Author Topic: Is African Bank Safe - Fixed deposit  (Read 30568 times)

Hamster

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Re: Is African Bank Safe - Fixed deposit
« Reply #15 on: March 08, 2017, 01:00:55 pm »
Thanks gcr.

Let just have a quick comparison:
ETF: 50% over 5 years
Initial investment R100 000
5 years Later: R 150 000

Fixed deposit at 9 p/a%
Initial investment: R100 000
5 years later: R 153 000

Fixed Deposit is less risk, than ETF. Therefore according to the above it should be the better investment. Less risk with similar returns?

50% over 5 years is 8.45%.
STXIND five years ago today was at 3100 and today it is at 6634. That's 16.43% pa (you can calculate it yourself if you want: http://finblog.co.za/tools/annualisedgrowth)

There's no guarantee that it'll do that in the next 5 years but that's where risk vs reward comes in. If you are closer to retirement age and cannot afford to lose a substantial amount of this money then shares is not where you want to be.

BTW, if you do not have a TFSA you can make use of Investec's. It's basically a fixed deposit but no tax and they give it at 8.4% I think. You can at least put some of the money in there over the next five years if you wish.

gcr

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Re: Is African Bank Safe - Fixed deposit
« Reply #16 on: March 08, 2017, 03:04:38 pm »
Hamster you wrote" If you are closer to retirement age and cannot afford ............." it has been proven that share markets generally advance over time. Similarly there are the occasions where markets drop quite significantly, but, they do tend to correct themselves within a reasonable length of time.
To my mind it makes no difference whether you are near to retirement or not, and, that on retirement you need to be cautious (I am not talking about being reckless) in terms of your investment approach.
I invest in the market even though I retired 12 years ago and have no intention of even getting out of the market, I may review my portfolio should there be a major crash but only to rebalance my portfolio, or follow some other bargains. I have been exposed to every market correction since the 70's and within a few years have always ended up in a better situation financially.
I can't speak for others but my share portfolio is used specifically for wealth creation and is not used to augment my pension and my current comfortable lifestyle, but, I am a realist so there may come a time in 10 - 15 years time where I may have to dip into my portfolio to support my pension, but, quiet frankly by then my share portfolio would have doubled

So I am certainly not in the camp that advocates caution when investing either near or in retirement (good basic fundamentals must be applied when selecting your share portfolio, cavalier buys will burn you), but by the same token I would not advocate that people who have either commuted part of their pension or have taken funds out of investments on which they need to survive and put the funds into the share market - that may well end up badly.

My focus is very simple in application - when I die and my wife outlives me she will enjoy 50% of my then pension and my share portfolio will then generate sufficient dividend streams to assist with her living and she may have to sell some shares from time to time to top up her needs, but, the reality is that when I die her financial situation does not change for the worse but does change for the better   
Not everything that counts, can be counted, and, not everything that can be counted counts - Albert Einstein

gcr

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Re: Is African Bank Safe - Fixed deposit
« Reply #17 on: March 08, 2017, 03:14:23 pm »
Hamster - also on the TFSA accounts the only reason I am putting money into them is because you can trade over this account as, as yet Treasury have not closed this loop hole - so no need to observe the 3 year holding period. So those people who would like to test their hand at trading they could now have the princely sum of R 90,000 in your TFSA.
Not everything that counts, can be counted, and, not everything that can be counted counts - Albert Einstein

