Cius
Honorary Master
A cautionary tale I wanted to share.
So my dad had an RA that performed horribly for him. He was always negative towards them but I decided to get one anyways as apparently the rules had changed and the new RA's where "better". So for the past 16 years I have been putting money aside into an RA and not really paying that much attention to it. The RA in question was with PPS, one of the better providers (I thought) in that they at least give profits back to members. A mutual society rather than a for profit outfit.
This year I finally had a proper look at my RA and it was dismal. Total value after all this time was 273K. I just did the math on my total contributions in rand value totaled about 165K. So about 65% cumulative growth for all the years I have been with them. Turns out the high fees of the RA plus financial advisor fees ate almost all my growth. Total costs where over 4% where my pension fund for instance is 1.5% and its growth returns were far better too.
Comparing my pension fund which has been going 2 years less than the RA my net worth is 100% more than my total contributions into it as compared to the RA that is 65% more than my contributions. That is the difference between good and bad fees, and proper returns.
So while the contributions where tax deductible somewhat reducing the cost of that money put in, that RA was never contributing meaningfully to my retirement. I have now switched the remaining lump sum into a SATRIX product with low fees with 25% in a money market index to keep it section 28 compliant and my advisor kindly removed any ongoing fees from his side. The RA contribution i can now rather add to my work pension fund where it will do far better, or perhaps invest myself so its money I can take offshore if needed.
Just wanted to share. RA's have a dirty name for me now. Make sure you are putting your money into something with very low fees, and good returns, as most of the RA industry has mediocre returns and high fee's eating all your growth.
So my dad had an RA that performed horribly for him. He was always negative towards them but I decided to get one anyways as apparently the rules had changed and the new RA's where "better". So for the past 16 years I have been putting money aside into an RA and not really paying that much attention to it. The RA in question was with PPS, one of the better providers (I thought) in that they at least give profits back to members. A mutual society rather than a for profit outfit.
This year I finally had a proper look at my RA and it was dismal. Total value after all this time was 273K. I just did the math on my total contributions in rand value totaled about 165K. So about 65% cumulative growth for all the years I have been with them. Turns out the high fees of the RA plus financial advisor fees ate almost all my growth. Total costs where over 4% where my pension fund for instance is 1.5% and its growth returns were far better too.
Comparing my pension fund which has been going 2 years less than the RA my net worth is 100% more than my total contributions into it as compared to the RA that is 65% more than my contributions. That is the difference between good and bad fees, and proper returns.
So while the contributions where tax deductible somewhat reducing the cost of that money put in, that RA was never contributing meaningfully to my retirement. I have now switched the remaining lump sum into a SATRIX product with low fees with 25% in a money market index to keep it section 28 compliant and my advisor kindly removed any ongoing fees from his side. The RA contribution i can now rather add to my work pension fund where it will do far better, or perhaps invest myself so its money I can take offshore if needed.
Just wanted to share. RA's have a dirty name for me now. Make sure you are putting your money into something with very low fees, and good returns, as most of the RA industry has mediocre returns and high fee's eating all your growth.
