Yes, but the market average will still be the average of the investors (whether institutional or private) and their weightings. And an index generally follow the market or a sector of the market. \
WHY DOES THERE NEED TO BE A VALUE ADD?
Will they ever guarantee to beat the index? No, they won't.
There are early retired people from overseas that spend 8 months a year in SA not only for the weather but to try and save on living expenses in order to prop up their retirement.
The couple I met puts back about 20k euro cost savings here into investment products separate from their official defined benefit pension schemes precisely because they believe their pensions will not pay the promise for their lives. Obviously their fall-back is a great state medical system for when they are really old / frail. they figure from 60 - 80 they will be here saving up for 80 - 100.
There is no such thing as the best retirement annuity because there isn't even such a thing as a good retirement annuity.
It's a mechanism created by the investment houses to keep your cash locked in for as long as possible so that they can take fees.
At long last, 10X's marketing message is shown to be outdated and unrealistic....
Supersunbird, as mentioned before, there is NO SKILL in investing in an Index. I am quite happy to pay a large fee to a Fund Manager who, uses his skill to outperform any Index. As long as I am receiving a REAL Return, that consequentially was due to that investment skill, I am happy.
HOWEVER, I could also merely invest in an Index Tracker and take my chances – there is no skill in this and therefore any reduced fees are merely for bottom line profit after customer servicing platforms/expenses are deducted. So I repeat, THERE IS NO VALUE-ADD!
P.S. anyone who still invests in the old RA products from Life Industry are just clueless….and conversion from OLD RA products, with little or no penalties, is allowed?
P.P.S. the past weeks has shown the value of a good Fund Manager; they have not dropped as much as the Index
Typical naive Pollyanna article which blissfully ignores any contrary reality.
The reality is that most African countries are experiencing uncontrolled - and unsustainable - population growth. It's no exaggeration to describe this as a population explosion.
This is the LAST thing Africa needs, and will be the continued cause of Africa being the basket case of the world.
As usual, there is a complete refusal by African leaders to take ANY responsibility for this self-inflicted social behaviour.
Instead, they will blame others for the inevitable consequences.
One can see these dynamics playing out in the local politics and media in SA.
So Grant, what do you mean about 10X? They sell a simplified single retirement annuity investment, not products (as say the Sanlam Echo Bonus RA, which would be a product).
And as to 10X on fees, the Sanlam Echo Bonus RA and Liberty stuff (that one thats keeps your investments safe when the market falls) that get advertised on radio daily, have ridiculously high fees (Sanlam one is 3.5% and up). Many people get interested in it due to the ads, I can provide links to where people have been interested in it online.
And even your other managed unit trusts had highish cost historically (which has come down over the past 5 years a bit, due to competition from index funds perhaps?), which combined with a FA fee would be 3% (2% + 1%), so the RA cost would be accurate, especially historically. So if the cost is 1.61%, and one adds the advisor fee if 1%pa... the RA costs the client 2.61%, still not near the index offering from 10X, Sygnia and others.
Disclaimer: I have retirements funds in 10x, Coro and AG and do not work in the industry at all
Investment fees are often presented in such a confusing and convoluted way. EAC sort of makes it simpler, but not every fund is listed with ASISA and therefore won't use the EAC format.
"At the end of the day, the after-fee, or net-of-fees, performance of your investment is your bottom line." - couldn't be more true. Always know what you're paying, whether its to the asset manager or your advisor or broker.
If you do know your fees and want to compare the real rand value against a lower or higher fee, give the thinkdirect fee calculator (https://goo.gl/maLFnT) a try. Simply slide to the 2 fees you want to compare and see how much more, or less, you could keep invested.
"Wakanda avoided colonisation by foreign powers, and is now wealthy and highly developed"
"South Africa was colonised by foreign powers, and is now wealthy and highly developed"
Nigeria like middle east was colonised and has abundant oil & gas.....what happened?
Maritius was colonised as is a jewel of Africa
Ethiopia and Liberia were the only two African countries that were not colonized. Liberia was founded by freed slaves and Ethiopia resisted Italian attempts at colonization
I do not know where to begin. Qatar and other oil rich countries pay pittance to foreign physical workers who pop up the economy. Without these virtual slaves they would be nowhere. Expecting an uninterrupted growth for 75 years in Ethiopia to reach South Korea is crazy. And what do you think will happen in South Korea in the meantime? Are they going to stop growing just to let Ethiopia catch up? Before WWI Britain had one of the highest standard of living in the world. Their per capita GDP was about the same as Bangladesh's today, corrected for inflation. In 75 years looking back even today's rich countries will look poor, so I expect African countries will lag way behind the rest of the world.
