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Author Topic: What would you do with R10,000/month savings?  (Read 28453 times)

Fawkes85

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What would you do with R10,000/month savings?
« on: September 01, 2015, 01:41:20 pm »
So I am working overseas and I find myself in the very fortunate position of saving roughly R10,000 a month(all depending on the exchange rate). So my question to you all are how would you invest R10,000 a month? Should I even invest the full amount every month? What are your thoughts?
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Mr_Dividend

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Re: What would you do with R10,000/month savings?
« Reply #1 on: September 01, 2015, 02:16:48 pm »
a) How old are you?
b) Are you planning to touch this money in the next 5 years or so (house deposit)?
c) Do you need any income from this in the next few years?
d) Do you enjoy reading about companies? Or do you chuck that part of the newspaper away?
e) Do you already have an RA or company retirement policy?
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Fawkes85

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Re: What would you do with R10,000/month savings?
« Reply #2 on: September 01, 2015, 02:26:48 pm »
A) Turned 30 little more than a week ago. Still dealing with that.
B) Depends on some factors but if all goes well no I do not plan to touch 80% of it in the next 5 years.
C) Do not need the income but will be nice if it can provide me with some. Mostly for reinvestment purposes in the short to medium term.
D) Won't say I enjoy reading about companies but do not mind it either. I do however prefer investing in ETFs over individual companies. Except for REITs. I am very interested in them.
E) I do not have an RA or company retirement policy
« Last Edit: September 01, 2015, 04:30:01 pm by Fawkes85 »
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Orca

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Re: What would you do with R10,000/month savings?
« Reply #3 on: September 01, 2015, 03:13:27 pm »
Do you have a SA banking account and if so, with which bank?
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Fawkes85

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Re: What would you do with R10,000/month savings?
« Reply #4 on: September 01, 2015, 03:29:14 pm »
I do. Cheque and trading account both with FNB. Should also probably add that I do not send the R10,000 back to SA every month. It costs me R280 on this side plus fees on the SA side to send the money every time. Couple that with waiting for the best exchange rate and I only send whatever I have saved up to SA once or twice a year.
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Orca

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Re: What would you do with R10,000/month savings?
« Reply #5 on: September 01, 2015, 04:24:46 pm »
I presume you have a SA resident trading account so you pay R49 pm and 0.6% per trade or R80 minimum. If you have a non resident account, you will not pay any VAT but your monthly fee will be higher.
Brokerage fees varies between 0.4 and 0.75% per trade so your 0.6% is not too bad.
So it seems you good to go. Download the trading App and get to know how it works first. If you have money in cash, it should show up. If not, transfer it from your cheque account and in future do all your transfers directly from overseas to the trading account.
Now all you need is to find the ETF that suits you.

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Fawkes85

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Re: What would you do with R10,000/month savings?
« Reply #6 on: September 01, 2015, 04:29:30 pm »
The FNB fees aren't very bad but what they don't make so clear, and I ended up finding out the hard way, is that you only get the 0.6% charge if your trade goes through before 3:30. If it goes through after 3:30 the commission goes up to 2%.
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Orca

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Re: What would you do with R10,000/month savings?
« Reply #7 on: September 01, 2015, 04:59:14 pm »
If you place a buy order, you can cancel it at 3 pm if it has not executed yet. As you are in it for the ling term, you can just buy the cheapest available immediately. The DIVTRX has a spread of 8c and I managed to buy 4 tranches at the same price as the robot keeps refiling it with 5000 shares when used up.
I am not advising you to buy DIVTRX at all. It just suits some of us here that don't want to watch stocks all the time or cannot pick stocks and still get great returns.
« Last Edit: September 01, 2015, 05:02:21 pm by Orca »
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Mr_Dividend

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Re: What would you do with R10,000/month savings?
« Reply #8 on: September 01, 2015, 05:09:56 pm »
Quote from: Fawkes85 on September 01, 2015, 02:26:48 pm
A) Turned 30 little more than a week ago. Still dealing with that.
B) Depends on some factors but if all goes well no I do not plan to touch 80% of it in the next 5 years.
C) Do not need the income but will be nice if it can provide me with some. Mostly for reinvestment purposes in the short to medium term.
D) Won't say I enjoy reading about companies but do not mind it either. I do however prefer investing in ETFs over individual companies. Except for REITs. I am very interested in them.
E) I do not have an RA or company retirement policy

Ok, so this account will be your retirement fund. Personally, I would target growth - that's not to say you will not get dividends, but it should not be the only factor when choosing your shares. First thing I would do is open a TFSA - ether with ABSA or EE. You might as well start filling that up. I would not JUST buy ETF's - unless you really are not interested. Give yourself a percentage to spend on individual shares - personally, I think it's more fun. And if it's fun, you will save more - always a good thing. REITS have been a great investment for the last few years - not as boring as some say - that said, all in moderation.

