You are currently viewing our desktop site, do you want to visit our Mobile web app instead?
 Registered users can save articles to their personal articles list. Login here or sign up here

Tax-free savings: Check out what the experts hold

SA’s personal finance community opens up.

I really love some of the ideas readers of this blog send through from time to time. A cool one that came through recently was a suggestion to try find out what some of the top personal finance and investment experts, thought leaders and media peeps are holding in their tax-free savings accounts (TFSAs).

So I did just that – and in the true spirit of the South African personal finance community, most were more than happy to help out.

I found some of the responses really interesting, though they all provide some food for thought. I must stress however that none of the below should be regarded as investment or financial advice. Remember that a TFSA is usually only a small part of a bigger overall investment portfolio, and everyone has their own goals, timelines and risk appetite.

Plus, as etfSA director and co-owner Nerina Visser put it, “As a woman, I always reserve the right to change my mind, as time goes on, and new information comes to light :)”.

In other words, please don’t read too much into this; always invest according to your own goals, risk appetite and time frame.

Okay, with the formalities out of the way, here we go …

In alphabetical order, this is what some of the more well-known financial peeps are holding inside their TFSAs:

Simon Brown, founder of Just One Lap: I hold Satrix Property ETF (31.8%), Ashburton Global 1200 ETF (36.6%) and Sygnia Itrix MSCI World ETF (29.5%).

Maya Fisher-French, founder of Maya On Money: All my TFSAs, kid included, are with Satrix. I hold the Divi Plus as I’m a firm believer in dividend investing. Right now it has a yield of 4.5% – if you consider that matches a drawdown rate, it’s a powerful retirement tool. I don’t hold offshore as my non-TFSA money is all invested directly offshore. That forms a significant part of my retirement plan along with my local RA [retirement annuity]. My TFSA is a tiny portion of my investment base at this stage, considering it was only introduced a few years ago.

Warren Ingram, executive director of Galileo Capital: I have been buying the Nedgroup Property Fund in my TFSA since TFSAs were launched. To date, it has been a bad decision if one reviews performance, but I like the high levels of income generated by the fund and hope that the performance will recover. Over the long term, I would view the income generated from this TFSA as a way to pay for our medical aid costs (if those are still around).

Bright Khumalo, portfolio manager at Vestact: I’m a balls-to-the-wall kind of guy and right now I think SA is extremely cheap as you’ll see by my split. As a super young man with some healthy appetite for risk I have a 50/50 split of the Sygnia Swix Index and the Sygnia Skeleton 70.

Charles Savage, CEO of Easy Equities and Purple Group: I hold the Emperor Core Flexible Equity (Everest) Bundle. It consists of:

  • Satrix Divi ETF (22.18%)
  • Satrix 40 ETF (18.67%)
  • Satrix S&P 500 ETF (13.11%)
  • Stanlib S&P 500 Information technology ETF (12.07%)
  • Satrix RESI ETF (8.75%)
  • Satrix MSCI World ETF (8.23%)
  • Satrix Fini ETF (5.77%)
  • Ashburton MidCap ETF (4.36%)
  • Satrix Nasdaq 100 Feeder Portfolio (3.14%)
  • Cash (2.44%)

Dr Adrian Saville, founder and chief executive of Cannon Asset Managers: My go-to option is the Cannon Global Growth portfolio because it has the highest compounding potential, underpinned by hard currency with greatest optionality. If I lived on Mars and could allocate capital anywhere in the world, inside of a TFSA, this is the place to invest – it is where our children’s TFSAs are invested.

Michael Treherne, portfolio manager at Vestact: In my account I have the Ashburton Top 100 through FNB. At the time I signed up it was the cheapest around, and I get great eBucks. My wife is in the CoreShares S&P 500. Both are funded through a monthly debit order, to give me dollar-cost averaging.

Kristia van Heerden, CEO of Just One Lap: Since our ‘Single ETF strategy’ Fat Wallet episode [Just One Lap’s weekly podcast dealing with questions about money], I’ve been stocking up on ASHEQ. I like that ETF for its wide diversification and emerging market exposure. I also enjoy getting dividends to reinvest – my opportunities to play around in my investment account are limited to reinvesting my dividends. I like the simplicity of a single ETF strategy. It helps me be less reactive when things go wrong in the world. I only have to keep track of one choice.

Visser: 

Local Equity (25.1%): CTOP50, 11.4% (broad-based domestic equity market, core holding); ASHMID, 3.7% (‘SA Inc’ shares, relative value after long period of underperformance); STXDIV, 6.3% (high dividends); and DIVTRX, 3.6% (consistent dividends).

Local ‘bonds’ (9.8%): PREFTX, 9.8% (preference shares, highest yield).

Local property (12.6%): PTXTEN, 12.6% (high yield, asset class diversification).

Global equity (40%): STXWDM, 21.5% (broad-based global equity market, core holding); GLODIV, 9.1% (higher yield, investment style diversification); and STXEMG, 9.4% (broad-based emerging market exposure, longer-term high growth).

Global property (12.5%): GLPROP, 12.5% (asset class diversification, higher yield).

Well that was interesting. And wow, what a diverse range of choices – from a single holding to ten different holdings, from passive to active, and simple to complex.

