Retirement Annuity Fund

[LancelotSA]

The newer generation RAs have lower costs.... so it may be in your best interests to check out the costs (via RIY - reduction in yield values on quotes. These show the effect of costs on your investment over various periods of time. The lower the RIY the better) before deciding where to invest further money....

I prefer to refrain from mentioning specific products...

 

[bigicy]

Never heard of PPS.

U do get a tax benefit, depends on your income.

U only start getting your money when you're 55 years old (are exceptions to that though, but thos end up costing u money).
One of those tricky investments that you really, really need to understand and think about before u sign up for one.

PPS is unfortunately a closed society for individuals that have 4 year degrees or equivalent. The benefits is that at the end of each year, all policy holders are members so you are apportioned any surplusses that they have.

 

[bigicy]

Bigicy, I work as an Independant Insurance Broker, and all I do these days is save clients big time on their Life Cover and benefits. With the markets like they are, and the admin fees, policy fees, broker commission etc, it makes sense to save your money in a money market account at a bank.

Lets see if this statement get me k@ked out by other advisers.

I currently do have money in a money market account but I am plaaning for the future as I am sure the interest rates will come down soon...

 

[bigicy]

i have a stratus ra through sanlam (i think its called) should i get one from allan gray as well? Can i do multiples? Or just push extra cash in?

I would love to put my RA's into the Allan Gray fund but my work independence prevents me as Allan Gray hold shares in one major JSE listed client which I work on.

Interestingly I am also getting the PPS Stratus RA

 

[bigicy]

Never heard of PPS.

U do get a tax benefit, depends on your income.

U only start getting your money when you're 55 years old (are exceptions to that though, but thos end up costing u money).
One of those tricky investments that you really, really need to understand and think about before u sign up for one.

Retirement annuity Tax Deductions: Limited (annually) to the greater of:
R1,750; or
R3,500, less the pension deduction; or
15% of net non-retirement-funding employment income

 

[bigicy]

PPS is an exclusive society for professionals with at least a 4year qualification. Their core business is to provide an income to professionals in times of illness, hospitalization, etc. For example, if you are a CA, and fall ill for 2 weeks, you cannot charge your fees. PPS will then re-imburse you for the time you are unable to perform your work.

Their rates are extremely competative in this niche market. All the other benefits that they provide are add on's underwritten by major players.

I am not looking at the income protection policy as I currently don't have a need for it as my work does have a Group Life policy which currently is more than adequate

 

[cois85]

Now think about this last one.... if you are on a 40% tax rate you are effectively making a 40% GUARANTEED return (you WILL get tax money back on this!!). To put it another way you are effectively only contributing R600 for every R1000 you invest! Tell me what other investment guarantees 40% returns... and this is before the actual portfolio return. And then of course throw in the benefits of these funds being protected from creditors... lose your house and their go your retirement "savings".

This is wonderful while building up your investment... but I am nearly 100% sure that you pay tax on everything once you cash out when you retire!!

 

[Ou grote]

This is wonderful while building up your investment... but I am nearly 100% sure that you pay tax on everything once you cash out when you retire!!

By the time u hit 55, there may be new tax laws.

 

[Nerfherder]

By the time u hit 55, there may be new tax laws.

Yes but you get the Tax benefit now.

They will only make it easier to invest in these things as not a lot of people do and the more the better.

 

[LancelotSA]

This is wonderful while building up your investment... but I am nearly 100% sure that you pay tax on everything once you cash out when you retire!!

By the time u hit 55, there may be new tax laws.

Cois, well I could tell you that current tax legislation allows you to get preferential tax rates on the 1/3rd lump sum withdrawal (the first R300 000 lump sum tax free, the next R300 000 at 18%, next R300 000 at 27%...) and that the monthly pension you would get from the remaining two thirds will be taxed as an income as it gets paid(which means, with the lack of sufficient retirement funding by the majority of South Africans, that in all likelihood this rate will be a helluva lot lower than the rate you are on while actively employed).

Then of course you also have the fact that your rebate for tax purposes is a lot higher when you are over 65.

