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This one is very frustrating. Firstly, do you remember that policy you took out 20 years ago where the "sales" guy told you that one day you will get R50 000 and you felt you will be rich and now today when it pays out, you can do absolute nothing with it and laugh your head off for being suckered into such a stupid thing? Well retirement calculators are the same. And don't get me started on inflation. Inflation is the biggest rubbish under the sun. You would do far better looking at the CPI (Consumer Price Index).

Well back to the original topic. If you have an investment and it gives you X amount every month, but the day-to-day living costs keep increasing by Y every month, you will reach a point where your pension just won't be enough. Let's take a very good example. My consultant told me that just doing a quick calculation, a million bucks should give you an income of +-R6000 per month(non-aggressive investment). Well just looking at medical aids that increase by 15% or more per year, will your investment ever be enough. If your investment does not give you income = to CPI increase on a monthly basis, then surely you will be worse off next month and the month after that and the year after that and so on.

 What I am trying to say, the cost of living increases on a month to month basis far faster than inflation and all these calculators use the inflation numbers that are wrong!

and just to make me angry as a bat:

If an average investment as I stated above can give you +-R6000 per month per million invested:

R1 000 000 = R6000 per month
R100 000=R600 per month
R10 000=R60 per month
R1000=R6 per month ? Really. You want to tell me that these financial guru's can't get us more than R6 per R1000 invested per month?

Hmmmm interesting comment you made there. I wonder if I can buy a CFD to go lower, because as you mentioned, the price tends to fall by the value of the divvy.

I have investigated the whole divvy thing. You need so many shares to make it worth your wile. The alternative would be to buy a derivative that does get a divvie payout like share installments on the share. But that opens another can of worms.

Thanks Moonraker. So the bottom line if I understand it correct, is that compared to putting money into the bank, you will pay less tax. You do get a component of interest earned at your bank tax free, think the amount is round R31000, but once that component is exceeded you will start paying tax at, what 18%, and as you earn more interest you will move into higher tax brackets. But with prefs you will just pay the divi tax.

So the bottom line is that up to that R31000 you can go the bank route but once you exceed that,  prefs are the route to go?

Now a question pops up - that R31000 tax free money, is that per year? In prefs you pay that divi tax from day one. So a good move could be to put your money in the bank for 6 months to get the R31000 tax free and the take it out and buy prefs for the ramaining 6 months and then next year sell the prefs and put ht emoney back in the bank and for the second 6 months put it in prefs again.

You basically swing it to prefs as soon as you hit the R31000 tax free number?

GCR, you are right with your comments. I wanted to know more about them as I am investigating the dark side - debt instruments. FRANZ, thanks for that info. Much appreciated.
To get back to your comments GCR, I am also baffled why anybody would buy pref shares and not just go for a fixed deposit. What are we missing???

GCR maybe you can take a look at this video and just maybe you see or hear something I have missed - http://www.justonelap.com/webinarDetail.asp?intWebinarID=100
Registration is free. Download the vid.

Thanks GCR. Yes I am only interested in them for creating an income stream. I still don't know where to go and look for preference shares. It's an enigma!
Anybody? Newspaper, website, bank?

I have read many an article stating the following. You do not make money when you enter a trade. You make money managing the trade. Even when the trade goes against you, how well you manage your exit will determine your losses. If you enter a trade and it goes against you immediately, nothing you can do about it. It happens. You might have read the signals wrong. An event triggered a price decline. You have to decide where is your ultimate loss point where you get out come hell or high water. That point is absolutely crucial and that is the point where most people fail!

4 Items make us fail at that point:

1. Emotions make us fail!!!! (It's going to turn, isn't it? Maybe, maybe not. At this stage you have become a gambler.)
2. Listening to other people make us fail!!! (You realize that they are in a losing trade also and do not want to feel alone right?)
3. Listening to the media make us fail!!! (These okes call tops and bottoms and only 1 out of every 100 get it right. You do realize that?)
4. Cashflow make us fail!!! (You have lost so much money, you can't afford to get out. You have to wait for it to make your money back. It can take a month or 10 years. You are stuck.)

A successful trader has a system that works 60% of the time and that 10% above the gambling point of 50/50 gives him the edge that makes him money.

Stoploss was mentioned. It's worth it's weight in gold! 

Okay here is the nitty gritty - You can do the course and that should give you a background of software to use, datafeeds and so on but do not think you will learn how to trade. These types of courses are a good base but will definitely not teach you how to trade. Go to JustOneLap.com and sign up for free. Then work through all the video's and articles! That will enhance your base knowledge. Then you go to Realchartist.com. Real traders trading for a living! Just close your ears and edit what you read. When things go wrong those okes can lose R50 000 a day!!! and then they use some very very hard words.

Trading is the worst emotional roller coaster you have ever been on.

And here is a master tip if you want to get into trading - learn all the candles!!! Candle reading is the second best thing after ticker tape reading. Ticker tape reading will take you 20 years to learn.

Okay that I do agree with. The pullbacks must be lower than the lump sum purchase price.