Evil landlord & RAs...

supersunbird said:
And don't forget the tax free lumpsum amount and then the other tax scale for lumpsum.
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Was just about to post this

When you retire you can take up to a third of your retirement annuity as a lump sum (or all of it if it‘s worth less than R 247 500).
  • The first R 550 000 is not taxed
  • The next R 220 000 is taxed at 18%
  • The next R 385 000 is taxed at 27%
  • Any amount after that is taxed at 36%
 
Cius said:
When I signed up for my RA it was not possible to get an RA without a financial advisor. It was baked into the system. A big part of why most RA's where so terrible.
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Your old school life policy RA experiences do not bare relevance to modern unit trust RAs, beyond explaining to avoid Life Insurer RA products as they are still in that old mindset and want to charge high fees..
 
Cius said:
Most RA's are a tax in and of themselves. Yet to meet a single person who was happy with an RA return rate if they actually knew anything about it. Fee's eat up all your returns.
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My 10X RA fees impact is like 0.4%.

My Coronation RAs has no fees beyond the internal fund fees of whichever Unit Trusts are in it.
 
supersunbird said:
My 10X RA fees impact is like 0.4%.

My Coronation RAs has no fees beyond the internal fund fees of whichever Unit Trusts are in it.
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Happy for you. My fees where about 2.65% and my RA was losing me money in the long run. I went to an independant advisor and asked if I could switch to the new system and save and I was locked in. So I guess I should ammend my statement to say us old guys with old RA's, that money is sunk cost and you will not get much out of it. New style low cost ones, sure. I view those as more like Public pension scheme's than the old school RA's. I have frozen my RA as of last year and instead am putting that money into my share trading account and am investing it myself. In time I will take it offshore. I have enought cash tied up in SA via my work pension so I am happy to take the tax hit to have some cash our government cant touch.
 
I am doing a good mix of RA, TFSA and normal brokerage. Normal brokerage route (all USD hedged ETFS) is not bad after all when you take CGT into account (yes after tax money) but still capped at 18%
 
Snyper564 said:
I am doing a good mix of RA, TFSA and normal brokerage. Normal brokerage route (all USD hedged ETFS) is not bad after all when you take CGT into account (yes after tax money) but still capped at 18%
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This is my strategy. Risk reduction incase government fugs up the RA system some how.

TFSA is maxed
Discretionary brokerage is in hard currency and invested in ETF
RA is next on my list for the last 25 years of saving.

I would like to figure out how to afford a property in cpt without drawing down my investments. But that's not the end of the world.
 
Scooby_Doo said:
This is my strategy. Risk reduction incase government fugs up the RA system some how.

TFSA is maxed
Discretionary brokerage is in hard currency and invested in ETF
RA is next on my list for the last 25 years of saving.

I would like to figure out how to afford a property in cpt without drawing down my investments. But that's not the end of the world.
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Our TFSA is similar to USA ROTH funds they have mega upside though R140k per year and I think no cap ours is a very small version of that but something I regret not dumping into sooner
 
Cius said:
Happy for you. My fees where about 2.65% and my RA was losing me money in the long run. I went to an independant advisor and asked if I could switch to the new system and save and I was locked in. So I guess I should ammend my statement to say us old guys with old RA's, that money is sunk cost and you will not get much out of it. New style low cost ones, sure. I view those as more like Public pension scheme's than the old school RA's. I have frozen my RA as of last year and instead am putting that money into my share trading account and am investing it myself. In time I will take it offshore. I have enought cash tied up in SA via my work pension so I am happy to take the tax hit to have some cash our government cant touch.
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The are still RA out there from Life Providers RA products with fees that are like 4% and they promise to give a "bonus" back and such.
 
supersunbird said:
The are still RA out there from Life Providers RA products with fees that are like 4% and they promise to give a "bonus" back and such.
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I have seen some RA products where the total fees are up to 7%.
And then some of the RA’s are holding money markets fund only. (For really old pensioners)

If you are getting a 7% return on a MM fund you are happy.
 
Pegging said:
Where is that?
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My worked tried to take out RA's for us all. Lets just say, it was a life insurance firm (and after two month, everyone signed up, moved away, and got 40% back (because of a "terminating" clause".

I pulled Sygnia in, and we all reapplied with them ( l o l )!

School fees for life!
 
The best investment I started was my TFSA. Contribution vs growth (it is running circles around a RA). Really hope the move the R500 000 cap up! I am in year 10 now!
 
Cius said:
Happy for you. My fees where about 2.65% and my RA was losing me money in the long run. I went to an independant advisor and asked if I could switch to the new system and save and I was locked in. So I guess I should ammend my statement to say us old guys with old RA's, that money is sunk cost and you will not get much out of it. New style low cost ones, sure. I view those as more like Public pension scheme's than the old school RA's. I have frozen my RA as of last year and instead am putting that money into my share trading account and am investing it myself. In time I will take it offshore. I have enought cash tied up in SA via my work pension so I am happy to take the tax hit to have some cash our government cant touch.
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Weird you should be able to do a section 14 transfer.
 
fire2029 said:
Lets assume

1. a R1m investment.
2. a 40% tax rate; which stays the same throughout.
3. the returns are the same for any investment. For arguments sake a global 10% return regardless of your investment.

Choice 1=Pay tax now & no tax later => R1m x (1-40%) x ^ 10 years to retirement
Choice 2 = No tax now , grow 10% and then tax at 40% => R1m x 1.1 ^ 10 years x (1-40%) to retirement


In this case, choice 1 = choice 2. What am I missing?
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In the cow example they are not the same. Rather give the 40% of your cows now. You will have the same amount of Cows after seven years by deferring but there are plenty of extra fees you will incur from raising those additional cows for 7 years. I am not a farmer but I assume raising cows are not cheap. Always choose the option with the lowest costs.

For an RA you are deferring the income tax but just like the cow example the fees (i.e tax) are completely different.
- The tax tables are different for the third you can withdraw at retirement
- Your income tax rate is likely to be different at retirement (At the very least you can double up on the 0% bracket)
- You pay no tax on the capital gains, interest and dividends

Sure there are downsides due to all the restrictions on an RA and you have to decide if the restrictions are worth the benefits and which one will come out better but they won't come out the same as choice 2 in the above is not a valid option.
 
I am 38 sitting with 4 x Living Annuities. Mom passed away and her RA was converted to an LA split 50/50 between me and my dad. Dad passed away and he had the 1 x LA from my mother and one that was already active. Then he had another RA that is now converted to an LA. I am the beneficiary of them all.

Moved them now to 10X with much better fees than where they were with the d00s FA etc.

All of them are set to 2.5% payouts.
 
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