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 The Sharenet Daily 
Friday, 07 March 2014 - 20:00
 
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Seed Weekly - Retirement Annuities

Every February I write an article about why people should use Retirement Annuities as part of their investment portfolio, but if I could get R 1 000 for every time a client, family member, friend, or acquaintance has told me that “Retirement Annuities are a waste of money”, I would be retired now and not writing this article. I have heard many stories about Mr X or Mrs Y, whose retirement annuities were inadequate to fund their retirement despite the fact that they had been contributing to them for many years.

Unfortunately many people use these stories as an excuse not to make any retirement provisions at all.

What are the main reasons for Retirement Annuities not giving sufficient Retirement Capital:

• The first and most obvious reason is that people do not put away enough money each month. If you worked for a big corporate, the total of your contributions and the employer’s contribution to retirement is often in excess of 15%. This means that somebody earning R 10 000 pm has a monthly retirement contribution in excess of R 1 500. As his salary increases, his retirement contributions also increase. People working for themselves, or for smaller companies, rarely spend this much on their retirement annuities. The problem is exacerbated when people have “traditional retirement annuities” which have life cover and other risk benefits attached to them. These risk costs radically reduce amounts available to the retirement fund.

• The second problem is the length of time people invest for. It is not uncommon for people to only start saving when they are 40 and then want to retire when they are 55. This does not leave much time for the wonder of compound interest to weave its magic.

The above problems are best illustrated by the following example. We have a client who started saving for his retirement 30 years ago into two policies – one of R 116 pm and the other R 35 pm. At that time, the contributions were probably close to 15% of his taxable income. The premiums remained unchanged until December 2007 when the client increased the R 35 pm policy to R 2 500 pm and has increased it by 10% pa since then. The total premiums paid on the R 116 policy to date are R 42 224, while the fund value is a staggering R 702 114. This equates to a return of 14.2% pa. The other policy has total premiums paid to date of R 295 516 but, because the real effects of compound interest are yet to kick in on the increased contributions, the fund value is R 574 706. This still equates to a return of 12.98% pa. It must be borne in mind that the huge tax advantages (up to 45% at one stage) have not been taken into account.

One of the major drawbacks of the “traditional” retirement annuity is the fact that it is costed upfront, i.e. your first number of premiums go towards the payment of costs and you only start increasing your retirement value after a while. Now days we have many products available where no upfront fees are accrued and very low ongoing fees are paid.

One of the major advantages of Retirement Annuities that people tend to forget is that your tax rate is usually higher pre-retirement than post retirement. Remember that post retirement you usually have lower income, higher rebates (after 65) and all medical expenses are allowed as a deduction (after 65). So the tax savings generated by the contributions are higher than the future liability created.

Do I think retirement annuities are the alpha and omega of retirement planning? Definitely not. You also need property, equities and offshore exposure in discretionary savings products, but retirement annuities definitely have their place and are ignored at your peril.

Kind regards,

Barry Hugo

www.seedinvestments.co.za
info@seedinvestments.co.za
021 914 4966

Fri, 07 Mar 2014
Top News
[IMAGE]
Gold tumbled more than 1 percent on Friday after stronger-than-expected U.S. jobs data helped soothe fears of an abrupt slowdown in the world's biggest economy.  Full story

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South African stocks ended a see-saw session virtually unchanged on Friday, pulling back from record high set earlier in the day as investors digested the widely watched U.S. jobs data.  Full story
President Vladimir Putin rebuffed a warning from U.S. President Barack Obama over Moscow's military intervention in Crimea, saying on Friday that Russia could not ignore calls for help from Russian speakers in Ukraine.  Full story
President Barack Obama on Thursday ordered sanctions on people responsible for Moscow's military intervention in Ukraine's Crimea Peninsula, including travel bans and freezing of their U.S. assets, and said a referendum by the region to join Russia would violate international law.  Full story
Turkey's president on Friday ruled out any ban on Facebook and YouTube after Prime Minister Tayyip Erdogan said the sites could be shut to stop his foes anonymously posting audio recordings purportedly exposing corruption in his inner circle.  Full story
 
