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RA Question

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HI ,

 

Hypothetical question.

Is there a better scenario or is the following the same.

You have an RA for lets say R500 a month with a SP where the annual fee's are lets say 1%.

 

You want to now increase your monthly contribution.

 

Do you add R500 to the existing RA thus having R1000 p/m @ 1% fee's

or start a new RA with another SP that has fee's of 0.7% per year?

 

I guess the answer lies within the performance of the RA?

 

Opinions?

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I'd stick with the original. The difference in fees isn't that great. A more important question is what the penalty fees for moving RA are one day. If there is any kind of penalty fee I wouldn't touch it.

 

Anyway, the answer to your question is 10X (EDIT: or Allan Gray if you go the managed route)


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HI ,

 

Hypothetical question.

Is there a better scenario or is the following the same.

You have an RA for lets say R500 a month with a SP where the annual fee's are lets say 1%.

 

You want to now increase your monthly contribution.

 

Do you add R500 to the existing RA thus having R1000 p/m @ 1% fee's

or start a new RA with another SP that has fee's of 0.7% per year?

 

I guess the answer lies within the performance of the RA?

 

Opinions?

 

I think the performance of the fund is important. But remember that performance now does not mean performance in the future.

 

Several years ago, when I had my own business, I put all my RA contributions into a  Liberty RA, because they were the best then. Now I regret not diversifying.

 

On the other hand, if you're with a fund manager like Alexander Forbes or Allen Grey or Coronation, they will spread the risk for you, so in this case, adding more to your existing RA is fine. I'd rather pay 1% for a fund manager rather than drop to 0.7% for a single SP exposure.

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