The Fat Wallet Show from Just One Lap

Like many of you, I have listened to every episode of The Fat Wallet Show. I've learned so much over the years, but I find it interesting that some lessons keep repeating. This week, Simon and I spend our last episode together reflecting on lessons we keep on learning. Think of this as the TL;DR version of 245 episodes of this incredible show.  Here's what we know for sure: Many people who listen to the show think their biggest financial decision is ahead of them when actually they've already made it: being an active participant in your own financial life is the best financial decision you've ever made. Emergency funds are more important than any other product we ever discuss, but you can't tell because it's boring. A bad plan is better than no plan. Time matters more than money. Lesegisha pointed this out using a kota as an example, so I also learned what a kota was. Fees matter at least as much as returns, if not more. Grant Locke explained why this is when OUTvest introduced its Onefee product. 100 years worth of market data support this. Because there are so many variables in the market, it's worth being suspicious of people who sell certainty. Cash offers certainty. Fixed interest bonds offer certainty. Aside from that, forget it. “The best investment” doesn't exist (but bad investments do). Taking positive action, keeping a close eye on things and learning as you go is the only way to do this. Start with what makes you comfortable and build from there. If that means a GIANT emergency fund and one fixed-interest bond in addition to your work RA, that's as good a place to start as any. The habit of setting money aside matters more than where the money goes. There is no single right answer. In fact, there are as many ways to get to financial independence as there are people in the world.  ETFs are the market. When ETFs try to beat the market, they are no longer the market. The harder they shout, the farther I run. Wealth building is either silent and slow, or extremely hard and slow.  Just because someone says they're doing something in the media doesn't mean that's what they're doing.  Subscribe to our RSS feed here. Subscribe or rate us in iTunes. Win of the week: Tim I feel like you are both good friends due to the millions of hours of the Fat Wallet Show I have listened to. I have been there from the beginning when I discovered your show in 2016 during the start of my financial obsession ( don't judge me for not writing, I'm an expert procrastinator). Although living in Germany since 2018, I have been listening to your show religiously and a lot of what I have learnt is the bedrock of my financial strategies. In October last year, my world changed forever, when in the week of the birth of our first child, my partner and I both got Corona which was a complete nightmare. Now 5 months later, a healthy beautiful boy, 2-3 hours of sleep a night, I am emerging from the haze of these challenging last few months to get back to old habits. I turned on the Fat Wallet Show and was shocked and saddened to hear that you are leaving Kristia. I just wanted to thank both of you for the amazing job you have done over the last 240 something episodes. You have taught me so much and done it in such a fun and enjoyable way. As a teacher myself, I hope that some of my students could have such an enjoyable learning experience as I have had with the two of you over the last few years. Ros It's worth looking into the bottom-of-the-range Discovery card.  The Gold credit card, on its own, is R60pm. If you want, you can add R15pm for Vitality Money. I would recommend adding the Vitality Money for the extra discounts and rewards it gives you. I'm attaching the Discovery brochure that explains the "dynamic discounts" (it's almost impossible to find this on their website, and almost impossible to understand the product without it, which is why I'm attaching it) as well as my spreadsheet showing how much I "make" out of Discovery Health and Card each month. Some things to note about the spreadsheet (there are two tabs): All my calculations are based on Diamond Vitality money status. (Also Diamond Vitality Health status, but I'm not sure that has any effect on the cashback calculations). A lower Vitality Money status means lower Vitality Money cashback percentages. I got to Diamond Vitality Money status without really trying - you should be able to as well. I'm a single person and generally a low spender. About 90% of my food spend is on "Healthy" food at Pick n Pay. I don't spend much on HealthyCare or HealthyGear, so the extra monthly cost of the Platinum credit card, or taking out a Gold transactional account, isn't worth it for the extra percentage discount on HealthyCare or HealthyGear.  I battle to hit the R12500 monthly credit card spend in order to hit the maximum Vitality Money extra cashback percentage on HealthyFood, fuel, and exercise points to miles. And I put *everything* on my card - even a chocolate for R15! Of course I pay it off in full every month.  Even at my low spend levels, I'm netting R450 to R650 per month (and that excludes my gym savings).  Download Ros' Discovery cashback spreadsheet. Discovery dynamic discounts

If you're new to this money business, access bonds will confuse you. Not only do we use the word “bond” to mean “lending money to the government” and “borrowing money from the bank to buy a house”. The access we're talking about has changed over the years. As Simon Brown explains in this week's episode, in the bad old days before the 2008 crash, banks used to give you a little additional spending money when you took out a home loan. Those days are long gone, but the idea prevails.  These days you can't access the interest or principal repayments you've already made. You can only access additional repayments you've made to reduce your interest payments over time. For this reason, many people store their emergency fund in their access bond. It simultaneously reduces the interest you pay by reducing your principal amount outstanding and protects your cash from tax on interest.  In this episode we discuss the possibility of using your access bond to become your own credit provider. Subscribe to our RSS feed here. Subscribe or rate us in iTunes. Gwen  I am in the process of searching for a house and I often hear people saying that they use an "access bond" as an emergency fund. A friend of mine once told me in the past that I should never take up an access Bond because you never finish paying it.  Listening to a lot of podcasts I often hear people saying they use it to put their emergency fund and then they get the benefits to reduce interest. Am finding it difficult to understand how this works, can you kindly explain this to me and how it works practically.  I need to understand how I put money in the access facility, do I deposit it and will the interest reduce automatically?  Win of the week: Katrien Just a short note to say thank you for the work you've done at Just One Lap. I'm one of the many thousands of people who drive to work on a Monday morning with a big smile to start our week. In addition to learning about personal finances, you guys lift our spirits and give us hope. Greg Moving towards pulling the trigger on the investment side so getting there...  TFSA for kids... (trustworthiness aside)  If I want to play catch up with their contributions (or mine) as we are all starting late (12 & 14 for them and 49 for me) I am aware of the 40% tax on over contributions, but surely in the long term their returns will work this off and they will be ahead of the slower sticking to the limit curve?  No.. I have not tried to spreadsheet this yet... My assumption is that the tax is on the input only? 

