Wealth and provision help

[SauRoNZA]

27.5% of total taxable income is tax deductible to a mamimum of R350k pa. Also if proof of the annuity payments is provided to the employer, he can arrange for the tax adjustment to happen on a monthly basis

27.5% of pensionable income. Thus the 90% as a loose value.

And yes one could have the tax back every month if they wanted, sure. I just prefer to have it as an annual surprise.

 

[SauRoNZA]

RA funds offer average returns at best later on and aren't even guaranteed to give you what you invested back at that stage, invest elsewhere and save as well. Don't think RA will be this magic fund waiting for you once you ready to retire and solve all your finances.The only people who make their money off RA are the entities offering it.

Couldn’t disagree more.

The RA funds generally provide the consistency one wants.

Sure they don’t peak as high, but they also don’t hit rock bottom frequently either.

Over a longer term view their returns are generally great, outlier funds doing terribly excluded.

Yes there are higher risk options outside of Reg 28 available, but for that very reason they are super volatile and not the place I’d want to put probably my biggest asset.

 

[jman]

Just bear in mind, before tying that up, that you should always have several months' worth of expenses set aside for emergencies, eg major car repairs, medical expenses, and the biggie - retrenchment.

Oh yes, this is NB

 

[diapason]

27.5% of pensionable income.

No. It was changed to 27.5% of taxable income a couple of years ago. The distinction between retirement funding income and non-retirement funding income no longer applies for tax deductability.

 

[Steamy Tom]

Start as soon as you can and stick to it.

Make the money disappear on a debit order so you forget it exists.

27.5% of 90% of your gross salary is tax deductible so that means you get a massive chunk back every year come tax time.

If you are that disciplined take half of that tax return money as a bonus and stick the other half into a tax free investment account of some sort.

Drop me a PM with your full name, cell number and email and I’ll drop you a 10x referral. Will score us both a R250 takealot vouched but more importantly you’ll get six months without fees which will be great as you can start with your lump sum.

Their fees are very transparent unlike everyone else.

The sooner you start, the better.

I got 10x to do a time comparison vs my Allan gray and the Allan gray was actually slightly higher over the time period. I think their fees thing is really mainly a marketing gimmick. Have you done any actual comparisons?

 

[backstreetboy]

I got 10x to do a time comparison vs my Allan gray and the Allan gray was actually slightly higher over the time period. I think their fees thing is really mainly a marketing gimmick. Have you done any actual comparisons?

Sounds like a salesperson getting a kickback. Love his super transparent line lol. https://www.10x.co.za/assets/downloads/Retirement Fund Investment Report - May 2019.pdf

Performance is before 10X's fee but after all other expenses. All returns greater than 12 months are annualised.

Yeah super transparent lol. I'll stick with Sygnia thanks.

 

[SauRoNZA]

I got 10x to do a time comparison vs my Allan gray and the Allan gray was actually slightly higher over the time period. I think their fees thing is really mainly a marketing gimmick. Have you done any actual comparisons?

They are in very similar ballparks yes.

As you say slightly higher, which doesn’t necessarily translate over time.

I seem to recall AG costs are also dynamic and change with performance or different scales, but might be thinking of someone else.

But I take a review every five years or so and decide if it’s worth moving around or not.

I have a work pension fund that is invested in others. 10x is only my privately managed RA.

It speaks worlds of 10x to do a time comparison for you and to show themselves up as the lower performing option. That is almost good enough a reason to invest with them instead.

What time period out of interest?

Compared to OM the switch to 10x was crystal clear.

I do also put some value into a company beyond just the numbers. How quick they are to respond, how well they answer my questions. How they treat me as a customer etc. Sure when it comes to money a little less so, but when we are talking about very minor point percentages in comparison then that kind of stuff sways me.

 

[SauRoNZA]

Sounds like a salesperson getting a kickback. Love his super transparent line lol. https://www.10x.co.za/assets/downloads/Retirement Fund Investment Report - May 2019.pdf
Yeah super transparent lol. I'll stick with Sygnia thanks.

You’ve quoted it right here quite easily, so it’s quite transparent.

Their costs are clearly stated, so I’m not sure how you can say it’s not transparent? It’s also perfectly flat and consistent.

Try getting a fee structure out of Old Mutual. Between management fees and performance fees and bullshit fees it’s impossible.

Even when you ask very directly nobody can give you a straight answer.

To show performance before fees also makes perfect sense.

 

[SauRoNZA]

No. It was changed to 27.5% of taxable income a couple of years ago. The distinction between retirement funding income and non-retirement funding income no longer applies for tax deductability.

Interesting.

And this applies across the board with RA, Pension, Preservation etc?

Doesn’t taxable and pensionable come to much the same though? Taxable after all isn’t gross income.

 

[Düber]

Even when you ask very directly nobody can give you a straight answer.

So true, many years back I asked a fairly successful businessman why he doesn't read his financial things from his accountant, his answer was that they just complicate matters, he knew the state of his business from a single simple figure, his bank balance.

 

[SauRoNZA]

So true, many years back I asked a fairly successful businessman why he doesn't read his financial things from his accountant, his answer was that they just complicate matters, he knew the state of his business from a single simple figure, his bank balance.

Exactly. When I ask you very directly what is going in , what is going out and what is being chopped off with fees based on my own accounting stating that almost 20% is disappearing every month and you can’t give me a straight answer without camouflage then I know bullshittery is afoot.