Which does make me wonder, this article may well have left you a little perplexed as to how best to approach your own TFSA investment. If this is the case, I want to leave you with something Van Heerden said when submitting her contribution:

“In these tax-free accounts, hitting your allocation every year is way more important than what you choose. Because there’s no tax liability, these accounts offer a wonderful platform to figure out your own investment style. If you choose the wrong ETF, you can rectify it later by contributing to one that’s better suited to you. Like most people, I took a while to hit my stride. That I chose differently at the beginning didn’t hurt me in the least. Don’t let the choice of ETF keep you from starting. You got this!”

That is pretty solid advice. Remember, your choice of investment has significantly less impact than not investing at all.

This article was originally published on the Stealthy Wealth blog here.

The views and opinions shared in this article belong to their author, cannot be construed as financial advice, and do not necessarily mirror the views and opinions of Moneyweb.

Get access to Moneyweb's financial intelligence and support quality journalism for only
R63/month or R630/year.
Sign up here, cancel at any time.

COMMENTS   23

To comment, you must be registered and logged in.

LOGIN HERE

Don't have an account?
Sign up for FREE

In the UK ISA accounts allow a maximum of 20 000 pounds per year.
That is approximately R360 000. Our paltry allocation of R33 000 needs to be increased to encourage savings/supplementing retirement.

I always find the comments on TFSAs amusing. It’s but one of the savings vehicles available in SA, with rules set out clearly beforehand, and NOT compulsory. Yet, the majority find fault with it to such an extend that they do not utilise it at all.

Yes, the UK has a higher contribution rate (GBP20k vs our GBP1.7k) but they have a Median disposable income per person of USD22k whilst we have USD4k (per quick wikipedia search). So it does not look that out of whack. Plus, they have more limitations on their RA equivalent, so there is that.

Yes, we cannot do full DIY (i.e. pick you own stock). But let’s be honest, for 99% of people that is an inappropriate option to have.

So do not use it and pay your tax to the Government, that at least (in a very small way) keep my tax rates just that little bit lower.

@singhprook is not saying dont use TFSA, he is said it should be increased, something that is hard to find fault with

The haves will say it’s too little, the have-not will say it’s too much. But honestly how many individuals are able to save R2750 per month in our country……

Personal views here, put income producing assets in, Preftrax and Property ETFs, maybe a divi ETF, save that 20% dividend withholding tax and your effective yield is 20% higher than elsewhere.

Take the capital gains route in your regular portfolio, as you can still defer that (dont sell)….

I stopped my TFSA as zero growth is not encouraging at all

It’s not your TFSA that produced zero growth, it was your asset allocation. How can Tax Relief make your return worse?

Technically, you should put all of your Listed Property in your TFSA as you get the Income Tax (40%+) and CGT relief on these – making it the most tax efficient. Warren Ingram above did that. And this would have delivered extremely poor results, because of the performance of the sector the last 3-5 years.

Or you could have invested 100% in the S&P500, being theoretically very tax inefficient by receiving NO dividend tax relief (as TFSAs cannot dictate other countries’ tax laws) and only CGT relief, but you would sit pretty on 30-50% returns depending on when you started.

The market has performed, not the tfsa…..

Meant “The market has not performed, not the tfsa”

I’m confused. I can buy a normal SATRIX 40 ETF or a tax free ETF, yet somehow it’s the tax free compenent which will make the one worse than the other??? Try harder to troll dude.

As someone who has just recently started investing in stuff other than property, my provident is returning a poultry 5.7%….i.e. it’s probably losing value in real terms but there isn’t much I can do about that being a company legislated savings vehicle. My TFSA is with FNB @ 6.6% so it’s performing a whole lot better than my pension but that’s the lazy mans route to TFSA. What kind of returns of these complex TFSA investment portfolios listed above returning. Should I be setting my growth aspirations much higher?

Maybe, but the potential upside on equities is always higher. So if you’re risk averse, the bank tfsa is better, but if u r more risk tolerant, better go tfsa investment route

TFSA is a scam, surprise surprise you cant put individual stocks in account like Roth IRA or 401K, brought to you by same people who brought you reg 28.They made sure funds stay in loser SA asset management industry. I stand corrected, but I remember reading that SARS review the most common asset in TFSA was a money market fund? HAHAHA. Great idea and execution overseas, perverted in SA.

A scam is when someone promises one thing, but delivers something else or nothing at all.

TFSAs have never promised to allow individual stock investing, so why does that make it a scam?

You can also invest 100% offshore via the multiple ETFs now available. Yes the money is still domiciled here, but you have the option.

And if most people invest in cash within their TFSA, it is not SARS fault, but rather banks with their marketing machine mopping up easy Basel Points. Don’t blame either of them, people should read and self educate on their options. But at least they saved.

Not boring at all.

Quite interesting to see how many have quite a diversified mix and are not just going for property and fixed income.

Lots of international stuff and good to see ETF’s being used. Cheapest way to go also.

Please follow up this article with a table showing the comparative performances of the various contributors’ portfolios over 1, 3, and 5 year periods (preferably after fees).

What a shame that you did not calculate the present value for each portfolio, under the assumption that each investor had invested the maximum allowable in every year since TFSA inception. That would allow is to easily compare our TFSA performance against the experts.

Mine grew 25% from when I started.

ETFGRE 25%
NFEMOM 10%
STXWDM 10%
SYG4IR 10%
SYGP 10%
SYGUS 25%

NFEMOM seems to be star.

You should include the participant’s respective ages (or at least age group).

Load All 23 Comments
End of comments.

LATEST CURRENCIES  

USD / ZAR
GBP / ZAR
EUR / ZAR

Podcasts

SHOP NEWSLETTERS TRENDING CPD HUB

Follow us:

Search Articles:Advanced Search
Click a Company: