How best to invest some money, long-term

[BARGUILD]

Hi All,

I am looking for some advice (I know it isn't real advice and I won't take it as such for obvious reasons) as to what I can do with some money.

Due to some family reasons, in the very near future (just waiting on money to clear) I will be coming into a decent sized chunk of money.

Since I am still young, I want to dump almost all of it (if not all of it, will see) into some long-term investment/saving/stock plans or whatever. Just so I can start earning as young as possible for as long as possible.

Any body have any idea what the best ideas and options might be? I have booked an appointment with a financial advisor and am awaiting that but just thought that a few different 2c pierces might be useful.

Any help/thoughts would be greatly appreciated. Thanks guys.

EDIT: Just want to clarify, I have next to no investment/stock experience and so that is why I have booked an appointment with a financial advisor and have asked for your guys advice.

 

[igg]

USD FX rate is still favourable right now (it dropped during elections). Consider opening an Easy Equities account and moving some of it into US based ETFs or stocks (i.e. USD hedge against Rand + potential growth).

 

[BARGUILD]

USD FX rate is still favourable right now (it dropped during elections). Consider opening an Easy Equities account and moving some of it into US based ETFs or stocks (i.e. USD hedge against Rand + potential growth).

I am assuming this sort of thing requires constant management and admin? Is this a good idea as someone with no experience whatsoever?

 

[igg]

I am assuming this sort of thing requires constant management and admin? Is this a good idea as someone with no experience whatsoever?

Depends on your investing stance, if you're taking a long-term approach then it's just a case of putting money in and watching it grow (hopefully). If you're looking at short-term growth, then yes, it will require research/management/admin and the magical ability to "time the market".

Otherwise just holding FX as a Rand hedge seems to be a pretty safe bet given the direction this country is heading, You also earn interest on the cash in EE accounts @ prime -3.5, though I'm not sure if this also applies to FX accounts.

It's a good idea to diversify anyways, so this is just 1 of the many options available. As someone with no experience, chatting to a financial adviser is a good place to start and seeing what they say. Just whatever you do, don't get conned into some crypto scam or Crowd1-esque nonsense.

As an aside, fixed deposits (and generally all cash investments) really suck right now. They're all based on the prime rate, which is at its lowest levels in decades, so taking out a long-term fixed deposit would lock you into a shitty rate that won't keep up when prime starts going up again.

 

[CaptainSlow]

If i had the money i would put into the stock market. .for long term i would look at Sasol, nedbank, or a REIT. try easy equities or standard bank trading platform. fnb is basic and expensive. note that i am not giving financial advice merely what i would do.

 

[Pansyfaust]

Protip: if the financial advisor is trying to get you to choose a policy that pays them an "Advice fee" or commission yearly, please avoid. They are not advisors, they are salesman just trying to sell you the policy or investment (Think Old Mutual, Momentum, Sanlam etc etc) that gets THEM the largest return and commission. These people are mostly sharks and don't give a shit about growing your investment.

If you are talking to an actual financial advisor, they would charge you upfront to give you advice and break down where you can put your cash and why. They would ideally not try to sell you a policy, just tell you how to structure your investment and at most tell what sort of investments suite the timeframe you have.

Also, this is not financial advice. If the amount I got was R500K, this is how I would break it down. Settle any debts, firstly. Assuming you dont have any, Then I would set aside R36 000 for this tax year and R36 000 for next tax year to chuck into a Tax Free Savings Account on Easy Equities and buy Ashburton 1200/ MSCI World ETF.

Then I would put R100 000 into Tyme bank Goal Save as an emergency fund at 6-7% Interest P/A. Then I would see how to off-set my tax bill by depositing extra into an RA or Pension, maybe just top them up at R50 000 or whatever amount that makes the best tax sense. I'd chuck R100 000 into foreign currency to also invest into some non-SA assets, maybe a Vanguard World ETF. With the last R150 000 or so I'd probably take R50- R100K and also put it into discretionary investments locally, and with the last R50K i'd spend on myself. New PC, new TV or something.

 

[BARGUILD]

Thanks guys for the tips. Am definitely going to speak to the financial advisor soon.

This will be long term so going to properly consider options. Thanks for the thoughts.

 

[Anneke]

Hallo, I work in Finance

Okay, I am no financial advisor but I can tell you this:

You get “financial advisors” who are basically there to sell you a product and earn commission om the products they sell. Eg a Liberty/Sanlam advisor. As per a compliance - treating customers fairly, they have do disclose exactly how much they will earn. They tell you their services are free to you as the customer, cause of their commission

Then you get independent financial advisors, who will invest your money in a place like allan gray or coronation, they do take a smaller commission fee, but will charge you for the advise.

I know and understand investments and have put my own in unit trusts in Coronation, Allan Gray and 10x

I will be very cautious for investment techniques and hedging as mentioned previously in other posts. They are very complicated and there are some really clever people working at investment banks taking the best advantage of this as their full time job

Then for the R2 mil upwards you can get your own Asset Manager. These guys are brilliant, but only dont care about the small guys (like me) some of their portfolios grew by 20% this year even with Covid.

But see a few advisors/ asset managers and also make sure you know what will be the impact on your taxes.