And the lovely charts and performance they show you is never your own account, but that of the fund as a whole and therefore doesn’t show the massive loss to costs for a middle man you don’t even need.

 

[Steamy Tom]

They are in very similar ballparks yes.

As you say slightly higher, which doesn’t necessarily translate over time.

I seem to recall AG costs are also dynamic and change with performance or different scales, but might be thinking of someone else.

But I take a review every five years or so and decide if it’s worth moving around or not.

I have a work pension fund that is invested in others. 10x is only my privately managed RA.

It speaks worlds of 10x to do a time comparison for you and to show themselves up as the lower performing option. That is almost good enough a reason to invest with them instead.

What time period out of interest?

Compared to OM the switch to 10x was crystal clear.

I do also put some value into a company beyond just the numbers. How quick they are to respond, how well they answer my questions. How they treat me as a customer etc. Sure when it comes to money a little less so, but when we are talking about very minor point percentages in comparison then that kind of stuff sways me.

It was only a 3 year period, but the point was with their claims the fees should have made them tops with the same investment balance

 

[diapason]

Interesting.

And this applies across the board with RA, Pension, Preservation etc?

Doesn’t taxable and pensionable come to much the same though? Taxable after all isn’t gross income.

Applies to all methods of retirement funding.

Taxable and pensionable can be very different. For instance on CTC many employers give you a choice as to what percentage of CTC you wish to base your provident deductions on - typically anywhere from 50% to 100%. One could also have other taxable income which is not connected to your main employment eg. a side gig, interest income, rental income, royalties, etc. All those can now be used for the 27.5% calculation.

 

[SauRoNZA]

It was only a 3 year period, but the point was with their claims the fees should have made them tops with the same investment balance

Not really.

The markets are in constant fluctuations and one 3 year is not like another 3 year etc.

Fees alone cannot automatically win the markets.

But terrible fees on top of terrible or just mediocre performance is a really bad deal.

 

[SauRoNZA]

Applies to all methods of retirement funding.

Taxable and pensionable can be very different. For instance on CTC many employers give you a choice as to what percentage of CTC you wish to base your provident deductions on - typically anywhere from 50% to 100%. One could also have other taxable income which is not connected to your main employment eg. a side gig, interest income, rental income, royalties, etc. All those can now be used for the 27.5% calculation.

Weird I’ve never seen a company let you choose what proportion of CTC you want to base it on, but rather always the exact percentage of CTC you want to allocate in 2.5% increments.

But yeah I always assumed it totalled all your various income sources together, but only applies to income which had other non-taxable portions subtracted and thus the “pensionable” nomenclature.

 

[Daisy Cloudskitter]

Try getting a fee structure out of Old Mutual. Between management fees and performance fees and bullshit fees it’s impossible.
Even when you ask very directly nobody can give you a straight answer.

^^ Agree 100% - R/A decisions can be ultra stressful for people like me who may have only basic accounting skills - or none at all.

Seems the fee structures have become so complicated that 'advisors' these days are incapable of giving a direct answer.

Bullshittery ( great word that ) is so easily camouflaged; makes it even more difficult for people who don't really know the right questions to ask.

Thanks for all the info, very interesting thread.

 

[supersunbird]

RA funds offer average returns at best later on and aren't even guaranteed to give you what you invested back at that stage, invest elsewhere and save as well. Don't think RA will be this magic fund waiting for you once you ready to retire and solve all your finances. The only people who make their money off RA are the entities offering it.

Of course, they are not charities. Say I have a Coronation RA, then I pay just as much as what the Coronation Unit Trusts would have cost me anyway, no more.

 

[supersunbird]

For this reason, there is lot to be said for having more than one RA. At the time of retirement, you may not need to access the full amount, but may prefer to have a "spare" annuity which you can leave to grow until a much later age, even if at that stage you are no longer contributing to it.

Pointless unless you love paying more fees etc. They call it a living annuity anyway.

Why do you want to be forced to take out at least 2.5% of your capital, and pay income tax on that, if you don't want to yet?

If you have say 3 or 4 RAs, you can let some lie there (and the compounding will be in full effect) and grow their capital amount as you just access what you need, and then later access those others as you need or want.

 

[supersunbird]

Hi All,

Have always gotten only the best advise here. From career growth to relationship help.

So I am 29, and I am not making provision or have any annuities in place.
For previous companies that I worked for, we had pension funds but I pulled them out after resigning.

The company I work for has no benefits or pension provision.

I am looking at getting an annuity or some provident fund from Allen Grey or something. But super ignorant and have this irrational fear that you will get screwed over with these things when you don't know how things work.

The other problem is I am getting older and for some reason feel that I am too late to have enough to last me when I'm old.

Any help on where to start and what to look at would be awesome.

I only got gainfully employed at age 29. My recommendation would be to save in an RA 25% of your pre-tax income (obviously if with an employer that has pension fund, you adjust that %). Maybe use R20 000 of that R100 000 as an initial lump sum. Keep the rest as emergency savings and also grow it a bit.

The one benefit of an RA is that you cannot take the money out (when changing jobs or someone comes a begging).

 

[Steamy Tom]

Not really.

The markets are in constant fluctuations and one 3 year is not like another 3 year etc.

Fees alone cannot automatically win the markets.

But terrible fees on top of terrible or just mediocre performance is a really bad deal.

for reference, they replayed it over the exact same parameters including time period.