Retirement annuity + general investment advice

[surface]

Name sounds new, not Skeleton funds we do know, so maybe they are new.

Check this one. Launched in 2018 but it has figures from 2015. I am completely confused. Is it possible that they had it running as a 'internal' thing since 2015 and exposed to public now?

https://assets.ctfassets.net/26bnfuc012vy/5BB3devcRxTMkIFBnzL4rF/6067e2e4bde0de3bba82627473481eb0/2020_OCT__SYGSYN70__Sygnia_Synergy_70_Fund_-_FFS_2016_INSTITUTIONAL.pdf

 

[backstreetboy]

Today, I got mail about launch of Sygnia synergy 40/50/60/70 and all look regulation compliant so good for RA, right? Strange is that all these funds are already launched years ago so not sure what 'launch' means here.

TER of 0.90% + vs 0.49% with Skeleton balanced 70 fund. No thanks.

 

[surface]

TER of 0.90% + vs 0.49% with Skeleton balanced 70 fund. No thanks.

Thanks. Of late, Sygnia seems to be doing much of the same really but that is my layman's perspective.

synergy 70

skeleton 70

 

[Pegasus]

No, only max out according to tax write-off limit if you were to do this, I think it's 25% or a flat amount (think it was around R150k pm earnings), whichever is reached first.
Right now, unless your company is matching it, I'd be very hesitant and would generally rather take the tax hit.

I don't think you need to max it out at late 30's, you could probably do something like 15% and you should be fine since your costs should reduce when you become older, e.g. house and apartment are paid off.
Personally, I'd move a lot of my funds overseas as South Africa is currently not a stable environment, and for your base retirement savings you want to generally take lower risk.

2. Once off consultations can always be good, but come prepared with questions you want answered and don't agree to invest in anything until you've put more thought into it.

With an RA you are not paying CGT on your trades. Also no dividends tax, or tax on interest.
So it’s fine to go over the tax right-off limit.

 

[Johnatan56]

With an RA you are not paying CGT on your trades. Also no dividends tax, or tax on interest.
So it’s fine to go over the tax right-off limit.

Yes/no, you'll pay that tax when your RA starts paying out if you're over the limit, most of the time it won't be worth it, again, due to the bad returns on an RA compared to normal/easily controllable investments.

 

[mr_norris]

I have a TFSA with Sygnia, and I'm invested in about 5 different funds. I have some in ESG, some in 4th IR, and the rest is over the 'safer' options like SWIX top 40, property fund etc.

Is this an okay thing to do?

I think for someone to say it's OK or not, they'd have to be in the know about the future, or just a genius. I am neither. On my side, I have gone almost 100% offshore in my TFSA because I have my normal ZAR account for investing locally. The thought was foreign would have more growth, but in hindsight, local performance has been quite good since the March hard lockdown last year. So I dunno.

I have mostly adopted a "1 ETF does it all" policy and the bulk of my TFSA is in the Coreshares Total World ETF. Then I have a bit of money in Sygnia Global Property (will probably keep this), and Satrix Property (A lemon, which I won't ditch until I break even - don't see me keeping this if it gets to that point)

 

[Pegasus]

Yes/no, you'll pay that tax when your RA starts paying out if you're over the limit, most of the time it won't be worth it, again, due to the bad returns on an RA compared to normal/easily controllable investments.

Lets say I work directly with Allan Gray.

If I buy a million Rands worth of Allan Gray balanced fund in a normal Unit trust fund and keep it there for 20 years and do the same in the Allan Gray RA wrapper, which one will have more money in 20 years?

And if I swap out the investments. eg Sell AG, buy Coronation Blanced etc a few times over the years.
In which one will have more money in 20 years?

 

[Johnatan56]

Lets say I work directly with Allan Gray.

If I buy a million Rands worth of Allan Gray balanced fund in a normal Unit trust fund and keep it there for 20 years and do the same in the Allan Gray RA wrapper, which one will have more money in 20 years?

And if I swap out the investments. eg Sell AG, buy Coronation Blanced etc a few times over the years.
In which one will have more money in 20 years?

And then if you take a loan, which one will have cost you more?

Being able to control it yourself means you can also pay off other things that are higher interest than you'd ever earn on your retirement.

South African JSE also hasn't been good the last decade or so, then you're also putting your money in something that doesn't look stable due to government wanting to do prescribed assets, and you already have rules in regards to offshore exposure.

I won't convince you otherwise, but would never consider going over the income tax deduction limit for a pension fund, seems like the dumbest idea ever.

Note choosing yourself includes being able to choose to put it in a long term deposit if you want, rather than forced to pick just an RA or whatever government mandates.

 

[Pegasus]

And then if you take a loan, which one will have cost you more?

Being able to control it yourself means you can also pay off other things that are higher interest than you'd ever earn on your retirement.

South African JSE also hasn't been good the last decade or so, then you're also putting your money in something that doesn't look stable due to government wanting to do prescribed assets, and you already have rules in regards to offshore exposure.

I won't convince you otherwise, but would never consider going over the income tax deduction limit for a pension fund, seems like the dumbest idea ever.

Note choosing yourself includes being able to choose to put it in a long term deposit if you want, rather than forced to pick just an RA or whatever government mandates.

I'm not talking about every single investment one could make.
I am also not saying invest every cent in a RA.

Just pointing out that if you do the same thing in a UT account vs RA over the long term, then the RA will work out better for you.

 

[zerocool2009]

I'm not talking about every single investment one could make.
I am also not saying invest every cent in a RA.

Just pointing out that if you do the same thing in a UT account vs RA over the long term, then the RA will work out better for you.

