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- Today
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"Trace" amounts, surely. I don't think we're losing out that much at all. Those offshore ETFs paying dividends etc have crappy payouts anyway.
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Problem is, in a TFIA, there are no tax savings in offshore ETFs except capital gains...
- Yesterday
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I see Long 4 Life took a 12.5% stake in Spur. Brian Joffe’s acquisitive investment group Long4Life, which, in May, said it had a cash pile of R1.1bn for buying opportunities, has more than tripled its stake in Spur Corporation to 12.5%. The transaction, which is worth about R220m, takes Long4Life’s interest in Spur, which owns Hussar Grill and RocoMamas, from 4% to 12.5%.
- Last week
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Different approach: if you think local think emerging markets. Rather invest in STXEMG instead of a local ETF. There is a discussion somewhere on the forum on the correlation between local vs emerging market index.
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The Sygnia skeleton balanced funds are cheap with TIC=0.55% and is also a good choice. It got cheaper over the year, the reason might be that the funds holdings are Sygnia ETFs. Together with my RA, I use my TFIA to increase my offshore holdings, so no local equities outside RA.
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LOL!
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Graze joined the community
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Cell C is planning to move its complete network to MTN and essentially become a high-level mobile virtual network operator (MVNO) as part of its turnaround strategy. This is the word from Cell C CEO Douglas Craigie Stevenson, who was discussing the company’s plans with the Financial Mail. Cell C is facing a challenging financial future after it recorded an after-tax net loss of R8.03 billion for the year ended 31 May 2019. Blue Label Telecoms co-CEO Brett Levy said they drew a line in the sand by writing off their entire investment in Cell C to zero. Despite this write-down, Levy remains upbeat about the mobile operator’s prospects, especially with the planned recapitalisation of Cell C through an equity partner. He said that the recapitalisation will address Cell C’s debt problem and help the company to become profitable. Moving Cell C’s entire network to MTN In his interview with Financial Mail, Craigie Stevenson said Cell C is negotiating a new roaming deal with MTN which will see it carry all of Cell C’s traffic. This new roaming agreement will also see Cell C hand all of its towers over to MTN, which means it will no longer run its own network. This radical move means that Cell C will essentially become a high-level MVNO without its own network infrastructure. This will remove the need for Cell C to invest billions in its network and allow it to use this money for operational expenses. Cell C’s plan to move its network requirements to MTN and become a large MVNO has been confirmed by an executive close to the negotiations who asked not to be named. He said such a deal would make financial sense for MTN and Cell C and allow the smaller operator to become more sustainable. Craigie Stevenson said Cell C cannot carry on with its “capital-intensive model”, and that this deal with MTN would entail substituting capital expenditure for operational expenditure. Since Cell C will use MTN’s network to serve its customers, it would allow the company to compete “on the basis of having the same geographical footprint and quality of service”. Craigie Stevenson told the Financial Mail that the deal with MTN is expected to be finalised by the end of October. Cell C has a bright future – Craigie Stevenson Craigie Stevenson remains upbeat about Cell C’s future considering the value of the company’s assets. He said that Cell C had valuable spectrum, a large customer base of 16 million active users, a wide distribution network, and a valuable brand – all of which it could leverage to improve its position. The Cell C CEO said they are getting rid of costs, getting more efficient, and “understanding what a performance culture is all about”. He said they are well aware that Cell C needs to be more efficient than Vodacom, MTN, and Telkom to recover and improve its position going forward. From MyBroadband
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Benefit of a TFIA if you start it early enough is that although your contribution limits are low the years it has to grow in value will result in quite a sum of money. Chances are that those limits will increase a couple of times more in the coming decades before you retire. Once you reach retirement (or have enough funds in your TFIA) you can use it to buy income generating funds which will provide you with additional income (tax free).
