‘Se­lected shares solid’

Finweek English Edition - - LETTERS -

I RE­FER TO “Vic’s non-guar­an­teed taxfree R5m port­fo­lio”. You men­tioned “this port­fo­lio is well de­signed for a sin­gle tax­payer who has no other in­come”. That’s cru­cial, as the in­come on re­tail bonds is taxed as in­ter­est and thus each in­di­vid­ual’s tax sit­u­a­tion could af­fect the af­ter-tax in­come from the port­fo­lio.

With re­gards to SA re­tail bonds, it should be noted that to get the 8% yield you’d need to in­vest in the five-year bond and that the in­come from these bonds will be taxed as in­ter­est. Please see be­low a por­tion from the web­site’s fre­quently asked ques­tions: https://se­cure.rsare­tail­bonds. gov.za/FAQ.aspx#ques­tion20

What are the cur­rent tax ex­emp­tions? For per­sons un­der the age of 65, the first R22 800 in in­ter­est re­ceived dur­ing a tax year is re­garded as tax-free/ex­empted. For those over the age of 65 the first R33 000 in in­ter­est re­ceived dur­ing a tax year is re­garded as tax-free/ex­empted. These amounts are ap­pli­ca­ble from your in­ter­est earned for the tax year 2011/2012.

We agree your four se­lected shares are, high div­i­dend yield­ing com­pa­nies with good long-term growth po­ten­tial. Many in­vestors don’t un­der­stand they can re­duce risk in in­vest­ing on the JSE by tak­ing a long-term view and that they won’t get good growth with­out tak­ing some risk.

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