Investment advice

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sandwitch

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I've been thinking about my retirement fund (I don't have any) which led me to think I needed to do more active investing. I went to 3 investment advisers a few years back and all of them recommended the Stanlib Equity Fund A and that didn't work out very well so I won't be visiting any advisers again anytime soon.


I've 4 investments with money (R250 000) split evenly between them all:
Coronation Top 20
Allan Gray Balanced
Satrix Indi
Satrix Nasdaq

What can I add to my investments to balance them out or improve them?
I can either add a monthly debit order of R500 to one of the accounts or I can deposit R20 000 in one of them - which would be the better long-term option and to which account?
Is it worth it making the Allan Gray Fund into an RA?
Do you have any good idiot's guide to investing book recommendations?

[edit] I've never contemplated tax repercussions for any of the above - I just saved money when I could.
 
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sandwitch said:
I've been thinking about my retirement fund (I don't have any) which led me to think I needed to do more active investing. I went to 3 investment advisers a few years back and all of them recommended the Stanlib Equity Fund A and that didn't work out very well so I won't be visiting any advisers again anytime soon.


I've 4 investments with money (R250 000) split evenly between them all:
Coronation Top 20
Allan Gray Balanced
Satrix Indi
Satrix Nasdaq

What can I add to my investments to balance them out or improve them?
I can either add a monthly debit order of R500 to one of the accounts or I can deposit R20 000 in one of them - which would be the better long-term option and to which account?
Is it worth it making the Allan Gray Fund into an RA?
Do you have any good idiot's guide to investing book recommendations?

[edit] I've never contemplated tax repercussions for any of the above - I just saved money when I could.
Click to expand...
If you were to have a Retirement Annuity it would need to be Section 28 Compliant as is the case with the the Allan Gray Balanced Fund.
Instead of asking for random advice here why not check what those funds are invested in, its available on their website. The Stanlib Equity Fund which you were invested in is not Section 28 Compliant.
The reason for mention the Section 28 issue is not because you have to invest according to those rules because its your own money as you say but there is good reason for you to copy what they do, to preserve your capital, especially if it is your pension. Its of paramount importance not to speculate.

The unfortunate part about putting money away that is not in a Pension Fund wrapper is that you can tap into that money which will work against you in the long term. Putting it into a Retirement Annuity will ensure that you cannot touch it to at least age 55, your creditors cant get at it and it has tax benefits.

I assume you are with Liberty, they have the Agile RA which is extremely versatile. However the investment story is quite boring because of the Section 28 rules. All they will do is put your money in a spread of Balanced Funds that are Section 28 compliant, like the Foord Balanced Fund, the Coronation Balanced Plus Fund and the Allan Gray Balanced Fund. They will spread the risk between 2 or 3 Section 28 compliant funds.

You could do the following:
Open your own Share Trading Account and copy the investment strategy of those balanced funds, its all online. They show their top 10 holdings and percentage of each holding.
I suppose a reasonable strategy would be to be 50% in Equity mimicking the top 10 shares listed in those funds.
25 to 30% earning interest and the rest in a global feeder fund. Twice a year check those companies top holdings and percentage holdings and manage accordingly.

Whatever you do, asking for help on a forum could be more devastating than the Stanlin Equity Fund A. The market is extremely fickle, any bad news on a particular share sees that share being punished heavily on the market.

Have you considered buying some property?
 
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What's is section 28?
What's the benefit of it?
 
@ Cornelius.van.Breda: I've been putting it off but I'm working to change things in the next week.

BTTB said:
Open your own Share Trading Account and copy the investment strategy of those balanced funds, its all online. They show their top 10 holdings and percentage of each holding.
I suppose a reasonable strategy would be to be 50% in Equity mimicking the top 10 shares listed in those funds.
25 to 30% earning interest and the rest in a global feeder fund. Twice a year check those companies top holdings and percentage holdings and manage accordingly.
Click to expand...
I thought about that but I don't know if I'm brave enough to follow the investment strategies of others. I like that I would be the one in control so maybe I should take another look.

BTTB said:
Whatever you do, asking for help on a forum could be more devastating than the Stanlin Equity Fund A. The market is extremely fickle, any bad news on a particular share sees that share being punished heavily on the market.
Have you considered buying some property?
Click to expand...
I've gone to the professionals for advice and every time I've lost money. Just passively investing in Coronation and Allan Gray has given me more returns than the advice I paid for. Although that isn't too hard because when I handed my money over to the advisers/brokers or did what they said I made a loss.

I'm not with Liberty. I've privately invested in the unit trusts I've mentioned.