It has always been the philosophy of this show that a good question is more valuable than a good answer. It's incredible what you can learn from a really good question, both about the topic and about the person asking the question. This week, Frank had an excellent question about moving retirement funds. This question reveals, first and foremost, just how much Frank already knows about the market. It also reveals a thoughtful person who has found a balance between taking calculated risks and doing whatever he can to protect his assets. In this episode, we address issues around the ethics of retirement product providers, loss aversion and rand cost averaging. All of that, from a single question! Subscribe to our RSS feed here. Subscribe or rate us in iTunes. Frank I have been contemplating transferring my retirement funds to OUTvest. I have some money with Allan Gray, some with Sygnia and most recently with EasyEquities. Combining all with Outvest will qualify me for the R4,500 fixed fee. My concern is switching providers too frequently and whether the risk associated with the potential savings is too high. The time out of the market between the exit and the re-entry may result in losses. Is it worth considering? What happens if someone cheaper comes along next year and I'm tempted to switch again? My other concern is the potential manipulation by the provider that I'm transferring away from, the amount that went to Allan Gray from Old Mutual was significantly lower than the balance showing on the investment platform around the time of the transfer. I had no control over what day the selling of the units happened and had no way of verifying whether the sale actually happened on the day they said. A number of weeks pass from the day you notify a provider of your intention to move away to when the move actually happens. What prevents them from selling on day two after I notify them, but selecting the lowest unit price in the following days and reporting that to me as the day on which they sold my units? They could sell on 1st of the month for R50, but the transaction is only finalised at the end of the month (31st) - they could then see that the unit price on the 12th was R46 and report to me that my units were sold for R46 - giving them the profit (is this a kind of arbitrage?). I'm conflicted about whether I should move to Outvest now and whether the benefit would be substantial or whether I should just leave the money where it is to grow and perhaps consider Outvest the next time I change jobs. With the bulk being in a Preservation Fund, what are the considerations I should take into account when combining it into my RA? Sygnia had allowed me, at the time, to change the allocation of my provident fund to 75% SYGWD (MSCI World ETF) and 25% SYGP (Global Property ETF). My concern is that with the uncertainty around the changes, the online platform is now reporting that my investment is not reg 28 compliant. What are the risks? Whose responsibility is it to ensure that the provident fund is compliant (me or Sygnia). What happens in reg 28 compliant providence where there is "drift" in allocation (ie I may have had the correct percentage in equities during January, but price changes in asset classes may have resulted in "drift" where the asset value in that class is now outside the allowed percentage?) In a previous episode Simon briefly mentioned that there may be scope to use available funds from a bond to invest in the market for returns that neat the interest. My current bond interest rate is 6.55% and I have a substantial amount available in the access bond portion. Could you discuss whether I should use those funds to buy ASHEQF? Am I correct in stating that 6.55% per annum is 0.55% per month? My logic says that as long as ASHEQF returns more than 6.55% per annum I should get out ahead. Thoughts? Win of the week: Shumi I am 33 years old, single, female with no dependents. I am not a cat, engineer or doctor. I studied Philosophy, Politics and Economics and ended up in finance but not the math side. I found the Fat Wallet in late 2018 after a financial awakening when I found FIRE and Stealthy's blog. Since then my net worth has grown from -R660 000 in June 2018 (I bought a house before I found FIRE

A conversation on our excellent community group had me wondering why we've never dedicated a whole Fat Wallet to finding passive income streams outside of investments. It took about ten minutes for the realisation to dawn on me: true passive income is a myth.  We often talk about side-hustles. “Hustle” is the operative word there, because we're describing a second job. The appeal of working in your free time is the diversification of income streams and the potential to eventually earn your monthly income doing something you enjoy instead of your day job. True passive income means you work at nothing but capital for the initial investment. It's important to remember capital can be physical or it can refer to your time. We discuss the potential of online businesses and the enormous amount of time required to get any sort of momentum. We talk about rental income, having an Uber fleet and selling products online and in each case talk about the work required to truly make it work. Subscribe to our RSS feed here. Subscribe or rate us in iTunes. Win of the week: Kay I stumbled across your podcast Sep 2019, via Sam Beckbessinger's book. I binged listened to all the episodes in a rather short space of time. I got a much clearer understanding of TFSA, and opened one immediately. My fear of stocks (which was more a lack of understanding) disappeared. Took my ostrich head out of the ground, and looked at my liberty RA. Ouch.  That got shifted out, can't say immediately, but Liberty did eventually let me go.   I started pumping money into an emergency fund. Life had taken an interesting turn in early 2019, and my income was more than halved. Come 2020 I had an emergency fund, which has saved my ass (or more like my animal's asses....pet insurance is definitely a future consideration with younger animals ) more times than I thought I could possibly ever need to use an emergency fund. If I had not discovered your podcast before 2020, I shudder to think what may have been in 2020. Once again, thank you for all that the two of you have done. It really has been life changing. I have a feeling once I finally retire, and I am able to still drink a fairly decent whiskey, I will think back to the early days of The Fat Wallet Show, and think thank goodness I discovered the podcast. On a side note, does Simon get to keep all the future donations that will be sent once we all have it made? Inge  I currently hold Ashburton 1200 and Satrix top 40. Now, with SATRIX I am guessing I am not taxed on dividends as these are SA stocks and fall under SARS, so they can't shaft me here. But do I pay tax on dividends and gains in the Ashburton 1200? Is there any benefit to holding it in my TFSA or should it just be a discretionary investment? Should do a 50% , 50% split between these two? OR because I have a local RA, do I max my offshore in the TFSA and do a 70 ash / 30 satrix split? I am torn between putting extra into my bond to reduce the term (and amount of compound interest paid) vs putting money into my RA/TFSA for the future. Currently my bond is also my emergency and travel savings fund. My current strategy is-  RA: maintain and only do standard annual increase.  Bond: pay in an extra 50%,  I take about the same amount I put into my bond and put 2/3 into a TFSA and 1/3 into an FNB share account. Do I pump up that bond and get it done, or maintain the current strategy? Do you have any suggestions of what calculator to use to show someone the value of time in the market? Una  I began a new job in early December and had my daughter in early February. While I understand the value of getting medical when you have a child, I signed up for health insurance instead of medical aid because I was in a hurry. I'm not sure if I should cancel and get medical aid; could you please advise which of the two choices is the best?  Tim She owns her home and should downsize. She likes having 2.5 vacant bedrooms for myself and my brothers.. despite 2 of us being married.  In 2014, we started buying apartments in Joburg, she owns a 1/3 of the company that owns 4 units (1.5 still bonded). She is a member of the GEPF  She has minimal discretionary investments (Satrix etc.) and I started her on a TFSA last year. My stepdad lost all his pension funding assets in his divorce. He's a (retired) teacher with a (small) preservation fund (and a TFSA from this year).  My mom currently has R15k per month cash to invest. My thinking is smash R6k into their two TFSAs and convert the balance to USD through EE/Shyft and buy VT through EE or TD Ameritrade.  She will need to leave that money for at least 5 years. She has a large amount of property and Reg28 exposure relative to offshore/ETFs.  Is there anything else you would suggest looking into? I've heard you say a few times that dividends within an RA/preservation and a TFSA are tax free whilst in the vehicle. Apart from the total return ETF complication, how does the company paying the dividend know that it is going into one of these vehicles and, therefore, doesn't deduct the tax? Christiaan It might seem that we have some tax relief, but when electricity prices are going up 15% and the fuel levy is increasing by 27c/l, does it just not mean indirect taxes are just diminishing any perceived gains?  Are we being tricked into feeling good, but when you look at your personal cash-flow you realise there is not more left? When electricity and fuel go up, would it not mean we have increased food prices, inflation in the general economy and will pay more for goods and services in general? When that happens, are we also likely to see interest rates going up? Mo My goal over the last year was to get an apartment and pay it off quickly to avoid big interest payments. I have already set aside an emergency fund and I am now paying extra into the bond to get it paid off hopefully under seven years.  Having discovered the wonders of TFSAs, ETFs, etc. I am now torn as to how to go about spreading my money. I am struggling to find a good ratio between the additional bond payments and an investment account (ETF invested account, not TFSA). I like the idea of having the apartment paid off but I am worried that I am putting too much emphasis on reducing the time period of the bond and at the same time losing out of potential growth of ETFs. I was previously putting all extra cash into the bond account, but am now looking at putting 2/3rds into the bond and 1/3rd into investments. I am still young and doing what I can to live frugally and not stuff up being in a good position.

