Review on investment strategy

[alecx5]

I have been reading a lot of the threads on this forum to try to improve my own financial future. The recommended strategy seems to be to max out RA, then TFSA and then concentrate on other investments (unit trusts, etc).

My current RA portfolio is low-medium risk. It is with Liberty and was done by my then broker.
I have been looking at changing to funds (section 28) that offer better returns.
Coronation Balanced Plus and Allan Gray Balanced funds seem good, but these will increase the management fees.
Can/Should I consider ETF's for my portfolio?
Should I manage the RA myself (this new broker is a bit slow)?

I'm confused with the TFSA terminology used. I know that there is a pure savings account (in which you get fixed returns) and an investment account (TFIA - which you can manage).
At the moment I have a Satrix 40 Equity Tax Free Fund, which I think is useless. I was looking at the TFSA offered by banks and weighing up the interest rates vs fees.
But should I rather be looking at TFIA instead?

Lastly, I have a unit trust and would like to know if I should put any extra funds into that or concentrate on ETFs? I've read somewhere that in a bear, I should invest in ETFs.

 

[nivo]

ff

 

[Chevron]

Some reading:

https://www.moneyweb.co.za/investing/analysis-passive-balanced-funds/

https://www.moneyweb.co.za/mymoney/moneyweb-tax/not-all-tax-free-savings-accounts-are-created-equal/

 

[bchip]

Nobody here can answer your questions because no-one here knows your financial situation.

You are also asking us to predict the future on some products.

The best we can do is to say pay off your debt first as its an instant guaranteed win,
make sure youve got some emergency fund savings and after that
go and see a reliable professional on where to invest your money.

Coronation and Allan gray have been given good reviews by others.

 

[supersunbird]

I have been reading a lot of the threads on this forum to try to improve my own financial future. The recommended strategy seems to be to max out RA, then TFSA and then concentrate on other investments (unit trusts, etc).

My current RA portfolio is low-medium risk. It is with Liberty and was done by my then broker.
I have been looking at changing to funds (section 28) that offer better returns.
Coronation Balanced Plus and Allan Gray Balanced funds seem good, but these will increase the management fees.
Can/Should I consider ETF's for my portfolio?
Should I manage the RA myself (this new broker is a bit slow)?

I'm confused with the TFSA terminology used. I know that there is a pure savings account (in which you get fixed returns) and an investment account (TFIA - which you can manage).
At the moment I have a Satrix 40 Equity Tax Free Fund, which I think is useless. I was looking at the TFSA offered by banks and weighing up the interest rates vs fees.
But should I rather be looking at TFIA instead?

Lastly, I have a unit trust and would like to know if I should put any extra funds into that or concentrate on ETFs? I've read somewhere that in a bear, I should invest in ETFs.

Well, I'd say at least 20% of income must go into ones various retirement funds, preferably more, up to the 27.5%.

How old are you? (reason for low to midrisk RA portfolio possibly)
I cant think that a Libery product will be cheaper.
Hard to have ETFs in a RA (ETFSA has a product made up of ETFs).
Easy to manage yourself and save the 0.5% (or more) advisor fee.

There is little in a TFSA bank account unless one has over R400 000 (due to current R23 800 interest tax exemption). I personally am eyeing CoreShares Top50 and CoreShares S7P 500 ETFs (50% into each).

After putting R2750pm or R33000pa into the TFSA you can look at putting into the UT, other UTs and/or ETFs.

 

[alecx5]

Well, I'd say at least 20% of income must go into ones various retirement funds, preferably more, up to the 27.5%.

How old are you? (reason for low to midrisk RA portfolio possibly)
I cant think that a Libery product will be cheaper.
Hard to have ETFs in a RA (ETFSA has a product made up of ETFs).
Easy to manage yourself and save the 0.5% (or more) advisor fee.

There is little in a TFSA bank account unless one has over R400 000 (due to current R23 800 interest tax exemption). I personally am eyeing CoreShares Top50 and CoreShares S7P 500 ETFs (50% into each).