There is another way of looking at the pension fund deficits. When banking regulations are too strict, companies do not have access to the banks, so they borrow from their one pension fund. Banking regulations became a pension fund problem. Look, the system is not viable anyway - the debts cannot be repaid. So just pretend, and kick the can further down the road. Move the pension fund deficits back onto the banking system, where it becomes the Reserve Bank's problem, and let them then inflate it away. There you go - problem solved.
South Africa's Muslim community is not oppressed and is fully integrated with the rest of its multicultural society. => No breeding ground for extremists.
No need to look for terrorist conspiracies where crime is a perfect explanation.
Alex Matturri, CEO of S&P Dow Jones Indices: It is not true that in Saudi Arabia has cheap water.
I go there often (as a UN accredited consultant engineering contractor for the industry) and I know that petroleum is cheaper than water, subsidised or not. Businesses there wash their street frontages with petrol, not with water (& suds). They have the largest water desalination plants in the World, but they are viable only because they have petroleum oil to drive them Desalination is extremely energy intensive.
Alex, this is clearly not your field of knowledge. It appears that your politics drive your opinion.
This is so unnecessary and uncalled for. We are such a diverse country and our Muslim Community forms part of that diversity and live their lives in a peaceful loving manner within our nation and their community and DO NOT encourage violence.
I think our South African Muslim Community can teach other communities a thing or two about family and nation harmony.
If it was a general travel warning stating which areas to avoid and where extra care must be taken when visiting our country and what actions one can take to minimise that risk in falling victim to our high violent crime rate then one could understand.
Viiolent crime is sadly the norm within our country and is not applicable to one community only.
Many articles and books have been written about this topic. Many people lost a lot of money, others lost out on making a lot of money because of their perceptions about this topic. The bottom line is "don't fight the Fed". The only real purpose of a Central Bank, as a lender of last resort, is to inflate the collateral held by the banking system. A Central Bank has in essence only got one goal, to create the maximum rate of inflation it can get away with politically. In South Africa it gets away with 6%, In the USA en Euro Zone 2%, the Germans get all nervous at 2%, while in Zim and Venezuela they got away with a 100 000%.
The interaction between inflation and interest rates, and the effect on the share-market creates a lot of confusion. The metric that sums it all up, that encompasses all the confusion and all the different opinions, the only objective and crystal clear measure, the "holy grail" of warning signals, can be summed up in one word - yield-spread.
Those who are interested in knowing what the yield-spread is all about, know it already. Those who don't know it yet, really don't care. So I will leave it there......
This is such a typical advertorial by a medical aid. By and large they are all money grabbers. Consider this:- they set the rules as to what codes a doctor must use when treating the patient, if they fail to use these codes the doctor or the main contributor foots the bill - oh and the med aids can change these codes at will. The med aid supports a nest of doctors which may not include your personal doctor - in my case they tried to exclude my doctor whom I have consulted since 1982.
The medical aids limit the price increases in consultations, and procedures, and then at the same time increase their fees upwards of 4% above CPI. One has to question what happens in the middle whose getting all the money. These funds garnered by the medical aids are assigned for running their administrations and salary increases for staff and management - yet they don't disclose % salary increases to these staff.
My opinion is that these medical aid operation are run inefficiently and are ripping off their members, and screwing over doctors, dentists, specialists and really don't care whether after spending vast sums on monthly premiums you also are faced with large co - payments and there are hardly any tax rebates these days - so the losers are the members and the medical fraternity
I think this is a very good article sir.
The reason it has attracted stinging comments is because those in the 10% getting the 50% are not yet prepared to give up their vantage point. Luckily its not entirely up to them only, if what is in the air is anything to go by.
Inferences are made about lack of education and skill amongst those earning below the living wage; look at the proportion of students at quality institutions by race, that should address that. Inferences are made about the authors country of origin; interesting enough Zimbabwe until late 90s and early 2000s paid tuition for university/ higher education which may explain a few things about the majority of those competing for opportunities with those in the 10%. it is fortunate that South Africa now seems to be on the trajectory of affording equal opportunity through empowerment/paying higher education and change in legislation.
Inferences are made about poor work ethic amongst those who earn below par; I suspect this has everything to do with motivation and feeling of belonging- as long as a worker feels that they are not an integral part of the company, do no expect them to be give 100%. One of the ways to instill that sense of belonging is through fair remuneration.
Inferences are made about human diversity as a means of justifying remuneration; this in fact is just an expression of an unequal system created to serve the interest of a few. To this day, this has worked to their advantage. I am only happy to say that enough of the current generation is now woke and the status quo will not remain the same.