Many people take their first wobbly steps into the financial world because they understand money is meant to do something. What exactly that “something” is, is often left to someone else to figure out. However, once they start learning about the financial environment for themselves they realise there might be products better suited to their needs. Moving a lump sum away from a provider you've trusted for a few years is a daunting process. Even if your reasons are sound, it's not an easy decision to make.  In honour of the brand new tax year, we spend this week's episode helping Carmen decide what she should do with her existing high-cost retirement product. We hope the discussion will help you decide what to do with an investment product that no longer suits you. We apologise for the ear worm.  This week's show is also the last of our shows sponsored by OUTvest. We are deeply grateful to them for their support. Also remember tomorrow at 11:00, Bobby from AJM Tax will talk about how the tax changes announced last week will affect your pocket. Join the Facebook community group to watch it live and ask your questions. Subscribe to our RSS feed here. Subscribe or rate us in iTunes. Carmen  Do I keep pumping money into my high cost actively managed RA at Old Mutual (I like the idea of money going somewhere that I do not think about)? Do I transfer the current balance to my low cost EE and let it sit there and grow (along with the increased monthly premium plan)...but then continue the R3500 contribution to OM (which will likely have even higher fees because now my base amount is R0). Do I reduce my RA contribution to Old Mutual to the minimum R500 per month (so that I don't incur an “admin fee”) and increase the RA amount to my EE RA immediately by R3000 per month? Do I get outta dodge re: Old Mutual RA and move alles completely? Ancillary reasons for sticking with an actively managed fund at a big investment house are: not to have all my eggs in the EasyEquities basket; my personal risk insurance side is sitting with Old Mutual (disability, illness etc) and my OM is invested in other items than my EE portfolio (bit of diversification); keep contributing to one RA up to age 60 and only pull from it from 65...and other RA only pull from later. Win of the week: Nalisa I started this email about four months ago, and listening to this week's podcast made me decide to get it done. Especially when pet expenses came up!  To clarify, I'm a vet and best you believe my creatures are on insurance! Yes, I'm a vet and proper medical care is still expensive for me! Akina, my eldest, decided to go ahead and twist her spleen (after hours, fucking typical) and the resulting bill came to about R20 000, and the medical aid paid me back in under a week. Even if it wasn't for that incident the peace of mind we get from it is worth every cent. But do your research and (I can't stress this enough) read the fine print! Know what they cover and what they exclude, and especially look at their limits (per claim and annual limits). They're still insurers, they're still trying to screw you.  My fiancé and I were discussing how one could become completely self insured.  We only insure our cars, our home and our pets. We both have life insurance ( to cover the bond), medical aid and I have income protection. We've always agreed that our home contents (aside from his laptop) are considered self-insured because our quote for insurance was exorbitant. In an ideal scenario, we'd need to have enough saved to be able to replace everything with cash, and have about R50k for the animals. The figure gets big really quickly. The main concern would be that you'd have such a huge pile that needs to be fairly liquid and would earn very little (but still more than handing it over to someone else every month). Are there any strategies for self insurance? Or is it actually a silly goal and we should resign ourselves to gamble on bad luck against insurance companies, while trying to save whatever else is left?  Solly I really like how you break down things for us that are so complex and make it consumable. I started listening to Just one lap last year around February and I have gained life changing insight. I just thought my first email to Just one lap is to say thank you so much!...for all the effort, the laughter and swearing

After five rewarding years as host of The Fat Wallet Show, my time with the show is coming to an end. This episode is a short retrospective of our time together, followed, as usual, by your questions.  On 30 May 2016 we published the first episode of The Fat Wallet Show. We knew from our personal experience and from our work at Just One Lap that money was such an emotional topic. All so-called financial education came with an assumption that you would already know the jargon and have some basic understanding of how the system worked. Based on the questions we got at Just One Lap, we knew that wasn't true.  I had started at Just One Lap a year before that and I was like a toddler, asking a hundred questions a day. These questions weren't orderly. I'd latch on to one topic, ask every question I could think of, mull it over and come back a few days or weeks later with either the same questions or more questions. I was learning a lot, but I wasn't learning it all in a straight line, because learning isn't linear.  Luckily for me I had a mentor with superhuman patience, who would keep explaining it to me until I got it. I figured if this is how I'm learning about money, this could probably help other people learn too.  The Fat Wallet Show was an experiment. It was just going to be questions and answers. It was always just going to be two people on the show. We decided to swear in the show, because we swear when we talk to each other normally. We didn't want any barriers to making the show sound just like our ordinary conversations. We didn't want experts, we didn't want to interview CEOs. We just wanted to get together once a week and talk about money. Since our first episode, the show has been downloaded 717,000 times. We've received 2,600 emails. Our Facebook community is 9,000 members strong. We've been supported by companies we truly believe in, companies where we have our own money. OUTvest especially has been a true friend to this show. We've made friends that I hope we'll have for life. I've been so inspired by the members of this community. Subscribe to our RSS feed here. Subscribe or rate us in iTunes. Ernst, in response to Louise's question: Louise is referring to her provisional tax estimates. So there is a timing difference as she will only get her certificate around June but she needs to estimate it now. She needs to run her own calculation and try to get as close as possible taking into account rate adjustments etc. Again tax works on accrual or paid, whichever comes first. It would seem that she has a considerable amount of interest as she probably uses up her annual exclusion amount. So if she ‘underestimates' her taxable income she may be liable for penalties if it's too far off.  She needs to do an excel calc to try calculate her interest so she can estimate accurately before 28 Feb 2021. She cannot wait until she gets paid or gets the certificate. Suzanne I did a little happy dance this week, on reviewing my OUTVEST RA statement. My transferred RA landed @ OUTVEST in May 2020 and the growth YTD has been SUPER! My set R4 500 fee, which is about 0,75% of my investment, has really made a huge difference. I will be saving my butt off over the next 10 years, to reach that minimum 0,2% fee balance.  This led me down an investment spiral, and after listening to episode 183 again I ended up asking the following question….where are the OUTVEST fixed fee living annuity products?……. If I am happy with the asset class breakdown, would there be any reason not to be able to continue with my pre-retirement investment strategy, after my retirement date, at the same 0,2% fee? I have no idea what the general going EAC is for a living annuity, apart from what I have seen on my Dad's statement – which stated a 1,5% fee. Chris I listened to your Money and Travel episode. Simon mentioned that the SYG4IR is bespoke and doesn't have a US equivalent - that is partly true. I fill up my TFSA with SA listed ETFs with risk that I like (STXCHN, STXEMG, SYG4IR, SYG500), build up some cash to make the EasyFX worthwhile and then buy similar exposure in the USD account. Long story short, SYG4IR tracks the Kensho New Economies Composite Index (KNEX). There is a US-listed ETF, SPDR S&P Kensho New Economies Composite ETF (KOMP US), that tracks the same index. The current hurdle is that KOMP isn't available on EasyEquities currently, but I have reached out to them to add it to the platform. Perhaps if enough of us chase them it will get listed sooner. Doris I've been a loyal listener since near-inception of the Fat Wallet show (via my spouse, though we tend to listen separately.)  You kick-started my TFSA journey. Eventually I figured I need to get this RA business sorted (I've been lax due to GEPF; OutVest it was when I eventually got my

