Tuesday, 11 August 2015 - 20:00
Seed Weekly - Investment Vehicles
As South Africans we have a number of different investment vehicles to our disposal. Each vehicle presents us with a different set of opportunities to potentially take advantage of as the benefits of the various pre- & post retirement vehicles remains underutilised by many. This article will not list all the pros and cons of each vehicle but rather look at ways these vehicles can be used to benefit the member.
We have always held the belief that a person’s overall asset allocation is one of the main determinants of the eventual success of an investment strategy. A successful investment strategy has many moving parts and as such has many different factors to take account of; the ‘big picture’ top down makeup of your balance sheet arguably has the biggest impact on your position over time. To take it one step further, we find it essential to look through the asset allocation and determine the best way to access the various asset classes.
Under normal circumstances we would recommend that an investor carries a certain exposure to growth and income generating assets (both local and offshore). The best way to access these asset classes is to consider the appropriate vehicles to your disposal and, very importantly, the goal of this specific asset class.
Growth assets are, generally & in the long term, best housed in a vehicle where the growth and dividends are untaxed, this is possible through utilising compulsory vehicles. As the untaxed growth and dividends compound over time it will outperform a similar investment in a self-funded (net of taxes) discretionary account. There are however 2 problems with the above statement;
• Compulsory vehicles are generally limited in the amount of growth assets that can be held where discretionary vehicles do not have this constraint.
• Income withdrawn from compulsory vehicles (after conversion to a living annuity) is in most cases taxed a much higher rate than income from discretionary sources (as long as the income from the discretionary sources are taxed as interest, CGT or dividends).
A potential solution to the above problems include using a Tax Free Savings Account (TFSA) to house some growth assets. TFSA’s have their own issue in that the amount of capital that can be committed at any time is limited, this account needs to be built up over the long term and it will be some time still before this will have a measurable effect on most clients’ position.
The solution that, in most cases, works the best is to make sure that your compulsory vehicles are fully exposed to growth assets up to the regulated limits. This is done through balanced funds in pre-retirement vehicles. Upon reaching the age of 55 one can access a living annuity which does not carry any asset allocation constraints, this makes living annuities very attractive vehicles in which to hold growth assets as the growth within these vehicles remain untaxed. Mandatory income paid out of living annuities can, however, potentially offset this benefit.
It is therefore pertinent to look at the ‘big picture’ and determine how to structure your portfolio to gain the maximum benefit. The untaxed growth in compulsory vehicles need to weighed up against the income tax on annuity payments, while the lower taxed income stream generated by discretionary accounts needs to be weighed up against the tax paid on growth, dividends and interest. It is just as important to consider the best way to structure your income as it is to structure your capital base for growth as they are ultimately intertwined.
The above is but one of the many factors the team at Seed takes cognisance of when designing solutions to our clients. Each solution we design is unique and tailored to your needs. We also monitor these solutions continuously and will make adjustments as circumstances dictate.
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Tue, 11 Aug 2015
Australian shares fell 0.7
percent on Tuesday, largely led by losses in banks, after China
devalued its currency following disappointing economic data.. . .
Japan's Nikkei share average edged
down on Tuesday after China devalued the yuan by nearly two
percent, with investors taking profits as they. . .
Gold rose 1 percent to
above $1,100 an ounce on Monday, its biggest increase in more
than seven weeks, as the U.S. dollar. . .
Slowing demand in China led some
stock markets to rise on Monday, on hopes of more policy
stimulus, but commodity prices fell.. . .
Revenue for the interim period lowered to R2.9 billion (R3.4 billion). Gross profit decreased to R698.3 million (R789.8 million). Profit from operating activities was higher at R167.4 million (R132.3 million). Profit for the period attributable to owners jumped to R100.5 million (R58.6 million). In addition, headline earnings per share shot up to 101cps (61cps).. . .