Thank you for the thought provoking conversation.
Myth 4: You want to continue your living standard after retirement:
Accept that it will be in your own best interest to scale down on household furniture, to exchange the luxury family car for an economical city motor, to sell the big house and move to a nice townhouse of sorts, to manage your expenses very actively and to forgo most of the expensive indulgences.
Start implementing this process at least three years before actual retirement.
Dump all the time consuming and money consuming add-on's you have accumulated over the years. Free yourself of this heavy burdens and start living a more care-free, unobstructed life after retirement. Replace the money intensive activities with quality time, meaningful interaction and assistance love towards your family, loved ones and good causes. Go travel out of season, seek out the value for money restaurants, destinations, etc. Enjoy the golden years and build peace.
It's not that difficult.
What happens if SA expropriates land without compensation? It will just confirm that which we already know namely that the ANC are thieves. If the regime took your car, house, land whatever why is this any different?
Markets punish thieves, so the ANC will get their comeuppance.
We are using the rugby rule-book at a soccer game. Those ANC and EFF members who advance the policy of expropriation without compensation are from a communal background or are unemployed or low-paid workers who do not own property. They don't own property themselves, and not even in their larger family structure. They do not understand, or care, about economic facts and figures. They don't care about food security or employment.
In all formal structures where people don't own property, they also do not have the right to vote. In the communal areas the chief rules according to traditional methods and has full control and manages all the resources. In a communist system the state owns the land and manages all the resources. In both these instances individuals do not have voting rights.
The problem begins when you have a system where a large part of society does not own property, but their vote gives them the power to determine economic policy. This is like giving the keys to your wine cellar to that group of job-seekers down the road. Will they value your wine? Will they protect it, nurture it and appreciate it?
Something extremely negative happens to the psyche of a generation who grows up in a system where they don't have property rights. People who don't have property rights also lose the initiative to improve their situation. They do not accept responsibility for their financial situation. They will blame everybody else and demand more and more support from the state. When you give voting rights to people who don't own property, you lite the fire of anarchy.
To prevent anarchy you have 2 alternatives. Take away property ownership and voting rights from every citizen (communism), or make every citizen a responsible property owner who is free to take the initiative and responsibility to improve is own position. It will be an enormous injection into the economy if all people in rural areas could get the title-deed of the place where they live.
The increase VAT by 1% WITHOUT any much new exemptions in basic goods, is a REMINDER to the “majority of the people” to realize there’s long-term economic CONSEQUENCES for voting for the ANC (especially under Zuma…where the majority voted him in in 2007/8). The rest is history.
The trouble we’re in now is not a Zuma-legacy or ANC problem….it’s the way the majority has voted & supported the problem.
This is the only way the uneducated can “learn” the hard way. Yes, go and vote in irresponsible leadership the past decade, but then please don’t cry when hardship results!
If these guys just did their jobs there would not have been any need for any tax increases.
Between a bloated government,failed state owned enterprises having to be bailed out for billions, corruption and wasteful expenditure.
My mind boggles that an airline, power utility, railroads etcetera cannot be run profitably by the All Not Competent. !!!!
2 wrongs don't make a right. The expropriated persons become homeless, financially destroyed, same as forced removals under apartheid. There are vast tracts of unused state owned land that can be used before resorting to expropriation of privately owned properties.
On hiking the personal income tax rate beyond 45% Dennis Dykes Nedbank Group chief economist said: "It would show that everyone is paying their contribution". This has got to be the DUMBEST remark I have heard in many years. Just look at the facts: 1 million on disability grants, 3 million AIDS orphans, 10 million on child grants, 3 million om social pensions, 1 million students demand free tertiary education, 18 million people are unemployed, 14 million registered taxpayers but only 7 million meet the threshold to pay tax. However, 1 million taxpayers earn above R500,000 per annum. They pay 62% of all personal tax. Without them the country will collapse. Dykes must be living on cloud cuckoo land if he thinks that "by hiking the personal income tax rate beyond 45% it will show that EVERYONE is paying their contribution" Very few people actually pay tax.
Why are increases in tax the only options that are considered? Why does the government not instead consider reducing their expenditure so that tax payers can once afford them?
Once the vat rate increases, there would be zero chance of it ever being reduced again.
the "Ramaphosa effect" is a bubble, to date a Broadway theatre show, with a ANC fairy-tale scrip, and applause before each intermission. In the real world, till their is no policy changes on the table, to the opposite of the "freedom charter", its business as usual,...ANC promises.
So no adjustment to top tax brackets or medical aid, despite medical aid growing above inflation.