I read an article yesterday about how "nice" RA's are. In short, if you are a high end tax payer, you can score someone, but you enrich others if you are not investing in the best product.

I already read the sygnia new product info ... so far only thing stated is the 0.90% managing fee

 

[Pegasus]

I read an article yesterday about how "nice" RA's are. In short, if you are a high end tax payer, you can score someone, but you enrich others if you are not investing in the best product.

I already read the sygnia new product info ... so far only thing stated is the 0.90% managing fee

It depends on your needs.

In my particular case, my RA is for when I'm over 70 and need a monthly income to pay for my drugs and hookers.

 

[Johnatan56]

I'm not talking about every single investment one could make.
I am also not saying invest every cent in a RA.

Just pointing out that if you do the same thing in a UT account vs RA over the long term, then the RA will work out better for you.

You did calculate that you will pay income tax on the RA payouts, right?

 

[Pegasus]

You did calculate that you will pay income tax on the RA payouts, right?

I do yes. Now over 20 to 40 years, do you think you are not going to score by leaving it in an RA?

I wasn't replying to your post to have a pissing contest, just to point out some of the benefits of an RA that you did not mention.

 

[zerocool2009]

Ra’s works like this.... no tax now! Its later payable!

 

[Speedster]

Ra’s works like this.... no tax now! Its later payable!

But you can generate returns on the delayed taxes. That can add up to a substantial amount over a couple of decades

 

[Johnatan56]

I do yes. Now over 20 to 40 years, do you think you are not going to score by leaving it in an RA?

I wasn't replying to your post to have a pissing contest, just to point out some of the benefits of an RA that you did not mention.

I definitely did mention them, I said that if you're still in the lower income brackets, I would not use an RA, and I would not use it over the 25% where the income tax deduction ends. I don't know how you read it, but that seems logical to me, and you seem to be trying to argue that an RA will net you better interest returns and therefore you should go over the max, which I don't understand as then you're paying the income tax and locking it into the fund, there are pretty much no funds that are worth that in the retirement space.

You're going to get a probably better return outside of an RA if income tax is not a factor, and you get to offset against interest on debt for e.g. house, or can directly put in stock market/whatever fund you want as accessible.

 

[supersunbird]

I definitely did mention them, I said that if you're still in the lower income brackets, I would not use an RA, and I would not use it over the 25% where the income tax deduction ends. I don't know how you read it, but that seems logical to me, and you seem to be trying to argue that an RA will net you better interest returns and therefore you should go over the max, which I don't understand as then you're paying the income tax and locking it into the fund, there are pretty much no funds that are worth that in the retirement space.

You're going to get a probably better return outside of an RA if income tax is not a factor, and you get to offset against interest on debt for e.g. house, or can directly put in stock market/whatever fund you want as accessible.

*coughs in 27.5%*

 

[derp90]

I think for someone to say it's OK or not, they'd have to be in the know about the future, or just a genius. I am neither. On my side, I have gone almost 100% offshore in my TFSA because I have my normal ZAR account for investing locally. The thought was foreign would have more growth, but in hindsight, local performance has been quite good since the March hard lockdown last year. So I dunno.

I have mostly adopted a "1 ETF does it all" policy and the bulk of my TFSA is in the Coreshares Total World ETF. Then I have a bit of money in Sygnia Global Property (will probably keep this), and Satrix Property (A lemon, which I won't ditch until I break even - don't see me keeping this if it gets to that point)

I more meant is it okay to invest in a few different funds rather than put everything in one?

 

[Pegasus]

I definitely did mention them, I said that if you're still in the lower income brackets, I would not use an RA, and I would not use it over the 25% where the income tax deduction ends. I don't know how you read it, but that seems logical to me, and you seem to be trying to argue that an RA will net you better interest returns and therefore you should go over the max, which I don't understand as then you're paying the income tax and locking it into the fund, there are pretty much no funds that are worth that in the retirement space.

You're going to get a probably better return outside of an RA if income tax is not a factor, and you get to offset against interest on debt for e.g. house, or can directly put in stock market/whatever fund you want as accessible.

I would not use it over the 25% where the income tax deduction ends

In Scope:
That is the point I am talking to. After the 25% (or 27.5%) you still have a tax benefit.
The CGT from trades, the dividends tax and tax on interest you do not pay. Yes, you pay some tax in 40 years time or whatever, but in the meantime that money stays in your portfolio and is compounded over decades.
So had you invested that money in a the same fund in a UT product, you'd pay the tax on it and lose out.
Do you disagree with that?

argue that an RA will net you better interest returns and therefore you should go over the max, which I don't understand as then you're paying the income tax and locking it into the fund

I don't understand what you are saying there about income tax locked into a fund.


Out of Scope:
I'm not arguing about investments like bitcoin, loans etc.
I take it you understand how the tax works on a Share portfolio?
You can actually avoid that by going to Sanlam Wealth, OM Wealth etc and getting them to put a Life wrapper on your investment.

 

[Speedster]

In Scope:
That is the point I am talking to. After the 25% (or 27.5%) you still have a tax benefit.
The CGT from trades, the dividends tax and tax on interest you do not pay. Yes, you pay some tax in 40 years time or whatever, but in the meantime that money stays in your portfolio and is compounded over decades.
So had you invested that money in a the same fund in a UT product, you'd pay the tax on it and lose out.
Do you disagree with that?


I don't understand what you are saying there about income tax locked into a fund.


Out of Scope:
I'm not arguing about investments like bitcoin, loans etc.
I take it you understand how the tax works on a Share portfolio?
You can actually avoid that by going to Sanlam Wealth, OM Wealth etc and getting them to put a Life wrapper on your investment.

Are you sure about the absence of tax within an RA? First I've heard of that