World Markets (Spot Prices)
|JSE Top 40||17:00||46622.58||190.59||0.41%|
|JSE Indust 25||17:00||67398.40||316.07||0.47%|
|USD / ZAR||20:00||12.7906||0.1477||1.17%|
|GBP / ZAR||19:55||19.8776||0.1853||0.94%|
|AUD / ZAR||19:55||9.3221||-0.0519||-0.55%|
|USD / JPY||20:00||125.1250||0.5550||0.45%|
|EUR / USD||20:00||1.1030||0.0014||0.13%|
|GBP / USD||20:00||1.5571||-0.0016||-0.10%|
Click here for the Sharenet Spot Price page
The JSE Today
* Includes all listed instruments on the JSE
|Index Name||RP||Move||% Move|
|Financial & Ind. 30||73,008.25||460.85||0.64%|
|Oil & Gas ||8,465.51||-821.16||-8.84%|
|Oil & Gas Producers ||45,517.50||-4415.20||-8.84%|
|Basic Materials ||21,267.17||33.98||0.16%|
|Forestry & Paper ||50,324.87||862.25||1.74%|
|Industrial Metals ||6,613.72||332.34||5.29%|
|General Industrials ||160.62||1.17||0.73%|
|Consumer Goods ||68,942.69||310.73||0.45%|
|Automobiles & Parts ||8,355.85||22.64||0.27%|
|Health Care ||10,064.33||68.19||0.68%|
|Index Name||RP||Move||% Move|
|Food Producers ||8,849.90||86.86||0.99%|
|Personal Goods ||1,053.40||-20.77||-1.93%|
|Consumer Services ||16,003.98||-85.00||-0.53%|
|General Retailers ||8,462.58||-44.56||-0.52%|
|Travel & Leisure ||6,137.42||22.50||0.37%|
|Support Services ||3,356.28||27.09||0.81%|
|Non-life Insurance ||55,076.92||-74.02||-0.13%|
|Life Insurance ||43,494.66||307.14||0.71%|
|General Financial ||4,849.35||22.86||0.47%|
|SHARIAH TOP40 ||3,455.36||19||0.54%|
|FTSE/JSE SHARIAH ALL||3,658.41||20||0.56%|
|FTSE JSE Fledgling ||6,728.79||50||0.74%|
|FTSE/JSE Alt X ||1,443.81||10||0.66%|
|SA LISTED PROPERTY ||667.02||0.46%|
|CAPPED PROPERTY ||587.95||0.82%|
|FTSE/JSE RAFI 40||9,465.03||59||0.63%|
|Capped Top 40||24,901.37||104||0.42%|
|Capped All Share||26,487.53||105||0.40%|
|JSE TABACO ||9,619.33||136||1.43%|
Click here for the Sharenet Index Summary page
Latest Consensus Changes**
|SGL||SIBANYE GOLD LIMITED||HOLD||07/08/2015|
|RES||RESILIENT PROPERTY INCOME...||HOLD||07/08/2015|
|OML||OLD MUTUAL PLC||BUY||07/08/2015|
|BAT||BRAIT S E||BUY||07/08/2015|
|NED||NEDBANK GROUP LTD||HOLD||07/08/2015||
|Expected||Company Name||Fin. Date|
|12/08/2015||MPACT||June 2015 (Interim)|
|12/08/2015||ROCKCASTLE||June 2015 (Final)|
|13/08/2015||ASCEN A||June 2015 (Final)|
|13/08/2015||ASCEN B||June 2015 (Final)|
|13/08/2015||CURRO||June 2015 (Interim)|
|TRADEHOLD PREF||06/08/15||21/08/15||01/09/15||ZAR 0.1781|
|IMPL CONV||30/07/15||06/08/15||21/08/15||ZAR 250.0000|
|ECSP C2||22/07/15||06/08/15||17/08/15||ZAR 0.9075|
|ECSP C||22/07/15||06/08/15||17/08/15||ZAR 0.9075|
|ECSP A||22/07/15||06/08/15||17/08/15||ZAR 0.6849|
|RBA||RBA Holdings Ltd.||11/08/2015||Confirmed|
|SOV||Sovereign Food Investments Ltd.||12/08/2015||Confirmed|
|LDO||Lodestone REIT Ltd.||12/08/2015||Confirmed||
Stock Exchange News Service
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