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RA vs SA ETF's

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44% of my monthly investments goes into RA’s and 56% into ETF's.

 

Major portion of all RA’s are invested in the SA stock market.  In in my local ETF portfolio I have monthly investments in Satrix Quality SA (2000.00), Coreshares SA Property Income (1500.00) and a TFSA in Satrix Divi Plus (1375.00).

 

As RA’s are heavily invested in SA, should I terminate my monthly investments in all SA ETF’s and increase my contributions to Satrix MSCI World and Coreshares Global DivTrax.

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That is what I am currently doing. I am slowly reducing my Unit Trusts portfolio (mainly SA) and moving the funds into the 2 ETF's you mention : MSCI and Glodiv

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On 2/6/2020 at 1:28 PM, VINNIE said:

That is what I am currently doing. I am slowly reducing my Unit Trusts portfolio (mainly SA) and moving the funds into the 2 ETF's you mention : MSCI and Glodiv

I eventually spoke to a Financial Adviser who agreed with my strategy to diversify offshore.

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So an update - when the markets started crashing again I cashed out everything I could (TFSA, other ETF portfolios etc). It may not be the smartest move but given that I don't do this professionally, don't watch the markets all day, use 15 min delayed pricing and have the exact opposite type of people also trying to take my money I thought it best. Let stuff settle and then we'll get back in even if it means losing out a bit.

 

What I could not do anything about is my RA. Luckily I cashed out my pension recently when I changed jobs, but to tell Allan Gray to convert my entire RA to cash would probably mean filling out a form, emailing it, make a follow up telephone call etc. if it is even an option.

 

Net result - my RA is down 16%. It is a lost cause, by far the worst investment I ever made and I'm sitting here wondering if it is even worth it to continue with it. I'm confident I can make up 16% by myself when the time is right using offshore bonds, ETFs etc. but to get an RA with 70% SA shares to to recover by 16% - sounds like a long drawn out and "be patient" affair.


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On 3/16/2020 at 7:01 AM, Bandit said:

So an update - when the markets started crashing again I cashed out everything I could (TFSA, other ETF portfolios etc). It may not be the smartest move but given that I don't do this professionally, don't watch the markets all day, use 15 min delayed pricing and have the exact opposite type of people also trying to take my money I thought it best. Let stuff settle and then we'll get back in even if it means losing out a bit.

 

What I could not do anything about is my RA. Luckily I cashed out my pension recently when I changed jobs, but to tell Allan Gray to convert my entire RA to cash would probably mean filling out a form, emailing it, make a follow up telephone call etc. if it is even an option.

 

Net result - my RA is down 16%. It is a lost cause, by far the worst investment I ever made and I'm sitting here wondering if it is even worth it to continue with it. I'm confident I can make up 16% by myself when the time is right using offshore bonds, ETFs etc. but to get an RA with 70% SA shares to to recover by 16% - sounds like a long drawn out and "be patient" affair.

 

I'm curious if you've reviewed your rationale recently now that the waters have temporarily calmed. Do you still think you were thinking clearly or do you recognize a little bit of the recency bias and nihilism that drove the choices you made here?

 

I'm speaking with regards to:

1. Cashing out your pension (!)

2. Panic selling from a passively managed portfolio (As an aside, who exactly was "trying to take your money"?

3. Staying invested (due to admin inertia) in the RA while thinking there was no way it could recover (I'm curious to know if it did and if so/not what exactly is your RA invested in and have you looked to tighten up there?) 

4. Not wanting to add more to your RA while everything was on sale

 

For the sake of fairness, I'll be transparent that I did nothing during the crash. Literally nothing. Everyone around me was tinkering and saying that I was crazy continuing with business as usual but I just couldn't understand why an investment plan that I made when I was calm and rational, specifically to whether the longterm (a longterm that EXPECTED crashes and "once in a lifetime" global events) needed to suddenly be abandoned. I don't regret that decision. A part of me wishes I'd taken on more shifts so that I could buy more during the dip, but again that wasn't part of my longterm plan so I felt silly even considering it. Even excluding rand weakness, my portfolio is essentially where it was precrash. My RA is shining too... with its 70% local.

 

I think the financial consequences of the last 9 months are far from over but my plan remains the same. If there's anything this storm taught me it's that you have to build a plan that matches your risk tolerance or you'll be prone to making decisions in the heat of the moment that contradict that plan. I'm curious if yours has changed at all with a bit of the tailwinds behind us and a bit more perspective? I think it would be a useful update.

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On 9/1/2020 at 2:44 PM, Saday said:

I'm curious if you've reviewed your rationale recently now that the waters have temporarily calmed. Do you still think you were thinking clearly or do you recognize a little bit of the recency bias and nihilism that drove the choices you made here?

 

I'm speaking with regards to:

1. Cashing out your pension (!)

2. Panic selling from a passively managed portfolio (As an aside, who exactly was "trying to take your money"?

3. Staying invested (due to admin inertia) in the RA while thinking there was no way it could recover (I'm curious to know if it did and if so/not what exactly is your RA invested in and have you looked to tighten up there?) 

4. Not wanting to add more to your RA while everything was on sale

 

Knowing what I know now I would do it again. Make no mistake, it could've ended badly but for some reason I had very little doubt that it will work out in my favour. Still scary.

 

1. Cashing out pension

Still happy I did it. We have plans to cash out my wife's as well. We are planning to move offshore for a bit (permanently?) but even if we didn't I have do not have enough faith in our government and Reg 28 to provide us with a retirement. Retirement is still 30 years away though. I'd rather sort it out myself. I would never suggest to anybody to cash out their pension (it could be the worst mistake you ever make) but personally I have no love for reg 28.

 

2. Panic selling

This wasn't panic selling. I saw an opportunity and took a calculated risk. All the money was reinvested. Yes I took the opportunity to rebalance but I invested in the same "philosophy" - not in SA. Panic selling implies that one has no plan and making rash decisions.

 

crash2.thumb.jpg.1ae239b856fab2209c9861c78cea00d4.jpg

 

*I bought back in over a couple of days but that's the rough idea. When I bought back in I thought we hit bottom already, but obviously not.

 

3. RA

So I moved my RA to Allan Gray in 2018. As a result the fund is split in two exact same funds - one that just sits there and one for new deposits. This is the lump sum with no additional deposits' performance:

image.png.2b2a928479c972298078d7d5efd29b86.png

Since inception: -0.49%

 

4. Not adding anymore to RA

I've stopped all deposits to my RA btw. Investing that money into my own investments. My new portfolio is up 6.59% over the last 6 months which is not spectacular but the investments are diverse and not bound to reg28 constraints.

 

 

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