Moving away from Liberty Retirement Annuity

[supersunbird]

One uninformed decision and it will take you years to make up the losses. Do not blame Liberty, blame the markets. I can assure you that in the current climate you will not do better at Allan Grey or Sygnia.

Don't come here defending Libertys high fees

Over the past 7 years only one of these balanced high equity funds have had -10% raw (unannualised) returns, never mind -30% over 10 years. It's all down to the expensive fees of Liberty., no one else, Liberty.

 

[supersunbird]

Just got feedback from Liberty on the section 14 move fees:

Investment value: R296765.62
Less activity fee: R280.00
Less early termination fee: R5955.31
Section 14 transfer value: R290 530.31

Expensive lesson in fees with Liberty, stay away! Will be moving this to either Allan Grey or Sygnia. Sygnia might be a better choice considering their fees, should be able to recover more quickly.

Also just learnt that the interest to earn is in the negative on the funds i am investing in, so am actually losing money. WTF! Nobody there says anything about it.
Quoted from Liberty: "We confirm that the negative average rate of return on the portfolio invested into reduces growth of the investment value."
This plus their fees, feels like im sponsoring a charity.

Don't use Liberty and don't trust Financial Advisors.

Sygnia, 10x or if you want managed, Coronation, not Allan Gray.

 

[supersunbird]

Sorry, I am not qualified to give financial advice. But, what I can tell you is that on such a long term investment as a RA, you leave it where it is and you never mess around with it. At most you can stop your monthly contributions but you never move the money about.

No, you don't leave it where it is, the high fees will just keep eroding the return,. Now you shouldn't make changes often or change your allocations willy nilly.

 

[supersunbird]

You did notice that I said over the past few months, did you? Look at the growth over the past three months in your table and you will see what I have been talking about.

You were just talking how it's long term thing, and you don't look at the long term?

Did you read the original post and understand it? The person has 30% less in the RA than they have put into over 10 years, negative growth, and high fees sure are not helping that. It's nothing to do with a 3 months period.

 

[Stonemason]

You were just talking how it's long term thing, and you don't look at the long term?

Did you read the original post and understand it? The person has 30% less in the RA than they have put into over 10 years, negative growth, and high fees sure are not helping that. It's nothing to do with a 3 months period.

Read carefully and then you may understand the context of the short term view. In any case, I am not going to argue with you about the merits of messing with RA's. What I will say is the mere act of moving his fund, has cost him 3 percent of his savings and that will take years to recover.

 

[supersunbird]

Read carefully and then you may understand the context of the short term view. In any case, I am not going to argue with you about the merits of messing with RA's. What I will say is the mere act of moving his fund, has cost him 3 percent of his savings and that will take years to recover.

Which is less than the 4% fee he has to pay to Liberty each year (for little to no added value to his fund returns), so if he goes with a 1% fee provider, he will be equal in 1 year and better off in the next year

 

[zerocool2009]

Read carefully and then you may understand the context of the short term view. In any case, I am not going to argue with you about the merits of messing with RA's. What I will say is the mere act of moving his fund, has cost him 3 percent of his savings and that will take years to recover.

Not really years. Lets say the existing cost is 3.5%, and the new RA cost 0.55%....

You will quickly make up your losses!

 

[beefymoocow]

May not be applicable to most People. But these RA from insurance companies might have some insurance benefits from covid, loss of income. I know someone who has a RA from Alexander Forbes and he’s benefiting from the income protection/sickness benefit built in the RA.

 

[kennedym]

Even on 10 years you must not have less than you put in. Reason for that situation is the fees that OPs GF is paying, changes must me made now, not later.

Agreed.
I think we need to assess these every few years more actively as clients because the financial advisors have proven not so trust worthy from my experience.

 

[kennedym]

Sorry, I am not qualified to give financial advice. But, what I can tell you is that on such a long term investment as a RA, you leave it where it is and you never mess around with it. At most you can stop your monthly contributions but you never move the money about.

I have to disagree, take the 10 year investment for example, thats a huge loss. It doesn't make sense to leave it. It's more hurdles to overcome because first you have to make up for the huge loss incurred and then try catch up on where you expected to be, so you basically are hoping for a dip followed by a huge upward gains spike.
We are cutting out all financial advisors, and now that we understand fees better, it will help us decide better.

 

[supersunbird]

I have to disagree, take the 10 year investment for example, thats a huge loss. It doesn't make sense to leave it. It's more hurdles to overcome because first you have to make up for the huge loss incurred and then try catch up on where you expected to be, so you basically are hoping for a dip followed by a huge spike.
We are cutting out all financial advisors, and now that we understand fees better, it will help us decide better.

Financial advisors can have their benefit in advising around things like getting/having adequate life and dread disease and similar cover. A much more complex field than retirement products.

 

[kennedym]

Financial advisors can have their benefit in advising around things like getting/having adequate life and dread disease and similar cover. A much more complex field than retirement products.

Fair point. The one did get me a good deal on life cover.

 

[zerocool2009]

May not be applicable to most People. But these RA from insurance companies might have some insurance benefits from covid, loss of income. I know someone who has a RA from Alexander Forbes and he’s benefiting from the income protection/sickness benefit built in the RA.

Nice (to say the least). I stopped my income protection many moons back, as the firm where I had it (finding out how they rather say NO vs Yes, it was money down the drain)

 

[HowTo]

There is no more long term view.
What you lose today you will never make it up again.
This is the biggest bullshit any adviser can make. They make money and you lose money.

You need to keep monthly tabs on your money. I did this 5 years before retirement.
Then when the markets crash you lose all the way. You cant recover from this.

 

[supersunbird]

There is no more long term view.
What you lose today you will never make it up again.
This is the biggest bullshit any adviser can make. They make money and you lose money.

You need to keep monthly tabs on your money. I did this 5 years before retirement.
Then when the markets crash you lose all the way. You cant recover from this.

Why? Do the markets never recover? Do you cash out when it has fallen and then try to buy when it's high again?

 

[zerocool2009]

Why? Do the markets never recover? Do you cash out when it has fallen and then try to buy when it's high again?

The same question is in my mind constantly (sell when its high, and to buy in again when its high). Something to think about ... Wish it could be sell when its high, buy when its low (LOL).

 

[HowTo]

Why? Do the markets never recover? Do you cash out when it has fallen and then try to buy when it's high again?

If you lost a couple of thousand rand, You cant recover that money anymore.
Money down the drain.
I know markets recover but money lost you cant recover.
If you lose 10k how long will it take to recover the lose. On the 10k you lost you don't make any money.

If you never lost that money your growth would have been better. Loses are bad even on long term.

 

[supersunbird]

If you lost a couple of thousand rand, You cant recover that money anymore.
Money down the drain.
I know markets recover but money lost you cant recover.
If you lose 10k how long will it take to recover the lose. On the 10k you lost you don't make any money.

If you never lost that money your growth would have been better. Loses are bad even on long term.

But you only loose if you take the money out. Now if you take it out or move it around, that is your choice.

The only way I can see it affecting a person, say a retiree, is if it taking out more of ones capital from the monthly drawdown when the market are flat or down, but then again the drawdown should rather come from the money in low risk asset classes rather than ones growth asset classes.