Markets
European shares fell on Friday, amid growing tension over Crimea, as investors tried to shield themselves from the impact of any confrontation between. . .  Full story
Britain's main share index fell to a three-week closing low on Friday as a landmark corporate bond default in China, the world's top. . .  Full story
U.S. equities and other risk assets pared gains on Friday as uncertainty over Ukraine tensions outweighed stronger-than-expected U.S. jobs growth, leading investors to pull. . .  Full story
U.S. stocks rose modestly on Friday after an unexpectedly strong payrolls report in February, although gains were curbed by lingering tensions in Ukraine, with. . .  Full story

The S&P 500 hit a fresh intraday record high on Friday after more jobs than expected were created in February and January's figure. . .  Full story
U.S. stock index futures added to gains after a better-than-expected reading on employment data for February.. . .  Full story
Britain's top shares fell on Friday with investors expected to avoid strong bets before U.S. jobs data that could sway the near-term direction. . .  Full story
World shares were at a six-year high and heading for a fifth week of back-to-back gains on Friday as the ongoing tug-of-war over. . .  Full story
SA Business
South Africa's rand lost ground against the dollar on Friday after stronger than expected U.S. nonfarm payrolls data.. . .  Full story
South African power utility Eskom said on Friday the power supply remained "constrained but stable" the day after it imposed rolling. . .  Full story
Gold held steady on Friday after its sharp overnight rise to trade near a four-month high and was poised to log. . .  Full story
Gold rose on Thursday, boosted by the European Central Bank's decision to not take fresh action to inject liquidity into the euro zone. . .  Full story

Economic growth in Nigeria will accelerate this year, driven by sectors outside its dominant energy industry, while inflation will continue its. . .  Full story
Europe's antitrust chief Joaquin Almunia, whose approval is required for Telefonica's two merger deals in Germany and Ireland, said on Friday that he. . .  Full story
South Africa sold 3.685 billion rand worth of three-month Treasury Bills at an average yield of 5.83 percent on Friday, from. . .  Full story
A hamstring injury will keep South African fast bowler Dale Steyn of out of the first two Twenty20 internationals against Australia. . .  Full story

Diversified mining group African Rainbow Minerals reported a 66 percent rise in headline earnings on Friday as higher prices and a weaker rand boosted its ferrous unit.. . .  Full story
The Chinese yuan is still expected to appreciate modestly this year, buoyed by continued foreign capital inflows, despite the central bank's recent moves to weaken the currency to punish speculators, a Reuters poll showed.. . .  Full story
South Africa's net gold and foreign exchange reserves beat expectations in February, rising to $45.337 billion from $44.918 billion in January, Reserve Bank data showed on Friday.. . .  Full story
World Markets (Spot Prices)
NameTimeRPMove% Move
JSE Overall17:0047786.77-32.76-0.07%
JSE Top 4017:0043206.26-29.87-0.07%
JSE Gold17:001524.9517.691.17%
JSE Financial17:0033968.08153.770.45%
JSE Industrial17:0062368.27238.700.38%
JSE Indust 2517:0055261.10266.560.48%
JSE Resource17:0056036.35-785.16-1.38%
DJ Futures06/0314432.0016.000.11%
DJ Ind19:5816449.1927.300.17%
SP 50019:541877.170.140.01%
Nasdaq19:584332.69-19.44-0.45%
FTSE 10018:296717.47-71.02-1.05%
DAX19:089350.75-192.12-2.01%
CAC4019:084366.42-50.62-1.15%
Nikkei08:3615274.07139.320.92%
Shanghai09:282057.91-1.67-0.08%
Hang-Seng10:2822660.49-42.48-0.19%
All Ords07:395477.0017.300.32%
NZSE 5006:285125.6510.860.21%
NameTimeRPMove% Move
Gold $19:591338.28-11.86-0.88%
Gold R19:5914343.5821.220.15%
Gold R/kg19:5846108424720.54%
Silver $19:5920.8900-.5320-2.48%
Platinum $19:591481.703.200.22%
Palladium $19:58777.75.950.12%
R15715:347.05-.02-0.28%
R18615:348.50-.01-0.12%
R20415:347.84-.14-1.76%
R20715:348.08-.04-0.55%
Brent Crude19:58108.761.000.93%
Rand / Dollar19:5910.71880.11131.05%
Rand / Pound19:5517.89910.17200.97%
Rand / Euro19:5514.87720.17371.18%
Rand / NZD19:599.07070.08050.90%
Rand / AUD19:559.72980.09390.97%
Yen / Dollar19:59103.31100.23900.23%
Euro / Dollar19:590.7208-0.0072-0.99%
Dollar / Euro19:591.38750.00150.11%
Pound / Dollar19:550.59770.00050.08%

