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Author Topic: Tax Free Shares  (Read 10526 times)

Pluto

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Tax Free Shares
« on: March 02, 2015, 11:19:48 am »
Hi,

Can I get your guys opinion on this Tax Free Share account offered by FNB please.

https://www.fnb.co.za/invest/tax-free-accounts/share-option.html

I read what I can find about it and it looks like the same limits that apply to a tax free savings account apply here.
R30,000 per year and max of R500,000.

It looks like they'll invest you in 2 ETFs, RMB Top40 and RMB MidCap.

All dividends and capital gains are tax free.

I guess things are all relative and if the companies that make up those ETFs do well you'll do well.
And if you were already invested in similar ETFs it would probably make sense to make use of this.

Annual fees range from 0.40% to 0.30% per annum plus VAT.
What exactly does that mean? 0.40% of you portfolio is fine, but the plus VAT part? Does that mean if you deposit R30,000 they'll charge you VAT on it?

What do you think? Worth looking into as a fairly safe investment?

Thanks for your input/views!

Cheers.
« Last Edit: March 02, 2015, 11:24:18 am by Pluto »
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JDP

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Re: Tax Free Shares
« Reply #1 on: March 02, 2015, 12:00:48 pm »
To be honest, my opinion is that it is early days.

I will definitely make use of this investment vehicle, but I would like to have a wide range of offerings, before I make my decision, in order to compare
cost, where my money would be invested etc.

I already have the max amount to invest for the year, basically I would carry over the R30k from my AG Balance fund, but I will give it till june / july to check
who else has what on offer. 
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Patrick

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Re: Tax Free Shares
« Reply #2 on: March 02, 2015, 12:33:37 pm »
Since I'm young I'll be putting my R30k into one of these accounts for the next 17 years, but like JDP, I'm not sure which one that should be yet. Sadly the regulations went through only a very short time ago, so the financial providers didn't have time to set up their accounts yet.

I'm hoping to find one with ETF like fees, and I did see that SATRIX will be offering something like this soon, hopefully with low fees. The tax free bit is great, it also opens up the ability to put it into property type funds without having to worry about income tax.

There's a good writeup here on the accounts:
http://www.iol.co.za/business/personal-finance/news/providers-set-to-compete-for-your-tax-free-savings-1.1821668#.VPQ57S402T8
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gcr

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Re: Tax Free Shares
« Reply #3 on: March 02, 2015, 12:43:10 pm »
I agree with JDP it is early days, I think there will be rule changes as speed bumps are found along the road, and then excluded.

In my opinion this is a smoke and mirrors product, as many people get a rebate on interest components within the tax structure, and given that you can only invest R 30,000 p.a. the rebate is more than adequate. Also they are capping the lifetime investment at R 500,000 so it will take you + 16 years to get to this amount, which in terms of pensioners is not really a positive at all as some may have less than 16 years to live.
There is to my mind only one positive factor in this investment and that is that there is no CGT, but in reality managing your own share portfolio you will be able to negate this cost through astute investing
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Orca

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Re: Tax Free Shares
« Reply #4 on: March 02, 2015, 01:14:52 pm »
@Pluto. No, the VAT is only on the fees and not your deposits.

Only SA residents.  :frustrated:
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gcr

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Re: Tax Free Shares
« Reply #5 on: March 02, 2015, 02:27:50 pm »
Quote from: Orca on March 02, 2015, 01:14:52 pm
@Pluto. No, the VAT is only on the fees and not your deposits.

Only SA residents.  :frustrated:

Ja Orca - I agree. Why can't those who emigrated not place their blocked funds into these investments and then after a given time frame arbitrage the funds out of the country :'(
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Pluto

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Re: Tax Free Shares
« Reply #6 on: March 03, 2015, 09:55:18 am »
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.
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Moneypenny

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Re: Tax Free Shares
« Reply #7 on: April 19, 2015, 07:49:15 pm »
On PSG site under Home, Wealth, Investment, Tax free investment plan.
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Hamster

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Re: Tax Free Shares
« Reply #8 on: April 21, 2015, 08:14:33 pm »
There's a bucket load of them by now. I know it is late but my 2c: I wouldn't bother with FNB's offering.

The reason: it is basically their Share Saver wrapped as a TFSA and the Share Saver account by itself is already very cheap to invest in (taxed of course). Since it makes no sense from a diversification point of view to invest in the Top40 twice (the Share Saver is VERY lopsided towards the Top40 which is not equally weighted), why waste the opportunity to have another "cheap" investment account (if that makes sense).

Personally, the Easy Equities looks the best to me. The STD Bank one requires you to be an OST client which requires monthly costs (if you are though it might be worth it - lots of ETFs to choose from).

My financial advisor is pushing for the Stanlib one...but she pushes only for Stanlib products. Any type of extra fee on these TFSA accounts is a waste IMHO.
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