Christmas is the most wonderful time of the year, but tax month is a close second. For buy-and-hold investors like myself, this is the only time of year I get to do anything significant in my portfolio. That's why I take a moment to reflect on my portfolio every February. My tax-free strategy may seem static from the outside, but it has changed as new products have come into the market and as I've matured in my investment philosophy. The market is a highly dynamic environment and even a buy-and-hold strategy requires sharpening every so often. In honour of tax-free savings month, we think through tax-free investment strategies in this week's episode, with the help of a few listener questions. Subscribe to our RSS feed here. Subscribe or rate us in iTunes. Rhona  I am asking on behalf of my daughter (turning 30!) regarding her tax free investments. Are there any recommended changes for 2021 to the high risk etf portfolio. Sonya I am 30 years old and have recently started worrying about my future financially. Until now, I have been using most of my savings to pay off as much as possible into my bond. I have also been contributing to my pension fund.  I've gotten to the point where I can finish paying off my bond in about two years and I have that additional money to put towards my investments. Should I continue to pay extra into my bond and pay it off in my two-year timeframe or rather put more into other investments? Any advice on what to do with that extra money?  I recently opened a TFSA started putting 60% in Ashburton 1200 and 40% into Satrix Top 40. I plan on putting the maximum monthly amount in there but not really sure of what ETFs to invest in.  I then plan on putting the money left over into ETFs but am unsure of which ones - I have thought of adding MSCI Emerging markets or maybe Dividend Aristocrat. Also, is it worth adding bonds into the mix?  Boitomelo I like how Kristia pronounces her name as KRIS-tia while Simon pronounces it as Kris-TIA with emphasis on the last three characters. Have you guys noticed? Just love it

We are still running our survey. Please take two minutes to help us here. Around the beginning of every year we notice a strange phenomenon. Energised by the holidays and inspired to turn life into an everlasting vacation, investors start searching for the investment Holy Grail. “What is the one, hot thing that will finally liberate me from the shackles of employment?”  The opportunity that generates the most excitement changes every year, but the pattern is the same. Newbies and impatient veterans alike flock to alternative assets, penny stocks or underdog listed companies believed to be the next hot thing.  This is an especially alarming tendency in first-time investors who have no other savings or investments to fall back on. Some of the questions we've seen this year are: Is it wise to buy Aveng shares now? Has anyone invested in the alternative stock exchange on the JSE? If you have, how does it work ? I'm looking to invest in penny shares through my bank FNB, how do I go about that? How do you buy "Doge Coin"? I don't know a lot about it but I just wanna try it out. What makes this question complicated is that there are sometimes hot things that run forever. By the time the rest of us wake up to the opportunity, it's over. How can we tell what has the potential to be the next hot thing and what is sure to wipe out our investment? Here are a few tips we identified throughout the course of our conversation: Do you have an investment strategy unrelated to this opportunity? If you have an existing investment strategy, have you confirmed that this purchase fits into your long-term investment plans? Why are you considering this? If it's only because someone else said so, do more research. Can you afford to take this risk? Only consider it if you can afford to lose 100% of your money. Are you considering this because a company called you about it? If it were really that great, would it need a marketing strategy? Is it listed? If it's a penny stock (a stock whose share price is only a few cents), has the price been steadily increasing over a period? Remember, for something to be a ten-bagger, it first needs to be a one-bagger.  What are the fees on this investment? Your fees have to be deducted from your returns before you get your real return.  What is your investment horizon? If this is part of your long-term investment strategy, will this product be around for long enough? How do you get out of this investment? Some over the counter (OTC) products can only be sold under certain conditions. A 100% profit is worth 0 if you can't cash in your investment. Subscribe to our RSS feed here. Subscribe or rate us in iTunes. Win of the week: Wesley W  Hey Buckles (better combined name than Chubbles...)  If one assumes a dividend yield of +- 2% and you pay foreign DWT of 30%, then the effect would be a DWT of 0.6% (30% of 2%) of your total investment. If you were to have this in your TFSA you could almost treat this as an additional cost to your TER for comparison sake. If the index did poorly and no dividends were paid the extra cost of DWT wouldn't apply, but based on a long-term investment that yields the 2% dividend average, you could factor in what you're losing out in tax as per the below. E.g if you were choosing between MSCI World vs Ashburton 1200 you could compare the costs as follows: Ashburton = TER = 0.55% p.a  MSCI World = 0.6% DWT + 0.35% TER = 0.95% p.a I initially went for the MSCI world in my tax free account based on TER difference and assuming the DWT might be minimal but now that I look at the numbers it seems I might have been mistaken. Vincent  Will the government increase the 1/3 of the lump sum value withdrawal on maturity of an RA? What is 500k going to be worth in 40 years? It seems pointless to take out an RA when the withdrawal amount is not adapting with inflation each year or at least increasing to cater for the cost of living?  I'm doing the RA thing, but only until my TFSA lifetime limit is reached via all my rebates from SARS [13 years to go]. Thereafter I'll stop contributing to the RA. RAs aren't podium investments, but should I set the quality of growth in an RA aside and see the tax break as the big win?  Would you say that having an enormous amount of money well distributed in ETFs is the way to go when debts, TFSA, RA and emergency funds are sorted?  You'll have this major asset base ready to sell when the tekkie hits the tar. You'll pay CGT and Dividend tax at most, and both will be lower than your marginal tax rate. Dividend payouts or general interest/capital gain can be used as your monthly income, versus monthly annuity payouts as you'll probably outlive your RA and never use/see the full value. Stephen  I see Long for Life have an aggressive share buyback strategy. Berkshire Hathaway and others also utilise this mechanism to boost their share price - I assume. From my observation it normally illustrates that the company believes their share is undervalued. However, can this not also be seen as insider trading? What's to stop a company initiating a share buyback when they know there is something big in the pipeline? Are there corporate governance processes in place to stop this happening? I just don't know if we as investors should see a share buyback as a buying opportunity. Hendrik I am trying to understand the NFGovi ETF. I am looking for a high as possible risk-free income yielding investment for my in-laws, whose capitec 49-month deposit at 10.25% is about to lapse. The renew options look very poor under current circumstances and I am struggling to find anything north of 8% that defends capital. I am aware that nfgovi etf does not guarantee capital and there is price movement risk. I would just like to wrap my head around that option and understand all factors.  Wesley Instead of two RA accounts which was my plan, rather a much larger single account. At 55, immediately convert this large RA to a living annuity. Growth in the account is still tax free, as is income and Dividends. Adjust asset allocation of this big LA to get more international diversification. (I expect a significant amount of my spending to be in other currencies so global is a basket of currencies, which is ideal.) If I don't want additional income and tax burden, set the distribution to the minimum percentage allowable eg 1.5%. Contribute to a new RA account to offset the tax burden of this excess income. My LA + RA asset allocation in aggregate can have geographic diversification, can be better matched to my spending and I have control of my income / tax.  