Author Topic: Investment Advice  (Read 13278 times)

Dont Look Down

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Investment Advice
« on: October 31, 2013, 06:51:27 am »
Hi, first time poster here.

I just sold my house and will be renting for a year whilst my new house is built.
I now have R700,000 that I would like to invest for the year into something that will give me a good return.

Any advice will be gretly appreciated.

Aragorn

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Re: Investment Advice
« Reply #1 on: October 31, 2013, 08:37:12 am »
Hi DLD
You'd need to consider your time period for the investment (i.e. by when would you need to withdraw from your investment), as well as your risk profile and your requirement (i.e. do you need regular income from the investment or are you looking for growth).
You'll find a common thread through all the post here that states "If you can't beat the Index, buy the Index". Check out the Satrix Indi post as well as the following posts for some good insights -
 - Share growth comparison and timeframes
 - RMB MidCap ETF
 - STX40 vs RMBT40 (read this before you buy Satrix 40)
 - Living off Dividends.
 - Reaching financial freedom
and don't forget to topic - Tax
Also look at the Investor Challenge category and competition.
You will find some great opinions.
Not idly do the leaves of Lorien fall.

Moneypenny

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Re: Investment Advice
« Reply #2 on: October 31, 2013, 08:50:23 am »
Hallo DLD and welcome. :)

I'm with A on this one, listen to him especially the part  'if you can't beat index, buy index.'

But don't stop there, whilst your real money is in the index, start learning and trading virtual money (as our competition) until you get it right and then but only then you start trading/investing yourself. 

Oh one more thing:  Never-ever base your decision on other's opinions, even the experts. Do your own thing.

You've started an exciting journey, best of luck to you.

jaDEB

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Re: Investment Advice
« Reply #3 on: October 31, 2013, 09:06:05 am »
Yes, R700 is not something just to chuck at the market. Do your research, and split it up nicely. Just keep in mind, if you can leave it in market you can ride your mistakes out, i.e. recover your losses. But it sounds like you will need to cash up within a period. And of course u need to keep in mind tax like Aragorn (Middle Earth) has indicated.
jaDEB

If it scares you, it's a sign you need to do it

Dont Look Down

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Re: Investment Advice
« Reply #4 on: October 31, 2013, 09:48:45 am »
Hi DLD
You'd need to consider your time period for the investment (i.e. by when would you need to withdraw from your investment), as well as your risk profile and your requirement (i.e. do you need regular income from the investment or are you looking for growth).
You'll find a common thread through all the post here that states "If you can't beat the Index, buy the Index". Check out the Satrix Indi post as well as the following posts for some good insights -
 - Share growth comparison and timeframes
 - RMB MidCap ETF
 - STX40 vs RMBT40 (read this before you buy Satrix 40)
 - Living off Dividends.
 - Reaching financial freedom
and don't forget to topic - Tax
Also look at the Investor Challenge category and competition.
You will find some great opinions.

thanks so much for the great reply and to the others who have also replied.

I just want to put the money away for a year and get some growth out of it, I don't need to use the money and I'd rather it made some money for me instead of just sitting in a bank account earning minimal interest. I'll speak to my tax consultant about the tax implications of any profit I will hopefully make !

Thanks for the advice, I will definitely look into the Satrix INDI and the other threads that you mentioned.

jaDEB

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Re: Investment Advice
« Reply #5 on: October 31, 2013, 10:07:04 am »
Just keep in mind, market is high, and 1 year is frikkin short term in market/investments.
jaDEB

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Orca

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Re: Investment Advice
« Reply #6 on: October 31, 2013, 10:36:11 am »
No need to ask your tax consultant. It is very simple. As you will be investing for less than the 3 year term required for CGT, you will have to add all your gains to your income after selling.
So if you are in the 40% tax bracket, you will pay 40% on your gains. Sux hey?

I agree with jaDEB. We are riding the peak of a wave that has to tumble +- 6 to 8% soon.
I started here with nothing and still have most of it left.

Patrick

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Re: Investment Advice
« Reply #7 on: October 31, 2013, 03:43:04 pm »
Not much to add to all those smart people, but the "for the year" part you mentioned means you will be paying income tax if you draw the money after just a year. If you're in the 40% bracket that will really hurt your returns... If you could leave it there for 3 years plus you'd be doing huge favors for yourself.

If not you're still likely to beat other investments by using the market, but it can't be guaranteed. All I can guarantee is that if you leave it in your bank account you will lose money to inflation.

yossarian

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Re: Investment Advice
« Reply #8 on: November 05, 2013, 08:25:50 pm »
12 months is a bit short to commit to the market.  You could easily lose money.  You can get about 6% from the bank on a fixed deposit (Capitec offers this).  There are also money market products available like RMB's offering.

Quote from: sars
Interest from a South African source earned by any natural person
under 65 years of age, up to R23 800 per annum, and persons 65 and
older, up to R34 500 per annum, is exempt from taxation

So although you're not really making any money after inflation, at least half of it is exempt from tax.  Consider putting enough in an interest earning account to earn up to your exemption.

Update:  consider you might be able to split your earnings over two tax years with exemptions of 23 800 for the first year and (probably) 25 000 for the second year.

R700 000 * 6% pa for 6 months = R21 000 (tax free) (stick it in a bank account -- low risk)

R700 000 * 10% pa for 6 months = R35 000 before tax = R21 000 after tax @40% (invest in the Top 40 or similar --  higher risk).
« Last Edit: November 05, 2013, 08:47:29 pm by yossarian »