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Question of the Day: Have you ever been to an airshow?
Retirement Annuity
- Thread starter Comet
- Start date
Billy
Expert Member
Allan Gray, but go direct not through an "Investment Advisor". More of you money will actually be invested.
If I had realised this years ago I would be thousands better off today.
If I had realised this years ago I would be thousands better off today.
Freshy-ZN
Executive Member
If you are going to contribute R1000 or more a month you might like Sanlam's Cumulus RA. You get an additional 2% allocation on every contribution.
Napalm2880
Expert Member
I've been wondering if its a good idea to link annual increases on an RA to CPI? Anyone have any comments on this?
Be very careful with an RA. I have one and its performance has been shockingly crap even though its suppose to be specifically suited for times of market turmoil. For the first time in pretty much ever it has just started to show a nett growth. And with that I mean its current value is a few rand more than what I put in over the last five years. It is nowhere near to CPI, or to what I could have earned if I had put it on the stock market like most of my other investments.
It is also practically impossible to ever get out of an RA early. You can't simply cash it out or stop it. The only way you can get the cash out early is if you emigrate and even then you take a massive knock. Are you sure you still want to get an RA?
I just spoke with my broker earlier today and asked what the minimum amount was that I could reduce mine too. His reply was R500pm. Still a lot of money for something that performs so shockingly bad.
Commencement date: 01/12/2008
Amount put in: R23,629.84
Fund value: R24,144.01
2.1% total growth in almost 4 years.
Invested in Allan Gray Balanced Fund, Investec Property Equity Fund, Investec Value Fund and Nedgroup Investments Rainmaker Fund.
Don't believe the charts they show you for a second. They will all show 20-30% growth per annum etc, but the fees devour those earnings and if you are lucky you might just end up getting a few rand more out than you put in.
I would rather advise that you pay off any loans, put it in a money market account or open a trading account and buy Satrix type shares. At least there you can decide when you've had enough and regain some of your funds.
It is also practically impossible to ever get out of an RA early. You can't simply cash it out or stop it. The only way you can get the cash out early is if you emigrate and even then you take a massive knock. Are you sure you still want to get an RA?
I just spoke with my broker earlier today and asked what the minimum amount was that I could reduce mine too. His reply was R500pm. Still a lot of money for something that performs so shockingly bad.
Commencement date: 01/12/2008
Amount put in: R23,629.84
Fund value: R24,144.01
2.1% total growth in almost 4 years.
Invested in Allan Gray Balanced Fund, Investec Property Equity Fund, Investec Value Fund and Nedgroup Investments Rainmaker Fund.
Don't believe the charts they show you for a second. They will all show 20-30% growth per annum etc, but the fees devour those earnings and if you are lucky you might just end up getting a few rand more out than you put in.
I would rather advise that you pay off any loans, put it in a money market account or open a trading account and buy Satrix type shares. At least there you can decide when you've had enough and regain some of your funds.
Don't shares attract tax? RA's don't AFAIK.
supersunbird
Honorary Master
http://www.allangray.co.za/individualInvestors.aspx#retirement
Please make double sure someone is not lying to you...
And anyway, you are in conservative funds from what I can see, no wonder your growth is poor. And why you paying a broker when you can go direct and save on fees? Cut out the middleman perhaps? Did he analyse your needs and is a certified financial planner/adviser? If you want strong growth you need to be in riskier funds.
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Riskier are funds like Coronation Top 20 Fund or Coronation Global Emerging Markets Flexible Fund , which you can access via your AG RA. They just need to comply with Regulation 28 in the percentages you put in.
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Yes shares attract tax (Capital gains tax) just like almost anything you do that earns money post tax. However you only need to pay in once you exceed a quite significant amount per annum (in the order of 60k). Frankly I don't mind paying CGT too much when I've made more than 60k in addition to my normal salary... It's something from nothing.
My conservative picks performed so poorly, how do you think the more riskier ones would have done?
I am extremely happy with the performance of my share transactions and I am extremely disappointed with the performance of my conservative RA.
