Retirement and self-sabotage in South Africa

[supersunbird]

Currently PF is with Momentum -- but will be moving this soon to Sygnia (just havent completed the paperwork yet
TFSA = maxed, RA contribution is small @ about R2k/pm and with iTransact (I consolidated my RAs about 2 years ago and reduced the investment amount to the current R2k.

Thanks. What is your current age? 10 years from retirement doesn't mean much lol, you could be 45, planning to retire at 55.

 

[Moto Guzzi]

Retirement and self-sabotage in South Africa

Even after the final reforms are in place investors will remain free to be their own worst enemy, writes Mica Townsend, business development manager and Employee Benefits Consultant at 10X Investments.

Test::A test of leadership foresight.

1-If most people in a country with a monetary system, Capitalism, Communism, Socialism, Ideology irrelevant today with digital, does not have money left to save, the monetary system is in trouble.
2-If most citizens pay excissve taxes, Levies, Admin Costs & Willy Nilly costs added on the fly(Digitally), high VAT etc, the monetary system is confirmed in trouble.
3-If people are advised to use their Pension fund/Retirement money to cover daily living expences, or any expenses for that matter, that monetary system is in deep trouble, and if laws are changed to support this, its probly an irreversible condition for the medium term, the effects will haunt them come old age down the road, even those today that did save is haunted.

 

[starmage]

Thanks. What is your current age? 10 years from retirement doesn't mean much lol, you could be 45, planning to retire at 55.

50 -- and definitely not planning on retiring @55 - at this stage the idea is to work for as long as possible (company mandatory retitement age is 63 I think).. but ofc no one knows what the future hold...

 

[Drifter]

Sure, but when I say "not anymore", it means present. You are probably talking about some scenario in future which was put forth somewhere in news.

It was supposed to be implemented last year already. Has been in the news for ages. All gone quiet now.

 

[surface]

It was supposed to be implemented last year already. Has been in the news for ages. All gone quiet now.

Care to post link though? Someone asked you already. Should be easy to find if it has been in news for ages.

 

[supersunbird]

It was supposed to be implemented last year already. Has been in the news for ages. All gone quiet now.

One link please, where it gives an indication they will do away with income tax benefit of RAs.

I do know they finally implemented the legislation that make contributions to Provident Funds after 1 March the same as Pensions Funds (Provident Fund contributions made after 1 March 2021 cannot be withdrawn 100% at retirement as it was before, now treated the same as a Pension Fund, 33.3% can be withdrawn, the rest must buy an LA, Provident Fund contributions made before 1 March 2021 and their growth can be fully access on retirement). That has been the only thing in the news for ages.

 

[saturnz]

What have you been preaching saturnz? If the entire country goes the way of Zimbabwe, your property portfolio will be worth very little as well.

explain to me the dynamics of how inflation will erode my property value?

the market value of my properties are immaterial to me, people can live in the property, use it as storage and do other useful activities on them

what can you do with an RA? look at the numbers on a screen- what a useful thing to do...

also I'm not having to work until I'm 55 (atleast a decade still to go before that point) to accumulate or access my property portfolio- I already have it and generating an income from it such that I do not have to work

so if you fast forward to a point where South Africa is like Zimbabwe, RA's will just be digits on a screen or piles of paper that can barely buy a few bricks to build a house on a property, meanwhile I will have my properties

 

[supersunbird]

so if you fast forward to a point where South Africa is like Zimbabwe, RA's will just be digits on a screen or piles of paper that can barely buy a few bricks to build a house on a property, meanwhile government will have my properties

FTFY.

 

[saturnz]

FTFY.

the issue is inflation....

if they will have my property, they will have yours as well

but I didn't work until I'm 55 to get them, and I already would have sufficiently made returns from the properties at that stage (if not at this point already)

 

[Paul_S]

What have you been preaching saturnz? If the entire country goes the way of Zimbabwe, your property portfolio will be worth very little as well.

And @Paul_S - exactly where are you putting your money?

Property will still retain most of it's value because people still require a place to live and you can't build new houses for free. So property prices tend to more or less track inflation. That's assuming EWC doesn't happen which is why I'm not investing in local property.

