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living annuity

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Super Contributor
I am in fortunate position to be able to set up a living annuity and am currently researching my options with different suppliers.my provident fund monies has been swopped into cash for the moment to protect capital.I will be taking the 500000 tax free allowance-anyone got any tips guideance or views.I am reasonably financially competent but always like to hear ideas-I will be taking the minimum 2.5% draw down to keep tax down to a minimum
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Super Contributor
As long as it isn't ZAR based both in terms or currency and jurisdiction (if possible.)
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ingwe
New Contributor
Stick with fund managers such as Allan Gray, Stanlib, etc. Stay away from insurance companies.
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Super Contributor
Look at government retail bonds https://secure.rsaretailbonds.gov.za/or perhaps a year investment at Finbond. Finbond do have a mutual banking license and they are governed by the Reserve bank. They offer 9% for a 18 month period. I reckon over the next two years or so we're going to see single digit returns on the JSE.
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leoridge
Contributor
Have a close look at the significant impact of fees on your LA and if you can and want to manage your own investments without a financial advisor even better.Suggest you take a look at the Sygnia offering.
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Super Contributor
This is like saying "I would like to build a house" . Pretty meaningless unless transferred into a context. What is the context and what are the objectives? Any financial planning that doesn't include that is "a waste of space". What amuses me no end is that folk who can afford to pay for advice( note advice NOT products )actually believe they are better off not paying for it- and Geordie much as I enjoy the cut of your jib I fear you are probably one of those people. I self invest my shares - but not my "long term pension monies" - these for most folk anyway are their "core assets". Why = because I want accountability and I want stuff that "does what it says on the tin". ( Funds that match objectives over rolling periods after all costs....) These are available and there are a lot of high quality funds and offerings out there that will gel with most objectives - but when I see some of the suggestions made here - like folk suggesting Stanlib then I want to fall about laughing - I can think of no worse product provider or investment house than that lot. Get a fee based certified financial planner - and save yourself a lot of trouble - and enjoy the protection of their liability and accountability. ( Besides if my memory serves me correctly from your previous comments you are a "multi-jurisdictional investor" - and that is complex stuff on its own?) ....anyway you clearly have the skills to be able to engage on an informed level on this with such a person. As the famous Casablanca line goes "this could be the start of a long friendship "( or similar).
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Super Contributor
thanks for all your input-really appreciated.some good ideas .The issue re use of a financial advisor is a great debate and there are pros and cons-my worry is that if I last another 30 years which is not impossible a 1% investment trailer cost will reduce my assets by 30%-that is significant and I would need to be convinced that the financial advisor is worth it-so far I have yet to be convinced.Stanlib has not had the best returns historically ?Is Alan Grey slipping up re returns??I will not be taking a guaranteed annuity at this point but will review every few years-I can shift all or some of living annuity to a guaranteed but not the other way round.This is the advantage of going living annuity in the first place-I can also move living annuity to another supplier if I chose to in future-not as easy with a guaranteed annuity-thanks again
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Highlighted
Frequent Contributor
I recently withdrew money from a Stanlib product when I had the cash needed for a project of mine. Great was my surprise when they held a large amount back in a African Bank rescue fund. It was explained to me that all SA institutions have to contribute to the rescue of this fiasco. Is this true, though? If not, then Stanlib owes me a explanation. If yes, then how 'safe' is one's money entrusted to these institutions?
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Super Contributor
Whom do you know ( who is not in an institution ) who is paying 1% pa asset based fees for financial advice?? Put down your fish and chips for a moment - on a suitable surface, wipe your fingers, pick up a pen and write this down. "I am perfectly entitled to and I WILL negotiate the fees/ rate I pay with my financial adviser WHO WILL charge fees for ADVICE and will not be asset based in their charging" ( repeat ALOUD three times until it takes desired effect). For goodness sake look for and get yourself a fee based CFP adviser who charges by the hour and who has an agreement with you as to what he or she will deliver/ ( with integrated revue basis) - essential -that is in terms of your stated objectives( not just, repeat not just investment returns) . That is not difficult now - is it??
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leoridge
Contributor
The aspect of fees that you should consider is whether you are happy to pay a fund manager to actively manage your chosen funds and or to make use of index tracker funds at much lower fees.The active versus passive debate is well covered on the web with some compelling statistics favoring the latter.
