Provident fund question

[Cage Rattler]

Same strategy as Hamster. Cashed out everything, paid large tax to SARS, and moved offshore some time back. Difference in returns massive compared to not doing that. And removing uncertainty of future tax levels, new punitive legislation, etc.

 

[mr_norris]

Have you seen the money market returns lately? In fact, have you seen the returns on anything in SA lately? Your provident fund isn't alone. And for something like that you shouldn't only consider the returns in the last few months.

I don't think it's a good idea to make investment decisions based off returns over a one year period. Its too short to be meaningful.

Your current fund is probably mostly invested in shares, as a long term investment should be.

Your age is also an important factor when deciding whether to switch funds.

And fees.

This. And also, money markets are not returning 8+% at the moment. FNB is only returning 4.25% at the moment. It's better than the provident fund, but you lose out on the tax benefits. I probably wouldn't bother switching. But I also wouldn't bank on the provident fund being enough to retire with - would probably look at trying to get something else going too.

 

[zerocool2009]

Have you seen the money market returns lately? In fact, have you seen the returns on anything in SA lately? Your provident fund isn't alone. And for something like that you shouldn't only consider the returns in the last few months.

This. And also, money markets are not returning 8+% at the moment. FNB is only returning 4.25% at the moment. It's better than the provident fund, but you lose out on the tax benefits. I probably wouldn't bother switching. But I also wouldn't bank on the provident fund being enough to retire with - would probably look at trying to get something else going too.

Dont put all your eggs in one basket.

I think you must have :

a Pension / RA / preserved fund / provident fund
Then some TFSA (shares 100% abroad)
Then some endowments / Unit Trusts / ETF
Then passive income (property)

 

[maumau]

Personally i wont cash out! Being hit with tax once off.... then what?

If you make interest or dividends, SARS will hold their hands too.

I changed jobs in 2008. Didnt cashout, and let it snowball over time.

RA’s is another story, let them work for you, or you are enriching them.

If you wanna be wise-> cash out-> buy Tesla shares

So that was August, how do you feel about cashing out and taking the tax knock now that gibs me dat wants your pension/ provident fund?

Thinking of resigning myself to get my $$, hoping to take it offshore. Next question how easily to take money offshore

 

[zerocool2009]

So that was August, how do you feel about cashing out and taking the tax knock now that gibs me dat wants your pension/ provident fund?

Thinking of resigning myself to get my $$, hoping to take it offshore. Next question how easily to take money offshore

To be honest here .... Resigning and investing your pension / provident fund aint a bad idea ... which is BAD, you cant merge or topup it. It is seen a lump sum (going forward), so its wise to max the oversea leg (30%).

Thats my advice. If you dont need the money, dont cash it out.

 

[maumau]

To be honest here .... Resigning and investing your pension / provident fund aint a bad idea ... which is BAD, you cant merge or topup it. It is seen a lump sum (going forward), so its wise to max the oversea leg (30%).

Thats my advice. If you dont need the money, dont cash it out.

Excellent reply, thank you.

 

[zerocool2009]

Excellent reply, thank you.

One thing I could say, before you plan to resign, take a few days and read up on options what to do with the lump sum money if you resign. Its very important ! Pm if you need advice