Advice on savings/investment strategy if you're only here short-term

[Itsme]

Hi all,

 

I'm in Oz short term, will be heading back to SA in 3-4 years after my contract is finished.

 

I'm struggling to figure out what to do with cash saved while I'm here.

Things to balance that are making me confused:

 

 - Bond interest back in SA vs keeping cash here in AUD

 - Interest rate on savings here (nothing basically)

 - Potential market growth here vs in SA if I put it into something like an etf

 

??

Anyone here who's planning to go back and has figured out what to do with your AUD savings, I'd love to hear about it.

Edited December 4, 2017 by Itsme

[ottg]

Before I attempt to answer:

1. Do you usually manage your own investment portfolio?
2. Do you follow the economy and stock markets both in RSA and Aus?
3. Do you regard yourself as an active or passive type of investor (not trader)?
4. Do you have at least 1 hour a week available as an active investor?

[ChrisH]

+1 on the questions that @ottg asked.

 

Also, consider that it might be better to have AUD vs ZAR as historically the Rand has had its ups and downs but it ultimately weakens: http://www.xe.com/currencycharts/?from=AUD&to=ZAR&view=5Y

[Itsme]

Thanks - all relevant questions.

 

I'm afraid I'm typically a pretty passive investor (bouts of way too much research followed by doing something fairly generic and passive)

So realistically I'm probably looking for a passive option here too.

 

Ja, I'm guessing keeping things in AUD is generally better. I'm a bit swayed by my bond interest rate, which means weakening of the rand would need to be pretty large to pay off, but less stressed about that now that it's mostly covered by the SA tennant.

 

Any ideas welcome - even if it's just pointing me at a good site for reading some more.

 

Cheers

[Nev]

From my perspective i am also a passive investor, and that means taking something with low risk, low maintenance, low fees (This is the important one long term) and long term returns, it also doesn't hurt that it is the one Warrent buffet recommends to people who are not looking to actively take up trading

 

Basically it is getting a little bit of each share in the top 100 shares on the share market, you can also get international ones to spread your risk on and offshore

 

They are called ETF Exchange traded funds - do lots of reading up on them, here is the Australian government's take on the

https://www.moneysmart.gov.au/investing/managed-funds/exchange-traded-funds-etfs

 

Here is one of the biggest of the bunch offering them here in AU

https://www.vanguardinvestments.com.au/adviser/adv/investments/product.html#/fundDetail/etf/portId=8205/?overview

 

It may be worth talking to a financial adviser or accountant as you will be running a gauntlet of investment products that can be dealt while you back in RSA, the tax implications to any return, capital gains ....etc

 

With that said financial advisers will generally not recommend ETF's as there is virtually no commission for them unless they are working for a fixed fee

 

In Auz it is illegal to finanicial give advice if you are not qualified to do so so....

This is my personal opinion and you really should get a professional to give you advice to make sure you dont get caught out by taxes or anything along those lines

Edited December 5, 2017 by Nev

[ottg]

A few options that may provide a better return than a savings account:

1. Consider Alan Gray managed Funds. 

 

 

http://www.saaustralia.org/topic/48447-savings-or-investment/?do=findComment&comment=444106

 

2. Alternatively, consider to read about Barefoot and his idea of multiple ETFs with annual rebalancing, as follows:

ASX 200 Streettracks (ASX Code: STW)                                                        -- 35%

Vanguard Australian Small Companies Index ETF (ASX Code: VSO)       -- 15%

iShares Global 100 ETF (ASX Code: IOO)                                                      -- 20%

Vanguard Australian Property Securities ETF ASX Code: VAP)                 -- 20%

Vanguard Australian Fixed Interest ETF (ASX Code: VAF)                          -- 10%

 

3. Read this book on ETFs

The Australian ETF Guide - DAVID BASSANESE

 

[Nev]

Nice one on the book ottg, i just bought it and will give it a read

[ottg]

Nev if you are into ETF you also may like to consider the book of Gary Stone. In there he mentioned which ETF not to buy. He also recommends a few international ones.

I personally dropped some of the local ETF and went for QQQ on the NYSE with considerable success. 

 

[LM17]

I assume you are all aware of the bet Warren Buffet made 10 years ago -- good support for the low cost passive investment strategy  https://www.cnbc.com/2017/10/03/after-winning-bet-against-hedge-funds-warren-buffett-says-hed-wager-again-on-index-funds.html   

[Nev]

yep, that has a lot to do with why i go with ETF's

 

[ocean]

I have be an active investor in managed funds with BT. They have been good up until recently when they sold my funds 9 days after my instruction. Which left me with considerably less than it should have. They have ignored all requests to fix the problem......however the previous 20 odd years with them has been good. I Will look at Vanguard and Maquarie as new supplier options.

[ottg]

@ocean Usually the service providers like BT will have an Order Execution Policy. Check if they have violated their own policy. One problem with managed funds is that have to move very large sums, especially in a down market with a sudden sell-off. If they got too many selling orders they cant just dump them to execute as it will cause panic and effectively put the market in freefall. If the trade volumes were much larger on those days following your instructions, then probably that is what happened.

[ocean]

Hi OttG, they do have a policy of executing by COB of day of order.... so they are out of order here. I forgot, they also lost a few thousand of my funds, until I called them out on it and they found the money a few weeks later.