What account to open

Each to their own though and the strategy chosen very much depends on risk appetite and your ability to recover if there is a major loss at some stage.
 
Thanks

I have very little knowledge on all this, that is why i am asking so many questions. Sorry I might have not explained myself correctly. I want to do sort of 2 things. When I said open an account for my son I wanted to open an account for me to save towards expenses for him, not really for him to have the account. Then the second thing was to setup an account that will be for him that his grandparents can put money into when they can and for birthdays, as they live in another province. This would be "his" account. Am I allowed to have more than one TFSA in my name, say for example one with EasyEquities and one with FNB and would each be allowed to have R30 000 deposited per year and each have R500 000 lifetime limit?
 
Greglsh said:
Thanks

I have very little knowledge on all this, that is why i am asking so many questions. Sorry I might have not explained myself correctly. I want to do sort of 2 things. When I said open an account for my son I wanted to open an account for me to save towards expenses for him, not really for him to have the account. Then the second thing was to setup an account that will be for him that his grandparents can put money into when they can and for birthdays, as they live in another province. This would be "his" account. Am I allowed to have more than one TFSA in my name, say for example one with EasyEquities and one with FNB and would each be allowed to have R30 000 deposited per year and each have R500 000 lifetime limit?
Click to expand...

No.

You can have more than one TFSA in your name, but the limits apply to the TFSAs combined. If you overcontribute, the portion overcontributed is taxed at 40%.

You can open a TFSA in your sons name. Maybe that's what the grandparents can contribute to. Note that age 18 he will have control over it.
 
Greglsh said:
Thanks

I have very little knowledge on all this, that is why i am asking so many questions. Sorry I might have not explained myself correctly. I want to do sort of 2 things. When I said open an account for my son I wanted to open an account for me to save towards expenses for him, not really for him to have the account. Then the second thing was to setup an account that will be for him that his grandparents can put money into when they can and for birthdays, as they live in another province. This would be "his" account. Am I allowed to have more than one TFSA in my name, say for example one with EasyEquities and one with FNB and would each be allowed to have R30 000 deposited per year and each have R500 000 lifetime limit?
Click to expand...

If you open a TFSA for your kid, grandparents' money and brithday gift money can go in there but you'll need to educate your kid that the money in there is for his retirement one day so hands off (and he'll be stinking rich by then). The downside is is that you have no control over what your kid is going to do nor do you know how good they will be with money.

You could always split it - have a TFSA and also a normal investment account (ETFs, Unit Trusts, whatever) into which you pump money which can be sold off one day. After more than three years of investment the gains made will be taxed as capital gains and not income tax anyway (of which there is a threshold). A combination of unit trusts might work well for this - Stanlib has multi manager unit trusts which basically wraps other unit trusts into one so diversification is good and costs aren't really that high.

Example - I own this one: http://www.stanlib.com/Individuals/...x?FundID=e1e3e8f0-499b-43d0-abb6-cd4544b85356

At the moment it is comprised of:
  • Nedgroup Entrepreneur Fund
  • Allan Gray Equity Fund
  • STANLIB Multi-Manager Global Equity Fund
  • STANLIB Multi-Manager Property
  • STANLIB Multi-Manager Equity Fund

All that behind one debit order and one transaction every month (consider the cost of doing the same with ETFs...transaction costs will kill you).
 
gfmalan said:
I would open a Satrix account
Click to expand...

Buy Satrix by all means...but whatever you do don't do it directly through Satrix.

Open an Easy Equities account and buy Satrix ETF through there.

Satrix Divi might be a good call whether Tax Free or otherwise.
 
SauRoNZA said:
Satrix Divi might be a good call whether Tax Free or otherwise.
Click to expand...

Wouldn't touch STXDIV. DIVTRX is a way better option IMO since it doesn't try and predict what will happen but works on historical data. The chosen shares are just way better "quality" as a result.
 
Hamster said:
Wouldn't touch STXDIV. DIVTRX is a way better option IMO since it doesn't try and predict what will happen but works on historical data. The chosen shares are just way better "quality" as a result.
Click to expand...

I have a finger in both pies.

Since I've added DivTrx it's just done miserably and Satrix has shot up 15%.

Sure these are dividend based so you shouldn't really look at the share price. It makes it even harder to calculate the true value.

That being said I haven't added anything to Satrix Divi in two years.
 
Investing in TFSA for a child doesnt not make sense in your circumstances Greglsh. Your child wouldnt be paying any tax on the interest income up to R23800 per year. The point of investing in a TFSA is that the interest is not taxable but most people forget that you also get an interest exemption from SARS annually (what I am referring to above). So any interest earned less than R23800 is not taxable. If we use an interest rate of 6.5% (currently offered) on the FNB flexi fixed deposit, you would need to put about R360 000 in there in a year before your son would get taxed on the interest.

Theres also the point that your son is so young. There is a lifetime contribution limit on a TFSA of R500 000. If for example you contribute the maximum limit per year R30 000 every year to the TFSA for your son. R500k/R30K= 16.67. By the time your son is 17 years old, you would have maxed out his contribution limit. Then he would never be able to contribute to the TFSA again without being taxed. Effectively you would have used up his contribution limits when he was not being tax and when he is old enough to contribute to the TFSA, any amount he puts into the TFSA will be taxed.

Based on the above, a TFSA is not the best strategy to save for your son. My suggestion would be diversification into different investments, eg ETFs, long term fixed deposits, etc. The investments that you pick would depend on your appetite for risk and risk profile. If you have more questions I could elaborate more.
 
You must log in or register to reply here.
Back
Top
Sign up to the MyBroadband newsletter
X