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You as an individual cannot open a pension fund. The company you work for can. As an individual, you can open an RA. RA - matures at retirement age. You'll then be able to buy an annuity with it which will provide you with income. Other than that, the only way to get money out of an RA is to formally emigrate or you have to prove that you'll basically die if that money doesn't become available (I've only heard of this, can imagine that it is borderline impossible). Pension - when you leave your current place of employment you'll have four options: Take the Pension money and move it into an RA Move the pension money to your new employer's pension fund Take the money and run (you'll pay tax on it) Move it to a preservation fund Preservation fund uses the same type of funds (regulation 28) as your pension and RA does, however you have the option of withdrawing from the fund once before retirement. Not sure if that restriction is per fund or per tax entity (you). Personally, I have a pension fund at 10x and an RA at Allan Gray. When I leave my current place of employment I will move my pension to a preservation fund. If I had to start an RA and only have one - 10x.
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Here are the main differences between a TFIA and an RA: Tax savings: TFIA - pay tax now (TFIA savings is paid for out of after-tax income) - save a ton of tax later. RA - All tax gets refunded now, but you pay tax on your income when you retire. (You should use the annual tax refund for retirement savings too.) Availability of money: TFIA - Can be withdrawn without penalties, but then you can't put the money back. RA - Practically, you can't withdraw anything until retirement without severe consequences. TFIA - Gives a lump sum on withdrawal. RA - Pays a monthly income after retirement. TFIA - You manage your own money. RA - Your money is managed by a fund manager. So all in all - it's best to have both an RA and a TFIA. As Bandit says, it's nice to have the government fund a huge chunk of your retirement now, but then you also want to reap the benefits of a tax-free income after retirement too.
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For RA's, I'd go for a company like Allan Gray or Alexander Forbes. Companies like Old Mutual , Sanlam and Liberty Life are also reputable, but their fees tend to be higher and their returns lower in my experience (although you should do some research first to verify the facts.) I think Bandit has hit on something very, very important. If you see a financial adviser, the first thing they will try and do is sell you life insurance, because the commission on that is huge compared to the commission on an RA. Don't give in - tell them you want an RA and nothing else at this stage.
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Is a Retirement annuity worth it?
Spreadsheet Ranger replied to Spreadsheet Ranger's topic in Investments
Thank you for both responses. Does 10x or Sygnia offer Pension Funds how are they different to an RA? -
All I'm going to say is this: Assuming you bring in a R20,000 pm salary, SARS will take R2,722.06 and leave you with R17,277.94. Assuming you pay 15% of your salary into an RA (and your payslip is structured like a pension fund), SARS will take R1,942.06 and you'll be left with R15,057.94. So for the R3,000 you saved into an RA/Pension, you are only R2,220 "poorer" and scored R780 (that's about 25% growth right there depending on how you look at it). If your salary wasn't structured you'd get back almost R10,000 from SARS come EFiling season provided you include it on your tax return. Now, it's not all sunshine and roses. The money in the RA/Pension will be taxed again at some stage and you don't know what the tax climate is going to be like at that time. They're also talking about prescribed assets (Eskom, Telkom etc) which is a concern. I reckon that if you can afford an RA you should definitely make use of it (a Pension Fund is even better imo, less rules). If you cannot easily afford it you should probably go speak to a financial advisor but I'm willing to bet good money that their response will be the stock standard: Get insurance Settle debt Secure retirement Look at other investments (TFSA). So if you do go see an FA, get one that charges for the consultation and with a good reputation and most importantly: DON'T SIGN ANYTHING. Listen...
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Oh, another thing - with RA's, starting young is huge, due to the power of compound interest. A 21-year old who invests R1000 into an RA for 10 years (until age 31) and then never contributes another cent again, will earn more at retirement than someone who starts at age 31 and pays R1000 for 34 years until age 65. Such is the power of compound interest. Thus, start as soon as possible with your RA!!!
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But in all seriousness - if you had ASHGEQ and SMART you probably have a better portfolio than most other people out there. Can't go wrong with that combination for a strong investment foundation.
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Locally it would have to be SMART (sensible choice) and ETFRHO (for now...because it is flying). I'm up 150% with ETFTHO (kicking myself I didn't have the foresight to push my entire life savings into it ) but it can't continue like this forever.
