Savings

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Friedpet

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Hey. What's the best method to save money if you're not the main bread-winner in the household? My thoughts is rather to have investments at banks.

Also, if I have a RA and I die before it's maturation date, will the RA pay out to my wife or will it still only pay out on its maturation date?
 
I recommend you use a unit trust. You can have a number of unit trusts in whats called a flexible investment for as little as R500. This type of investment vehicle allow you to access your investment at any time. A financial advisor can arrange all this for you.

When you die the full proceeds (benefit) of an RA may be taken as a lump sum or as an annuity (monthly amount), or a combination of these, by your beneficiary/ies. Coupled with this, the restriction on lump-sum benefits on the death of a fund member has been removed (normally 1/3rd max) from the Income Tax Act. The beneficiary of the RA is now allowed to take the entire benefit in the form of a lump sum.

Hope this helps.
 
Jozsef Borbely said:
I recommend you use a unit trust. You can have a number of unit trusts in whats called a flexible investment for as little as R500. This type of investment vehicle allow you to access your investment at any time. A financial advisor can arrange all this for you.

When you die the full proceeds (benefit) of an RA may be taken as a lump sum or as an annuity (monthly amount), or a combination of these, by your beneficiary/ies. Coupled with this, the restriction on lump-sum benefits on the death of a fund member has been removed (normally 1/3rd max) from the Income Tax Act. The beneficiary of the RA is now allowed to take the entire benefit in the form of a lump sum.

Hope this helps.
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Or a minimum R300 for a ETF product.

And yes OP, the RA pays out to your beneficiaries.
 
What does being the bread-winner or not have to do with anything?

You should be saving regardless of your "role".
 
akescpt said:
Is it also accessible anytime?
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Yes it is. But do yourself a favor. Compare the return of the Satrix40 against a equity fund, like coronation top 20, foord equity fund or even allan gray equity.

The Satrix ETFs only track there respective index's. After costs they normally under perform those benchmarks.

Equity funds try and out perform them. Sometimes they fail but that's a risk you take for greater return.

Speak to a financial adviser to find out more.
 
akescpt said:
Is it also accessible anytime?
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Not instantly but can accessible in a week.

Jozsef Borbely said:
Yes it is. But do yourself a favor. Compare the return of the Satrix40 against a equity fund, like coronation top 20, foord equity fund or even allan gray equity.

The Satrix ETFs only track there respective index's. After costs they normally under perform those benchmarks.

Equity funds try and out perform them. Sometimes they fail but that's a risk you take for greater return.

Speak to a financial adviser to find out more.
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I personally like a mix of 50% unit trusts and 50% ETF/index tracking.
 
Lovely said:
I love Satrix. The Indi 40 is currently doing better than the Satrix 40. Minimum is R300 pm or a lump sum. Go to www.satrix.co.za
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I think you mean Satrix Indi, and it's actually 25 shares, not 40.
Also, it's outperformed the Top40 over the last 10 years by a long way.
 
SauRoNZA said:
What does being the bread-winner or not have to do with anything?

You should be saving regardless of your "role".
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True, But your role will influence where you save. The bread-winner will rather opt for RA's while the other person will rather go for savings accounts/investments, or not?
I say this because the other person might have a very low income.

In me and my wife's case, where we both earn about the same, we both have LI and RA.
If my wife was earning only a small salary, I'd have her rather make investments at a bank.

What is Satrix's minimum entry fee?
Allan Gray is R20 000 last time I checked.
 
Friedpet said:
Hey. What's the best method to save money if you're not the main bread-winner in the household? My thoughts is rather to have investments at banks.

Also, if I have a RA and I die before it's maturation date, will the RA pay out to my wife or will it still only pay out on its maturation date?
Click to expand...

Why not start with a balanced fund from a reputable asset management company (Allan Gray, Coronation, Investec etc...), and forego the fees a financial advisor will take, most have a minimum of R500pm or R5000 lumpsum.
Once you understand and feel comfortable with how returns and dividends work, you can look at some pure equity funds or ETF's.
 
Hendrix said:
Why not start with a balanced fund from a reputable asset management company (Allan Gray, Coronation, Investec etc...), and forego the fees a financial advisor will take, most have a minimum of R500pm or R5000 lumpsum.
Once you understand and feel comfortable with how returns and dividends work, you can look at some pure equity funds or ETF's.
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To be honest, I'm quite scared to start one of those. I have absolutely no idea what's the difference between all that products and I never seem to have the time to do a bit of reading on it:erm:
 
Friedpet said:
True, But your role will influence where you save. The bread-winner will rather opt for RA's while the other person will rather go for savings accounts/investments, or not?
I say this because the other person might have a very low income.

