So overall networth has been growing well. This was driven by a combination of strong equity market growth, savings and improving political situation in our country.
In terms of overall NW we’re sitting at 80% in listed equities.
The focus has now shifted from maximising networth to optimising income. The focus is to get as much tax benefit through optimally placing the investments into the correct taxable vehicles. So my waterfall looks as follows:
1. Max out interest allocation, that’s R23.8k per person and at 7-10% interest rate is about R240k-R340K of interest instruments. Ours are fixed deposits, loans and bonds here.
2. Max out Tax free saving account (TFSA) a small r33k per annum allocation that attracts no tax on after tax income. We invest these into high income instruments like property and bonds.
3. Max out retirement annuity, tax free savings but hesitant since a growing balance means more money stuck in SA till we’re 50+ age and big slant towards SA and the income tax rates start to exceed other tax rates once the balance is higher than R1m. Anyway whilst I’m working its better than marginal tax at 40-45%.
4. Pref shares, I like these since can get dividends at high rates but am able to get them at 0%-20% tax depending on vehicles
5. Global property – decent returns at 3.5% yields but am avoiding SA property for the foreseeable future post the expropriation discussions that started in December.
So there you have it. Increase income, probably not with more local or global equities for a while until all expenses get covered by passive. Plans had to change because local property is no longer an attractive option so will instead generate it from preferred shares, fixed income and global property REITS.