Retirement annuity + general investment advice

[supersunbird]

Discretionary means anything not a TFSA or RA, so whatever unit trusts (called mutual funds overseas) or ETFs or gold or bitcoin or property or whatever else you decide to invest in.

 

[Scooby_Doo]

@TheHand

Open an EasyEquities account, and play with the demo accounts. Once you are comfortable, drop upto R36k in the TFSA and get started buying ETFs.

Once you have done that and maxed the R36k limit for the year, post back here and we can talk next steps if you have more cash available

 

[r4nd0m]

@r4nd0m, definitely good advice, and interesting chart. Diversification is something I am aiming at. Quick question, since it's been mentioned a couple of times - I have an account where I can convert my rands into dollars (again, following my general approach to **** up everything, I did this during the pandemic at the worst possible time, when the rand was roughly R19 to the dollar and it didn't seem to be abating. I've left the dollars in there but I've now lost about 20% on that amount already). Would it be worthwhile continuing the account, or should I rather just close shop and shift them to the ETF

Since you've converted that money from ZAR to USD already, I'd try and get it into an investment ASAP. If you can get a foreign brokerage account, you should be able to transfer that amount (via SWIFT or whatever) to them while preserving the USD (at a cost obviously, live and learn).

Then I would close that account because the interest is a pittance and your dollars would better left to work for you in an investment abroad, rather than sitting in a bank account.

I use Shyft because the rates are better than my bank and the transfer fee (to brokerage) is fixed at $14.

I don't buy individual shares, but rather go for indexed funds in whatever sector I'm interested in.

 

[zerocool2009]

Related to a tfsa, alot of friends dont do it either.

Till now they lost R195k “buying power”.

Use it wisely ... as in max it yearly

 

[the eskimo]

OP, You don't mention if you have been contributing to a company Pension/Provident fund?

 

[mr_norris]

So no RA then, because discretionary has no cap so you cannot reach a level where you must get a RA. Just say "No RA" then.

But I have a small RA which I contribute to, it is just not a priority for me. More goes to discretionary. I didn't mean to confuse anyone with what I said.

 

[Gtx Gaming]

I save bit to an RA, Incase I do want to retire in SA, I do get nice bonus every 5 years and fixed amount when I retire.

So I do 50% Ra and 50% ETF's.

With RA you also get money back from SARS.

 

[azbob]

The reason I'd do the above is because with RA are protected from oneself and bad investment ideas (you can't put your R4 million into Sharemax and then be left with nothing of your efforts over the years, since the money is in the RA) and for the tax benefit, which would then be used to invest internationally.

What do you mean by this? Can RAs not have negative growth?

 

[supersunbird]

What do you mean by this? Can RAs not have negative growth?

Yes, it can have negative growth (shorter term due to markets, long term if one has one with excessive fees), but you cannot just take the money out and invest in your buddy Frikkies oh so great bar that he is opening, or put your discretionary/TFSA saved up R4 million "retirement funds" all in the Sharemax property syndicate and loose it all.

Or as I read recently in another forum :

We went bankrupt and lost everything after con men had him invest money on some can of spray you spray on a TV screen which takes away any glare.

 

[Affieplaas]

What do you mean by this? Can RAs not have negative growth?

I think what was meant by that statement is that, by signing up to an RA via a monthly debit order, the money is taken from your account thereby taking away the temptation of spending the money.
RA's can have negative growth AND the fees can be very high. If you do have an RA and you have had it for long (more than 20 years), it may be worthwhile checking up on what the fees are. There was a time when RA's were not regulated by the pension fund act and brokers and investment companies could ask whatever they wanted. I had an old PPS RA that was under written by Sanlam that I took out in 1998 that had fees that exceeded the growth every year. Section 14 of the pension fund act allows you to do transfers between RA's so it is possible to move your current RA to a different investment company.

I'm not a Financial Advisor, just a plain accountant. I'm very weary of FA's and I have lost a lot of money in my youth due to bad advise. Most of the FA's push the products that give them the best commission. Many also really don't understand what the hell they are doing. If you do consult an FA, look for someone that is a qualified CFP.

Yes, good FA's do exist, finding one is not that easy.

 

[supersunbird]

I just use FAs for life insurance and the like, a much more complex field to ensure you have the right cover for your situation.

 

[PhreakBoy]

A lot of good advice in this thread. My only concern always with these kind of threads is that people tend to give advice relevant to their specific circumstances.

The arguments for and against RA's for instance changes a lot depending on your existing diversification (how much of your retirement savings is already "stuck" in an RA and how much is discretionary) and your tax bracket. The difference between getting 18% back on R100,000 versus getting 38% back on R350,000 is substantial and worth considering. You'd be hard-pressed to get 38% return in a year on any investment and you could invest the tax refund offshore.

With regards to independent fees based financial advisors, perhaps consider someone like Verso Wealth. The have percentage based fees to manage your portfolio and hourly rates and/or once off rates for specific analysis.

 

[zeb]

Please correct me if I'm wrong, but having to pick between paying money into a RA or towards SARS in the form of PAYE, the RA is the lesser of two evils?

 

[Affieplaas]

Please correct me if I'm wrong, but having to pick between paying money into a RA or towards SARS in the form of PAYE, the RA is the lessor of two evils?

It is effectively a tax deferment.

Remember that you contribute to an RA from post taxed earnings. SARS is effectively only giving you the PAYE that you paid back on the money you contribute to the RA. Once you start drawing money out of the RA, the entire drawing is taxable (not just the growth).

The benefits are that, at the time you will need to draw RA funds, the tax brackets for RA withdrawals are lower (the first portion is tax free) and you will have a 65-and-older primary tax rebate to utilise against those RA withdrawals.

 

[TheHand]

Discretionary means anything not a TFSA or RA, so whatever unit trusts (called mutual funds overseas) or ETFs or gold or bitcoin or property or whatever else you decide to invest in.

Ah, right. Thx.

OP, You don't mention if you have been contributing to a company Pension/Provident fund?

No pension/provident fund. nicks.

 

[TheHand]

Since you've converted that money from ZAR to USD already, I'd try and get it into an investment ASAP. If you can get a foreign brokerage account, you should be able to transfer that amount (via SWIFT or whatever) to them while preserving the USD (at a cost obviously, live and learn).

Then I would close that account because the interest is a pittance and your dollars would better left to work for you in an investment abroad, rather than sitting in a bank account.

I use Shyft because the rates are better than my bank and the transfer fee (to brokerage) is fixed at $14.

I don't buy individual shares, but rather go for indexed funds in whatever sector I'm interested in.

Cheers, thanks for the additional advice!

 

[zerocool2009]

LOL, looking at the JSE today, fun and games ahead ! -3.33% down

 

[Magandroid]

Hi All

I am looking for some assistance. I am almost sure that a while back I saw in some thread that someone had kindly calculated the cost comparisons between the 4 low-cost RA's offered by Sygnia,10X, Outvest and Easy Equities. I am trying to find that thread. Thanks in advance.

 

[Magandroid]

Hi All

I am looking for some assistance. I am almost sure that a while back I saw in some thread that someone had kindly calculated the cost comparisons between the 4 low-cost RA's offered by Sygnia,10X, Outvest and Easy Equities. I am trying to find that thread. Thanks in advance.

 

[zerocool2009]

Hi All

I am looking for some assistance. I am almost sure that a while back I saw in some thread that someone had kindly calculated the cost comparisons between the 4 low-cost RA's offered by Sygnia,10X, Outvest and Easy Equities. I am trying to find that thread. Thanks in advance.

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