What to do with Provident Fund

[Heisenborg]

Hi guys

My wife just resigned and we need to consider what to do with her provident fund. What are the best options in terms of placing it in a long term account. taking tax into consideration? One option is our house bond, anything else we can look at?

 

[blunomore]

I am sure the first question posters will ask is how much money is involved and what are your ages. This has an influence on the risks you could take/not take with investments.

I am learning!

 

[Gaz{M}]

DO NOT spend it. You will lose so much to tax if you take it out and spend it.

Save in a Preservation fund or similar.

 

[Heisenborg]

No intention of spending it, will be around R100 000 or so, just wondering how one could "continue" it

 

[Mila]

Put it in her new fund.

 

[Heisenborg]

Put it in her new fund.

I forgot to mention, she will be contracting, so no new company fund to add it into

 

[Mila]

I forgot to mention, she will be contracting, so no new company fund to add it into

She can contribute herself, I'm in the same position. So add up what she and her previous company contributed and do a debit order into the fund.

 

[AlmightyBender]

A proper financial advisor is the way to go

 

[blunomore]

Allan Gray Pension Preservation Fund (Stable).

 

[^^vampire^^]

A proper financial advisor is the way to go

Who will take a few hundred bucks after telling you something like:

Allan Gray Pension Preservation Fund (Stable).

 

[Gaz{M}]

Yes, any decent investment company will do.

And no, not Life insurance companies like Liberty, Old Mutual etc. They will rip you with fees.

 

[the eskimo]

If a full withdrawal is made, the tax on 100,000 will be 18% on the amount exceeding 22,500 (i.e 18% of 77,500), which is 13,950. In other words, if she has never made a early withdrawal before, she will be paid out 86,050.

1. A good case can me made for withdrawal if you have quite a bit of unsecured high interest rate debt that you wish to settle with the payout. If this is the case, only withdraw enough to settle this and use the repayments you were making on the debt and buy unit trusts/etfs/etc.

2. You could transfer the benefit to a preservation fund. One pre-retirement withdrawal is typically allowed. There are a whole host of preservation funds, you can use google to help you find one. No tax implications here, the whole amount is transferred.

3. Set up a RA, and get the benefit transferred into the RA. Again, no tax implications, but no withdrawal unless you retire/emigrate. You'll have a multitude of options here as well, but allow me to recommend 10x indexed RA because of their low fees. Also you can make additional regular contributions to the RA.

 

[supersunbird]

Provident Preservation Fund

10X is one low cost option. Allan Gray and Coronation also an option.

 

[Heisenborg]

Thx everyone