Personal Tax on Investment Interest

[Houses4Rent]

I would not invest in any paper assets unless its just a short term emergecy kitty. Basically you hand over your cash to someone else. They will live nicely off it, but if the projections do not work out and you lose its your problem, not theirs. More than 95% cannot retire financially independent. I am of the firm believe that this is because of the bulk of people invests in paper assets. If you want to be successful you have to do something what the bulk does not do - swim against the stream so to say.

Savings accounts are useless as pretty much all of them are below inflation. So you loose and the bank wins.

I invest all in residential (global) property mostly in a trust and never sell. I will retire one day from my PASSIVE rental income. Since I never sell I will never have to pay Capital Gains Tax either. I manage 130 properties for my sins and never really had any tenant seriously trash a place.

This is a generic feedback of course as we have little insights to your specific situation, but I do above and am most certainly not going to be one of the 95%.

[Rafael]

More than 95% cannot retire financially independent. I am of the firm believe that this is because of the bulk of people invests in paper assets. If you want to be successful you have to do something what the bulk does not do - swim against the stream so to say.

I believe that the reason why 95% do not retire financially independent is because most people do not save or they leave it for too late.
I see many South Africans living in a R900 000 houses driving a R500 000 car. Most people tend to try keep up with appearances. I see many clients leave their company and withdraw their full pension/provident fund losing 10 years or more worth of investing. I have clients that are 45 investing R500 into their retirement and not wanting to increase it, yet they pay R5 000 a month for their short-term and R8000 for a car that they will never keep because every 3-4 years it is being replaced and R500 a month for the latest Iphone.

Not all of the 95% of people can qualify for a bond. If I earned R15 000 per month, how much of a bond would i be able to afford and if my tenant missed one month if would put immense pressure on me. The best way for me to create liquidity and retire is to invest in "paper assets" if I was earning R15 000 per month

According to Credit Suisse, South Africa’s middle and upper class accounts for 14.6% of the total adult population. Of this, the middle class comprises 13.7%, showing that approximately 10% of the the country’s 1% are actually considered upper middle class.

The lower boundary to South Africa’s middle class is a net worth of R306,160, the middle class holds 38% of total wealth in the country, giving an average net worth of just R825,200.

Stats SA data on monthly income in South Africa in 2010 shows that anyone earning a salary higher than R22,840 per month would be in the top 5% of earners in the country.

You have to clear R560,000 after tax to be considered top 1% in the country,This equates to a pre-tax salary around R800,000 a year

More than 95% cannot retire financially independent. I am of the firm believe that this is because of the bulk of people invests in paper assets.

Based on the above mentioned I believe it is not because the bulk of the 95% invests in paper assets, but because they hardly invest, but this my opinion

I do believe in is good to have a balance of both.

[Houses4Rent]

Yes, as I said I was generalising. There are plenty of reasons for the 95%. The biggest bummer is probably the lack of financial education (a global problem) and the status thinking. The bulk thinks if they save in these paper assets and see all the zeros in the projected amounts they feel rich. However, nobody really tells them about the compound affect of inflation and that these projections are usually a bit on the optimistic performace side (my feeling).
The basic principle is flawed. To handover the cashto some else and assume this other party looks first after them and not themselves.
But of course not many have the invling and understanding to take chage of their financial future and its so much easier to hand that over.

I one inveted a lot in RA's, because I did not know better. Then came Rob Rusconi and blew the whistle about how they really (used to) work and I stopped it all. Since then I invest all in global entry level residential property investment and ar much better off. I basically send my tenant to work to pay my asset off. How much better can it get?

For the low income earners there is help too in form of FLISP and rent-to-buy or siilar schemes which are mostly unknown.