Read Patrick's great article http://investorchallenge.co.za/can-you-retire-by-40/ :: look at the big picture, make a plan, then start filling in the blocks.

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Fawkes85

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Re: What would you do with R10,000/month savings?
« Reply #9 on: September 01, 2015, 05:20:59 pm »
Funny you should say that. I actually bought 1000 shares of it just today. As I mentioned when we were talking about the NFGOVI, I was looking for something to invest in that could provide me with good income and the DIVTRX seemed like a good choice. Think I will be making that my core investment and the STXIND, STXFIN, PTXSPY, RMBMID, DBXUS, DBXEU, DBXUK and DBXJP my satellites.

But that plan is definitely not written in stone. I am still open to other suggestions. It the reason why I started this thread in the first place.

@Mr_Dividend as I was writing that reply you posted yours. Thanks for the advice. I definitely won't stay in ETFs forever. Just right now I am still very new to investing and I do not feel confident in my abilities to start picking individual stocks. ETFs are easier to understand and as I have been told many times, never invest in something if you do not understand it. But am spending time on forums and YouTube and podcasts and other websites to grow my knowledge. Once I feel confident enough I will start investing directly in companies.

Must admit I do have Discovery and SABMiller on my radar though. Just my personal ignorant opinion, but I feel it is good to invest in companies where people will still spend money even during a recession. And let's be honest, even during a recession people need healthcare and alcohol (not sure what that says about humanity). As for REITS I have Growthpoint and Redefine I am looking at. Growthpoint because it is such a Goliath of the industry and Redefine for growth purposes. Won't invest in both so still deciding which way to go.
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Orca

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Re: What would you do with R10,000/month savings?
« Reply #10 on: September 01, 2015, 05:23:36 pm »
The TFSA has a limit and is off bounds for non residents. I would certainly use it but cannot. I think you have to be resident in SA for at least 91 days a year to be considered tax resident.
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Orca

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Re: What would you do with R10,000/month savings?
« Reply #11 on: September 01, 2015, 05:32:08 pm »
Having 5 different ETF's is a total waste. May as well invest in the ALSI. I think there are 150 stocks in the ALSI.
The DIVTRX is well diversified in many sectors and is the best performing ETF.
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Fawkes85

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Re: What would you do with R10,000/month savings?
« Reply #12 on: September 01, 2015, 05:47:25 pm »
Yeah I was wondering about the TFSA. Is it tax-free from all taxes including Dividend Tax and Capital Gains Tax or only Income Tax? If it is only for Income Tax it does not serve me much purpose. As I am paying income tax where I currently live I am exempt from SA income tax anyway.

You really think investing in 5-8 different ETFs is not worth it? Thought I would do it for a bit of diversification. With the STXIND, STXFIN, PTXSPY(will only be invested in this one until I decide which REIT I want to invest in) I would cover all the sectors I want to be invested in and with the RMBMID I can be invested in some smaller companies with growth potential. As for the DBXUS, DBXUK, DBXEU and DBXJP I can get some diverse exposure to different geographical regions.
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Orca

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Re: What would you do with R10,000/month savings?
« Reply #13 on: September 01, 2015, 06:24:41 pm »
Strange why South Africans want to diversify into developed markets and investors in developed markets want to invest in emerging markets like SA for the extra growth.

I posted a chart somewhere here of the STXIND vs Japan, China, UK and US markets and the STXIND is almost double the growth. To top it, the DIVTRX beats the STXIND so far as well.

Also bear in mind that DIVTRX holds about 15 stocks that have consistently increased their dividends and they dump those that have not. It is a known fact that a company that keeps increasing it's dividend has good fundamentals in place. This alone is good enough for me as I no longer have to do research myself. 

Read Patrick's thread on Core Shares (DIVTRX) just below here. You have peeked my interest in the ETF's you mentioned and I will see if I can get a comparison chart posted here. 


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Fawkes85

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Re: What would you do with R10,000/month savings?
« Reply #14 on: September 01, 2015, 07:06:38 pm »
I did read the thread on the DIVTRX and that's what piqued (I checked. That's the correct spelling. Thought it was 'peaked' myself;) my interest and made me read up on it more and eventually caused me to by those 1000 shares today. And you make a good argument for it so you reckon it would be a investment to have as the core of a portfolio?

And I fully understand that emerging markets hold the best posibilities for growth as the developed economies have developed as far as they can go and from here on out it's just small, sustainable growth for them. I know how won't get the same kind of growth with them as I will with the JSE. The thing that irks me though is the political situation in SA. With Eskom, the EFF, the trade unions and their power trips hell bent on destroying the SA economy, Zuma, and the ANC in general, I do not want to have all my eggs in the SA basket.

I am not an all doom and gloom kinda guy but it is hard to look at SA and not see the writing on the wall if something does not change and quick.
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