Primary and secondary education in tatters but hey let's spend on higher education because those students made the most noise.
Increases on VAT effectively target the middle class because of zero rated goods.
So overall, most peoples tax has increased significantly in nominal terms. Surely the average middle class person has a all in tax rate of close to 50%. That is before you consider cash spent on services which the state should be providing.
Lastly, I'm ok with being taxed silly if that money is going to improve the lives of the poor but for redistribution to work there has to be a distribution leg to the journey. Can't say I'm delighted being further squeezed to fund my local municipal managers BMW.
Just a question to Moneyweb. It is a stinky one but i want to know if it's workeable. Regarding the feefree education for households that earn below R350k: My wife is a stay-at-home mom. Can I divorce her (on paper only - nothing will change in our family setup) and she (with her little money) then claim for free education for our soon to be first year university children?
In this land with it's skewed income dispensation, high unemployment, extremely high social grant system, unaffordable over-stocked government employee compliment and massive government financial difficulties due to:
corruption, inabilities to manage government departments and SOE's properly, over-promises and poor service delivery -
I guess the taxation adjustments is as good as S.A. citizens could have hoped for under the prevailing circumstances.
Now all hope is on a restructured cabinet, -government -SOE's and elevated policies to lift S.A. out of the mud that the despot Jacob and his follower gang members has caused over the past nine years.
Spark. Those neurons need to fire more collectively. The ANC did initiate a land claims process. Whether this addressed everything appropriately and exhaustively is disputable (in the usual ANC ineffective manner). The concept of private land ownership was not prominent in African cultures nor was there an existing legal system to record such titles. In the absence of these structures I would nonetheless, agree (no concession required) that the 1913 Act was specifically designed to steal land.
If I can digress for a moment. The law is the glue that binds society together. The impartial, disinterested, equitable application of this system without prejudice is represented by a blindfolded lady holding nothing but a pair of scales. What Ramaphosa is proposing is populist rabble rousing rhetoric that will involve legislation to be implemented by force or threat of force that will favour one group at the detriment or destruction of another. The concept of group identity and pitting one group against another, in this process, is very important: Hitler had the Jews, Lenin the bourgeois and Idi Amin his Asians. Ramaphosa has his whites and his proposal is a perversion of the law.
Successful societies have one thing in common and that is equitable application of the law to ALL. South Africa is a mess because of the enforcement of laws is non existent and the belief amongst a large sector of the population that one can steal and somehow its okay. Whether it is shoplifting, housebreaking (theft), car hijacking, state capture (Gupta style), grand theft Zuma style or perverting and abusing the state apparatus to do your bidding, its one and the same.
Its time to take a stand. Time to choose between good and evil which is a choice between the law and perversion of it.
Property investors are not alone. There are still people who invest in gold mines because they had a huge rally in the 70's! People believe in property due to the law of random rewards I suppose. When a regular reward ends, the reaction stops, but when a random reward ends the subject will keep on performing his acts because the next reward might be right around the corner.
Few property investors realize that the biggest boom we ever had was due to the declining government bond yields. The boom in the price of government bonds led to the property boom. In reality, the property investor indirectly speculated in government bonds without him being aware of it.
Being under the impression that you are a property investor while you are in fact a bond speculator can not only be very confusing but can also be very dangerous.
The USA bond prices recently reached the end of a 40 year bull market. The bond prices entered a bear market now, leading to rising interest rates over the longer term. The biggest driver of property valuations just flew out the window. The bond market turned around, and the property market will follow. Any book about investments in property that was written within the last 40 years is now irrelevant.
My problem is this - 98% of my assets are in property.
I'm an in the lower middle income bracket and the buy to let market has far outstripped the monthly income. The lessors of the letting market should've seen this coming and to be honest, I've got no sympathy at all, in fact I'm extremely angry. The yearly increase of salaries in the private sector is far below the actual inflation rate of approximately 7.25%. For reasons beyond me, the lessors in the buy to let market are under the impression that everyone is earning the highly inflated salaries of Government employees of the Zuma era and beyond. The Government should never have scrapped the Rental Act as this had given the middle income earner respite from the sharks in the tank and at the very least the prospect of saving to one day also be in a position to purchase a property. No thanks to the sharks in the buy to let market the middle income earner can hardly afford basics as food, water, electricity, etc., after paying the highly inflated monthly rent as we, after all have to "pay" the lessors' monthly bond payments. It's for the same reason that the retirement villages have also become the playground for the sharks in the tank and no thanks to them they've got no idea that some of their lessees in these retirement villages have to get assistance from Meals on Wheels to survive. Shame on you!!!!