After putting R2750pm or R33000pa into the TFSA you can look at putting into the UT, other UTs and/or ETFs.

I am 31.
I have had my RA for almost 8 years now. I want to change the funds to something a bit more aggressive whilst also keeping an eye on the management fees.
I should add more into my RA, although my advisor told me it is better to start a UT (since the money will already be taxed and you can get full access to it unlike an RA).

When you mention TFSA, do you mean a fund with Satrix or Coronation or through EE? (Sorry, the terminology confuses me. I always think of TFSA as fixed saving in a bank, but TFIA as investment you can manage.)
My current UTs are with Coronation (Top20). I have been following the advice on this forum and looking at UTs/EFTs.

 

[alecx5]

Nobody here can answer your questions because no-one here knows your financial situation.

You are also asking us to predict the future on some products.

The best we can do is to say pay off your debt first as its an instant guaranteed win,
make sure youve got some emergency fund savings and after that
go and see a reliable professional on where to invest your money.

Coronation and Allan gray have been given good reviews by others.

I have no more debts for now (just paid off the car and still living at home to support the folks).
So the little extra money I get, now just sits in the bank. I'd rather put it somewhere where the returns can serve me well in the future.
I do have some saved funds in case medical emergencies.
Finding a reliable financial advisor is something I should prioritise.

 

[supersunbird]

I am 31.
I have had my RA for almost 8 years now. I want to change the funds to something a bit more aggressive whilst also keeping an eye on the management fees.
I should add more into my RA, although my advisor told me it is better to start a UT (since the money will already be taxed and you can get full access to it unlike an RA).

When you mention TFSA, do you mean a fund with Satrix or Coronation or through EE? (Sorry, the terminology confuses me. I always think of TFSA as fixed saving in a bank, but TFIA as investment you can manage.)
My current UTs are with Coronation (Top20). I have been following the advice on this forum and looking at UTs/EFTs.

31 is young, so more aggressive is better yes, given the long timeframe. An RA gives you an immediate tax benefit that is hard to beat, which a UT won't. An index fund RA would be even cheaper in cost (Sygnia and 10X are providers of those, fees under 1%). Either of those 2 or any of the managed providers (Coronation and such) make it easy to do your own RA.

In SA TFSA refers to everything in the TFSA wrapper (tax free savings accounts and investment accounts), not like in UK where they use the I in the name for Investment. I'd use ETFs with EE into the 2 ETFs as mentioned, for my TFSA, I am first trying to get to 27.5% into provident fund and RA, nearly there at 25%.

 

[Magandroid]

I'm confused with the TFSA terminology used. I know that there is a pure savings account (in which you get fixed returns) and an investment account (TFIA - which you can manage).
At the moment I have a Satrix 40 Equity Tax Free Fund, which I think is useless. I was looking at the TFSA offered by banks and weighing up the interest rates vs fees.
But should I rather be looking at TFIA instead?

Lastly, I have a unit trust and would like to know if I should put any extra funds into that or concentrate on ETFs? I've read somewhere that in a bear, I should invest in ETFs.

Hi alecx5

I can by no means give you advice on investing but I can advise that you do a bit of research. Up until a few weeks ago, all terminology such as TFSA, ETFs, etc just flew over my head. Then this thread was started https://mybroadband.co.za/vb/showthread.php/874696-Newbie-needs-help-Shares?highlight=newbie+shares and thanks to people like Thor and Hamster and their helpful advice, I have managed to open my TFSA on Easyequities and purchased my first shares.
I am also currently listening and watching some videos by Simon Brown of Justonelap.com and his advise on TFSAs and purchasing shares. Also read the forum on platinumwealth.co.za.
I even got a few of my colleagues and friends interested now, so much so, that some have opened their own EE TFSA accounts as well.

 

[alecx5]

Thank you to Chevron, bchip, supersunbird and Magandroid. I really appreciate your feedback.