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The JSE Today

Trading Statistics
DateAdv.Decl.Unch.ActivesVolumeValueTradesOrders
07/03/201418818870446187,641,820R14,225,576,507158383348124
06/03/201422013858416201,584,426R15,537,671,662157346262660
05/03/201417715278407204,111,799R14,478,231,3541490261075920
04/03/201422914159429227,257,004R17,308,156,3881751171055491
03/03/201417319666435164,138,776R13,273,854,889146336672763
* Includes all listed instruments on the JSE
Major Moves Up
SharenameSaleMove% MoveVolume
1 PUTPROP  649406.57.%12550
2 DELTA  500306.38.%1500
3 ADAPTIT  780395.26.%172879
4 INVPROP  1394594.42.%80014
5 KELLY  19084.40.%10000
6 SIBANYE  2384974.24.%2477267
7 KEATON   281114.07.%24015
8 TORRE  270103.85.%10150
9 CSG  23083.60.%36747
10 CROOKES  72002503.60.%2422
11 MMIHLDGS  2441783.30.%3358471
12 ALTRON  2479773.21.%160
13 SYCOM  2320693.07.%14485
14 SANTOVA  17752.91.%119884
15 RCL  1439362.57.%266571
16 NIVEUS  2045452.25.%21521
17 CML  91702002.23.%237316
18 SANTAM  187004002.19.%18451
19 OCTODEC  1875402.18.%52608
20 DAWN  940202.17.%60553

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Major Moves Down
SharenameSaleMove% MoveVolume
1 ANDULELA  300-99-24.81.%5066
2 ASCEN B  215-25-10.42.%3000
3 CENRAND  375-35-8.54.%20491
4 PINNACLE  2100-153-6.79.%2451713
5 SEARDELN  210-15-6.67.%20000
6 DIGICOR  213-12-5.33.%71131
7 EHSV  1460-80-5.19.%955
8 MASTDRILL  951-49-4.90.%2000
9 FONEWORX  220-10-4.35.%110392
10 DIAMONDCP  110-5-4.35.%36250
11 ANGLO  26674-1201-4.31.%3083036
12 CADIZ  115-5-4.17.%13916
13 CONVERGE  125-5-3.85.%340079
14 ELLIES   430-17-3.80.%418746
15 ASCENDIS  1070-40-3.60.%3583638
16 AFRIMAT  1305-45-3.33.%40737
17 GLENCORE  5874-201-3.31.%784033
18 METROFILE  495-15-2.94.%39582
19 BRAIT  4809-121-2.45.%581672
20 TSOGO-SUN  2512-62-2.41.%76260

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New Highs
SharenameSaleHighMove% MoveVolume
1 SIBANYE  23842385974.24.%2477267
2 SANTOVA  17718252.91.%119884
3 CML  917091702002.23.%237316
4 ASPEN  28599287004731.68.%779223
5 CULLINAN  33533551.52.%2150
6 STEINHOFF  54005424801.50.%11335215
7 SASOL  58200584297981.39.%1380950
8 AFGRI  70670681.15.%1487368
9 ASSORE  45150462454521.01.%45155
10 INVLTD  80088017760.96.%577243
11 OLDMUTUAL  35463575120.34.%4888906
12 PSG  95809580300.31.%84361
13 GRANPRADE  50000.1540944

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New Lows
SharenameSaleLowMove% MoveVolume
1 LITHA  205192-4-1.91.%189133

