Author Topic: TFSA (2016)  (Read 8127 times)

Hamster

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TFSA (2016)
« on: February 12, 2016, 09:52:45 am »
So it's been a year, I learnt a lot (fully aware of my n00b status still) and I'd like to get some ideas on what you guys think is the best make up for my TFSA. There was a JSE talk last night on the topic and the video will be posted later today apparently.

So initially I started of with DBXWD and STXIND in my TFSA. But further reading indicated to me that DBXWD in a TFSA is probably not optimal. Reason being that if I invest in DBXWD it is for the long term (I still have another 25-30 years to go before I retire) and all I'll be scoring on one day is not paying capital gains on my earnings (dividends on the it is almost non-existent plus foreign tax etc). Given that we don't know what capital gains will be in 30 years time I'm really seeing no benefit in having it in my TFSA vs having it in my normal long term investment account.

So, my current thinking is this:
GIVFIN - 25%
PTXSPY - 25%
STXIND/GIVIND - 50%

These give reasonable growth vs. dividends. The reason for combining STXIND and GIVIND is to offset the biggish weightings of companies like NPN (maybe split it 65% STXIND, 35% GIVIND).

I really want to come up with a weighting and stick with it for a long time. What do you guys think?


PS: Other considerations include Top40 type ETFs like NFEMOM, MAPPSG, MAPPSP and your regular RMBT40 types. MAPPSP gives better dividends but at the expense of growth. In fact it feels like a waste having a top40 in your TFSA although people like Simon Brown are gaga over the equally weighted one and have it in their TFSAs apparently.

Strive

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Re: TFSA (2016)
« Reply #1 on: February 12, 2016, 10:15:11 am »
Ha, I'm about ten times the noob you are - I'm still in the process of soaking up as much info as possible, so I find these types of threads to be very interesting.

Is there a particular reason why you're not including DIVTRX in your portfolio? In terms of growth and dividends, it seems to be pretty solid (perhaps not recently :P ) for the most part. I'm also wondering about including a Top 40, but not sure if it makes sense considering the other constituents. If you want growth, especially over the next 20 years, then focusing on the big returns of the more specialized trackers may make more sense. Could stand to be corrected here!

I also like the combination of the industrial trackers, especially the attempt balance out the weightings - I may just steal that for my own portfolio :D


Hamster

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Re: TFSA (2016)
« Reply #2 on: February 12, 2016, 10:38:09 am »
Is there a particular reason why you're not including DIVTRX in your portfolio? In terms of growth and dividends, it seems to be pretty solid (perhaps not recently :P ) for the most part. I'm also wondering about including a Top 40, but not sure if it makes sense considering the other constituents. If you want growth, especially over the next 20 years, then focusing on the big returns of the more specialized trackers may make more sense. Could stand to be corrected here!

I looked at the DIVTRX, STXDIV and PREFTX. PREFTX aside (gives almost no growth), by my calculations the DIV ones don't seem to beat the others by that much if any. I think most of those companies are probably included via the industrial, financial and property sectors I'm targeting. Same deal with Top40s.  :)

Again I might be very mistaken so feedback will be appreciated  :whistle:

gcr

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Re: TFSA (2016)
« Reply #3 on: February 12, 2016, 11:15:40 am »
For those who may be interested I attended one of Simon Brown's Power Hours at the JSE last night and the two counters he has in his portfolio are the Betta Beta Top 40 and DBXWD and says his next trance of funds will go into these on a 40/60 (from what I recall) ratio next month.

I am still hesitant with this investment but the more I read and hear about the 39 counters that you can purchase is become a bit more compelling, the only issue I have is that I can't invest more than R 30,000 per annum and I don't have the luxury of investing for the next 17 years as I will probably in a wheelchair dribbling into my bib in 17 years time - need to be able to fast track at least 10 years of investments
Not everything that counts, can be counted, and, not everything that can be counted counts - Albert Einstein

Hamster

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Re: TFSA (2016)
« Reply #4 on: February 12, 2016, 11:24:37 am »
What's his reason for sticking with those two? His had a couple of talks here with us before and seems to be on the ball so there must be a good reason he is picking those for this TFSA.

EDIT: Found the video
« Last Edit: February 12, 2016, 11:29:26 am by Hamster »

jonb

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Re: TFSA (2016)
« Reply #5 on: February 12, 2016, 11:32:08 am »
I am in the same boat and setting mine up for long term

STXIND - I am not sure of this will continue to be a winner but I like that is has a reliable perf history /30%

BBET40 - really because of Simon :)  and also as this can play against STXIND with its heavy Naspers weighting / 15%

PTXTEN - Long term slow burner, good dividend, property core holding in equal weighting /15%

DBXWD - The international play with a view of taking all currencies as I am a little worried on US economy only / 40%

Appreciate any feedback you guys might have, feel like this past year I have been jumping around and really want to get something solid , lock it in and forget about it!




Hamster

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Re: TFSA (2016)
« Reply #6 on: February 12, 2016, 12:43:42 pm »
So what Simon is proposing (bearing in mind I think this is for people who only save in a TFSA):

In retirement:
BBET40: 10%
NFGOVI: 40%
DIVTRX: 10%
PTXTEN: 20%
DBXWD: 20%

Within 10 years of retirement:
BBET40: 20%
NFGOVI: 20%
DIVTRX: 15%
PTXTEN: 15%
DBXWD: 30%

More than 10 years to retirement:
BBET40: 20%
NFGOVI: 10%
DIVTRX: 15%
PTXTEN: 15%
DBXWD: 40%

Hamster

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Re: TFSA (2016)
« Reply #7 on: February 12, 2016, 12:46:12 pm »
So given the above you can possibly combine the BBET40 and NFGOVI with the MAPPSG and switch it to MAPPSP when you are close or in retirement. PTXTEN can possibly be replaced with STPROP which performs the same and gives better dividends.