And in case you needed a final reason even if you were taxed at the same rate as you were on when you were actively employed you would have been earning returns on all that money, over all those years, that would have been GIVEN to the tax man if you had not contributed to an RA!


But then as Alf rightly says, tax laws could change in that time! However, the likelihood of the government making it less attractive to save via a retirement annuity is unlikely as any person not financial independent at retirement age will need government hand outs!

 

[rwenzori]

Bigicy, I work as an Independant Insurance Broker, and all I do these days is save clients big time on their Life Cover and benefits. With the markets like they are, and the admin fees, policy fees, broker commission etc, it makes sense to save your money in a money market account at a bank.

Lets see if this statement get me k@ked out by other advisers.

Just be very careful. There is wisdom in what Goblin posts. These RA brokers rave about great returns, but often neglect to mention that these returns are PRIOR to fees, commissions, theft, etc. They also get their commissions early in the life of the product IIRC, so your investment for the first few years is about forkol. These boys make a living, often a good one, on YOUR money. That is first principle. If you have some clue about investing on your own, you are likely to get a greater return in the long run. Some of the big investment companies are also known to rape funds on technicalities ( go read Noseweek on Investec and Nedbank ).

Don't trust them to look after your interests - they look after their interests, and the two are seldom the same.

PS: "Illustrative" values are quite illusory.

 

[Ou grote]

Just be very careful. There is wisdom in what Goblin posts. These RA brokers rave about great returns, but often neglect to mention that these returns are PRIOR to fees, commissions, theft, etc. They also get their commissions early in the life of the product IIRC, so your investment for the first few years is about forkol. These boys make a living, often a good one, on YOUR money. That is first principle. If you have some clue about investing on your own, you are likely to get a greater return in the long run. Some of the big investment companies are also known to rape funds on technicalities ( go read Noseweek on Investec and Nedbank ).

Don't trust them to look after your interests - they look after their interests, and the two are seldom the same.

PS: "Illustrative" values are quite illusory.

And take out RA's at more than one place.
(just my advice)

Financial advisors / brokers generally don't give a fsck about u.
It doesn't feed their families to "help" you.

Always make sure u know what u want BEFORE u go to one.

 

[LancelotSA]

Just be very careful. There is wisdom in what Goblin posts. These RA brokers rave about great returns, but often neglect to mention that these returns are PRIOR to fees, commissions, theft, etc. They also get their commissions early in the life of the product IIRC, so your investment for the first few years is about forkol. These boys make a living, often a good one, on YOUR money. That is first principle. If you have some clue about investing on your own, you are likely to get a greater return in the long run. Some of the big investment companies are also known to rape funds on technicalities ( go read Noseweek on Investec and Nedbank ).

Don't trust them to look after your interests - they look after their interests, and the two are seldom the same.

PS: "Illustrative" values are quite illusory.

Hmm I have read this post a few times and wondered how/whether I should respond... and you know what I decided to rather just let people believe what they will... after all a mind changed against one's will, remains a mind unchanged!

Rwenzori, do a little research on the new generation RA products. And then also take a read through the recent legislation regarding commissions on RA products. Then also be so kind as to advise the rest of us where you are able to do investing, in an approved retirement fund (or any investing for that matter!) which does not incur any costs... I for one would be happy to invest my money there!

 

[LancelotSA]

Financial advisors / brokers generally don't give a fsck about u.
It doesn't feed their families to "help" you

I can give you the name and contact details for the Long Term Ombud if you have a specific complaint. If you were given ill advice you have recourse.

Further to this if you read the same legislation regarding commissions on RAs that I referred Rwen to above you will see that future commissions will be on an "as and when basis" so you keeping you policy going is in the consultant's best interests and will feed his family! If you are not happy with the advice or service given, you change consultants and his income stops.

 

[rwenzori]

Hmm I have read this post a few times and wondered how/whether I should respond... and you know what I decided to rather just let people believe what they will... after all a mind changed against one's will, remains a mind unchanged!

Rwenzori, do a little research on the new generation RA products. And then also take a read through the recent legislation regarding commissions on RA products. Then also be so kind as to advise the rest of us where you are able to do investing, in an approved retirement fund (or any investing for that matter!) which does not incur any costs... I for one would be happy to invest my money there!