If the tax free lump amount is adjusted upwards, check if I need to contribute extra so that 1/3 takes advantage of the adjusted tax table, then retire from this RA the following month. Repeat as necessary. This will get the significant tax free lump sum(s) out as soon as possible, which seems ideal to me. I can spend this lump sum cash initially while deferring higher withdrawals and therefore higher tax from the LA(s) to squeeze out a bit more tax free compounding. Craig Despite my attempts at getting them to increase it sufficiently enough so I don't need to go through it every month, I fail. It seems it might all be automated with fixed rules, as the “agents” never really seem to read or acknowledge my pleas / questions. They just ask for payslips and bank statements then I get an email saying it's all sorted. Rinse & repeat the following month.  Have you guys heard anything about this process? How would you suggest I explain to them why the percentage they have chosen should not apply to me, as previous attempts of mine have all failed? I'm wondering if once your portfolio hits a certain size or if your monthly contributions are over a certain size, if it might be better to go with another provider? Do you know if other providers also make you jump through these hoops to spend your money on ETFs? Brett I have just been sent an email from the money transfer company I use. I am not sure if this is new regulation that has been put in place. I am a SA tax payer, but am starting to rethink this decision. Can you confirm that this new tax has in fact been put in place? 

There's nothing like lockdown to induce a bad case of wanderlust. 11 months into the biggest bummer of many of our lifetimes, it's wonderful to hear some ordinary good news. Remember weddings? Lady Kablo certainly does. She got married in December. Lockdown is giving her a little time to think about what she'd like for her perfect honeymoon.  Many of us striving for financial independence hope to travel once we no longer have to work. Every time I take a trip, be it abroad or local, I'm reminded travel money works differently from ordinary money. While I'm extremely frugal in my day-to-day life, when I travel I don't think about money. I also don't worry about how much I eat or drink, I never check my phone and in general I'm just a much cooler person. In this week's episode we help Lady Kabelo think about her honeymoon. In the process, we reminisce over some of our own adventures and dream about a time when we can do exciting things like visit friends and go to the shops. Hopefully this episode delivers a spot of whimsy to your lockdown.  Please take our survey here. Subscribe to our RSS feed here. Subscribe or rate us in iTunes. Lady Kabelo I got married in December. Having spent the last 3 or 4 years following your savvy advice to tackle debt, emergency fund, insurance, retirement and medical aid, the time may have arrived for an international honeymoon trip (Yes, Covid is also a factor. I'm hoping when it's over some hard-hit places will be a little cheaper in an effort to attract visitors.) Every overseas vacation I've taken has been with my parents, so I've never considered the planning and budgeting that goes into an international vacation. My biggest nightmare is running out of money in a foreign country. As a result, I am leaning towards all-inclusive packages - even if we overspend, we'll at least have food. The downside is you're in a resort removed from the "real" place and people but then you can get cabs into the nearby towns for daily excursions.  But I'm not sure if this is the most cost-effective way to travel. So, my questions: Are the all-inclusive packages a good way to travel? What are the hidden costs people commonly forget to plan for? What are the biggest financial mistakes people make with regards to travelling? Any additional tips for cost-effective travel? Win of the week: Charlene Thank you from the bottom of my heart for the financial education. I've been reading and listening to all your advice since lockdown in March and it has really made a HUGE impact on my financial decisions. I cannot thank you enough. I live in Mossel Bay. Should you ever be in the area I would love to offer lunch/dinner to thank you both for everything. I've been getting my financial house in order ever since. I have identified ETFs that I have invested in and I am very happy with the performance. I have invested in Satrix Emerging Markets(20%), Ashburton Global 1200 (60%) , Sygnia 4th industrial revolution (10%) and Satrix Nasdaq 100(10%). I have now sold a property and have money I want to invest. I want to invest it in the overseas markets directly. I'm currently using EasyEquities and I see I can use their platform for international investments as well. I had a look at their fees and I see they charge a brokerage fee of 0.25%. This whole world story is a bit intimidating and scary... so I am thinking to approach it using EasyEquities even though I know it's a bit more expensive. What are your views on this? My next hurdle is choosing what to buy. I want to buy similar ETFs to those I currently have, but don't know where to start. I saw Vanguard has a Total World stock ETF etc etc. Could you please kindly point me in the right direction? Dylan I was wondering whether a RA can be paid out to more than one person? In a family where the wife was a stay at home mom for most of their life and they only really have the husband's retirement fund to live off when he retires, would it be possible to pay the fund out to both people in order to split the retirement income between two incomes to save on income tax? I read the blog on Tax on lump sums in retirement. It states that if you have discretionary investment funds available at retirement, it's a good idea to hold on to your retirement savings and rather use your discretionary savings to cover expenses. It explains that by doing this, you allow your retirement savings to grow some more. Now this got me wondering, why would you want to cash out discretionary investments to have your retirement savings grow more? It seems the wrong way around to me. If your retirement savings grow larger, sure you save on the CGT and DWT inside the retirement product for the time your discretionary savings last you, but now you will probably pay more income tax on the extra retirement income than you ever would pay on CGT if you did it the other way around. My gut tells me it would be more efficient to take your retirement income when you start needing it and supplement that with your discretionary savings where required while trying to minimize the CGT of the investments you cash out. Jean We have been saving for our son's tertiary education and now have a sum in our bank account earning pathetic returns. We will need to start drawing from this in about 9 months time. We have been thinking of Satrix world as we really need better returns. Are ETFs/ international ETFs, too risky for this application?  Chad I am a great fan of 1 share to rule them all. (Vanguard total world in my case). However, your recent podcast wrt the dangers of too much exposure offshore got me thinking about Rand-hedging. What would you say is the best ratio of Offshore vs Local equities in a total equity portfolio (apart from 20% which is Reg28 compliant)?  Then there is the question of which is the most diversified local ETF? I have been investing in the Satrix 40 when the Rand is really weak but realise now that this might not exactly be a Rand-hedge ETF. Is the Sygnia itrix SWIX 40 ETF a good rand hedge option? Please help? Martin My brother sent me a link to one of your shows when I took an interest in my finances and I've been hooked ever since. Thanks for all the education, even if the majority goes over my head at the moment. But I can confidently say there is a huge difference now in comparison to when I started a few months back. I follow the Dave Ramsey baby steps: I am currently saving my emergency fund and up to two months-worth of expenses. It is a decent amount but I feel it is being wasted in a savings account.  I keep hearing everyone say put the money in a money market account. I have been looking around with no luck. I bank with FNB and for example the one they propose I open is one with an opening amount of 100k. I also came across one from Old Mutual which seems reasonable and you get a card as you would want to have easy access to the funds when needed.  What are the options out there and which do you guys use?