If I ask on this forum I get a range of advice from people with different strategies who actively manage their own finances. They've had successes and failures and it comes from experience. I can see what each person says and align that to my view of saving and investing. Since I haven't considered saving anything before I'm a complete noob so getting to see how other people approach the idea is really helpful - I'm not going into it blindly anymore. Then when I choose the advice that's relevant to me and it doesn't work out I'm the only person I have to blame. I'm not paying for advice from a person who gets incentives and kickbacks.

BTTB said:
Have you considered buying some property?
Click to expand...
That seems really risky and permanent so I'd prefer not to. Even the thought of investing in it makes me cringe a little.
 
Dubai said:
What's is section 28?
What's the benefit of it?
Click to expand...
Apologies it is not Section 28 but Regulation 28 or fully known as Regulation 28 of the Pension Funds Act.
Benefits? Hard to sum up in my own words so will add a link rather.
 
sandwitch said:
I've been thinking about my retirement fund (I don't have any) which led me to think I needed to do more active investing. I went to 3 investment advisers a few years back and all of them recommended the Stanlib Equity Fund A and that didn't work out very well so I won't be visiting any advisers again anytime soon.


I've 4 investments with money (R250 000) split evenly between them all:
Coronation Top 20
Allan Gray Balanced
Satrix Indi
Satrix Nasdaq

What can I add to my investments to balance them out or improve them?
I can either add a monthly debit order of R500 to one of the accounts or I can deposit R20 000 in one of them - which would be the better long-term option and to which account?
Is it worth it making the Allan Gray Fund into an RA?
Do you have any good idiot's guide to investing book recommendations?

[edit] I've never contemplated tax repercussions for any of the above - I just saved money when I could.
Click to expand...

OK, are you earning a salary and contributing to a work pension/provident fund? If yes, how much?

Say you do have a pension fund at work, and you're contributing 15% of salary to that , you can contribute another 12.5% to that work fund (if allowed) or to an RA, the tax benefit limit is 27.5% of income. This has a tax benefit (but also "negatives" according to some people, like only accessing it after age 55 and then only a portion directly).

Say your earn R200 000 per year and you contribute 15% to work pension/provident fund. You are then taxed only as if you earn R170 000. If you contribute another 10% to an RA, you will be taxed as earned R150 000. Come efiling time you then get the income tax paid on that R20 000 back.

You can also look at TFSA (which includes investments into unit trusts), R33 000 per year limit on total TFSA contributions (a year runs from 1 March to 28 Feb). Contributions are taxed at 40%.

So on way you could do it, put money into a RA. Then some of it into a TFSA and keep the rest as is in discretionary unit trusts.

If you ever need to access the funds for whatever reason liek emergency or whatever:
You access the normal unit trusts.
Then if that not enough, you access the TFSA, you cant replenish what you take out (there is a lifetime limit), so savings of last resort.
After age 55 you can access a 1 third of RA as cash at anytime, the rest must buy a living or life annuity which pays a pension.

I hope the above helps, feel free to ask more.
 
supersunbird said:
OK, are you earning a salary and contributing to a work pension/provident fund? If yes, how much?

Say you do have a pension fund at work, and you're contributing 15% of salary to that , you can contribute another 12.5% to that work fund (if allowed) or to an RA, the tax benefit limit is 27.5% of income. This has a tax benefit (but also "negatives" according to some people, like only accessing it after age 55 and then only a portion directly).

Say your earn R200 000 per year and you contribute 15% to work pension/provident fund. You are then taxed only as if you earn R170 000. If you contribute another 10% to an RA, you will be taxed as earned R150 000. Come efiling time you then get the income tax paid on that R20 000 back.

You can also look at TFSA (which includes investments into unit trusts), R33 000 per year limit on total TFSA contributions (a year runs from 1 March to 28 Feb). Contributions are taxed at 40%.

So on way you could do it, put money into a RA. Then some of it into a TFSA and keep the rest as is in discretionary unit trusts.

If you ever need to access the funds for whatever reason liek emergency or whatever:
You access the normal unit trusts.
Then if that not enough, you access the TFSA, you cant replenish what you take out (there is a lifetime limit), so savings of last resort.
After age 55 you can access a 1 third of RA as cash at anytime, the rest must buy a living or life annuity which pays a pension.

I hope the above helps, feel free to ask more.
Click to expand...

When I retire and I get a monthly income from the pension and RA, is that amount taxable?
 
sandwitch said:
I went to 3 investment advisers a few years back and all of them recommended the Stanlib Equity Fund A and that didn't work out very well so I won't be visiting any advisers again anytime soon.
Click to expand...

