Retirement Annuity

V

^^vampire^^

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Hi Guys

So I'm possibly starting a new job soonish and need to get my retirement sorted as they don't have any company benefits structured.
I'm looking to put away R7000.00 a month and need to know the best way to structure this?

Should I put a certain amount into an RA and then reap the benefit of money back from SARS? I'm worried I commit too much contribution initially so maybe i must put R3500.00 a month into an RA and then do separate unit trusts every month with the other R3500.00.

Any advice or guidelines would be appreciated.
 
The tax perk is applicable on a maximum of 15% of your salary, so if you are doing this for that reason then make sure that the values match up. Just remember that an RA will not pay out, regardless of the reason, before either the specified retirement age or your death, whichever comes first. For this reason I believe it prudent to not but all your eggs in the RA basket.

If you have other debt and are a disciplined type of person then rather cram all the money you can muster into paying them off. The best investment you can make is in property, so if you have a bond pay that off first and then once done so start buying "rentable" properties that will be your own private retirement investment.
 
Be very careful with RAs. How do you feel about the future stability of this country? It is extremely difficult / practically impossible to recover any funds from an RA until you are 65 or what not.

There are several other good investment options available which don't have this limitation. Whatever you do, don't put all your eggs in one basket. Don't expect your broker to take care of your financial well-being. By the time you are going to need the RA he/she will be long gone...
 
Thanks, I'm also worried about tying up the money or setting a high value on the Ra if I decide to go that path.
The thing that interests me would be the 15% tax free portion. I've done plenty of research on and off for the last few months but still finding it hard to make a choice

Ultimately I'm trying to do something with 20% of my gross salary as that is what is recommended to earn roughly what I would now in retirement.
Maybe RAs aren't the way to go but then what would a better alternative be? Unit Trusts?

Currently I put R500 into a Satrix40 and R500 into FNB Growth fund monthly and do minimal trading on the FNB platform (about R1000 per month).
Although I don't see this money as saving per se as I'm looking to use R7000 as my monthly retirement contribution somehow.
 
abzo said:
Making me rethink my RA :(
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Good! RAs are so last generation. Anybody 'investing' in a vehicle that is linked to the rules of wall street needs to take a good long look at the past few years. If you really want to invest then invest in something that is physical and yours. Buy property or buy kruger rands and bury them somewhere very safe (a safe is not safe enough and neither is a bank vault/safety deposit box).
 
abzo said:
Well from what i read here, it seems like i can't do anything now.
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You can have it marked as 'paid up' and stop paying for it every month. The money you have in there is still yours but you will only have it at your disposal at the specified retirement age. In the meantime it will still make some interest, even if not quite what was promised at inception.

Once the RA is 'paid up' you will then be able to use the monthly deposits for whichever investment vehicle you like.
 
If you read the latest Weekend Argus, in the business section they had a front page article on RA's. They also had a drawing of a building with 2 doors. One was an entry to RA's and the other was a door to Unit Trusts.
The RA door was closed with yellow tape across it and written on the windows were;
Closed due to high charges. Closed due to minimal gains. Closed due to reduced clients.
The UT door was open and showed many people running towards it with bags of money.

RA's are so outdated and give you small change. Diversify with SATRIX UT's. The best performing one is SATRIX INI. It outperforms 90% of Managed Accounts over long term.

Satrix ini 50%
Satrix 40 30%
Satrix Divi 20%
 
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There have been several similar threads about this very subject. RAs are at the bottom of the investment list
 
chrisc4290 said:
There have been several similar threads about this very subject. RAs are at the bottom of the investment list
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Agree. So old school. At some stage you might need money and then if you withdraw then you get penalized. Not so with Satrix. You can expect about 25 to 30% pa gains. RA's about 6 to 10%.

If you are an active investor and have time to do so then you can make 60 to 80% pa like most of them do.
 
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Ok will try to put a stop to my RA.

What about my pension preservation fund?
 
abzo said:
Ok will try to put a stop to my RA.

What about my pension preservation fund?
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I would not make any hasty moves without either research or non-forum advice.

Starting one vs stopping one are very diff decisions.
 
"Experts" out in force I see.

Please point me in the direction of any investment that can earn you a guaranteed 40% (assuming you are at highest tax rate). And that is before considering the return on your portfolio (which is taxed more favourably than other investments too).

Some are saying avoid an RA and get a unit trust. You do know you get unit trust RAs and life company RAs? The latter is getting the bad press but even then they have improved. Penalties only in first 5 years and improved costings. However, if still not convinced go the unit trust RA route.

It is frankly stupid to not take advantage of the tax break. Yes, one can argue the tax is merely delayed but when you are older your tax rate improves, and your earnings probably drop, and you have been earning returns on the full amount for all those years.
 
marco said:
Agree. So old school. At some stage you might need money and then if you withdraw then you get penalized. Not so with Satrix. You can expect about 25 to 30% pa gains. RA's about 6 to 10%.
Click to expand...

What crap! An RA can give you access to a portfolio with the exact same make up as Satrix. Your returns are dependent on your portfolio make up. Yes, they are affected by costs but nowhere near to the extent of creating a 20% difference based purely on the investment vehicle (all other things being equal).

And 30%pa returns with Satrix? Care to link to something showing those returns?

And you can't withdraw funds from an RA until age 55, death or disability.
 
Debate is great. But in a debate both parties usually have some knowledge of the subject. It is apparent that some know very little about this subject but still feel the need to offer advice without mentioning how little they actually know. And worse still, others seem to be lapping up the blatantly inaccurate information offered.

Be careful guys. A person on a forum will suffer no liability or censure if inaccurate advice is given. A professional adviser will. They do have their place.
 
Feel free to fire questions at me if you so desire. Yes, I am also offering advice on a public forum but I'm fairly convinced I know what I am talking about. And I'd be getting nothing out of it so no need to lie :)
 
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