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Yip. I made some "skillful" investments some years ago and now just having bad luck.
Sorry, I must add that those figures are divides included.
Forgot to add this. Portugal wants to see funds coming in to our Portuguese bank account for self sustainability before we can get residence. FNB needs a residence certificate before they can send my own money here. A catch 22 situation.
Been here for 3 months now and enjoying it. No burglar bars
**snip**
This is why there are so many more females here than men.
If only I was younger.
This part is only for the single guys here.
Capital gains tax is one third of income tax (so a 13.3% max, not 10%), after the R30k exemption.
So if you decided to retire on your investments, and need to sell R600k worth of shares to live on every month. I'll assume you bought the R600k worth of shares 5 years, and they grew at 15%pa. I'll also assume you're now retired and have no other income. Dividends are pre-taxed, so they don't count here:
Selling price R600 000
Less cost price R300 000
=Capital gain R300 000
Less exemption = R270 000
Divided by 3 to get taxable income = R90 000
Tax on R90 000 p/a = R3474 if you're under 65, if you're over 65, you won't pay a cent!
As to whether it's better than an RA depends on many things. RA fees, performance, your current tax bracket etc. I would imagine that from next year, having the ability to put 27.5% of your salary away without paying tax on it is going to be a worthwhile thing to do. Just make sure you put it somewhere where the performance is good, and the fees are low.
Satrix charges fees every single year on the full amount invested. The brokersonly charge when you buy or sell. ABSA has a 0.4% or R120 minimum charge, so it make the most sense if your transactions are R30k or more at a time.
Erwin, you will need to use the first in, first out method (fifo) and not the weighted average in your case. In other words, you can start selling your shares monthly after 3 years. Only the amount of shares you bought 36 months back at earliest.
This takes some work as you need to file each purchase monthly with the cost price (not share price). Plus management fees and other charges.
If you want to buy/sell shares, you must do your bookkeeping and filing religiously otherwise you will get into the mess I was in. It will also save you some coronary events or infarctions.
Bank interest will practically never exceed inflation. It's a guarenteed loos over time regardless of how it's compounded. The indi most likely will beat inflation by a fair margin.
Aside from that, growth in shares takes two forms, share price increases, and dividends. The dividends for the indi are paid every three months, but growth takes place at any time, and does compound just like interest. If you gain 2% this month, and 2% next month, the growth this month would be from say R60 per share to R61.20 a share, a gain of R1.20. Next month though, the same 2% would be from R61.20 to R62.42, a gain of R1.244.
If that keeps up, and it has for some time, you'll be faaaaaaar better off than some type of cash account earning you 6% p/a.
Here's your R1000 a month (increasing with inflation) in the bank at 6%: http://www.investorchallenge.co.za/calc_compound.php?initial_deposit=0&monthly_deposit=1000&yield=6&years=20&inflation=6
Balance of R749 516,77
And here the same R1000 a month (increasing with inflation) in shares at 15% (the indi has done 20% since inception): http://www.investorchallenge.co.za/calc_compound.php?initial_deposit=0&monthly_deposit=1000&yield=15&years=20&inflation=6
Balance of R1 894 004,61
So the difference is huge. Cash is not a good place to keep cash! http://investorchallenge.co.za/the-only-way-to-get-rich/
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