TFSA vs RA vs Satrix - Calculator

[MikyMouse]

no - completely correct.
I have yet to find RA returns that can keep up with equities. with a TFSA you can invest into ETF's, and some of them do perform much better. if that will be constant for the next ten years - who knows.

in actual fact my Allan gray RA balanced only gave only 10% last year

I'm with you - but if they were to give you the same returns then the RA would be the best to max out 1st

 

[Neo_X]

Exactly the reason for creating this calculator. Playing around with it shows me exactly what gain difference I can expect between RA and Equities

 

[supersunbird]

Exactly the reason for creating this calculator. Playing around with it shows me exactly what gain difference I can expect between RA and Equities

Shouldn't the TFSA results in columns 1 and 3 be the same?

 

[Neo_X]

Shouldn't the TFSA results in columns 1 and 3 be the same?

Hmmm right you are. Will dbl check

 

[Neo_X]

Shouldn't the TFSA results in columns 1 and 3 be the same?

ok did a check now - just had to refresh the memories.

TFSA > RA > Equities -> it invests into TFSA, then fills up the RA as much as possible( on this example at 4.5k per month).

year 2, the tax return is pumped directly into the TFSA, thus filling it up a bit quicker, and earning more interest.
this boost in interest is what makes the difference.

 

[supersunbird]

ok did a check now - just had to refresh the memories.

TFSA > RA > Equities -> it invests into TFSA, then fills up the RA as much as possible( on this example at 4.5k per month).

year 2, the tax return is pumped directly into the TFSA, thus filling it up a bit quicker, and earning more interest.
this boost in interest is what makes the difference.

Both column 1 and 3 state Max TFSA first, they should be the same at the end, because you are maxing them to the PA or lifetime limit. If you over contribute, the over contributions themselves will be taxed at 40% no matter what your personal bracket is, so if at max and you put tax return in you will be over contributing if they are already maxed as the column heading states.

 

[Neo_X]

Both column 1 and 3 state Max TFSA first, they should be the same at the end, because you are maxing them to the PA or lifetime limit. If you over contribute, the over contributions themselves will be taxed at 40% no matter what your personal bracket is, so if at max and you put tax return in you will be over contributing if they are already maxed as the column heading states.

yes - those limits are in place
See the below captures :
MAX TFSA then Equities



and

MAX TFSA then RA


in the first scenario, no Retirement anuity is paid, and thus no tax return. TFSA is only finished on month 19, thus leaving value at end of year 2 on 72,715.41

In the second scenario, 9000 from the tax return is pushed directly into the TFSA, thus finishing the TFSA on month 17, thus leaving the value at end of year 2 on 72,107.12

This difference is compounded over the ten years with each additional tax return.

the only part i am wondering, is how often the 30,000 annual limit will be adjusted.

 

[supersunbird]

yes - those limits are in place
See the below captures :
MAX TFSA then Equities

and

MAX TFSA then RA

in the first scenario, no Retirement anuity is paid, and thus no tax return. TFSA is only finished on month 19, thus leaving value at end of year 2 on 72,715.41

In the second scenario, 9000 from the tax return is pushed directly into the TFSA, thus finishing the TFSA on month 17, thus leaving the value at end of year 2 on 72,107.12

This difference is compounded over the ten years with each additional tax return.

the only part i am wondering, is how often the 30,000 annual limit will be adjusted.

Ok, I see what you are doing now.

Realistically I will rather just do a R2500pm debit order to get to the R30 000pa. Less likely to forget or use the money on something else when having to do it manually (that's one reason why I like RAs, they protect you from yourself and others that try to prey on you).

 

[WebNexus]

Sunbird, I always wanted to ask. What do you do for a living? You are always the most active and quite insightful on myBB.