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Index Summary
Index NameRPMove% Move
Top 4043,206.26-29.87-0.07%
Industrial62,368.27238.700.38%
Mid Cap58,980.57-97.43-0.16%
Small Cap51,218.52179.220.35%
Resource 2056,036.35-785.16-1.38%
Industrial 2555,261.10266.560.48%
Financial 1513,029.3675.800.59%
Financial & Ind. 3058,556.30304.810.52%
All Share47,786.77-32.76-0.07%
Oil & Gas 44,042.59603.881.39%
Mining 33,440.24-652.54-1.91%
Gold Mining1,524.9517.691.17%
Platinum Mining49.23-.47-0.95%
GENERAL MINING9,630.17-241.59-2.45%
Oil & Gas Producers 23,680.89324.701.39%
Basic Materials 29,768.81-533.75-1.76%
Chemicals 24,497.38-103.73-0.42%
Forestry & Paper 32,919.84-85.09-0.26%
Industrial Metals 23,758.39-423.51-1.75%
Industrials 41,602.24-148.60-0.36%
General Industrials 129.77-.34-0.26%
Consumer Goods 57,286.69272.760.48%
Automobiles & Parts 9,940.97-113.23-1.13%
Household Goods367.0451.50%
Health Care 74,403.31427.990.58%
Beverages 178.42.400.22%
Index NameRPMove% Move
Food Producers 63,804.11-269.41-0.42%
Personal Goods 1,051.407.690.74%
Consumer Services 11,900.8027.550.23%
General Retailers 56,375.5626.870.05%
Travel & Leisure 5,329.10-52.99-0.98%
Media 289.521.720.60%
Support Services 2,592.33-27.89-1.06%
Telecommunications 9,807.63126.981.31%
Financials 33,968.08153.770.45%
Banks 57,472.99233.440.41%
Non-life Insurance 47,726.531020.892.19%
Life Insurance 33,333.47325.890.99%
General Financial 3,342.5820.220.61%
Technology 44,334.4170.920.16%
SHARIAH TOP40 4,131.94-25-0.61%
FTSE/JSE SHARIAH ALL4,219.26-23-0.53%
COAL MINING18,836.22-63-0.33%
FTSE JSE Fledgling 6,548.54-8-0.11%
FTSE/JSE Alt X 1,184.8420.21%
SA LISTED PROPERTY 481.54-0.05%
CAPPED PROPERTY 423.14-0.08%
RESOURCE 30,656.51-408-1.31%
DIVIDEND PLUS209.1510.36%
FTSE/JSE RAFI 409,519.67-27-0.29%
Capped Top 4022,873.28-3-0.01%
Capped All Share24,195.07-12-0.05%
JSE TABACO 7,588.10320.42%

Click here for the Sharenet Index Summary page
Latest Consensus Changes**
CodeCompany NameStatusUpdated
FSRFIRSTRAND LIMITEDHOLD06/03/2014
IPLIMPERIAL HOLDINGS LTDSELL06/03/2014
BTIBRITISH AM. TOBACCO PLCBUY05/03/2014
RBPROYAL BAFOKENG PLATINUM L...BUY04/03/2014
APNASPEN PHARMACARE HLDGSBUY04/03/2014
Results Expected**
ExpectedCompany NameFin. Date
10/03/2014A-V-IDecember 2013 (Interim)
10/03/2014A-V-I-PDecember 2013 (Interim)
10/03/2014BEE-SASOLDecember 2013 (Interim)
10/03/2014S.OCEANDecember 2013 (Final)
10/03/2014SASFINDecember 2013 (Interim)

Recent Dividends**
Share NameDec-DateLDTPay-DateAmount
STANBANK06/03/1404/04/1414/04/14ZAR 3.0000
RMIH06/03/1420/03/1431/03/14ZAR 0.4600
EXXARO06/03/1404/04/1414/04/14ZAR 3.1500
SANLAM06/03/1404/04/1414/04/14ZAR 2.0000
FAIRVEST06/03/1420/03/1431/03/14ZAR 0.0675
Ex Div**
Share NameDec-DateLDTPay-DateAmount
KUMBA11/02/1407/03/1417/03/14ZAR 19.9400
ASSORE12/02/1428/02/1410/03/14ZAR 4.5000
DSY B PREF20/02/1407/03/1417/03/14ZAR 4.2849
HUDACO31/01/1428/02/1410/03/14ZAR 3.1000
TRUWTHS20/02/1407/03/1417/03/14ZAR 2.1600

