Noob investment help

[Hamster]

Cach?

*Cash

 

[supersunbird]

BWHAHA!!

This ETF - http://etfcib.absa.co.za/products/exchange traded funds/balanced/mappsgrowth/Pages/default.aspx

Interesting, didn't know it existed, but then again a lot of new ETFs released the whole time. For a young guy like the OP I'd still do the 2 x 100% equity ETFs...

 

[patrick]

So for example if investing R1500pm and no other savings to rely on:
R500pm into local index unit trust or ETF in a TFSA
R500pm into foreign index unit trust or ETF in a TFSA
R500pm into a savings account with bank (Capitec a good option)

So for example if investing R2000pm and no other savings to rely on:
R750pm into local index unit trust or ETF in a TFSA
R750pm into foreign index unit trust or ETF in a TFSA
R500pm into a savings account with bank (Capitec a good option)

While I know having a foreign index is a good thing, isn't it wasted in the TFSA? You still pay divi tax on foreign ETFs in a TFSA, so I would put those somewhere else and put as much of the local stuff into the TFSA. Something like STXIND is very foreign in any case, and will still save you the divi tax.

 

[supersunbird]

While I know having a foreign index is a good thing, isn't it wasted in the TFSA? You still pay divi tax on foreign ETFs in a TFSA, so I would put those somewhere else and put as much of the local stuff into the TFSA. Something like STXIND is very foreign in any case, and will still save you the divi tax.

Well, one has to consider what the Capital Gains Tax will be on the foreign investing UT/ETF if it grows by a lot in R terms due to R weakness. You do have a point though.

I pondered it a bit before, and I'd still do it my way, despite the foreign dividend tax issue, inside the TFSA till I reach the limit, then 50/50 split too if I invest outside it.

 

[Hendrix]

While I know having a foreign index is a good thing, isn't it wasted in the TFSA? You still pay divi tax on foreign ETFs in a TFSA, so I would put those somewhere else and put as much of the local stuff into the TFSA. Something like STXIND is very foreign in any case, and will still save you the divi tax.

Every article I read states no tax at all, they make no mention of foreign dividend tax, you have any sources for this?
I'm currently investing my TFSA into the Foord Flexible Fund, which is around 70 % foreign.

 

[Hendrix]

@patrick, I just googled it, and yes foreign interest and dividends are taxed, so basically it's "almost tax free"

Oh well, I'm in it for the long run anyways

 

[Hamster]

Every article I read states no tax at all, they make no mention of foreign dividend tax, you have any sources for this?
I'm currently investing my TFSA into the Foord Flexible Fund, which is around 70 % foreign.

There was a Fin24 article about it last year sometime. It doesn't really matter because the dividend payout of your foreign investments via ETF (DBXWD etc.) is so small that what you are losing is trace amounts...cents.

If you are in it to score of dividend tax you shouldn't be using those ETFs anyway. You should be looking at DIVTRX, PREFTX and your property ones. In fact STXIND and your Top40s strike a good balance between growth a dividends.

Personally only plan on using that money come 2040 so it is advisable to go for growth right now. With these small amounts (R90k after three years) your dividend payouts will be so little anyway that it just doesn't make sense not to focus on growth for the first couple of years (unless of course you already have other portfolios and just moving some if your stuff over here)