New portfolio

[u/wipez1]

Hi everyone, I hope you are all well

I am currently maxing out my TFSA all into the 10X Total World but I want to start investing into my ZAR account too.

I am 21 years old and have an extra R7000 a month I can deploy into this account. My current mindset for this account is deploying as much as possible with the possibility of taking some of it out in +-5 years for a deposit on a house. I would like to keep this account going forever and use it as my snowball/growth account where it becomes my biggest account because of the contributions.

I have recieved some advice saying do a 60/25/15 split between the Satrix top 40, Satrix S&P500 and Satrix Nasdaq 100.

Im not too sure about this portfolio and would love some feedback based on my situation/goals.

Thanks !

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[u/Equal_Corner_7398]

I would not use a TFSA for a 5 year timeframe investment. That is throwing the tax free benefit out the window, as taxes on a 5 year investment will be minimal compared to possibly the tax break you can gain with a 40year+ investment timeframe. Please reconsider that part.

[u/wipez1 → u/Equal_Corner_7398]

I’m talking about my ZAR account, not touching my TFSA anytime soon don’t worry

[u/Creepy_Ice_820]

Not a FA, but why not utilize the USD account in EE then contributing to VT for the much lower expense ratio?

[u/Consistent-Annual268]

75-80% international / 25-20% South Africa (Top40 or similar) is a good split over the entirety of your combined portfolio (TFSA and non-TFSA and RA all considered together).

Therefore, just invest in a way that you maintain that ratio. And stick to your discipline, don't be tempted to deviate in order to chase recent performance otherwise you'll always be buying high and will lose out.

If you have Total World then there's no need to consider US funds separately (S&P500 or NASDAQ), you will just be over-concentrating into one country instead of maintaining your diversification.

[u/Edrahimovic1001001]

I assume you have a job and that you have an RA, if not, consider increasing RA contributions (if you have a job) for tax efficiency as I also assume that your income is at or around the 40% mark with that nominal level of saving. Don't need to max it out (at 27.5% of gross) but RA @15% + TFSA in your 20's and your set for retirement.

If no job and you just have the extra lying around, 5 years is a bit too short imo to full send it and not give yourself the breathing room for markets to recover IN THE EVENT of an inevitable crasb, especially due to the volatility of the global economy during and post a middle eastern war.

Not saying dump it in all in cash, but something a bit more balanced may do you good vs dumping it into a volatile market for 5 years just to realise the market crashes year 2/3 and now you have 1 or 2 years to recover.

Not an FA and my knowledge of other funds are limited as I have my own FA and set of objectives, but if your saving in a "sinking fund" (<=5 years) you need to diversify using either unit trust that offer balanced returns (they are more expensive, but auto balance things for you and are usually less volatile, lower overall returns, i.e. see Allan Gray Balanced or 10x Your Future) OR DYI and split the 7k into like 50% Higher risk, 30% Medium Risk and 20% Money market/Income funds (copy the Unit Trusts basically and save some TIC)

Again, not financial advice, just don't do either one of the extremes (don't dump it all in high risk, don't keep it all cash, keep it in the middle)

[u/SLR_ZA]

How much are you planning to take out for the house deposit, and what happens if there is a downturn at that time, can you easily delay the purchase or take the loss selling at a low?

5 years is a bit short for equities and if it was money put aside for a house exclusively then many would say you need fixed products. But as it's only a partial withdrawal you may be able to balance your risk with a mix of interest and equity.

Regarding the mix, 85% of Nasdaq 100 companies are also in the S&P500. You're effectively doubling down on the largest companies in mostly one (tech) sector in one country, then ignoring mid and small caps and the whole rest of the world with 40% of your portfolio, but then the other 60% is exclusively the top 40 companies in SA.

It seems a bit of a contradictory mix, unless it is designed to give balance with more local market exposure to account for your total world only TFSA?

[u/Parakiet20]

Total amount you can invest in one year in TFSA is R46000

[u/wipez1 → u/Parakiet20]

Yes