Time is such an odd ingredient in the realm of wealth creation. When treated with respect, a good amount of time can be your greatest ally. When ignored, however, time can be your biggest risk. In a country with so much historical inequality, the idea of intergenerational wealth seems entirely mythical. However, a small amount of money sprinkled with a great deal of time makes building a nest egg for the next generation seem downright simple. By the same token, sleeping at the wheel creates an opportunity for inflation to eat away at real returns.  In this week's episode, we explore intergenerational wealth building strategies using two real world examples. Is this our cutest episode yet? You tell us. Subscribe to our RSS feed here. Subscribe or rate us in iTunes. Mark  I have twin girls who just turned five. I have contributed to their own respective RAs since they were eight months old. I started at R1k a month each and this contribution has increased by 10% a year. I will keep up with the annual increases for as long as possible, but I realise the contributions will become pretty large over time.  My girls have Capitec bank accounts and are registered with SARS and file tax returns. They are building up tax credits from the RA contributions in their name with SARS given they have little or no taxable income.  I realise this might not be the most tax-efficient or tax-effective option for saving for your kids and DeWet and others might disagree with it. I have outlined below why I went with this strategy over TFSA or unit trusts in their name or the plethora of additional options and combinations.  RA is with Sygnia, so it is a low-cost product, and their capital can compound tax-free over a long period 50+ years.  They can't touch it when they turn 18. I acknowledge this lack of access can be a double-edged sword given they might like it for a car, a deposit for a property, starting a business, etc. The tax credits they are building up with SARS should see them receive some decent tax refunds when they first start working which they can use for the uses as mentioned earlier or to plough into their own TFSA or back into the RA for even more tax credits. I acknowledge I am giving SARS an interest-free loan and the effect of inflation on the tax credits is a downside here. I also recognise I am losing out on the tax credit myself.  They can keep contributing to the RA's when they start working as it is already set up for them.  Having the RA, Bank A/C, EasyEquities account, and a SARS efiling profile provides an excellent financial education base when they are older.  TFSA and/or unit trust they can access when they are eighteen, and they could withdraw everything and blow it all so this strategy guards against this. Some may see this as excessive control or control from beyond the grave, and I take their point.  This RA is their inheritance which should be substantial even in today's rands by the time they can draw down on it. Some of their inheritance they get when they are younger once the tax refunds kick in from the contributions and the balance when they are older.  There are pros and cons to the above approach compared to other kids saving options but after I weighed several different approaches and strategies, I decided to go with this one for now for better or worse.  Wesley The lifetime limit is inflated periodically The scheme is abandoned to inflation The allowable limits are significantly increased (as has happened in many other countries) If the lifetime limit is not increased periodically, the TFSA scheme is abandoned to inflation and will become worthless, much like the interest income exemption has been abandoned. At a 4.5% midrange inflation target, assuming the original 30k annual contributions took 16.7 years to max out the 500k, the value of the 500k limit at that date will be around 240k in today's money for someone starting out on that future date. Those future starters will be proportionally disenfranchised from the TFSA scheme.  The time horizon from birth to earning enough to contribute to a tax-free account is 20 or 25 years. The optimal time horizon for a TFSA is much longer than that.  A child born now, six years into the TFSA scheme, starting their contributions at 25 years old would have lost 75% of the value of the original 500k limit. It's not a very valuable loss at that point. I'm assuming the lifetime limit will always increase to allow an annual contribution. If not, the best possible course of action is to get in on the ground floor on this once off opportunity before it becomes worthless. Win of the week is: Henno Feedback for Lizl, whose company wants to force her to move her brokerage accounts in-house.  “It's always important to take a closer look at the conditions of employment in your contract on the day you started. Anything that changes after that requires a process of consultation. The employer can't make changes unilaterally. The consultation process is more than an email from HR. What typically happens is HR sends an addendum to your employment contract, none of the employees query it before signing and then it's as if the consultation happened and you accepted it. I'd argue if my original employment contract didn't include anything about this, if there was no consultation process and if I didn't sign anything, they can't enforce that rule. If they want to fire me after that, I'd go to the CCMA on the grounds of an unfair dismissal.” Gerrie My employer is massively exposed if I were to abuse any potential privileged information to do some insider trading, either on my own accounts or within family accounts. The regulatory world has changed massively in recent years and fines from the FSCA can run into 100s of millions in addition to imprisoning my employer's directors. Banks and other institutions take this very seriously and would rather have too harsh restrictions on their employees than to allow anyone to abuse the system. Financial institutions force all their employees to trade under a watchful eye.  It's not fun, but I understand why.   I informed my employer's compliance team of all my and my family's accounts at EasyEquities and I told them I have no desire to move it.  Turns out the process was slick and simple.  I only buy ETFs at EasyEquities and never individual shares.  My purpose is to invest and not to trade and ETFs fall outside of the trading restrictions.  I made a declaration to that extent and the compliance team told me to happily continue doing so.  