Should I kill my RA?

supersunbird said:
FTFY.

Is all your advice on everything else in life also pre-smartphone? ;)

Unit Trust RAs can be stopped and started and changed at will without any penalties. My decent 10X pension fund can easily be replicated with a 10X RA.
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Mostly yes I guess. The issue I have with RA's are deep and the whole concept has been burned in my mind. While I realize the info is somewhat dated I would still like to see the RA industry reform itself somewhat before I ever like them again. It's all well and good that the new batch are better but what about those of us still stuck in the old style ones? If the laws change it should effect existing stuff too.

Also, never pay long term financial adviser fees on an investment product. Financial advisors should be paid like doctors, a fee for their time, and non of this endless free income crap. The rest of the world has moved on in that direction about time for SA to enforce that too. The on-going fee's are often so high your real rate of return is pathetic even if you are in a great fund.
 
Cius said:
Mostly yes I guess. The issue I have with RA's are deep and the whole concept has been burned in my mind. While I realize the info is somewhat dated I would still like to see the RA industry reform itself somewhat before I ever like them again. It's all well and good that the new batch are better but what about those of us still stuck in the old style ones? If the laws change it should effect existing stuff too.

Also, never pay long term financial adviser fees on an investment product. Financial advisors should be paid like doctors, a fee for their time, and non of this endless free income crap. The rest of the world has moved on in that direction about time for SA to enforce that too. The on-going fee's are often so high your real rate of return is pathetic even if you are in a great fund.
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There are financial advisors around, that charge per hour and receive no kickback from selling products. They're pretty expensive to use though.
 
Cius said:
Mostly yes I guess. The issue I have with RA's are deep and the whole concept has been burned in my mind. While I realize the info is somewhat dated I would still like to see the RA industry reform itself somewhat before I ever like them again. It's all well and good that the new batch are better but what about those of us still stuck in the old style ones? If the laws change it should effect existing stuff too.

Also, never pay long term financial adviser fees on an investment product. Financial advisors should be paid like doctors, a fee for their time, and non of this endless free income crap. The rest of the world has moved on in that direction about time for SA to enforce that too. The on-going fee's are often so high your real rate of return is pathetic even if you are in a great fund.
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The fact that government could make them limit the causal penalties to 30% (or less, depending on date of initiation) on a contract signed by you (that's how the old RAs work, they are contracts with the life insurers like Sanlam, Old Mutual, Liberty etc.) is already pretty impressive, before that you could loose 100% via penalties.
 
Method said:
Sanlam paused mine for about 3 years, but had to pay a massive amount to do so and then I moved it to 10x.
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For interest’s sake, how much was your penalty as a percentage of the total RA amount, and how much of your term was remaining?

I am considering trying to move my Old Mutual RA and wondering how prohibitive the “normal” penalties are when making it paid up
 
NoviceDIYer said:
For interest’s sake, how much was your penalty as a percentage of the total RA amount, and how much of your term was remaining?

I am considering trying to move my Old Mutual RA and wondering how prohibitive the “normal” penalties are when making it paid up
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You can request a quote for what the costs would be, from what I understand,
 
NoviceDIYer said:
For interest’s sake, how much was your penalty as a percentage of the total RA amount, and how much of your term was remaining?

I am considering trying to move my Old Mutual RA and wondering how prohibitive the “normal” penalties are when making it paid up
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supersunbird said:
You can request a quote for what the costs would be, from what I understand,
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I can't remember, but it was substantial. Sanlam is not very fee friendly. I'll never recommend them to anyone.
 
supersunbird said:
You can request a quote for what the costs would be, from what I understand,
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Thanks. Did that and they quoted me:

Fund value: 521k
Transfer out value: 451k

So basically 70k penalty = 13.5%

Not sure if I should do it...
 
NoviceDIYer said:
Thanks. Did that and they quoted me:

Fund value: 521k
Transfer out value: 451k

So basically 70k penalty = 13.5%

Not sure if I should do it...
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Well, one thing you can consider is time to accessing fund. So if it still has 20 years to grow in a cheaper fund, no problem, it will get that and more back via lower fees. 3 years till using the RA, not worth it, in my opinion
 
supersunbird said:
Well, one thing you can consider is time to accessing fund. So if it still has 20 years to grow in a cheaper fund, no problem, it will get that and more back via lower fees. 3 years till using the RA, not worth it, in my opinion
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I’m 42 now. So minimum 13 years, but probably will aim to wait longer than that before accessing it
 
beans100 said:
Ask Old Mutual if you can pause your RA. I know others, like 10X and Sygnia, where you can pause for years. Sanlam didn't want me to pause, so I moved away from them. Now I get better growth and I could pause when I really needed the money.
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They won't let you pause it (as in stop payments) but would let you stop the increase annually.

