Investment Advice

Rkootknir said:
The approach is problematic though and it is typical of how investment marketing confuses people (big numbers after relatively long periods without adjustment for inflation). As far as I can see that calc is based on the following:
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Your formulaes are still incomplete, you havent added Taxes encumbered and Forex gains,
On the comparison between stocks (active and passive) versus the bonds gains returned.

Inflation of 6% is also just an assumption. Other countries are going through deflation,
this needs to be factored in as well.

Without forecasting these into the equation these values arent right either.
 
bchip said:
Your formulaes are still incomplete, you havent added Taxes encumbered and Forex gains,
On the comparison between stocks (active and passive) versus the bonds gains returned.

Inflation of 6% is also just an assumption. Other countries are going through deflation,
this needs to be factored in as well.

Without forecasting these into the equation these values arent right either.
Click to expand...
That's why I'm pointing out the calculation in the linked article is misleading :confused: People who get these kind of projected values as part of financial advice should always request those values in current money terms as well - preferably on more than one single point estimate of future inflation, or, if you are lucky (rich :) ) and your adviser is a CFA \ quant using an accepted stochastic inflation rate model.

Your point about taxes is misplaced when referring to TFSAs. They're free of income tax, CGT, tax on REIT distributions and tax on local dividends (I'm not sure whether you can attempt to claim tax on foreign dividends withheld at source - I suspect not). As such, they rank just below retirement funds (pension, provident or RA) in terms of tax advantage for a person subject to income taxation at high marginal rates.
 
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bchip said:
Thank you, appreciate the feedback.

I believe a lot of people under-estimate SA's pro's,
like high interest rate returns.
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Very nice from the Education angle.

Would I be correct in saying that come year 16 you could simply change the "re investment" to pay out instead and use that to pay for education and such while protecting the capital?

And not knowing Investec could you have that one monthly or would it be annual only?
 
bchip said:
/snip

And I would love to hear answers on how to mitigate inflation other than the "buy the dip & hold"
....

/snip
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By buying insurance on your investments. People buy insurance for anything with reasonable value yet not a single institution in SA, that I'm aware of, offers insurance on investments to the buy and hold investor. I know this concept borders on the realm of trading but it shouldn't be. How hard or expensive could it be to offer an option to the regular investor to minimise his losses during prolonged bear markets.

You pay insurance on a car that you maybe utilise once yet no insurance on your future funds. Does not compute.
 
FrankieK said:
By buying insurance on your investments. People buy insurance for anything with reasonable value yet not a single institution in SA, that I'm aware of, offers insurance on investments to the buy and hold investor. I know this concept borders on the realm of trading but it shouldn't be. How hard or expensive could it be to offer an option to the regular investor to minimise his losses during prolonged bear markets.

You pay insurance on a car that you maybe utilise once yet no insurance on your future funds. Does not compute.
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You can go buy that today - derivatives. You can totally insure against the risk of your investment falling...only problem is you don't make any profit either. The cost of the insurance eats the profits.

Risk free profit for all intents & purposes doesn't exist.
 
geekso said:
Hi Everyone,

I have about 170k in cash with Momentum invested in 3 different types of accounts. The return over the last 5 months has been about 4k. Is this decent or is there somewhere else I should be investing the money? The fees have been about 500 got the last 5months. I opened up an easy equities and satrix account to put some other money in there as well.

Currently I have an RA, two properties, some gold coins but the above area I feel like I need to put a bit more focus on.

What sort of return are you receiving on average on Investment accounts? 10/15/20%?

I assume the markets are affecting the returns currently as I lost about 3k in the last month with momentum so nett is 4k.

I aim to have diversified portfolio, so any advice to add to what I currently have will be appreciated?
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We cannot comment on the performance of your MOMENTUM investment unless you tell us what platform you are using, what commission you have paid and are still paying, what funds you are in and what tax bracket you currently operate under...

The only the things that one can control as an investor are your tax, costs and risk management...

The members here have given suggestions which talk to these three issues... But this information is of little use unless you disclose the requested information... Beware of the cookie cutter one size fits all approach to ETF investing... It most certainly doesn't tick all the boxes in terms of tax and risk management...

But having said that it most certainly plays it's role in a well diversified portfolio...
 
HavocXphere said:
You can go buy that today - derivatives. You can totally insure against the risk of your investment falling...only problem is you don't make any profit either. The cost of the insurance eats the profits.

Risk free profit for all intents & purposes doesn't exist.
Click to expand...

I agree.

The best way to mitigate risk is to

- diversify at the lowest cost = cheapest global ETF you can find.
- keep investing over the very long term (decades)
 
FxJalarupa said:
We cannot comment on the performance of your MOMENTUM investment unless you tell us what platform you are using, what commission you have paid and are still paying, what funds you are in and what tax bracket you currently operate under...

The only the things that one can control as an investor are your tax, costs and risk management...

The members here have given suggestions which talk to these three issues... But this information is of little use unless you disclose the requested information... Beware of the cookie cutter one size fits all approach to ETF investing... It most certainly doesn't tick all the boxes in terms of tax and risk management...

But having said that it most certainly plays it's role in a well diversified portfolio...
Click to expand...

A global Index Fund is the most diversified financial instrument in existence, not so?
 
Only short sighted if you started around 1945. The Nasdaq has barely regained it's losses since the tech bubble burst and that's about 15 years ago. You would have been better off putting your money in a BOB Save.
 
FrankieK said:
Only short sighted if you started around 1945. The Nasdaq has barely regained it's losses since the tech bubble burst and that's about 15 years ago. You would have been better off putting your money in a BOB Save.
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I was just joking :P
 
I'll believe it to have been short sighted when we take out... 20000 and stay above it... ;)
 
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