They may ask me for a statement from time to time and I'll gladly supply it, but there is no need for any ongoing burdensome process.  The entire process took me half an hour to resolve.  I made full disclosure.  They are aware of my accounts and my or may not check up later.  I have undertaken to inform them the moment I intend doing anything other than investing in ETFs.  I prepared myself for much pain that never happened.  So Lizl– my experience was that there was no need to move accounts and trigger capital gains events.  What a relief. Koketso  I started looking into my investments and was horrified that: - My EAC was sitting around 2.45%; 1.15% of which was advice fees - The general performance of my investments in the last 3 years was not great and with the 2.4% in fees I practically kept money under my mattress and all that prudence was for nothing! What I have done so far is: - Got rid of my financial advisor dropping 1.15% of fees from my EAC - stopped contributing to my RA as I have intentions to move abroad in the next 2-5 years - Moved funds from the more expensive products to a global feeder while I figure out what to do I recognise that this is not ideal, but this was a first step and one step at a time! And the questions: For my global money, I would like to invest most of my USD abroad (not using any local platforms) and in ETFs. Do you have any recommendations?  I understand that from an estate planning perspective, Switzerland recognises SA wills should anything happen Before I fired him, my financial advisor recommended two products, the first with the above in mind: the Galileo balanced fund which has fees of 2%+. I must mention here that the advisor works for Galileo so I was not 100% sold on this idea.  the nedgroup investments core global fund, details also attached For my local money, again I am all in for ETFs and would also want to look at moving away from my expensive platform. - If I wanted to say move to a cheaper provider, how do I actually do that? Would there be CGT on my unit trust and TFSA? - I am thinking the following for my ETFs TFSA: 50% ashburton 1200 ; 50% MSCI world Unit trusts:  50% - ashburton 1200, 30% satrix 40 and 20% MSCI world Retirement annuity: I won't add to this for the moment. I know there is a requirement to have a max 30% offshore holding so I'm thinking to change the makeup of my RA to: 15% ashburton 1200; 15% MSCI world and not too sure what else   Brendt  My mother is 62 years old, and will be retiring from work in Apr 2022. My parents plan to save R20k a month from now on until they retire. My mother has no retirement products apart from one RA that has a current balance of R80k. My parents want to have as much of their savings available in discretionary savings as possible. My idea was for them to pay the R20k monthly saving into my mother's RA until it reaches a balance of about R220k. Then open up another RA with a different service provider and save the remaining monthly amount to this RA.  That way my mother would have two RAs on retirement, both of which will have a balance of less than R247k, which is the lowest amount for which it is mandatory to buy a living/guaranteed annuity with. Meaning that she would be able to withdraw 100% of both RAs as a lump sum, tax free (She has yet to make use of the R500k tax free withdrawal concession), to invest in ETFs for retirement. She will be able to reduce her taxable income in the year or so that she invests the money in the RAs, without being bound to a guaranteed/living annuity and the personal income tax implications on retirement (CGT is sooo much cheaper). In effect SARS will be paying them. :)Chris Many young South Africans are drawn to the idea of working on the yachts in the Mediterannean as a way to explore the world and earn some hard currency. I spent five months as a steward, sailing from Monaco to Barcelona with plenty of glamorous stops along the way!  I managed to save some of the Euros that I earned overseas and those are in a Standard Bank Isle of Man account (earning next to no interest). I am keen to make that cash work a bit harder, so I would like to exchange it into Rands and invest it in some ETFs (a question for a later date). I have been hesitant to “just transfer” the Euros to my South African bank account until I fully understand the tax implications.  What is the most tax efficient way to get the funds from my Isle of Man account to my South African account? What is the best way to actually transfer the funds from one account to the other? Brett  My emergency fund will cover about 6-9 months of living costs. That is more than I've got invested in equities. I'd like to have much more exposure to equities to get maximum growth over the next 20 years.  How would you recommend investing such a lump sum to gain relatively high growth for cash (5-10%), while keeping it relatively low risk, and liquid? I've considered the following: FNB Money Maximiser - 3.75% interest, completely liquid. The interest rate I believe is fixed to the lending rate as it was closer to 7% a year back. It's still higher than typical liquid saving accounts. Fixed deposit or 32 day notice was not considered liquid enough. Money Market products offered the highest growth out of the products i looked at, i.e. a few percent above inflation. But the costs and fees were also the highest, and based on recent performance and inflation, the high fees largely eroded any gains.  High dividend or REITs ETFs, which seems to have a yield of about 2-5%, so very much in line with inflation. (And then some growth) Bond ETFs, like New Funds GOVI, which was about 6-7% growth based on 3-5 years.  And last is to keep it in my mortgage to reduce the interest I pay each month, at prime. So many options right? Would you recon it is best to keep the cash? Candice De Wet mentioned asking your HR department to adjust the RA contribution figure on their payslip to include the personal contributions. My payslip has been showing an R2906.75 shortfall in contributions as I have been doing my own thang.  I asked the HR department to adjust this and the difference is just over R1000 extra on my net. This will be going straight to my TFSA monthly. Lebo I currently have a tax free account with EasyEquities. I've maxed out the R36000 limit for the year and I know the lifetime limit is R500000. I was wondering once the lifetime limit is reached, can I open another tax free account and receive the R36000 tax free benefit on the new account? Basically can I start the process over with another account and effectively have a R1m lifetime limit?