I think its safe to say that the advisors wasn't the problem, it was the fund they all recommended. In light of the fund performance (or lack their off), are you willing to move your hard earned cash elsewhere, with the same risk moving forward?

My personal experience with RA's, pensions, provident funds and endowments are that they are a load of k@k. Prospective returns never live up to the hype due to a range of factors (high fees, commissions, admin fees, slow economy etc).

Personally I am done with the lot, and my entire retirement plan is in property. Its not for everyone, but maybe you should consider to use that R250 000 as a deposit for a rental property of sorts. If you have some extra time (to be a landlord) and if you are entrepreneurially minded, its not a bad option (its been working for me at least).
 
sandwitch said:
I've been thinking about my retirement fund (I don't have any) which led me to think I needed to do more active investing. I went to 3 investment advisers a few years back and all of them recommended the Stanlib Equity Fund A and that didn't work out very well so I won't be visiting any advisers again anytime soon.
Click to expand...

How exactly didn't it work out very well? Did you never invest in it?

Or what was the problem. If it's only a few years ago then you've hit the worst time of market fluctuations and quite possibly would have seen the same results elsewhere.
 
handyman007 said:
What would you do with the tax refund? Invest in the RA again to get another refund?
Click to expand...

If you not contributing 27.5% of income to retirement, it's an option. Or you can put it in TFSA or normal unit trust or savings or bling or clothes or movies or car service or...
 
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Tman* said:
I think its safe to say that the advisors wasn't the problem, it was the fund they all recommended. In light of the fund performance (or lack their off), are you willing to move your hard earned cash elsewhere, with the same risk moving forward?

My personal experience with RA's, pensions, provident funds and endowments are that they are a load of k@k. Prospective returns never live up to the hype due to a range of factors (high fees, commissions, admin fees, slow economy etc).

Personally I am done with the lot, and my entire retirement plan is in property. Its not for everyone, but maybe you should consider to use that R250 000 as a deposit for a rental property of sorts. If you have some extra time (to be a landlord) and if you are entrepreneurially minded, its not a bad option (its been working for me at least).
Click to expand...

If you feel that way you should add all regulation 28 compliant Unit Trusts and actually all unit trusts and shares (endowment policies would be in those, side note: endowment policies can work for people in the top 2 or 3 tax brackets, don't bother with them otherwise)
 
LazyLion said:
Stay away from Old Mutual! :crylaugh:
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I tried at the beginning of the year but they put the Unisa admin department to shame. Old Mutual is the reason I have the Satrix investments.

supersunbird said:
OK, are you earning a salary and contributing to a work pension/provident fund? If yes, how much?
Click to expand...

Nope to all your questions. Irresponsible but I want to change that now.

SauRoNZA said:
How exactly didn't it work out very well? Did you never invest in it?

Or what was the problem. If it's only a few years ago then you've hit the worst time of market fluctuations and quite possibly would have seen the same results elsewhere.
Click to expand...

I started investing in 2007, R500 a month. By 2011 I was in the negative and since their customer service was horrible when I tried to open another account with them I decided enough was enough. When I called to cancel the call centre agent commented that he didn't blame me for cancelling. I've had a look at the Stanlib details again every few years and I haven't found anything to make me regret the decision.

The thing is, I'm not completely averse to going to a financial professional. I'm the first one to admit I don't know what I'm doing or where to start (it's why I posted here). I know there are good ones out there but I don't know who they are and I'm pretty sure I can't afford them. I do know enough that the 35% commission fee asked for by my boss's broker is crazy. But beyond that I'm still taking baby steps.

The 4 investments I have now I have just because it seemed like I should be doing something. Anything. But I chose them by thumb-sucking. I would love to learn more, and have a plan of some sorts to follow.

I'm happy to have an RA - I like that I won't have access to the money. I'm thinking of converting my Allan Gray into an RA account.
 
sandwitch said:
I started investing in 2007, R500 a month. By 2011 I was in the negative and since their customer service was horrible when I tried to open another account with them I decided enough was enough. When I called to cancel the call centre agent commented that he didn't blame me for cancelling. I've had a look at the Stanlib details again every few years and I haven't found anything to make me regret the decision.
Click to expand...

Yeah a negative should almost never happen.

Low growth for specific periods I could understand.
 
I thought that too. They kept telling me to hang one and things would get better.

I'll change my Allan Gray UT into an RA - I really like the idea of tax-savings and not being able to touch the money. I'll also spend the next few months reading up on investing (and taxes) and all the ins and outs so I have a better general idea of what I'm doing.
 
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