In me and my wife's case, where we both earn about the same, we both have LI and RA.
If my wife was earning only a small salary, I'd have her rather make investments at a bank.

What is Satrix's minimum entry fee?
Allan Gray is R20 000 last time I checked.
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Do you wanna do a lump sum or monthly debit orders?
Yes, Allan gray has a minimum of 20k for an initial investment. BUT, if you have a monthly debit order with them, you may make additional investments of R500 or more at any time you want, it doesn't have to be 20k :) (I use them and do this all the time).
They are very professional and the service is top notch, just be aware that they will not offer you advice, you will need to know what you want before buying.

Satrix has a minimum of R300pm per ETF, or R1000 lumpsum.
 
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Hendrix said:
Do you wanna do a lump sum or monthly debit orders?
Yes, Allan gray has a minimum of 20k for an initial investment. BUT, if you have a monthly debit order with them, you may make additional investments of R500 or more at any time you want, it doesn't have to be 20k :) (I use them and do this all the time).
They are very professional and the service is top notch, just be aware that they will not offer you advice, you will need to know what you want before buying.
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Well there's my problem right there! I'll have to read up a bit before I try them out.

Well, initially this thread wasn't meant for me, but seeing as I can learn here ;)

Monthly debit orders should work for now (can't see myself having 20k cash anytime soon).
 
Friedpet said:
To be honest, I'm quite scared to start one of those. I have absolutely no idea what's the difference between all that products and I never seem to have the time to do a bit of reading on it:erm:
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A balanced fund will invest in most asset classes (shares, bonds, cash and property), it's therefore a good "starter" fund.
I suggest you make some time to learn, it's too easy saying you don't have time, it's your money after all, put in the effort!
 
Hendrix said:
A balanced fund will invest in most asset classes (shares, bonds, cash and property), it's therefore a good "starter" fund.
I suggest you make some time to learn, it's too easy saying you don't have time, it's your money after all, put in the effort!
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Lol, will do. Let me first get my degree though!;)

I will check out the above mentioned companies' balanced funds. Thanks:)
 
Hendrix said:
Do you wanna do a lump sum or monthly debit orders?
Yes, Allan gray has a minimum of 20k for an initial investment. BUT, if you have a monthly debit order with them, you may make additional investments of R500 or more at any time you want, it doesn't have to be 20k :) (I use them and do this all the time).
They are very professional and the service is top notch, just be aware that they will not offer you advice, you will need to know what you want before buying.

Satrix has a minimum of R300pm per ETF, or R1000 lumpsum.
Click to expand...

I am a financial planner and would like to add some context in terms of the fee's that I would charge in this case. I have clients that just want to start saving and very often start with the R500 debit order scenario. The fees charged normally is 1.5% upfront and 0.5% ongoing. On a annual basis this sums up to R7.50 on each debit order and about R30 after 12 months of contributions. To be honest I do not feel that this is a large fee to pay considering the bespoke advice given.

Keep in mind that everyone is different. They have different financial goals, different circumstances and are at different stages in there lifes. This is just a small aspect of what we deal with but the bottom line is this. Save for retirement!

The one thing I do for my clients in terms of adding value is a retirement forecaster. Which basically calculates to live off of RX0,000 each month at retirement, you have to invest X on a monthly basis, invested in Y portfolio.

I created a nice YouTube video describing the basics of unit trusts. Link.

Hope this clarifies some issues in terms of the fees financial planners charge. Well at least this financial planner. :)
 
Please explain the "upfront" charge, I see this a lot but don't understand it?
Let's say I bought unit trusts through you for R1000pm, what would the upfront charge be?
 
Ill run you through a quick example, assume no market growth.

1.5% upfront fee, 0.5% ongoing. + VAT

So the upfront fee is charged on new cash flows into the investment only once. The ongoing fee is charge on the total value of the portfolio. It is a annual fee, but charged on a monthly basis, so its 0.5% divided by 12, 0.042%.

Month 1: R500 Contribution, Upfront Fee = R7.5, Total Value R 492.50, Upfront Fee = R0.20
Month 2: R500 Contribution, Upfront Fee = R7.5, Total Value R 985.00, Upfront Fee = R0.41
Month 3: R500 Contribution, Upfront Fee = R7.5, Total Value R 1,477.50 , Upfront Fee = R0.61

We have to add VAT on to.
 
Ohhhh, now I understand.
So CFP's get paid twice, once for any money going in and again on the total value of the portfolio, which will increase as the investment increases.
I shall keep the rest of my thoughts to myself...
 
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