 

[supersunbird]

IT support (this thread explains more http://mybroadband.co.za/vb/showthr...or-useless?p=15274826&viewfull=1#post15274826 )

Thanks, and if you are referring to financial threads specifically. Self taught (observation and reading) like my IT skills lol, but always willing to learn from others. Self taught since I don't want to be like my friends parents and such that I have seen struggle in retirement, and I don't want to rely on others good will (like my kids for financial support, if I ever have any, so I suck up as much info as I can) and very suspicious as to Financial Advisers from the things I have read. I read every piece of SA personal finance stuff I come across and also use my logic.

Not the best with complex Excel formulas, makes my brain hurt a wee whenever I initially look at something like is in this thread, quite envious of Neo_X in that regards and this a decent thread..

 

[WebNexus]

Onsite IT support can be a bit like war: 95% boredom/5% terror

I lol'ed at this.

Ya same with me regarding finance. Studied it in highschool, varisty, post-grade, etc ,etc, just to make sure I knew what was going on in terms of how money works.

Ended up working in the industry as a financial planner, so I have seen the worst and the best of financial planners. I believe there is a need for them, mainly to protect people from themselves as you pointed out above. But honestly, this kind of stuff, atleast the basics should have been taught in highschool.

Quit my financial planning career once I found what I actually enjoyed doing, namely creating websites and working for myself.

I dont think the traditional way of living life is applicable anymore. With some simple knowledge and the ability to learn from the net a person can do what they enjoy doing and earn a living off of it. Like creating investment calculators and selling it to financial planners and the public

 

[Neo_X]

..snip..
. Like creating investment calculators and selling it to financial planners and the public

should have added a copy right notice. sigh - there goes my chance : -p

 

[WebNexus]

should have added a copy right notice. sigh - there goes my chance : -p

lol, I think there is a certain degree of trust in these forums.

Plus you can have the greatest idea in the world and tell everyone about it. However it means nothing if people don't take the time and hard work to make it happen. So don't worry, lol.

A couple tips however if you seriously plan to do so. Its needs to be user friendly and preferable a one pager. When I started I made the most complex retirement forecaster I could think of. The others didnt use it because A. they didnt understand it, B. the clients didnt understand it and C. it looked like the Matrix thru up on to the spreadsheet.

You can try using this if you like as an example. View attachment Finspotza-Education Savings Tool.pdf

 

[Neo_X]

A couple tips however if you seriously plan to do so. Its needs to be user friendly and preferable a one pager. W

Yours look real nice!

nope its fine - i am too lazy to spend the other 90% of the time getting it "user friendly" - as long as it is practical i am quite happy.

 

[KalMaverick]

Just had a quick look, I might be mistaken but your tax looks wrong.

In the Max RA first tab, it looks like you're taxing the portion above R500k at 27% instead of the portion above R700k.

 

[Neo_X]

Just had a quick look, I might be mistaken but your tax looks wrong.

In the Max RA first tab, it looks like you're taxing the portion above R500k at 27% instead of the portion above R700k.

Formulae is :

=IF(E4<500000,0,IF(E4<700000,18,IF(E4<1050000,27,36)))

eg
below 500,000 : 0%
else below 700,000 : 18%
else below 1,050,000 : 27%
everything above : 36%

think it matches the current sars doc :

 

[KalMaverick]

Cell H4 you've got R500 000.00

on R713 162.94 you've got R93 554 tax paid.

In Cell I4, you're taxing the portion above R500k @ 27%.

 

[Neo_X]

Cell H4 you've got R500 000.00

on R713 162.94 you've got R93 554 tax paid.

In Cell I4, you're taxing the portion above R500k @ 27%.

*adds coffee*
*adds some more coffee*
*ahhhhh*

ok more or less - column H was the culprit (was supposed to show 700,000) - not sure where i got the constant 500,000(possibly a mix from an old tax document and the current one)

thank you! - fixed and op updated! hope its correct now

 

[Neo_X]

version 1.7 has been added to OP. Tax returns is now much more accurate (i compared with calculators on taxtim), and fixed a few of the tax tables/calculations.

 

[MikyMouse]

version 1.7 has been added to OP. Tax returns is now much more accurate (i compared with calculators on taxtim), and fixed a few of the tax tables/calculations.

still same link as before?