I have already been burnt by RA's once and I haven't even belonged to them for four years. One should be extremely careful of something where it's practically impossible to get your money out of.
krono9
Senior Member
I put my money into Allan Gray Balanced fund unit trust.. get minimum 10% return per year..and its a safe fund. Gains only attract cgt. Plus you get dividends etc..
RA, worse returns... Once it pays out you only get 1 third paid out lumpsum..balance paid out in annuity.. all of this pay out fully taxed as income.. you NEVER seem to get your money's worth you put in.. just in a nutshell.. bit more complex than just that..just the idea..
RA, worse returns... Once it pays out you only get 1 third paid out lumpsum..balance paid out in annuity.. all of this pay out fully taxed as income.. you NEVER seem to get your money's worth you put in.. just in a nutshell.. bit more complex than just that..just the idea..
Freshy-ZN
Executive Member
Why is it people take out RAs and then moan that they get one third as a lump sum and the rest buys you an annuity to live off of? Or moan that you cant access it until at least 55 or that you cant touch it now etc etc etc. Did you miss the part where RA stands for RETIREMENT Annuity?
And Wyzak, its been four years now and you are wanting to bail from a LONG TERM INVESTMENT? Have you done annual portfolio reviews and made sure that your funds and their stated objectives match yours? Have you made use of the tax savings and taken that into account when calling your returns bad? Sometimes its helpful to go back and try think what your reasons were for starting an RA in the first place. If you are in your 20s or 30s you probably shouldn't be in a conservative portfolio as that will only ever keep up with inflation at best. And if you look at your returns thats exactly what you have achieved! Now ask yourself- what is the problem, the portfolio or your unreasonable expectations of it?
And Wyzak, its been four years now and you are wanting to bail from a LONG TERM INVESTMENT? Have you done annual portfolio reviews and made sure that your funds and their stated objectives match yours? Have you made use of the tax savings and taken that into account when calling your returns bad? Sometimes its helpful to go back and try think what your reasons were for starting an RA in the first place. If you are in your 20s or 30s you probably shouldn't be in a conservative portfolio as that will only ever keep up with inflation at best. And if you look at your returns thats exactly what you have achieved! Now ask yourself- what is the problem, the portfolio or your unreasonable expectations of it?
So your advice is that I should just keep on pumping money into a sinking ship with the hope that someday it's going to come right? My parents did just that and they were burnt, most of the people from the previous generation were burnt.
My advise is that people should keep a hawk eye on every single financial transaction that they have, and decide for themselves. Brokers have no bloody idea what they are talking about.
supersunbird
Honorary Master
To answer your first question: Better!
Thats exactly why conservative is called conservative. The risks are small but so then is the potensial for growth or loss. Your own share transactions are "risky" just because they are equities, so you cannot compare their performance to your conservative RA, which probably has lots of bond and money market assets and little equity or property.
supersunbird
Honorary Master
You are probably revering to old style life RAs and not unit trust RAs in that experiencial regard, the latter are MUCH better and flexible.
And your advice is correct.
I have been reading up on RA, I will be 26 in 5months,...I'm "obsessed" with savings worried about retirement...I haven't seen a 'positive' story when it comes to RA, makes me wonder why ppl still take RA....shares are the way to go, I think...
I hv one of those FNB online share investment account..bought MTN shares for R5000 in 2010, I wish I had bought more....shares were almost _R120 Nd now they are R145
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I agree, I have also seen excellent growth on my share portfolio. Shares or Satrix is the way to go.
I chose a conservative RA because I have a more risky share strategy that I'm following. But 2.1% per 4 years is not conservative, that is a money sink. If I had put the money into the bank I would have had more over 4 years.
supersunbird
Honorary Master
But who chose those multiple conservatve funds in that RA? Blame that person. Not the RA. Or put it into the bank if you think if will be better (but highly unlikely to beat inflation just as the that RA)
Your age and planned retirement date also impacts an what you should choose to invest in with your RA.