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Online Share Trading

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Where will be a good time to get out of the banks?

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Brazen
Super Contributor
LOL! And despite being a tad annoying louisg is right. Funny that. Often people who are right are a tad annoying. What is that about?
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Brazen
Super Contributor
And john, if I skipped one of every four birthdays I'd be younger. . . .
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john_1
Super Contributor
this true but also a little bit more confussed...It is possible, its called long term averages.
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Brazen
Super Contributor
And BRE lays it all out pretty clearly. Acutally, his posts are always well considered.
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louisg
Super Contributor
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louisg
Super Contributor
BRE you are correct. I've tried to keep the math as simple as possible, hence the small changes in the compounding calculations assuming the interest is paid out daily and not annually in arrears. By the way if one is over 65 the interest exemption is R 27500 for this year. The gist of my argument is that over the long term the share market has outperformed ALL other asset classes. In the short term it will vary amongst shares, property, bonds, cash and gold, BUT in the long term its SHARES that outperform by a long shot. Trying to time your entry and exit points in the various asset classes in the short term is basically impossible. I'm certainly not that clever... not even close. By remaining in the market for the long term I am giving myself the best chance to outperform all other asset classes. IF one uses the US market as an example, dividends make up almost HALF of the market return over the past 100 years. As long as my shares keep compounding their dividends I'm happy. The short term share price movements are not important to me. If anything they are opportunities to buy more high paying dividend shares at lower prices and therefore HIGHER yields.OMO
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louisg
Super Contributor
Anyone considering trading via a company MUST consider the related auditing fees and other administrative costs. A company does pay 28% tax but if you want to distribute the profit you will incur a 10% STC (Secondary Tax on Companies)charge. Of course you can reduce your loan account and pay no STC, but once your loan account reaches zero you have to pay the STC.
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john_1
Super Contributor
How much will you pay me to teach you how!!!
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Shaun_Siddall
Super Contributor
But can declare yourself a salary up to the effective tax rate which is currently 35,2% and still be in a better position than trading as an individual.
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louisg
Super Contributor
Correct Shaun Siddal. One should perhaps consider investing/trading via a trust. Although there are accounting fees involved, there are no expensive auditing fees incurred. A trust also has estate planning and asset protection advantages to consider. Profits and capital gains taxes can be legitimately minimized by distributing them to a beneficiary(yourself) and taxed at your own marginal rate.
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geordie1
Super Contributor
consider this-invest for long term as individual,invest and trade as a cc-minimimal accounting fees and no audit-have a trust to make yearly donations for kids.
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louisg
Super Contributor
A cc does not address the issue of estate planning and asset protection. It is possible for your trust to own the cc. But I don't see why one would want to do that.
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geordie1
Super Contributor
a cc can have more than one member ie your children therefore good for estate planning-re protection of assets well that depends on what the cc invests in-certainly over the long term good shares will keep up with inflation and should do better.
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louisg
Super Contributor
Because each individual's needs are unique, it depends entirely on what one is trying to achieve and therefore how one arranges one's financial affairs. WEALTH WARNING: First consult a financial adviser, accountant and/or attorney.
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geordie1
Super Contributor
That is certainly true-how do you find a genuine financial advisor who is not in it for the commission?They are a very rare breed and those that are properly qualified and with integrity are even more difficult to locate.Some accountatnts do add value although with current legislation I tend to find they work for sars rather than small individuals like myself.In the end I was happier to do it on my own-make and hopefully learn from my mistakes,
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louisg
Super Contributor
DO NOT get someone who works for a commission. They will inevitably have a bias towards their own interests at your expense. Try to get someone who can explain the various options to you and then you decide what you want to do. At the end of the day it's best to educate ourselves, but I don't have a problem from employing/paying professionals who are cleverer than me to explain to me my options. LIVE and LEARN, you're right.
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