[whatwhat]

Yep, like I thought, the shares will be registered in the name of the company. They will only mention you as true owner in their accounting records.

Legally, you are not the owner of these shares you invest in through them. If the company goes belly up you will lose your investments. You will need to go through expensive litigation to fight them, but if the company goes belly-up, even a billion rand worth of litigation may not be of help to you.

It is exactly the same you guys pay me R1000 a month to invest on your behalf. I buy shares and register them in my name and keep them for you. If I go bankrupt, chances are 100% this money will be attached, as I am the legal owner, it will be distributed amongst all debtors and claims against me.

Fact is, there is a reason you pay so cheap with them...

So in a nutshell this seems pretty crap.

 

[Toothless]

So can something happen to EasyEquities? Lets say they close shop tomorrow, what happens to all your investments?

Or is that not a possibility?

You are likely to lose your investment if something happens to them.

If you are trading large amounts, best is to go with a company that registers shares in your name or a bank that are not open to the same risks than a small company.

 

[Deleted member 83147]

Yep, like I thought, the shares will be registered in the name of the company. They will only mention you as true owner in their accounting records.

Legally, you are not the owner of these shares you invest in through them. If the company goes belly up you will lose your investments. You will need to go through expensive litigation to fight them, but if the company goes belly-up, even a billion rand worth of litigation may not be of help to you.

It is exactly the same you guys pay me R1000 a month to invest on your behalf. I buy shares and register them in my name and keep them for you. If I go bankrupt, chances are 100% this money will be attached, as I am the legal owner, it will be distributed amongst all debtors and claims against me.

Fact is, there is a reason you pay so cheap with them...

It's a tough choice.

I'm probably gonna be using them to invest in the new year. With the amounts I'll be investing, they are the only ones that even remotely make financial sense. The minimum brokerage and monthly fees would kill me from any other broker.

At the very least the shares are held in another company that is ring fenced, so hopefully that means our assets are protected to some extent.

 

[Toothless]

So in a nutshell this seems pretty crap.

Unfortunately yes. Legally you are not the owner of those shares, as the share certificate indicates a different person / institution. What if those 'records' go missing or the company goes into liquidation? Chances are good all those shares will be sold off and thrown into a single trust. Everyone affected will need to submit a claim and the monies recovered will be distributed between claimants. Else, if the owners sell of all shares, steal billions and run away, you are f**ked too.

If you invest large amounts of money, best is to make use of services like PSG or banks. Alternatively wait until EE can register shares in clients' names.

I would never recommend anyone investing large amounts of money through them.

 

[Toothless]

It's a tough choice.

I'm probably gonna be using them to invest in the new year. With the amounts I'll be investing, they are the only ones that even remotely make financial sense. The minimum brokerage and monthly fees would kill me from any other broker.

At the very least the shares are held in another company that is ring fenced, so hopefully that means our assets are protected to some extent.

I too will make use of them. But, that being said, it will be small amounts.

I do not know any of the companies who hold the shares in their names, but the risk is just too big to risk large amounts of money this way.