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Hey, I'll give my opinion, might be wrong so don't take it as 100% correct.

It looks like they're gearing your investment 2x

Assuming the Rand $ exchange rate stayed as it is, all that is needed for you to hit their cap is (55/2)/3.5=7.85% a year on the S&P500. (This isn't even taking into account compound interest, so over 3.5 years it will probably be closer to 6.5%)
Anything above this will go to them.

You're being paid out in $ too so along with the S&P increasing you've got to hope that the Rand loses value against the $.

So if the Rand depreciates against the $ and the S&P increases by anything over 6.5% Investec will be making quite a bit of money with your money.

Another interesting comparison, all you need to make is 13% per year in order to make 55% over 3.5 years. (Compounded annually.)
Year1 - 100k + 13% = 113k
Year2 - 113k + 13% = 127.7k
Year3 - 127.7k + 13% = 144.3k
Year4 (6months) + 13% = 153.7k

Fees 1.25% year 1, 0.75% year 2 and 3 are all built into the offering.

I don't think there is a catch, they're just banking on way more upside to this than the 55% they're going to give you so it makes it worth the low risk they'll be exposed to in the unlikely scenario that things go bad and they've got to refund your initial payment.

At the Maturity Date if the Index has fallen, the Investor receives his full
capital back in Rands on condition that there is no credit event in respect
of FirstRand Bank Limited as Reference Entity.

And I have no idea what that means 

Thanks for digging a bit deeper into this Erwintwr and for the calculations/explanations.

Doesn't look as good as I initially thought.

Hi,

I've often heard about funds like the below but never gotten around to checking them out.

https://www.discovery.co.za/discovery_coza/web/linked_content/pdfs/invest/discovery_europe_high_five_fund.pdf

From my side, it doesn't look too bad but I get the feeling that i'm missing something otherwise people would be talking about it a bit more.

In a nutshell from what I understand, invest over R100,000 after 5 years you'll get interest as if you'd been invested in the top 5 European shares.

A few catches I think there may be:

• It looks like they'll only give you the % increase over the 5 years, so you'll miss out on some compound interest.
• Your money will be stuck there for 5 years which could be seen as bad or not.
• They have something about if the top 20 drop by over 40% at anytime in the 5 years you won't get the top 5 returns, instead you'll get returns from the top 20.
• I guess if you think Europe is really in trouble it could be a bad idea too.

Would the possibility of being invested in the Top 5 Euro shares not outweigh the above negatives?

Can you guys give me your opinion on it?

Thanks

Thanks Patrick!

That is an awesome explanation of how things work, best one I've seen.

Can anyone explain why everyone says you should put money into a retirement fund, as in the article ... but it doesn't seem like many people do it?

Most of us have put up details of our investments in this thread, http://shareforum.co.za/shares/what-investment-instruments-do-you-use/, but not one person has mentioned retirement funds, yet ... 

Is it just that everyone assumes they can out perform a RA with whatever else they are doing?

Thanks everyone for your input and clarification on the VAT part.

I think i'll wait a few months as suggested and see what else gets offered.