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Yes, it is definitely worth getting an RA! An RA works as follows: - You pay a monthly investment premium not exceeding 15% of your income (or you lose some tax benefits). -The premium is invested in actively managed funds (similar to units trusts) on your behalf by the finance house. - When you do your tax return each year, SARS refunds all the tax paid on the amount you invested during the tax year for your RA. (In other words, since you will not be relying on a state pension later, SARS will waive the tax now of any money earned that you invest in an RA as an incentive). - You cannot withdraw the money until retirement age. (Well, theoretically you can draw the money before retirement but there are extremely heavy penalties plus you have to pay back all the tax you ever got refunded, leaving you with very little). - The money is untouchable by anyone, even if you go insolvent - it will be there when you retire. On retirement, you have two choices (or you can split your money into these two options according to the percentage you choose): 1) You can buy a life annuity from the insurance company with your money (or part of your money). This means you pay a once-off premium (a percentage of your RA savings) for a guaranteed salary (plus inflation-related annual increases) for the rest of your life. You will receive a guaranteed salary until the day you die, irrespective of the age that you die. After you die, you don't get any of your capital back from the money spent on this option. 2) You can invest in a living annuity with your money (or part of your money). This means that the capital is invested and you take a certain earnings from the investment each month. Your salary is not guaranteed, but varies according to the market. This option pays a higher monthly retirement salary, but at some age, if you live longer than estimated, the money may run out (since you draw a little of the capital each month). If you die earlier than expected, the remaining capital forms part of your estate. Most people do a mix of the two - for example, use half their RA to make sure they are supported until death, and the other half to live the good life until, say 80 years old.
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Might be a stupid question, but is it worth getting one and how exactly does an RA work? I have a TFSA and I have an EasyEquities account, but I often find myself not taking full advantage. It's not like I do not have the money to invest, but I do lack the discipline I think the last ETF I bought was in April. Instead I ate out and opened a second gym contract. Funny thing is, since I opened this Discovery Bank account it really made me think about what happens the day I can no longer work and what stuff needs to be in place when I retire.
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It's hard to know which local ETFs are best to invest in. At least with the offshore ones, ASHGEQ or STXWDM are no-brainers and either of them serves as excellent all-rounders. But locally, we don't get "All-rounders" of the same quality. Your Top40 and Top50 ETFs are market capped and you end up having 70% of your money in four or five shares, which is certainly not great. Then, there are the myriad of smart beta ETFs, each claiming to have a better methodology than the rest, but all untested. So for now, with my local ETFs, I have one third of my local portion of my TFIA in the new multi-factor SMART, one third in the momentum methodology NFEMOM and a third in quality shares with great fundamentals (STXQUA). But if you had to choose just one (or two) local ETFs, what would it be and why?
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I'm maintaining 24% of my TFIA in PTXTEN. Sometimes I feel it might be a bit much and that I should reduce it to 20%, but since the other 76% of my TFIA is all equities, I think it should be okay.
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I was happily surprised by SMART's distribution. It's the first time SMART has distributed (being a new ETF) and it was way better than I expected at 44c per share.
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Hi guys. Thank you for taking the time to respond. I also have MCSI US and MCSI World, which are both going strong. I have started funding ptxten from scratch. Side note, I got almost R200 from my Top50 this morning Thanks again, appreciate the input.
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Black Friday 2019: The best Black Friday deals in South Africa
Noobly replied to Spreadsheet Ranger's topic in General Chat
Joburg. Your best bet is probably to drive a volvo - I haven't heard of a single Volvo owner being hi-jacked. -
Black Friday 2019: The best Black Friday deals in South Africa
Bandit replied to Spreadsheet Ranger's topic in General Chat
I live in Joburg. Great cars but I wouldn't touch a Polo here. Had one when I moved here and had two close calls with hijackers Want an automatic again. I tried manual after my auto and.... no. Just no