Upcoming AGMs**
CodeCompany NameDateStatus

Stock Exchange News Service
DateTimeHeadline
07/03/201417:35SOUTH OCEAN HOLDINGS LIMITED - Changes to the Board
07/03/201417:30ADCOCK INGRAM HOLDINGS LIMITED - Notice of Extraordinary General Meeting
07/03/201417:30SOUTH OCEAN HOLDINGS LIMITED - Audited consolidated results for the year ended 3...
07/03/201417:05REMGRO LIMITED - Trading statement
07/03/201416:55ANNUITY PROPERTIES LTD - Firm intention by Redefine to make an offer to acquire ...
07/03/201416:05IVUZI INVESTMENTS LIMITED - New Insrtument Listing-IVA412
07/03/201416:00ARROWHEAD PROPERTIES LIMITED - Revised listing particulars
07/03/201415:55TELKOM SA SOC LIMITED - Further cautionary announcement
07/03/201415:55DISTELL GROUP LIMITED - Dealings in securities by Company Secretary
07/03/201415:54IVUZI INVESTMENTS LIMITED - New Instrument Listing -IV04Q
07/03/201415:40INDWA INVESTMENTS LIMITED - New Instrument Listing -IN06H
07/03/201415:36AFGRI LIMITED - Finalisation announcement in respect of Scheme of Arrangement
07/03/201415:30RCL FOODS LIMITED - Acquisition of 49% stake in Senn Foods Logistics (Pty) Ltd
07/03/201415:15MONDI LIMITED - Employee share plans Transactions in Mondi plc ordinary shares
07/03/201415:10SHOPRITE HOLDINGS LIMITED - Dealing in securities by a non-executive director
07/03/201414:58INVICTA HOLDINGS LIMITED - Directors dealing in securities
07/03/201414:45THE SPAR GROUP LIMITED - Dealing in securities by The Spar Group Limited Employe...
07/03/201414:45STRATCORP LIMITED - Withdrawal of cautionary and further cautionary
07/03/201414:35EFFICIENT GROUP LIMITED - Results of general meeting and changes to the board of...
07/03/201414:20VISUAL INTERNATIONAL HOLDINGS LTD - Abridged prospectus relating to the listing ...
07/03/201414:16GOLD FIELDS LIMITED - Dealing in Securities
07/03/201414:16ASSORE LIMITED - Dealing in Securities
07/03/201414:15PIONEER FOOD GROUP LIMITED - Exercise Of Phantom Share Rights In Terms Of The Pi...
07/03/201414:13RBA HOLDINGS LIMITED - Loan, issue of debentures, share options and cautionary a...
07/03/201414:07PIONEER FOOD GROUP LIMITED - Acceptance Of Allocated Phantom Share Rights In Ter...
07/03/201414:00JSE LIMITED - Removal of Listing Announcement
07/03/201414:00NEDBANK GROUP LIMITED - Dealings in securities by executive directors and compan...
07/03/201413:23CHEMICAL SPECIALITIES LIMITED - Dealing in securities by a director
07/03/201412:21LIFE HEALTHCARE GROUP HOLDINGS LTD - Trading statement
07/03/201410:45TRACKHEDGE (PTY) LIMITED - Partial De-listing of NewRand Securities-"NRD"
07/03/201410:36JSE LIMITED - GEN - General - Financial Reporting Investigation Panel (FRIP)
07/03/201410:08TRENCOR LIMITED - Trencors Textainer to present at the 2014 J.P. Morgan aviation...
07/03/201409:36METROFILE HOLDINGS LIMITED - Director's dealings
07/03/201409:15MACQUARIE SEC SOUTH AFRICA LTD - New Financial Instrument Listing: MAQ049
07/03/201409:10MACQUARIE SEC SOUTH AFRICA LTD - New Financial Instrument Listing: MAQ048
07/03/201409:06ANGLO AMERICAN PLC - Notification of major interest in shares
07/03/201409:05BRITISH AMERICAN TOBACCO PLC - Notification of transactions of directors, person...
07/03/201408:58BRITISH AMERICAN TOBACCO PLC - Transaction in own shares
07/03/201408:42LITHA HEALTHCARE GROUP LIMITED - Reviewed condensed consolidated financial state...
07/03/201408:30SUN INTERNATIONAL LIMITED - Joint cautionary announcement
07/03/201408:00PINNACLE HOLDINGS LTD - Unaudited interim results for the six months ended 31 De...
07/03/201407:13GOLD FIELDS LIMITED - Dealing in securities by directors of Gold Fields Limited...
07/03/201407:05AFRICAN RAINBOW MINERALS LIMITED - Interim Results for the six months ended 31 D...
07/03/201407:05JOHN DANIEL HOLDINGS LIMITED - Proposed Related Party Acquisitions, Approval of ...

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