Kind Regards


Sent from my iPhone using Tapatalk

 

[Haffy]

Put some into gold purchases

 

[Niyaaz]

Hi All,

I am looking for some advice (I know it isn't real advice and I won't take it as such for obvious reasons) as to what I can do with some money.

Due to some family reasons, in the very near future (just waiting on money to clear) I will be coming into a decent sized chunk of money.

Since I am still young, I want to dump almost all of it (if not all of it, will see) into some long-term investment/saving/stock plans or whatever. Just so I can start earning as young as possible for as long as possible.

Any body have any idea what the best ideas and options might be? I have booked an appointment with a financial advisor and am awaiting that but just thought that a few different 2c pierces might be useful.

Any help/thoughts would be greatly appreciated. Thanks guys.

EDIT: Just want to clarify, I have next to no investment/stock experience and so that is why I have booked an appointment with a financial advisor and have asked for your guys advice.

As a financial advisor myself I just want to caution you about what you invest in. Try and keep some money liquid for emergency purposes, you never know what might happen. Also make sure that they don't pull the wool over your eyes with regards to investment management fees. Some advisors can be really shady when in the pursuit of commission.

 

[Dom]

Hallo, I work in Finance

Okay, I am no financial advisor but I can tell you this:

You get “financial advisors” who are basically there to sell you a product and earn commission om the products they sell. Eg a Liberty/Sanlam advisor. As per a compliance - treating customers fairly, they have do disclose exactly how much they will earn. They tell you their services are free to you as the customer, cause of their commission

Then you get independent financial advisors, who will invest your money in a place like allan gray or coronation, they do take a smaller commission fee, but will charge you for the advise.

I know and understand investments and have put my own in unit trusts in Coronation, Allan Gray and 10x

I will be very cautious for investment techniques and hedging as mentioned previously in other posts. They are very complicated and there are some really clever people working at investment banks taking the best advantage of this as their full time job

Then for the R2 mil upwards you can get your own Asset Manager. These guys are brilliant, but only dont care about the small guys (like me) some of their portfolios grew by 20% this year even with Covid.

But see a few advisors/ asset managers and also make sure you know what will be the impact on your taxes.

Kind Regards


Sent from my iPhone using Tapatalk

This - PSG is pretty decent (I believe) but look for FA's who specialise in investments only.

 

[Niyaaz]

This - PSG is pretty decent (I believe) but look for FA's who specialise in investments only.

FA's who deal with investments only are usually wealth EFA's but they are picky about their client base. You need to have a minimum asset value of around R3.5 million it varies from firm to firm.

 

[PJtheKILL3R]

Easy Equities and buy Ashburton 1200/ MSCI World ETF

EE + TFSA + ASHEQF is a match made in heaven.
All with a TIC of 0.65%

 

[Smooth_Red]

I had a look at this, I only see losing money the last three years. Please if you wouldn't mind explaining why this is such a match made in heaven? Curious to learn more

EE + TFSA + ASHEQF is a match made in heaven.
All with a TIC of 0.65%

 

[PJtheKILL3R]

I had a look at this, I only see losing money the last three years. Please if you wouldn't mind explaining why this is such a match made in heaven? Curious to learn more

Where did you see it losing money over 3 years?
On the 23rd of Nov 2017 the Ashburton Global 1200 was at R43 and today its at R56, that is a annual growth rate of 9.2% excl dividends.

EasyEquaties has no monthly account fees and extremely low brokerage fees per trade.

The ETF itself is very cheap (TIC = Total Investment Charge) so that is the total cost of owning the ETF, which is very low, some active managed funds can easily hit 1.5% in fees alone.
0.65% vs 1.5% in fees makes a huge difference over time.

Its a very diversified ETF (You own a small piece of the 1200 largest companies in the world)
You have the safety of not being reliant on a single company, sector (or even country) in such a large ETF.
The US does however represent a large portion of the index at 63% which is a little concerning but hey that is where the megacaps like Apple, Amazon, Microsoft, Alphabet etc are listed.

The TFSA part of the equation is what makes it so brilliant, TFSA accounts are exempt from capital gains tax, dividend withholding tax and even VAT (They do however have annual and lifetime contribution limits)
This is extremely important if you consider the ultimate form of expropriation : Inflation.
I am going to exaggerate the number a bit to prove my point in my example.

Milton Friedman used to say: Inflation is taxation without representation (He was definitely on to something)
Why take the nominal value of money in peoples bank accounts or pension plans when you can just take the real value instead without even lifting a finger? If the government where to monetize debt with money printing we could theoretically repay all our rand based debt in a afternoon no problem, but, we would have massive massive amounts of inflation.

Now your ETF would obviously shootup in value, because it owns foreign companies, earning in foreign currency, however, that appreciation is only in nominal rand value, meaning your R56 ETF of yesterday might be worth R10 000 today but in USD its still only 4.5USD.
That inflation is then taxed with capital gains tax when you sell, SARS will say : Whoa! Mister would you look at this! You bought something for R56 and sold it for R10 000 that is a massive R9944 taxable capital gain! That will be R1789 (18%) in capital gains tax please.
All the while in USD terms is still worth exactly the same, of course this is an exaggerated example but it does prove my point.

TLDR:
- Low account / fund fees
- Great diversification
- Tax efficient