Author Topic: My Beginner's Portfolio Blog(Experiment)  (Read 46373 times)

Fawkes85

  • Guest
Re: My Beginner's Portfolio Blog(Experiment)
« Reply #30 on: November 02, 2015, 02:35:44 pm »
Not sure, but if it is the case that they are treated as income then there is a further problem as it is likely to put one into a higher tax bracket with little opportunity to reduce once taxable income.


I do not pay income tax in SA so it doesn't concern me. Will just be paying the flat 15% Div Tax.

Moonraker

  • Hero Member
  • *****
  • Posts: 1095
  • Karma: +31/-0
    • View Profile
Re: My Beginner's Portfolio Blog(Experiment)
« Reply #31 on: November 02, 2015, 03:11:48 pm »
@gcr Check the SAC thread http://shareforum.co.za/shares/sac/ to find out about REITS and to see how they outperformed equities by a huge margin over the past 10 years and even this year.
Looks like you missed out on some great wealth creation for fear of paying tax. If you take something like NEPI or RES the outperformance is even higher.
NEPI = 15% withholding tax, so not added to taxable income. RES = locally registered with holdings in NEPI, Rockcastle, Fortress. As RES is not foreign listed income from distributions are added to income (so what ?) but there is no withholding tax.
Take some time to learn about the various REITS, which ones to avoid etc.
« Last Edit: November 02, 2015, 03:16:51 pm by Moonraker »

gcr

  • Hero Member
  • *****
  • Posts: 1008
  • Karma: +28/-1
    • View Profile
Re: My Beginner's Portfolio Blog(Experiment)
« Reply #32 on: November 02, 2015, 03:20:54 pm »
@gcr Check the SAC thread http://shareforum.co.za/shares/sac/ to find out about REITS and to see how they outperformed equities by a huge margin over the past 10 years and even this year.
Looks like you missed out on some great wealth creation for fear of paying tax. If you take something like NEPI or RES the outperformance is even higher.
NEPI = 15% withholding tax, so not added to taxable income. RES = locally registered with holdings in NEPI, Rockcastle, Fortress. As RES is not foreign listed income from distributions are added to income (so what ?) but there is no withholding tax.
Take some time to learn about the various REITS, which ones to avoid etc.
Ta - will look into them
Not everything that counts, can be counted, and, not everything that can be counted counts - Albert Einstein

Moonraker

  • Hero Member
  • *****
  • Posts: 1095
  • Karma: +31/-0
    • View Profile
Re: My Beginner's Portfolio Blog(Experiment)
« Reply #33 on: November 02, 2015, 03:35:04 pm »
Backing up what I said (again).
Tax not a worry for me with  the right REITS.


« Last Edit: November 02, 2015, 03:37:44 pm by Moonraker »

gcr

  • Hero Member
  • *****
  • Posts: 1008
  • Karma: +28/-1
    • View Profile
Re: My Beginner's Portfolio Blog(Experiment)
« Reply #34 on: November 02, 2015, 04:20:31 pm »
I don't want to hijack this thread but this is what I have established looking at my present portfolio:-
I sold out of SAC September 27, 2007 at a price of R 4.14 and per todays figures the price is R 5.20. Since 2008 it has declared the following dividends 2008 29.50 cents; 2009 29.70 cents; 2010 27.48 cents; 2011 28.53 cents; 2012 29.65 cents; 2013 31.26 cents; 2014 34. 15 cents; 2015 37.68 cents
I then compared this against my Woolworths holdings which I bought at the same time as I sold SACI bought at R 20.93 and todays price is R 103.02
Dividends declared since 2008 were as follows 2008 173 cents; 2009 85 cents; 2010 105 cents; 2011 143.5 cents; 2012 198 cents; 2013 234 cents; 2014 251.5 cents, and 2015 247 cents
On the Woolworths shares there would have been the 15 withholding tax per cycle and dividend payout

So my question to Moonraker - Help me through this malaise and tell me how I could have scored a better wealth return by staying in SAC as the WHL price has gone up significantly since 2007 (Allan Grey had a sell at this stage) yet SAC has gone nowhere in real terms.
What I am trying to get my head around is how REIT are better than equities - because in my mind it all revolves around what you purchase
So happy to learn
Not everything that counts, can be counted, and, not everything that can be counted counts - Albert Einstein

Fawkes85

  • Guest
Re: My Beginner's Portfolio Blog(Experiment)
« Reply #35 on: November 02, 2015, 04:36:14 pm »
I don't want to hijack this thread

Please do. As things are now I only write on here once a month to give my updates. This means after a month I have to go look for this thread. Helps me if you hijack this thread cause it means it will stay at the top where it is easy for me to find. Also, like I have said many times I am still a newbie. I am still learning and forming my strategy as I gain experience. Helps me a lot when someone more experienced like you come on here and ask questions that haven't even crossed my mind yet.