However it being 10 years old it should now be cost free so should be able to move it to someone like 10X or Sygnia or other reputable investment company without any penalties.
 
I've done a few of these things already mentioned here already, so this is just up my street.
1. absolutely take the knock now and move to a lower cost RA provider. do the numbers will show how many years it will take to recoup. I moved a paid-up RA from Sanlam to 10x, took a 26k knock, but in 3 months, its grown 5k with no further contributions from me. payback in 15 months then, after that about 16 years till its R1.6M@12%... i'm actually going to forget about this till it becomes relevant at 55.
2. Paid up the RA coz its crap. Debt first, then TFSA, then RA. you may be on a much more aggressive trajectory, so I'd say if your savings rate is >40% then math that **** up and educate yourself on your options.
3. Good fin advisors are expensive.... but worth it. again, if you aggressive then definitely see someone.
4. for the man on the street, saving in the bond will be fine for now....but read up there are some nice options out there! gearing etc come to mind, but you gotta have the belly for it!
 
pboy said:
I've done a few of these things already mentioned here already, so this is just up my street.
1. absolutely take the knock now and move to a lower cost RA provider. do the numbers will show how many years it will take to recoup. I moved a paid-up RA from Sanlam to 10x, took a 26k knock, but in 3 months, its grown 5k with no further contributions from me. payback in 15 months then, after that about 16 years till its R1.6M@12%... i'm actually going to forget about this till it becomes relevant at 55.
2. Paid up the RA coz its crap. Debt first, then TFSA, then RA. you may be on a much more aggressive trajectory, so I'd say if your savings rate is >40% then math that **** up and educate yourself on your options.
3. Good fin advisors are expensive.... but worth it. again, if you aggressive then definitely see someone.
4. for the man on the street, saving in the bond will be fine for now....but read up there are some nice options out there! gearing etc come to mind, but you gotta have the belly for it!
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Finding it hard to find the current OM fees - they make it so complicated to get any transparent information! Will keep digging and then so sums
 
FlashSA said:
Why should I not switch to the Access Bond facility for this monthly repayment? I feel my financial advisor will not be straight with me were I to ask him because of commission and it is his livelihood...
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The money in your access bond can be spent so that's the immediate disadvantage along with the loss on the tax break (small as it may be). The amount you are paying into your RA probably won't make much of a difference on your home loan repayment anyway.

Rather switch your RA to 10x with their very low fees provided you don't pay a penalty.

RAs may be 70% exposed to SA stocks and every armchair expert and Magnus Heystek says it is ****. 5 years ago all those experts except for Magnus Heystek said it was great. Complement it with offshore investments and you are sorted.

Taking your RA contributions and pushing it into your homeloan means it is still exposed to the South Africsn economy and specifically the property market. In fact, your RA has about 30% offshore exposure so the "risk" of the JSE some are mentioning is a moot point.
 
A further point on penalty fees and moving RAs:

1. I have a 10x pension fund. Very happy.

2. I moved my Stanlib RA to Allan Gray. No penalty fees (lucky me) and to be honest, I've never had better service from a company. Everything just worked, they kept me informed and I never had to chase up on anybody during the process. Some may have had a different experience but I'd recommend AG to everybody :)
 
Hamster said:
The money in your access bond can be spent so that's the immediate disadvantage along with the loss on the tax break (small as it may be). The amount you are paying into your RA probably won't make much of a difference on your home loan repayment anyway.

Rather switch your RA to 10x with their very low fees provided you don't pay a penalty.

RAs may be 70% exposed to SA stocks and every armchair expert and Magnus Heystek says it is ****. 5 years ago all those experts except for Magnus Heystek said it was great. Complement it with offshore investments and you are sorted.

Taking your RA contributions and pushing it into your homeloan means it is still exposed to the South Africsn economy and specifically the property market. In fact, your RA has about 30% offshore exposure so the "risk" of the JSE some are mentioning is a moot point.
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And many JSE companies earn money elsewhere in Africa and further.
 
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