Author Topic: Investing in SA or taking/leaving money overseas  (Read 25288 times)

Mr_Dividend

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Investing in SA or taking/leaving money overseas
« on: September 03, 2015, 04:46:20 pm »
This conversation seems to often pop up on different threads. I thought I would compare a very popular overseas fund (VSTX - vanguard total market, broad USA all share) with one of our favorite funds - the STXIND

https://personal.vanguard.com/us/funds/snapshot?FundId=0585&FundIntExt=INT#tab=1

5 Years: The info.

Dollar : 7.18 now 13.3

STXIndi - R23,96 now R63.81

VSTX $10,000 -----> $21,046

So, if you had R71800 you could have changed it into $10,000 and you would now have (21046 x 13.3) R279,911
Had you bought the STXind R71800 you could have bought 2996 STXindi shares, now worth R191,174

So although the INDI has done very well in % terms, because of the Rand,  you would have done a fair amount better had you taken the money overseas.


#####should just add, the Rand has taken a beating lately - it might recover. At the same time, what do you think would happen to the rand if say a Mr Malema came into power?



« Last Edit: September 03, 2015, 04:49:55 pm by Mr_Dividend »

Fawkes85

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Re: Investing in SA or taking/leaving money overseas
« Reply #1 on: September 03, 2015, 05:29:10 pm »
I don't want to be a doomsayer and I have expressed my opinions about the current situation in SA a couple of times now. But I think it is always a good idea to have something overseas just in case. As a safety net.

Mr_Dividend

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Re: Investing in SA or taking/leaving money overseas
« Reply #2 on: September 04, 2015, 07:01:07 am »
Quote
Dollar : 7.18 now 13.3

STXIndi - R23,96 now R63.81

VSTX $10,000 -----> $21,046

So, if you had R71800 you could have changed it into $10,000 and you would now have (21046 x 13.3) R279,911
Had you bought the STXind R71800 you could have bought 2996 STXindi shares, now worth R191,174

What about if the rate of exchange was R10 to the $1?

so, $21046 x 10 = R210,460
vs
R191,174

Still better off overseas - but a lot closer.  And of course, if the rand goes to R20 to the $ - you would have had R420K - so over double.

Unfortunately,  the rand /dollar equation will be set (by the large part) by our politicians (and there policies and actions). Personally, there is a chance we might see 10 again I guess, but I think there is a better chance of us seeing 20/1 in the next 5 years.

Now I do hope I am wrong, and some amazing leadership arrives in SA to lead this country forward - but it's not looking good. Forget long term planning, the current leadership has problems with even short term planning. Like making sure the SAPO has petrol.

Luckily, most of our portfolio's will have dollar/euro hedges - the guy with "savings in the bank", not so much. But I suggest the dollar hedge question move up in the list when it comes to add a new stock/etf to your portfolio.

Maybe Patrick can be nice and do a more in depth look for one of his blog posts...

On the side...

What do you think would happen to the rand if one of our ministers says they think they might like to implement a Zimbabwe style indigenisation type act? Just a thought.
« Last Edit: September 04, 2015, 07:32:15 am by Mr_Dividend »

Fawkes85

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Re: Investing in SA or taking/leaving money overseas
« Reply #3 on: September 04, 2015, 07:37:20 am »
You might want to take a look at these figures too:

5 years ago, for R71 800, you could've bought 9 509 shares of the DBXUS at R7.55 a pop. Those 9 509 shares would be worth R242 859.86 at todays prices.

Sure that is about R37 000 short of the VSTX but it still beat the STXIND by R50 000.

Orca

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Re: Investing in SA or taking/leaving money overseas
« Reply #4 on: September 04, 2015, 12:34:36 pm »
Clearly the DBXUS is the better performer but there are other factors to take into consideration. The DBXUS holds about 600 stocks mostly in the tech sector and is overweight in Apple and Microsoft. Need I mention the dot net bubble that burst?
The tech sector is, according to analysts, the best sector to be in at this stage. So 5 stars for that.

What is not taken into consideration is the fact that the DIVTRX pays a much higher dividend. I would love to see a chart where dividends are factored in.
I would prefer this to DBXUS due to it's diversity alone regardless of the superior dividends it pays.
I started here with nothing and still have most of it left.

Fawkes85

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Re: Investing in SA or taking/leaving money overseas
« Reply #5 on: September 04, 2015, 12:48:00 pm »
I get what you're saying but was just doing the comparison for Mr_Dividend so that he can see he does not need to go through the hassle and trouble of opening up an offshore trading account to invest in the US and have access to the benefits of the weak Rand. He can do it right here in SA by investing in the DBX trackers.

Mr_Dividend

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Re: Investing in SA or taking/leaving money overseas
« Reply #6 on: September 04, 2015, 02:35:28 pm »
I get what you're saying but was just doing the comparison for Mr_Dividend so that he can see he does not need to go through the hassle and trouble of opening up an offshore trading account to invest in the US and have access to the benefits of the weak Rand. He can do it right here in SA by investing in the DBX trackers.