But now to the defense of REITs. Like Moonraker said, you just need to make sure you invest in the right REIT. SAC would seem to not be one of those so you were wise to get out of it. But a lot of others have performed really well.

As I also said in a different thread, I have always been interested in being invested in real estate. REITs gave me the opportunity to do that without having to go out and take out a mortgage. I avoid debt like the plague and I wouldn't touch a mortgage with a ten foot pole. With a REIT I can just buy into it as I get the funds. It is like buying a house one room at a time. REITs can also provide you with a much better income then a rental property as well as simplicity. With a REIT I don't have to bother with property taxes/levies, homeowners insurance, maintenance costs, an empty apartment cause I can't find someone to rent it out to, or even worse, a pain in the ass tenant.
« Last Edit: November 02, 2015, 04:38:34 pm by Fawkes85 »

Moonraker

  • Hero Member
  • *****
  • Posts: 1095
  • Karma: +31/-0
    • View Profile
Re: My Beginner's Portfolio Blog(Experiment)
« Reply #36 on: November 02, 2015, 04:48:39 pm »
I am talking about REITS as a group - Get the right ones and you would have outperformed even a good share like WHL on capital appreciation only, let alone the dividends.
SAC was one of the poor performers until they restructured their portfolio to include affordable residential units. I would not now buy those counters with only or mainly local
property portfolios, but rather those I mentioned, incl. RES because of the part overseas exposure. However these are now pretty much fully valued.
The graphs I posted are fact. Now compare your WHL to NEPI  over the time period you mentioned, include RES as well (there are others), and take into account the divs.
FFB has been the phenominal outperformer..
(Retirees should certainly balance their portfolios to include REITS)

« Last Edit: November 02, 2015, 05:30:53 pm by Moonraker »

Mr_Dividend

  • Hero Member
  • *****
  • Posts: 586
  • Karma: +21/-0
    • View Profile
Re: My Beginner's Portfolio Blog(Experiment)
« Reply #37 on: November 02, 2015, 05:12:48 pm »

Using your example and figures and R10,000 initially invested I get SAC +_ R5988 and WHL+-R6849 - 15% R5821. So as income stream you would have done better with SAC. Of course, you capital would have grown substantially with WHL around 500% and only around 25% with SAC.

So you would have been better off with WHL - but WHL has been a very good performer in equities - I am guessing in the top 20%( maybe 10%), and you comparing it a very boring REIT - definitely in the bottom half. A fairer comparison would be HYP -but am not going to go through all the sens to hunt dividends!

Of course, WHL has always been a decent divided payer and deserves a spot in a dividend paying portfolio anyway.



« Last Edit: November 02, 2015, 05:14:59 pm by Mr_Dividend »

gcr

  • Hero Member
  • *****
  • Posts: 1008
  • Karma: +28/-1
    • View Profile
Re: My Beginner's Portfolio Blog(Experiment)
« Reply #38 on: November 02, 2015, 10:49:19 pm »
It is obvious that we have distinctly different viewpoints, so here's a proposal which will take the emotion out of the matter and stop it becoming a pissing competition.
Patrick no doubt will run this competition again next year and more than likely assign the same monthly amount over the competition duration.
Proposal
Between January 4th 2016 (the date that we should get our 1st R 100,000) we have until 29th January 2016 to invest the R 100,000 fully into any REIT's or securities of our choice. These instruments may not be sold during the course of the year, but you may add funds to these instruments during the course of the year. This requirement is to in theory not violate SARS conditions whereby you need to hold the instruments for 3 years to avoid being designated a trader.
So in principle these funds are ring fenced within the competition and then o the appropriate day in December 2016 when the competition ceases we can tot up the capital appreciation (Patrick carries both purchase and current price in the competition) and the dividends/interest earned. The dividends/interest declared can be reinvested within the respective counters but dividends of other holding may not be invested in the ring fenced instruments.
Thus at the end of December 2016 we can see what the respective ring fenced instruments achieved in creating wealth

Should sufficient numbers of forumites enter into this aspect of the overall competition we may well pick up some interesting results and from which all of us can learn and make us better investors.
This is not a bragging competition but a mechanism by which we can all learn and can make future decisions with some historic data
So I am keen to be part of this exercise, are there others that would be interested in being part of the "challenge" and maybe Patrick can create a suitable thread just for this year long exchange   
   
Not everything that counts, can be counted, and, not everything that can be counted counts - Albert Einstein

Fawkes85

  • Guest
Re: My Beginner's Portfolio Blog(Experiment)
« Reply #39 on: November 03, 2015, 07:11:11 am »
You can consider me in.

