Retirement Annuities

[zerocool2009]

That's only the initial lump sum. Additional lump sum contributions can be R5k or just do a debit order for R500 and cancel it after.

Try to get something where you can do DO's with topups.

Just want to take the time to thank @zerocool2009 and @supersunbird for their contribution to this thread and the many other mybb threads on Retirement Annuities.

My motto is to try and uplift investors, taking the first step to do things on their own (who will surely smile into the future saving on fees and admin costs (meaning, no more FA)).

Big pleasure ! Cheers on that comment

 

[LPCPT]

That's only the initial lump sum. Additional lump sum contributions can be R5k or just do a debit order for R500 and cancel it after.

Yes I did notice that. I need to make lump sum payments from my bonus, otherwise I do not see where my money goes. I know I should take better care of my money and that is why I go this route.
So putting all that extra cash in your bond beats investing it for the last couple of years, but the RA gives you some tax back. Last year I got a nice tax refund.

 

[LPCPT]

Is there a place where one can find an objective comparison of all RA funds or let's say the top 20?
I would like to see over a period of time what happens to an investment of say 10K or any arbitrary amount.
That is what goes in and what it's worth after a year. All costs must be taken into account.

 

[supersunbird]

Is there a place where one can find an objective comparison of all RA funds or let's say the top 20?
I would like to see over a period of time what happens to an investment of say 10K or any arbitrary amount.
That is what goes in and what it's worth after a year. All costs must be taken into account.

Not really, because RAs are also highly customisable (within Reg 28 limits). It can include more than one fund in the RA wrapper. The best I think one can do is to compare the various balanced fund unit trusts that generally out there and are likely to be what is inside an RA wrapper.

 

[LPCPT]

Not really, because RAs are also highly customisable (within Reg 28 limits). It can include more than one fund in the RA wrapper. The best I think one can do is to compare the various balanced fund unit trusts that generally out there and are likely to be what is inside an RA wrapper.

Thank you.

I actually wanted to see the funds comparison.
To me it looks like a FA will just see where he can score the most.

 

[backstreetboy]

Is there a place where one can find an objective comparison of all RA funds or let's say the top 20?
I would like to see over a period of time what happens to an investment of say 10K or any arbitrary amount.
That is what goes in and what it's worth after a year. All costs must be taken into account.

Sygnia https://online.sygnia.com/Alchemy/Analytics/Strategy. Unfortunately you have to be registered but you can see the TER and 5 yr performance of (last I checked) 1500 UT's and ETF's and compare it to what you have with Sygnia or you can enter your own investment amount and start date to see the growth.

 

[Cage Rattler]

Question is.. is it worth the risk though ? personally i'm not convinced anymore hence i keep it to minimum and upping discretionary savings via etf which at some point can be taken abroad (can do the same with tfsa i guess but then limited fund selection).

Good comment .. Too few bother to look at total return after tax taking into account the income streams once the RA starts paying out. Everyone only looks at the tax benefits from contributions .. Doing the calculations on the total picture might make one think really hard about using alternative investments. One anecdote .. Have an actuarial friend who was a CEO of a local life insurance company .. He actually cashed in all his retirement funds, paid a massive tax bill and then managed everything himself outside of the retirement industry .. And has done far better...

 

[Ishould_BeWorking]

Yes I think the PPS Life/Disability package is still a preferable option for most professionals for the Profit Share Account - especially if you don't intend to touch the funds until age 65+.

For RA I have chosen to invest with Investec RA (7% of gross salary) and the Sanlam Echo Bonus RA (5% of gross salary) to balance the portfolio and take advantage of what appears to be a really great long term investment reward. Might swap that 5 and 7 around after reading more up on it...

Hi, I would you to know what is your rationale with using Investec for an RA. I have been battling to find any good advice or reviews on the internet regarding Investec's RA offering. I currently have UTs with Investec and also bank with Investec.

Is there a cost advantage / benefit with using Investec ?

 

[Gaz{M}]

From what I've seen, RA's a nightmare to compare. Each company has their own RA fund wrappers and a limited amount of included funds and fees payable. It is really hard to pick a winner. Plus the returns are mostly terrible over the last 10 years.

Be aware that all RA's will be limited to 70% investment into South Africa. That is where you will lose all your money.

I can see why someone who ignores RA's, takes the tax hit and invests offshore will do better over the next 5 years.

 

[Cius]

RA's are also incredibly difficult to switch out of if they end up sucking. Big penalties etc (unless that has also changed recently). For instance my PPS RA has under-performed my pension fund at work consistently for years but if I want to get out of it I have to pay huge penalty fees. I'm essentially trapped for life. My pension fund though is a simple switch form and a cost of R400 or something which is nothing compared to the RA. I would avoid RA's and try get into a pension type product that allows switching into other pension funds. That way if performance drops you can move the money easily and cheaply. My 2c. Unfortunately I really don't know if the rules of the pension I have are specific to my company or if that type of arrangement is available to anyone. I just know that I despise my RA and wish I had never taken it. Would much rather add my RA contribution as a voluntary extra contribution into my pension fund as it has lower fees, better returns, and is actually easy to get out of if it stops performing.

 

[backstreetboy]

From what I've seen, RA's a nightmare to compare. Each company has their own RA fund wrappers and a limited amount of included funds and fees payable. It is really hard to pick a winner. Plus the returns are mostly terrible over the last 10 years.

Be aware that all RA's will be limited to 70% investment into South Africa. That is where you will lose all your money.

A proper LISP will make it easy. With Sygnia I can compare the 5 year performance of over 1700 funds.

I can see why someone who ignores RA's, takes the tax hit and invests offshore will do better over the next 5 years.

Well that is if you think the US stock market can continue to grow like it did in the last years. I and many others don't and foresee another global recession soon.

RA's are also incredibly difficult to switch out of if they end up sucking. Big penalties etc (unless that has also changed recently). For instance my PPS RA has under-performed my pension fund at work consistently for years but if I want to get out of it I have to pay huge penalty fees. I'm essentially trapped for life. My pension fund though is a simple switch form and a cost of R400 or something which is nothing compared to the RA. I would avoid RA's and try get into a pension type product that allows switching into other pension funds. That way if performance drops you can move the money easily and cheaply. My 2c. Unfortunately I really don't know if the rules of the pension I have are specific to my company or if that type of arrangement is available to anyone. I just know that I despise my RA and wish I had never taken it. Would much rather add my RA contribution as a voluntary extra contribution into my pension fund as it has lower fees, better returns, and is actually easy to get out of if it stops performing.

The new post 2009 Unit trust based RA's are very easy to switch to and fro and you can stop contributing without penalties. If you still have time on your side perhaps it's better to take the knock and move it somewhere else.