Sure, but I already did the comparison yesterday  ;)

Quote
Re: What would you do with R10,000/month savings?
Reply #28 on: September 03, 2015, 02:46:58 pm
QuoteModifyRemove
Actually, was wondering the best way to compare - working out how much R1000 could buy 5 years ago ect ect. But of course, the easiest is just to compare JSe:DBXUS vs STXIND - over 5 years, 236% vs 177%

I would hazard a guess too, that out the country, there are better ETF's to go into than the rather high fee DB funds. Not only that - trading fees are a lot lower as a bonus.

Personally, if I was out the country and needed to live on Euro/Dollars, the bulk of my money would have followed me - but probably would have left some behind to try get some of the African growth.

Fawkes85

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Re: Investing in SA or taking/leaving money overseas
« Reply #7 on: September 04, 2015, 02:44:35 pm »
Ah. I guess I missed that. Anyways, you might be interested in reading this:

http://investor.moneyweb.co.za/2015/09/02/offshore-investing-foreign-investing-the-direct-or-indirect-route/

Patrick

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Re: Investing in SA or taking/leaving money overseas
« Reply #8 on: September 04, 2015, 02:46:26 pm »
The only thing I don't like about the DBX trackers is the very high fees, and spread too if I remember right. I think it was about 6 times more expensive than a similar vanguard funds, and twice the price of the indi or divtrx.

If like to know what the odour component is of the indi and divtrx. I've heard numbers as high as 70% for the indi. It's pretty believable if you look at the bigger companies in the index, and I expect it will grow as those smart, well run companies focus their expansion outside of SA.

rjthomas

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Re: Investing in SA or taking/leaving money overseas
« Reply #9 on: September 10, 2015, 01:34:45 am »
This is a very interesting thread. I'm currently living in China and I was planning to take all my income from back to SA because it will be double, and invest it in dividend stocks. After reading this thread, it may be wise to keep a good portion in USD for emergencies.

In China you can easily get a bank account in USD. I have a credit card from ICBC Bank which is 5000 RMB and over 700 USD. When I spend locally it goes off my RMB balance, and online transactions goes from USD balance. Even though their currency is regulated, it's pegged directly to the USD.
« Last Edit: September 10, 2015, 01:36:19 am by rjthomas »
South African working in China since 2012

Fawkes85

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Re: Investing in SA or taking/leaving money overseas
« Reply #10 on: September 10, 2015, 07:31:16 am »
It might be wise to keep a good portion in the overseas but be sure to not keep too much of your money in cash. As many people will tell you, inflation will beat the hell out of your cash.

By the by, for anyone interested, I looked into FNB's offshore account offering. For those who do not know what I am talking about, you can open up an FNB Channel Islands account on the island of Guernsey. You can open up the account in either GBP, USD or EUR. As long as you keep a balance of more than GBP5000 there are no monthly banking fees(this is how I understand it but you can check it yourself). If you have an FNB Share Investor account you can link it to your Guernsey account and you will be able to move funds between the two.

I am looking into opening up one myself but haven't made my mind up just quite yet. If you want to look into it yourself you can do so here:

https://www.fnbci.co.uk/index.html

Orca

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Re: Investing in SA or taking/leaving money overseas
« Reply #11 on: September 10, 2015, 10:35:20 am »
No transaction fees in the EU. No interest on credit cards either.
I started here with nothing and still have most of it left.

Fawkes85

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Re: Investing in SA or taking/leaving money overseas
« Reply #12 on: September 11, 2015, 07:18:01 pm »
Don't know if you will be interested in this Mr_Dividend but you might want to look into Redefine International. Even though the SA REIT Redefine Properties owns a roughly 33% share in it, it is still a fully foreign company. They do, however, have a secondary listing on the JSE. So you there is an opportunity for you to invest offshore without having to go through the hassle of sending money abroad. Doesn't give you exactly what you are looking for but still something you might want to look into.

Mr_Dividend

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Re: Investing in SA or taking/leaving money overseas
« Reply #13 on: September 12, 2015, 07:21:12 am »
Yup, have had them for a few years now - actually one of my first purchases - before they changed their name. Also own ROC, INTU and Nepi and recently added Delta inter as well as TEX which now has a fair UK component.

The other day I checked my main main portfolio and 25% reports in ether dollars/ euro's or pounds - most of that is REITS but also OML and BTI. So relatively well rand hedged.

Fawkes85

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Re: Investing in SA or taking/leaving money overseas
« Reply #14 on: September 12, 2015, 08:36:32 am »
Yup, have had them for a few years now - actually one of my first purchases - before they changed their name. Also own ROC, INTU and Nepi and recently added Delta inter as well as TEX which now has a fair UK component.

The other day I checked my main main portfolio and 25% reports in ether dollars/ euro's or pounds - most of that is REITS but also OML and BTI. So relatively well rand hedged.

Seems like you have been dealing with offshore REITs for awhile now. Maybe you can answer me this then, when they pay out dividends do those dividends get taxed twice? In other words do they get taxed in the UK and in SA?