RA/Provident fund

A

ADRAM3L3CH

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Ok so I have a provident fund with the company I'm currently working for, the way things are I'll probably stick around with them till I retire. So basically I'd like to know would it be worth it if I start up an RA for myself with
R500 a month? I've also been thinking of Satrix options so I'm not that sure.

Any advise will be welcome, I have been reading a few of the threads on here but they seem to have mixed results ragarding RA's and Satrix.

Thanks in advanced :confused:
 
There is no RAs that I am aware of that does use Satrix or similar indexing except http://www.10x.co.za/.

Satrix or similar investments done outside of a RA would not have the same tax benefits as a RA, but will be accessible.

So 10X tracks the top 60 shares (but no single share can have a higher than 6% allocation - there is a rebalancing twice a year). 75% of the fund is into this indexing, while the rest is into bonds and a bit of cash, due to Regulation 28 limits.

My works provident fund uses 10X. My private RA is into Unit Trusts. I prefer a mix of index funds (ETFs like Satrix or the 10x RAs) and managed funds (most Unit Trusts).

Feel free to ask for clarity if somethign is unclear.
 
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Sorry I didnt mean RA's that use Satrix, Basically I would like to know which would be a more benificial investment, I will definitely look at Satrix as an option but would an RA really benifit me as pay towards a provident fund already?
 
Satrix will outperform any RA Ive seen. Plus your not restricted to only taking the money out when your over a certain age.
RAs have a tax benefit, but the outperformance should beat the benefits by far.
Just rather stick to the Satrix Indi or Fini.
 
ADRAM3L3CH said:
Sorry I didnt mean RA's that use Satrix, Basically I would like to know which would be a more benificial investment, I will definitely look at Satrix as an option but would an RA really benifit me as pay towards a provident fund already?
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Ok, what is your aim with the investments? Retirement funding? Extra/above-retirement long term savings with accessibility?

RA has some benefits in regards to being unaccessible till 55 (even to debtors), no tax on the returns inside the RA, a small amount back from tax return. Limits on the type of investments in some asset classes (75% equity and 25% in property for example) and having to invest 66.6% into a pension generating investment on retirement.

Discretionary non-RA investments (ETF/Unit Trusts) has the benefits of being 100% allocation to a class of asset if you want to and being accessible at anytime (normally a week or less).

I personally like a mix. Half of my non-RA investments (66.6% of total investment) are index funds (satrix - 100% equity) and the other half managed funds (Unit Trusts - 50% property and 50% emerging markets ). Then I have a RA in managed funds too (33.3% of the total investment).
 
Go direct with Allan Gray or Coronation. Lowest fees best returns. Don't go with the likes of Liberty Old Mutual etc.
 
Dont forget, you can start with 1 investment (say a satrix) with your R500pm. Then when you feel comfortable with the ins and outs, you can invest your next R500pm investment into something else.
 
supersunbird said:
Ok, what is your aim with the investments? Retirement funding? Extra/above-retirement long term savings with accessibility?

RA has some benefits in regards to being unaccessible till 55 (even to debtors), no tax on the returns inside the RA, a small amount back from tax return. Limits on the type of investments in some asset classes (75% equity and 25% in property for example) and having to invest 66.6% into a pension generating investment on retirement.

Discretionary non-RA investments (ETF/Unit Trusts) has the benefits of being 100% allocation to a class of asset if you want to and being accessible at anytime (normally a week or less).

I personally like a mix. Half of my non-RA investments (66.6% of total investment) are index funds (satrix - 100% equity) and the other half managed funds (Unit Trusts - 50% property and 50% emerging markets ). Then I have a RA in managed funds too (33.3% of the total investment).
Click to expand...

My main aim is Extra/above-retirement long term savings with accessibility?

supersunbird said:
Dont forget, you can start with 1 investment (say a satrix) with your R500pm. Then when you feel comfortable with the ins and outs, you can invest your next R500pm investment into something else.
Click to expand...

I like this plan, seems like a good way forward , maybe I could start of witha saitrix acc then later on look at unit trusts. I prefer playing it safe though so not looking at taking a big risk. I have looked at the Allan Gray balanced fund , that there may be an alternative also.
 
ADRAM3L3CH said:
My main aim is Extra/above-retirement long term savings with accessibility?

I like this plan, seems like a good way forward , maybe I could start of witha saitrix acc then later on look at unit trusts. I prefer playing it safe though so not looking at taking a big risk. I have looked at the Allan Gray balanced fund , that there may be an alternative also.
Click to expand...

I personally think a balanced fund would be better suited if you did the R500pm RA thing (due to minimum limits of R200 in the underlying funds at most providers, forcing you have R300 (60%) in equity and R200 in bonds for example, even if you wanted to be 75% in equity).

You dont have much capital (yet!), so I think you can just do pure equity for now. There are also ETFs (http://www.etfsa.co.za/ETF_factsheet.htm) that give you access to other classes like proptrax for property, and a ETN from Deutsche Bank for emerging markets that you can look at later or other Unit Trusts.

