Author Topic: Blog post: You need a TFSA and here is the only place you should get one  (Read 2098 times)

Patrick

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https://investorchallenge.co.za/you-need-a-tfsa-and-here-is-the-only-place-you-should-get-one/

Hamster

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I wouldn't say EasyEquities is the only place you should get a TFSA. Speaking purely from a product/features point of view and not the execution of it, it is one of if not the best.

Before I continue I need to get something of my chest first: *clears throat* .. SCREW YOU ABSA!!!  :frustrated:

BUT, different strokes for different folks. Not everybody out there is an emotionally mature investor and I'd argue that most aren't. The downside of EE is that it gives you so many options of ETFs and makes it so easy to buy, sell and swap them which in itself makes for a bad investment strategy.

Costs aside, a unit trust based TFSA like Allan Gray's Balanced Fund or similar funded via a debit order may work better for most investors. They set it up and forget about it. No changing between funds because Sygnia released a new ETF tracking cryptos, weed or whatever and no rebalancing because local shares have been doing great over the last year and I am now overexposed. Just a R2750 debit order going off every month.

Now you can achieve the same with EE because of they allow debit orders, which is great, but you have alternatives with fewer features which might be more effective: CoreShares, Sygnia etc. If Costs are absolutely EVERYTHING to you then sure, EE is the way to go but it shouldn't be.

Another option worth exploring is FNB's Horizon Unit Trusts. Yes, they come with costs which I haven't fully explored but if eBucks is your thing you'll gain points for making use of it which can result in quite a lot of savings, more in savings and cash back than the total amount of charges from any platform out there.

So I beg to differ - it is not the only place you should get one. (on a separate note, is EE actually profitable or bleeding money and how sure are we they'll be around in 5 year's time?)


Idea for next article: the one TFSA you should NEVER use (Liberty Stash).

Patrick

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I just can't bring myself to go for a non-broker style TFSA. Even if a unit trust was a cheaper and better option you just never know what's going to come up in the ETF world. If someone launches a global fund at 0.1% TER I'd want to switch to that, and in anything unit trust based you're just locked in to their product or would need to go through the switch.

Have you got details on the liberty stash? I called them when they launched because their website claimed a 0% TER and that's just too good to be true. On the phone they confirmed it, but it's just not possible. There must be a catch somewhere, I just haven't found it yet.

gcr

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Interesting discussion on TFSA's - firstly I opened a separate TFSA account with my present brokers and negotiated a fee structure which is more than satisfactory.
All my counters in are ETF and I hold STXIND, SYGWD, ASHMID - the only negative is the Ashburton but that because I only recently invested in them. I still await the purchase of STXNDQ but the price is just not right at the moment - waiting on some dollar weakness. To my mind Mutual Funds are not necessarily to right options for TFSA's - their growth progressions are too slow for my needs - I want growth of at least 12 - 16% p.a.

May be an interesting exercise to get forum ikes to list what they are holding in their TFSA's
   
Not everything that counts, can be counted, and, not everything that can be counted counts - Albert Einstein

Hamster

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Have you got details on the liberty stash? I called them when they launched because their website claimed a 0% TER and that's just too good to be true. On the phone they confirmed it, but it's just not possible. There must be a catch somewhere, I just haven't found it yet.

My problem with Liberty Stash is that they promote is as a "bank your change tax free!" which you can then cash out and spend:

Quote
Cash out whenever
Your Stash is yours to do what you want with it. No complicated cash out rules or delays.

Comes across as if they are taking advantage of the uninformed to make use of their TFSA as a short term savings account. It just doesn't feel right.

That said, their target market isn't me/us. IMO, if you are serious about your investments you wouldn't bother. Now if they were to offer Stash as a non-TFSA product I'd probably jump on it.

Hamster

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May be an interesting exercise to get forum ikes to list what they are holding in their TFSA's

STXQUA, STXEMG, STXWDM, PTXTEN and then recently I bought some STXNDQ with the dividends (so nothing significant at all  :)) )

Patrick

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Just STXWDM for me.

willemm

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Is anyone concerned about the huge spread on the STXWDM? It seems to be constantly just under 1% difference between buy and sell. (and thats with the market maker in the spread.)

Hamster

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If I could have a do over: ASHGEQ and CTOP50. Keep it simple.

Patrick

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Is anyone concerned about the huge spread on the STXWDM? It seems to be constantly just under 1% difference between buy and sell. (and thats with the market maker in the spread.)
The TER will have a greater effect than the spread. A 1% spread means you're overpaying by 0.5% (or underselling by 0.5%) If we assume the market will go up by 12% per year perfectly linearly then the spread will be taken care of in 2 weeks.

Even though I'd love it to be lower, it doesn't bother me.

willemm

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The TER will have a greater effect than the spread. A 1% spread means you're overpaying by 0.5% (or underselling by 0.5%) If we assume the market will go up by 12% per year perfectly linearly then the spread will be taken care of in 2 weeks.

Even though I'd love it to be lower, it doesn't bother me.

Yeah, I totally agree. Although, I do think that this specific cost to the investor (seemingly mostly for the market maker service) should and could easily be disclosed in the minimum disclosure doc so that you are aware of the wide spread. Some of these spreads are totally out of hand - and I'm starting to see Magda's (from Sygnia) point from a few years back of ETF vs Unit trusts (passive UTs). As I understand it, if you buy a UT after market close you buy/sell at exact NAV - and without hoping there is a market maker (and more importantly hoping it's a cheap one :) )
« Last Edit: May 18, 2018, 06:39:35 pm by willemm »