Funny enough, he is ignoring all the other sectors except for property (no INDI, FINI or RESI). May be a smart move if you do not want to actively manage your TFSA and use it as "buy and forget"

jonb

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Re: TFSA (2016)
« Reply #8 on: February 12, 2016, 12:51:42 pm »
Why ignore  STXIND ??

That my main question... unless you feel Naspers is on shaky footing

It has 5 years of solid growth, SAB will move out soon and those top 15 will move up

I am of the opinion ( could be so wrong! ) that with Naspers you pretty much own ten cent and get all the other business in SA as an extra... its pretty good value

..............

My thoughts on BBET40, if you had to remove NASPERS, SAB and BAT out of the TOP40 in 2015 you would have had a shocking negative year... these stocks drove the year, why would i want to minimize my holding on them and go all equal in stock s that are clearly struggling in a no growth weak SA economy ?

Strive

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Re: TFSA (2016)
« Reply #9 on: February 12, 2016, 01:03:15 pm »
Why ignore  STXIND ??

That my main question... unless you feel Naspers is on shaky footing

It has 5 years of solid growth, SAB will move out soon and those top 15 will move up

I am of the opinion ( could be so wrong! ) that with Naspers you pretty much own ten cent and get all the other business in SA as an extra... its pretty good value

..............

My thoughts on BBET40, if you had to remove NASPERS, SAB and BAT out of the TOP40 in 2015 you would have had a shocking negative year... these stocks drove the year, why would i want to minimize my holding on them and go all equal in stock s that are clearly struggling in a no growth weak SA economy ?

That was my question as well - would it ever make sense to not include the one ETF that's done exceptionally well for years from your portfolio? It appears to be the closest thing to a relatively sure bet we have in our beleaguered economy at the moment.

Patrick

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Re: TFSA (2016)
« Reply #10 on: February 12, 2016, 02:13:42 pm »
I wonder if Simon is aware that he still has to pay divvie tax on DBXWD as Mr Div pointed out in another thread. That being the case I'd rather buy DBX in a normal account and save the tax free account for stuff that can really take full advantage.

jonb

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Re: TFSA (2016)
« Reply #11 on: February 12, 2016, 02:34:05 pm »
@Patrick

I was under the impression all dividend tax is exempt in a TFSA ?


Hamster

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Re: TFSA (2016)
« Reply #12 on: February 12, 2016, 02:39:45 pm »
@Patrick

I was under the impression all dividend tax is exempt in a TFSA ?



Here:
Quote
Deutsche Bank’s response to my question on how dividend withholding tax worked on its range of blue-chip exchange-traded funds (ETFs) was: "Section 64 (n) of the Income Tax Act provides for a rebate to be deducted from the local dividends tax payable in respect of a foreign dividend if that dividend was subject to foreign tax."[

As far as I understand that, it means the dividend taxes are already deducted in the US or wherever, so you do not get as much tax savings from holding them in a TFSA as you would by escaping the full 15% tax on dividends from local companies.

Aside from the tax issues, the MSCI World tracker is not particularly attractive from a dividend perspective since its dividend yield is only about 1.7%, placing it fairly low when ranking ETFs by their dividend or interest payouts./quote]
http://www.bdlive.co.za/opinion/columnists/2015/08/27/how-to-find-your-perfect-tax-free-saving-fund

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Re: TFSA (2016)
« Reply #13 on: February 12, 2016, 02:45:37 pm »
Yep, that was an interesting discovery - I think there is still perhaps some good to be had from having exposure to the world market (assuming you're not getting that elsewhere), but I wouldn't make it a core constituent of a TFSA portfolio.

jonb

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Re: TFSA (2016)
« Reply #14 on: February 12, 2016, 02:52:45 pm »


@Patrick

I was under the impression all dividend tax is exempt in a TFSA ?



Here:
Quote
Deutsche Bank’s response to my question on how dividend withholding tax worked on its range of blue-chip exchange-traded funds (ETFs) was: "Section 64 (n) of the Income Tax Act provides for a rebate to be deducted from the local dividends tax payable in respect of a foreign dividend if that dividend was subject to foreign tax."[

As far as I understand that, it means the dividend taxes are already deducted in the US or wherever, so you do not get as much tax savings from holding them in a TFSA as you would by escaping the full 15% tax on dividends from local companies.

Aside from the tax issues, the MSCI World tracker is not particularly attractive from a dividend perspective since its dividend yield is only about 1.7%, placing it fairly low when ranking ETFs by their dividend or interest payouts./quote]
http://www.bdlive.co.za/opinion/columnists/2015/08/27/how-to-find-your-perfect-tax-free-saving-fund


Really interesting ! thanks for passing that on

I already sit with savings in the S&P 500 index plus some blue chips in an offshore portfolio ( dividends are taxed here as well i think ? )   however with this TFSA I am not sure if I want to go all SA at this point in time

oh well back to the drawing board ...  only a dozen or days to go before d day :)

Still think DBXWD + STXIND or a third thrown in for some stability is not a bad offering. I am however looking at this for the real long term