The balanced funds approach I would only do in a RA and if I didn't want to spend time selecting my own class percentages and let the manager do that (to keep Regulation 28 compliant).
 
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Regarding RA's, stay far away from insurance companies as stated above.
Rather go with Allan Gray, Coronation or 10x, they don't have "penalties" if you stop paying or want to move the money to another company.
The insurance companies will take up to 25% of your RA value if you stop honoring the policy.

Another tip, don't go through an advisor, go direct.
Do your own research on the RA options, and underlying funds, and make your choice.
I've not dealt with 10x before, but have received nothing but excellent service from AG and Coronation.
 
supersunbird said:
I personally think a balanced fund would be better suited if you did the R500pm RA thing (due to minimum limits of R200 in the underlying funds at most providers, forcing you have R300 (60%) in equity and R200 in bonds for example, even if you wanted to be 75% in equity).

You dont have much capital (yet!), so I think you can just do pure equity for now. There are also ETFs (http://www.etfsa.co.za/ETF_factsheet.htm) that give you access to other classes like proptrax for property, and a ETN from Deutsche Bank for emerging markets that you can look at later or other Unit Trusts.

The balanced funds approach I would only do in a RA and if I didn't want to spend time selecting my own class percentages and let the manager do that (to keep Regulation 28 compliant).
Click to expand...

Ok seems like I would look into starting with Alan Grays Balnaced fund, maybe at R300 increasing yearly? would that be a safe bet?

Hendrix said:
Regarding RA's, stay far away from insurance companies as stated above.
Rather go with Allan Gray, Coronation or 10x, they don't have "penalties" if you stop paying or want to move the money to another company.
The insurance companies will take up to 25% of your RA value if you stop honoring the policy.

Another tip, don't go through an advisor, go direct.
Do your own research on the RA options, and underlying funds, and make your choice.
I've not dealt with 10x before, but have received nothing but excellent service from AG and Coronation.
Click to expand...

25% wow I didnt know that. Thanks for the advise, I will look at directly applying with AG
 
ADRAM3L3CH said:
Ok seems like I would look into starting with Alan Grays Balnaced fund, maybe at R300 increasing yearly? would that be a safe bet?

25% wow I didnt know that. Thanks for the advise, I will look at directly applying with AG
Click to expand...

As said above, R500 is minimum for most unit trusts, R300 for ETFs.

And I would still suggest a full equity fund of some kind (balanced fund only if doing a RA).

And if not RA: if you want a managed fund something like Coronation Top 20 or Allan Gray Equity Fund, or if you want a index fund like Satrix Top 40 or Divi or Nedbank BettaBeta EWT 40.

Then when you want to invest more you choose another type of fund to diversify with.
 
Hendrix said:
Regarding RA's, stay far away from insurance companies as stated above.
Rather go with Allan Gray, Coronation or 10x, they don't have "penalties" if you stop paying or want to move the money to another company.
The insurance companies will take up to 25% of your RA value if you stop honoring the policy.

Another tip, don't go through an advisor, go direct.
Do your own research on the RA options, and underlying funds, and make your choice.
I've not dealt with 10x before, but have received nothing but excellent service from AG and Coronation.
Click to expand...

You can only get RA's from insurance companies?

And where do you get this 25% thing from? That may have been true in the past, but these penalties only apply to policies these days where you try and transfer to another insurance company.

Also, most of these costs are commision for brokers; if you dont use a broker you pay less.
 
Billy said:
Go direct with Allan Gray or Coronation. Lowest fees best returns. Don't go with the likes of Liberty Old Mutual etc.
Click to expand...

Such a sweeping statement. Care to back it up with some numbers? Seeing as Alan Grays results have been, umm, average over the last year or so....
 
Spunkywunky1 said:
Such a sweeping statement. Care to back it up with some numbers? Seeing as Alan Grays results have been, umm, average over the last year or so....
Click to expand...

He did say Coronation too and they did well. One can also just use Allan Gray for the platform. None of my underlying funds in my one Allan Gray RA are Allan Gray except the small bit I need in bonds.

His point, I think, is that life-insurance based RAs (as historically sold by Old Mutual and such) are bad due to inflexibility, fees and penalties.
 
Spunkywunky1 said:
You can only get RA's from insurance companies?

And where do you get this 25% thing from? That may have been true in the past, but these penalties only apply to policies these days where you try and transfer to another insurance company.

Also, most of these costs are commision for brokers; if you dont use a broker you pay less.
Click to expand...

No, you don't have to use a Life Insurance Company.
I just payed a 25% penalty to do a Section 14 transfer of my Liberty RA to Coronation, I decided to take the knock now, instead of later.
The fee's were too high, like advisor fee's and fund fee's, I worked out that in the long run, it would be better to move.
I'm just saying do your home work first, read the fine print...
 
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