I'm spreading the risk around a bit and invest about 50% in local retirement products and the other 50% in high equity offshore products.
That way if things go badly locally I don't lose everything. If things go okay locally then even better. Either way you just don't want to place all your eggs in the local economy and hope that government don't seize it or make it worthless.

 

[Splinter]

explain to me the dynamics of how inflation will erode my property value?

the market value of my properties are immaterial to me, people can live in the property, use it as storage and do other useful activities on them

what can you do with an RA? look at the numbers on a screen- what a useful thing to do...

also I'm not having to work until I'm 55 (atleast a decade still to go before that point) to accumulate or access my property portfolio- I already have it and generating an income from it such that I do not have to work

so if you fast forward to a point where South Africa is like Zimbabwe, RA's will just be digits on a screen or piles of paper that can barely buy a few bricks to build a house on a property, meanwhile I will have my properties

What's inflation got to do with this?

You proposed some sort of doomsday scenario which would affect property as well, obviously. Well, obvious to most....

 

[Splinter]

Property will still retain most of it's value because people still require a place to live and you can't build new houses for free. So property prices tend to more or less track inflation. That's assuming EWC doesn't happen which is why I'm not investing in local property.

I'm spreading the risk around a bit and invest about 50% in local retirement products and the other 50% in high equity offshore products.
That way if things go badly locally I don't lose everything. If things go okay locally then even better. Either way you just don't want to place all your eggs in the local economy and hope that government don't seize it or make it worthless.

Not in saturnz's doomsday scenario. As well as our particular political issues. A question - the high equity offshore products - are you investing directly overseas?

 

[hj007]

RA has a nice tax benefit and annual costs are low these days - just make sure it's asset not insurance-based RA. Use it for the first R350k invested, or split your risk 50/50.

As to whether SA will fail or not and therefore it's worthless is a risk scenario with asymmetric payouts. What happens if SA carries on or does well? Your RA is worth a bit more. If SA fails? ruin if all you have are SA assets.

Since SA is <1% of the world economy, you need to be a lot diversified than the 25% offshore threshold in your RA. It's just good to hedge against ruin even if the returns were swapped and SA returned 2x offshore returns.

 

[supersunbird]

Since SA is <1% of the world economy, you need to be a lot diversified than the 30% offshore threshold in your RA. It's just good to hedge against ruin even if the returns were swapped and SA returned 2x offshore returns.

FTFY

 

[hj007]

FTFY

tx - was thinking of the 75/25 equity split.

But it would've been great if the domestic/foreign relaxation had all worked out: https://www.biznews.com/global-investing/2020/11/18/foreign-investment-etfs

Or if they just gave us IRAs like the US, where you can put in all kinds of random things:

Lord of the Roths: How Tech Mogul Peter Thiel Turned a Retirement Account for the Middle Class Into a $5 Billion Tax-Free Piggy Bank

Roth IRAs were intended to help average working Americans save, but IRS records show Thiel and other ultrawealthy investors have used them to amass vast untaxed fortunes.

www.propublica.org

The RA has potential, but the limits are IMO too restrictive considering the concerns around SA returns.

 

[surface]

What's inflation got to do with this?

You proposed some sort of doomsday scenario which would affect property as well, obviously. Well, obvious to most....

I am being cautious & presumptuous here but I think what he has in mind that if worst comes, he will still have his property on hand whereas other investments are cash and can disappear. And my assumption that EWC (which is imminent guys - migrate as soon as you can) will not affect his properties.

 

[Speedster]

I am being cautious & presumptuous here but I think what he has in mind that if worst comes, he will still have his property on hand whereas other investments are cash and can disappear. And my assumption that EWC (which is imminent guys - migrate as soon as you can) will not affect his properties.

Do you think properties in Zim have retained their value?

 

[surface]

Do you think properties in Zim have retained their value?

No idea. When do you think Zim scenario will be happen in SA? I have been waiting for that & zulu uprising since I migrated here many moons ago.

 

[Speedster]

No idea. When do you think Zim scenario will be happen in SA? I have been waiting for that & zulu uprising since I migrated here many moons ago.

It is imminent...

 

[surface]

It is imminent...

indeed. @zerocool2009 and @saturnz , please make note of the imminency for your properties. Don't say I didn't warn you.