Mr_Dividend

  • Hero Member
  • *****
  • Posts: 586
  • Karma: +21/-0
    • View Profile
Re: My Beginner's Portfolio Blog(Experiment)
« Reply #40 on: November 03, 2015, 07:26:27 am »
Personally, I think you looking at this the wrong way. I use REITs for income and as a way to diversify my portfolio - for me is like having a rental flat without the hassle. I think you said you keep quite a bit of cash in FD's? I am guessing that's fixed deposits? Why not compare overall returns on FD's to REITS? I, on the other hand, keep nothing in cash.

As you pointed out, it really does come down to circumstances - I retired on VERY little very, young at 40. Besides having to squeeze every last cent as income, I needed that income to be regular and to at least grow with inflation. REITS formed a part of that.

It comes down to :: dividends/yields are a function of the business and the wider economic situation. Share price, although partly a function on the business, is mainly set on the whims of the JSE - IMO.  As my money has to last 40 - 50 years I opted to rely on the former - rightly or wrongly.

That said, variety is the spice of life, and have a smaller portfolio where dividend is not part of the equation so contains shares like Taste, trustco, Adapt, DSY and aspen. If I am going to fish, I might as well use a big net!

Personally, I will not get involved with your competition - the time line is to short and it's not about total gain but monthly income - so you need to decide on a yield you want before starting.






Patrick

  • Administrator
  • Hero Member
  • *****
  • Posts: 2551
  • Karma: +47/-2
    • View Profile
Re: My Beginner's Portfolio Blog(Experiment)
« Reply #41 on: November 03, 2015, 07:57:21 am »
May I perhaps derail this already derailed thread, hope you don't mind Fawkes, but since we have a fair amount of foreigners here, and I myself plan to be a non-resident at some point in future, what happens to tax on a REIT when you're a foreigner?

Fawkes85

  • Guest
Re: My Beginner's Portfolio Blog(Experiment)
« Reply #42 on: November 03, 2015, 08:09:59 am »
May I perhaps derail this already derailed thread, hope you don't mind Fawkes, but since we have a fair amount of foreigners here, and I myself plan to be a non-resident at some point in future, what happens to tax on a REIT when you're a foreigner?

You pay the 15% Dividend Withholding Tax just as you would on any other dividends and will no longer be taxed on your income.

Fawkes85

  • Guest
Re: My Beginner's Portfolio Blog(Experiment)
« Reply #43 on: December 01, 2015, 07:39:15 am »
Another month gone by and here is what happened. Not much. Except for a lot.

Not much happened in the sense that I did not do a lot of buying. In the beginning of the month I added a little bit to my TEX position and that was that. Not gonna do a lot buying in the next few months because sending money home means getting destroyed by bank charges on either side of the border. It costs me minimum R400(depending on how much money I send) every time I transfer money back home. So you can do the math. If I were to send money back home every month I will pay almost R5000 in fees over the course of a year. Thus I will only be sending money back home every three months which in turn would mean I can only buy shares every three months. The next planned transfer will only occur in February and thus I will not have much to report on except for portfolio performance until then.

A lot happened on the performance front. A lot of falling. Both TEX and RPL took nosedives over the course of the last month. From a dividend perspective I know I shouldn't be bothered about it falling as I do not intend to ever sell these shares. Didn't buy them to sell. Bought them for the income. And in fact I should be delighted that they have come down. It means I can continue buying them at a price that provides me with a good dividend yield. Or at least I WOULD HAVE been able to if I had the cash. Will talk again in February when that happens and see where they are then. But with that said it still stings like a maternal defiler seeing the overall worth of ones portfolio go down by that much. But what you gonna do? It is what it is. If there is one thing I learned, anyway, is that I should block out the white noise of short term volatility and keep my eye on the prize that older people refer to as the "long term." Whatever that may be.

So anyway, here is the current portfolio makeup(make-up?):

RPL 55.37%

TEX 40.78%

FDP 2.64%

Cash 1.21%

By how much did things fall this month? By this much:

Performance for Nov(divs incl): -4.28%  :wall:

Performance since inception(divs incl): -5.68%  :wall:

jaDEB

  • Global Moderator
  • Hero Member
  • *****
  • Posts: 4551
  • Karma: +31/-3
    • View Profile
Re: My Beginner's Portfolio Blog(Experiment)
« Reply #44 on: December 01, 2015, 08:11:08 am »
I must say, I do not like FDP's name. Reminds me of you know who !!! :frustrated:
jaDEB

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