Hamster

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Re: Is African Bank Safe - Fixed deposit
« Reply #18 on: March 08, 2017, 03:30:08 pm »
Hamster you wrote" If you are closer to retirement age and cannot afford ............." it has been proven that share markets generally advance over time. Similarly there are the occasions where markets drop quite significantly, but, they do tend to correct themselves within a reasonable length of time.
To my mind it makes no difference whether you are near to retirement or not, and, that on retirement you need to be cautious (I am not talking about being reckless) in terms of your investment approach.
I invest in the market even though I retired 12 years ago and have no intention of even getting out of the market, I may review my portfolio should there be a major crash but only to rebalance my portfolio, or follow some other bargains. I have been exposed to every market correction since the 70's and within a few years have always ended up in a better situation financially.
I can't speak for others but my share portfolio is used specifically for wealth creation and is not used to augment my pension and my current comfortable lifestyle, but, I am a realist so there may come a time in 10 - 15 years time where I may have to dip into my portfolio to support my pension, but, quiet frankly by then my share portfolio would have doubled

So I am certainly not in the camp that advocates caution when investing either near or in retirement (good basic fundamentals must be applied when selecting your share portfolio, cavalier buys will burn you), but by the same token I would not advocate that people who have either commuted part of their pension or have taken funds out of investments on which they need to survive and put the funds into the share market - that may well end up badly.

My focus is very simple in application - when I die and my wife outlives me she will enjoy 50% of my then pension and my share portfolio will then generate sufficient dividend streams to assist with her living and she may have to sell some shares from time to time to top up her needs, but, the reality is that when I die her financial situation does not change for the worse but does change for the better

To each his own, there never is one rule or approach that fits everyone. You clearly know what you are doing and can make your own risk decisions.

My dad, on the other hand, only ever dealt with regular banks, building and selling properties, owning a business and made a reasonable amount of money that way. There is no way he should be touching equities though - he's never done it before (unless he gets a professional to help him out but I reckon their advice would be to go for something with guaranteed returns anyway :p )

Hamster

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Re: Is African Bank Safe - Fixed deposit
« Reply #19 on: March 08, 2017, 03:32:59 pm »
Hamster - also on the TFSA accounts the only reason I am putting money into them is because you can trade over this account as, as yet Treasury have not closed this loop hole - so no need to observe the 3 year holding period. So those people who would like to test their hand at trading they could now have the princely sum of R 90,000 in your TFSA.

20% dividend tax-free could really be helpful for somebody living off dividends :p

Will take you quite some time to amass enough funds in there though to make it worth your while, not sure if there are any worthwhile dividend-focused instruments or funds available in TFSA's either. On the ETF side you have two dividend ETFs, a couple of property ones and the preference share one. Probably not good enough for reliable income

MoneyChief

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Re: Is African Bank Safe - Fixed deposit
« Reply #20 on: April 11, 2017, 02:48:37 pm »
The best option looks to be Nedbank, with 9.56%

That should be safe. I hope.

I am surprised that nobody has pointed this out yet, but you are about to commit one of the biggest investment mistakes there is, putting all your eggs (or almost all) in the same basket.

Open up multiple accounts at different banks and spread the risk. I have four investment accounts at four different companies and two bank accounts at two different banks.

Investment mistake 2, putting too much in cash. You do need some cash, but not too much. Once you have enough cash to fund 6 months or max a year of expenses, you really don't need any more cash.

Investment mistake 3, having too much capital in Rands. Try to get some international exposure.

Do you have any debt or a home loan? Pay that off first.
« Last Edit: April 11, 2017, 02:51:44 pm by MoneyChief »

Hamster

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Re: Is African Bank Safe - Fixed deposit
« Reply #21 on: April 11, 2017, 03:08:08 pm »
The only time a thought of Nedbank ever crosses my mind is if I think Noah and his Ark. I imagine that there was an ancient Nedbank ATM in there somewhere, maybe right next to the hippo family.

MoneyChief

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Re: Is African Bank Safe - Fixed deposit
« Reply #22 on: April 11, 2017, 03:16:20 pm »
The only time a thought of Nedbank ever crosses my mind is if I think Noah and his Ark. I imagine that there was an ancient Nedbank ATM in there somewhere, maybe right next to the hippo family.

When I have friends over from overseas they always laugh at Nedbank, because NED stands for Non-educated delinquent. Maybe I should get some less snobbish friends, oh well.