I'm not going doing a whole fscking runaround on the subject. I have quite a bit in RAs - would have been a lot more if not raped early in their lives for commissions. What I will just say is that, for example, in spite of the current property slump, my investments in properties have done a **** lot better than the RAs.

 

[Ou grote]

I can give you the name and contact details for the Long Term Ombud if you have a specific complaint. If you were given ill advice you have recourse.

Further to this if you read the same legislation regarding commissions on RAs that I referred Rwen to above you will see that future commissions will be on an "as and when basis" so you keeping you policy going is in the consultant's best interests and will feed his family! If you are not happy with the advice or service given, you change consultants and his income stops.

Don't need an Ombud , tx.

 

[LancelotSA]

I'm not going doing a whole fscking runaround on the subject. I have quite a bit in RAs - would have been a lot more if not raped early in their lives for commissions. What I will just say is that, for example, in spite of the current property slump, my investments in properties have done a **** lot better than the RAs.

rwen, you too are in desperate need of a new advisor who knows what he is doing!

I know of clients who suffered losses as they were told to invest in technology stocks when they were flying, then they were told to invest offshore when the rand was plummeting, and then they were told to invest in property when everyone thought property was a one way street... now these people often moved in when prices were peaking and sold out after it had slumped. In ALL cases if they had just chosen a risk strategy and stuck to it they would have been infinitely better off.

EDIT : In fact this needs an edit as I seem to have placed all the blame at the feet of the advisors whereas it is often the client's who insist on investing in these sectors as they got told about the money to be made in them at braais etc. But the advisor is still to blame as they should have known better.​

With recent market turmoil I have a large number of clients who have not lost any money due to the correct diversification of their portfolios! Now I am no magician but if you follow the basic principle of diversification and ensuring your client's asset allocation matches their risk profile you can't go wrong!


As a matter of interest do you do any sort of research when buying property? Or do you just jump straight in?

I realise you will not do the research but then you should also not speak as if you know all the facts and possibly put someone off saving for their retirement because of your ignorance of the ways things actually work! Your poor performance may have had more to do with bad investment choices rather than costs and rape and commissions!

 

[rwenzori]

With recent market turmoil I have a large number of clients who have not lost any money due to the correct diversification of their portfolios! Now I am no magician but if you follow the basic principle of diversification and ensuring your client's asset allocation matches their risk profile you can't go wrong!


As a matter of interest do you do any sort of research when buying property? Or do you just jump straight in?

I realise you will not do the research but then you should also not speak as if you know all the facts and possibly put someone off saving for their retirement because of your ignorance of the ways things actually work! Your poor performance may have had more to do with bad investment choices rather than costs and rape and commissions!

I don't know all the facts and I am not a "financial adviser".

I'm not saying do not save for your retirement ( where did I say that??? ) - I am saying DIY if you can. If you can't, then put your money in the hands of someone who will take his slice. Put some there anyway, for diversity.

Property - I just jump right in. Maybe I have a feel for it, dunno.

My RAs have not performed particularly poorly, other than the early-on rape, which you do not counter. They are not "bad" investments - just not as "good" as others, by a long way.

The "way things actually work" is that investment funds are vehicles for companies to get a juicy slice of your bucks, pay themselves well, build fancy head-offices, while giving you a "reasonable" return. Provided the markets stay up LOL!


PS Edit - on your edit - I am not one of those that gets swayed by the latest opinion. BLASH, my boy!

 

[LancelotSA]

Where are your properties, Rwen, as I am as interested in this as I am in your investments which you can do with no costs? Most people I know are battling to get enough rent to cover bond repayments and also finding that the properties have a lot less equity in them than they would have hoped...

Rwen, you cannot DO IT YOURSELF and still get the tax deductibility unless you are starting your own SARS approved retirement fund that I am unaware of! Your post insinuates avoiding any of the big approved funds as they are sharks, rapists etc etc.

 

[cois85]

Correct me if I'm wrong, but with property investment... I don't think you actually want the rent to cover the bond repayments as the loss you make on the investment is actually tax deductible.