Investment question...

The Door said:
50 years old
What would you do with, say, R20k with the aim of upping your retirement funding (and possibly reduce tax - not 100% required)?
I don't mind going a bit more aggressive...
I don't have any TFSA
I'm happy to consider all options that you think would be a healthy way to build a bigger portfolio with the aim of retirement in 5-15 years.

I do have a bond and car so I assume it would be ideal to settle those first, but perhaps that's not always the case.
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I'm echoing what a lot of people have said - settle your debt first and the order to settle it is the most expensive debt first (the one with the highest interest rate).

Once that is settled, I would invest invest in a TFSA - market is very volatile at the moment, but it's not about timing in the market - it's time in the market.

Which TFSA - personally, I would look at the S&P 500. But do a bit of a research and look at the returns they have provided historically for your investment time horizon.

Just a-heads-up, a time horizon of 5 years is not very long, and for that - I would probably look at sometime more low risk - like an income fund.
 
A TFSA allows you to contribute R36k per year (R3k per month if you want to do equal monthly contributions) up to a max of R500k during your lifetime. If you contribute the max per year it will take just short of 14 years to reach the R500k.

It all depends on what your existing retirements savings balance is. If you are on track and have existing savings personally I would do R3k per month into a TFSA as will ensure you can still use full benefit before your reach retirement age. The remaining R17k per month can then go on the car until the car debt has been settled.

If you have no current savings, I would honestly sell the car, settle the debt and use whatever capital comes out and buy something for that value only. So you have a car with no debt. I would then put R3k in a TFSA, R17k into ETFs and the whatever you save on the carpayments into the bond.

You only have 10 years left to save and the future is unsure. Compounding takes time to work so the faster you start the bigger the gain.
 
deweyzeph said:
Open up an offshore bank account and stick your spare cash there in dollars or pounds. You have to be crazy to keep your investments and cash in South Africa.
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How about he sticks it in an MSCI World ETF? How's that crazy?
 
rvZA said:
No, but that is sane and great advise.
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Yip, and it's never been easier to invest offshore with platforms like Shyft and Easy Equities. Use that R1 million a year SDA to your advantage. People don't understand how much their capital is being eroded by the devaluation of the rand. It's like a frog in a slow-boiling bot. You don't notice it at first, and then slowly but surely the water starts warming up and before you know it you've got nothing left.
 
Pegasus said:
Pay off the car and bond as per normal.

Since investing is not your thing.

I'd stay put the 20 k in a Satrix Tax free account, add R100 or so a month to it, or whenever you have spare cash.
Also open an RA. Satrix seem to have a decent one, you get some tax back from that. So happiness once a year.

That'll get you into investing.

I'm saying Satrix because its cheap, simple, and you can add and remove small amounts. Also no advisor needed.
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Don’t limit yourself to Satrix.

They were historically kak to manage
, but now use the Easy Equities platform.

But don’t register on their limited version of the platform and just go straight to the Easy Equities one which gives you everything instead.
 
I would go TFSA but your best bet is to pay a professional for an hour or two of advice.
 
Buy crypto with it using a home baked machine learning model to tell you when to buy and sell. :p
 
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The Door said:
50 years old
What would you do with, say, R20k per month with the aim of upping your retirement funding (and possibly reduce tax - not 100% required)?
I don't mind going a bit more aggressive...
I don't have any TFSA
I'm happy to consider all options that you think would be a healthy way to build a bigger portfolio with the aim of retirement in 5-15 years.

I do have a bond and car so I assume it would be ideal to settle those first, but perhaps that's not always the case.
Click to expand...

At your youthful age I would aim at property investments as they offer pretty good returns and are "safe" investments. Try looking at having your own construction company that can build a unit or two and then leverage the properties for growth aspects at no more than 60%. Its not really what you are earning but what credit you can withdraw for returns, in your first endevour you can get over R3m to start of with, if you are as aggressive as you say you are, you will then go for 2-3 single home dwelling developments at the same time. In this case you can quadruple your allocated spend income.

Look at the coastal areas offering cheap land within the W.Cape and perhaps E. Cape, what you want to do is increase your income but at the same time increasing your nett worth. You can try the Gauteng opportunities but then you wont meet the required credit requirements as most of them are centered around whole township establishments, but you can try. The business is full of quinquagenarians like you so youself so you will feel right at home, and I can not over-emphasis on the importance the use of specialist consultants.
 
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Pegasus said:
Also open an RA. Satrix seem to have a decent one, you get some tax back from that. So happiness once a year.
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RA's are only worth it if you can still utilisate the tax benefits
Lots of cons wrt access to money later down the road

But my take is pay off short term credit -> Car -> House -> TFSA till limit -> equities/offshore

I also invested in longer term stuff at the house like solar and getting off the grid with water etc. Those investments will be paid off in 4 years and realise about R7K pm combined in saving for what I need to pay the council.
 
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Major Boredom said:
RA's are only worth it if you can still utilisate the tax benefits
Lots of cons wrt access to money later down the road

But my take is pay off short term credit -> Car -> House -> TFSA till limit -> equities/offshore

I also invested in longer term stuff at the house like solar and getting off the grid with water etc. Those investments will be paid off in 4 years and realise about R7K pm combined in saving for what I need to pay the council.
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At 41% marginal tax, RAs are very attractive
 
Look. at the way global markets are going, everyone will lose money. There is a guaranteed way of securing your capital....

productimg


Thank me later.
 
Major Boredom said:
Yes, if you can still use the tax benefits. I cant. There is a cap.
Also just be aware that there are severe limitations on access to that money afterwards
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If you're reaching your RA tax benefit limit each year, freaking well done! I can't imagine too many others manage that.

The limitation isn't that severe. You can take 1/3rd lump sum and then 17% of the balance each year ensuring you have income for at least the first 6 years after retirement.
 
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