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Super Contributor
my hands are so greasy that everything is slipping and I cannot count to 3 so I will get someone to assist me there.I think the best discount I could get is 100% and I will try to figure out a plan on how to achieve that-thanks again for your wonderful advise-don't eat fish by the way as I am a vegetarian-wonderful saving on butcher bill and means I get discount on the grocery bill from discovery-
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Super Contributor
just checked re fees and the information I am getting on line is that financial advisers can charge max 1.5% prior to investment being made and a max of 1% per year.I have been offerred a discount of 25% but still this is quite a significant overhead-the admin fee in comparison is 0.5% for first 1.5 million and 0.2% thereafter.investment fees depend on the portfolio chosen and can get complicated if performance related.the point about index funds potentially being more cost friendly is well made.
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Super Contributor
interesting the financial advisor has agreed to waive all fees upfront and ongoing if I take living annuity out with same company my paid up provident fund is with-depending on their admin fees that could work for me but requires some analysis
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Super Contributor
Just as there are compelling stats in favour of active management especially when it comes to managing downsides....but the short answer is there is a place for both. I have stopped licking my fingers - and put down my newspaper( GREAT BEER BATTER!!) and this is key: a) a quality managed fund - will have a TER of about 1.2 - 1.5%pa iro the assets( COULD BE LESS - but must be an institutional pricing - not some idiot who is going to assemble retail funds for you - where he plays the role of secondary fund manager and switches stuff around - what a joke that is...and yet the majority of "advisers" seem to think that is their value add. Beats me. ) - To this price above,add the price of the "platform" on which the funds are held - should be about .45- 0.50%. Some offerings include the platform with the fund management - so can be less Total say 1.6 - 1.8% pa=parity pricing. b) an adviser ( like mine) charges me for TIME AND ADVICE - not asset based fees - he contracts with me to do a yearly review for which he charges R1000.00per hour - which Price is about 5hours worth of work. When we set up our relationship he did the full Monty - checked everything from taxes , to Will to who owns which property, income flows, rhubarb, rhubarb, - offshore probate and all that jazz. The initial fee was about R8- 9000 as I recall. Acts as a great sounding board too... He invoices me and all the interactions are reflected. He is accountable and is professionally insured ( Lawyer and CFP). So. Now work out that cost of ADVICE as a percentage of YOUR assets - nowhere near THIS 1%PA RUBBISH ....the best is I don't hand over 1/12 of 1% per month - I get to invest it until I pay my fees. I do have a contract with him - severable on 3 months notice and I have to see him once a year at least..... The only thing that is missing is the following .. where can I buy a decent bottle of Old Speckled Hen?
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Pauldelmas
Contributor
Partridge you're saying this guy is good can you send me his phone number
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Super Contributor
thanks for that input-the hourly rate works as a much better approach in my opinion.I was invested for over 30 Years in provident fund and basically was going to wait until I was 70 before I "retired" but when I added up all my different funds the income would create tax that would hit max.retiring early means I can drip that in slowly.I do acknowledge the sounding board makes a lot of sense .will chew on it.last time I had a speckled hen was in the rose and crown in riverside but the pub moved and no longer stocks this beer-maybe exchange rate was a negative
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Super Contributor
thanks for that input-the hourly rate works as a much better approach in my opinion.I was invested for over 30 Years in provident fund and basically was going to wait until I was 70 before I "retired" but when I added up all my different funds the income would create tax that would hit max.retiring early means I can drip that in slowly.I do acknowledge the sounding board makes a lot of sense .will chew on it.last time I had a speckled hen was in the rose and crown in riverside but the pub moved and no longer stocks this beer-maybe exchange rate was a negative
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Super Contributor
Geordie - the speckled hen is a great loss... love that stuff. But the good news is that there are some good craft ales developing in SA ...in CPT at the Club there is one called "Signal Hill" - I think. Good stuff. Here in the SWD there is "Red Bridge" - also good plus Mossel Bay Ale - cannot remember the name - could be light house or similar excellent stuff. Never tried the Zulu blonde(sp?) hear its good. Unfortunately.Can't put the adviser name up on this site I'm afraid.
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Super Contributor
thanks understand re advisor.I have tried some of the craft and to be honest there is some ***** around.drinking guinness these days but will look out for the ones you mentioned and give them a try.my research re annuity goes on and is fun-talking to a few already retired guys and getting input from them as well-all helps and paints a picture for me.
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Frequent Contributor
The craft beers in Clarens are worth trying (the English Pale Ale is really good) as are the ones at Darling on the Cape West Coast.
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