There's more than one way to raise taxes. You can subject yourself to the ire of the masses by being up-front about it, or you can eke out little tax wins on the sly. Our government likes to do a bit of both. This week, with the help of Wesley, we explain how tax creep works and what you can do about it. We also talk about lump-sum withdrawals. You are taxed on previous withdrawals taken after the following dates: Withdrawals: 1 March 2009 Retirement benefits: 1 October 2007 Severance benefits: 1 March 2011 If you took lump sum withdrawals before these dates, consider that an entry for your gratitude journal. Wesley  It's been 6 years since the lump sum benefit was last adjusted and we have lost 26.5% of the value of the incentive during this time. Where is my inflation adjustment? Obviously someone is desperate for cash right now, and SARS doesn't think it is pensioners. When the lump sum is adjusted from 300k to 500k, but you already took 300k in the past, what happens when you take a 200k lump sum from your other RA account? More complicated. Was 300k, take 400k, pay 18% tax on 100k = 18k tax. Now the limit is 500k. take another 300k lump sum from your other RA account. What on earth happens? Do you not get any benefit from the increase? Does 100k at 18% wipe out half of your new 200k tax free lump sum? Or do you treat it as a 700k lump sum on the new provisions less 18k tax previously paid on lump sums. It seems like a good idea to have at least 2 RA accounts. Subscribe to our RSS feed here. Subscribe or rate us in iTunes. Win of the week: Candice Just thought I'd say a HUGE thank you.  After being introduced to the show just 3 years ago, I feel like we are in a committed relationship. It's the only podcast I listen to and look forward to my Monday morning drive to work with you guys.  I finally budgeted.  I'm horrified to see where our money goes monthly.  I can't complain though, because without knowing I wouldn't be able to change spending habits. Martinus I've always championed Total Return ETFs. Outside a TFSA you'd have to pay Capital Gains Tax. TRTs also save on brokerage costs and admin. However, the feedback from De Wet has me reconsidering that approach. If the fund is a feeder fund like the Satrix MSCI World, is there any local tax event? To me, it makes sense that if they just reinvest the distributions they receive outside SA the only tax event would be in the foreign country. Your only local tax concern then is CGT. It is possible to switch from Satrix to 1invest MSCI world at an increase in fees of 0.05% and then have dividends paid out. This leaves an increase in brokerage costs and personal admin.  Martin  I've been putting money into the Satrix World. As I understand it, I lose the benefit of the saving on dividend tax in a Global ETF, but I'm at least hedged in a way with the rand weakening over time, and it should show better growth over time than local (who knows though).  So I just listened to your podcast (Asset Allocation Problem – 14/12/20) regarding total return funds (like MSCI World). Am I correct in my understanding that the dividend tax is in the region of 28%, not 15%? Furthermore, are we saying that tax free investments should pay out the dividend, and not reinvest? That feels wrong though, that money then can't keep growing? Then, to make matters worse, when you Google “tax on tax free global etf”, you get many links proclaiming that you do not pay ANY tax on either local or foreign tax free investments, e.g. https://www.sygnia.co.za/press/how-to-invest-offshore-and-pay-zero-tax Please put me out of my misery on this one! Lizl I have the *honour and privilege* of working for a financial institution that recently decided all employees must close all accounts with other brokers and open a stockbroking account with them. Exceptions may be approved, but I don't want to open that can of worms just yet. I have EasyEquities accounts - both an Easy Equities ZAR account with individual shares and a TFSA account with a few ETFs. Does Easy Equitites count as a stockbroker in this case? Should I just sell the individual stocks and hope they'll let me keep the TFSA? Does the TFSA fall under this prohibition as well? And why is it that they can legally do this? I have zero energy for the admin of moving and the inevitably higher fees, preferential staff rate or not. Greg  Normally I put my TFSA allocation of R3000 per month into my bond. At the end of the financial year I draw R36000 and buy the Ashburton Global 1200 ETF in my TFSA. Should I still be doing so for the coming year? Is this still the one ETF to rule them all?

For all the flack they've been getting, there's no easier way to reduce your tax liability than pension fund contributions. In this week's episode of The Fat Wallet Show, we help Megan correct an assumption about her tax savings on retirement annuity contributions. We use the opportunity to talk about offshore allocation and prescribed assets. Subscribe to our RSS feed here. Subscribe or rate us in iTunes. Win of the week: Megan I listened to your "To RA or Not" episode today, and one of the questions (about RA contributions vs paying off a bond) reminded me of a dilemma I've been wondering about for a while. I'm 25 and working as a junior engineer. My marginal tax rate is at 26%. I'm currently putting R3000/month into my TFSA (Satrix MSCI World ETF with Easy Equities) and R2000/month into a Sygnia RA with decent fees. I save R1000/month in a TymeBank goalsaver for holidays. After that I can't really afford more savings at the moment, which means I'm not adding anything to my long-term discretionary investments. (I have an emergency fund and enough short-term investments for my needs and goals.) My question is this: Considering  1) The Regulation 28 requirement on the RA which limits global diversification,  2) My low tax bracket, and 3) The fact that Rand devalues around 4% per year to the dollar,  is the RA really worth it?  Putting money into an RA saves me 26% now. But what if I were, instead, to put that R2000 into a discretionary investment (e.g. MSCI World ETF)? If the MSCI World outperforms the local 70% of my RA by 4% a year (which seems likely imo), then surely the discretionary fund would be "outperforming" the RA in the long term?  For arguments' sake, with the assumption that global returns outperform Rand returns by 4%, then after 10 years, R2000 in the RA + 26% (assuming I could magically reinvest the tax return instantly) would be worth (2520 x 0.3 x 1.04^10) + (2520 x 0.7) = R2883.  While R2000 in the discretionary global ETF would be worth: (2000 x 1.04^10) = R2960.  (I mean this in relative terms, I don't really expect 0%).  This difference would only get greater over time due to compounding.  The other thing is that the RA money will all get taxed in future. And that the RA fees, although low, are higher than the discretionary fees.  So while I fully understand the tax benefits of an RA for people earning at 45%, I'm not as convinced for those of us in some of the lower brackets. What do you think? Is my assumption wrong about global markets showing better returns? Is it normal to feel this uncertain about putting so many eggs in the SA basket, or am I being silly? Is an RA worth it for me now, and if not, when does it become worth it? 

2020 gave us all a new appreciation for the humble emergency fund. In this episode of The Fat Wallet Show we think about some steps you can take to prepare your money for the year ahead. Win of the week: Celma I turned 55 and had to visit my bank (Nedbank) a few months later. I asked them if there is any reduction in bank fees when you turn 55 and to my surprise my bank fees got waived provided I make a R10 000 deposit. I only get 2.5% on the deposit, but save about R300 in monthly bank fees. The facility is probably available to everybody but seems like you must ask about it - it is not as though they tell you or advertise it. Subscribe to our RSS feed here. Subscribe or rate us in iTunes. Zee I've been listening to you guys like a fiend for the past 3 months and I have managed to follow your instructions of having insurance, reducing living expenses etc. Now I'm at that stage of forming my retirement strategy. Annnnnddd I'm pretty much having a bit of a breakdown as to whether I'm going in the right direction. So I'm 28 and working in South Korea. I've never had any debt, I don't pay rent, car, I have no kids or financial dependents. This allows me to save about 54% of my pay, which is split between my RA 16% and about 4% Unit trust (which I top up with my annual bonus) both with 10X .  Then 30% in a ZAR Easy Equities monthly (I just opened my TFSA which I will max out on the 1st of March as I have already saved the R36K). Ohhh I have saved 3 months salary as an emergency fund. Should I keep the UT as a means of saving a year's worth of salary for when I am old and wrinkled and the medical costs are eye wateringly high or to supplement my income when the market falls apart. Orrrrr should I just leave that and go beast mode into EasyEquities and the RA. I also wanted to know if I should push to save up to a 6 months salary even if it takes me more than a year? And put it into a money market or savings account cause the prospect of going back to being unemployed for a long period of time scares me to death!

If nothing else, 2020 was humbling. There were many things we thought we knew about the market, about gold, about interest rates and about predicting the future that just turned out to be not so. In this year-end episode of The Fat Wallet Show we share some thoughts and insights, as well as a nice bottle of bubbles.  Here's to a happier 2021. Subscribe to our RSS feed here. Subscribe or rate us in iTunes. Win of the week: Tayo One thing I do however is set up separate scheduled transfers with different references if I have a more specific goal. So instead of transferring R100 every month into my EM, I'll have a transfer with reference UPGRADE_KITCHEN of R20, another with R10 for UPGRADE_PHONE_FUND and the rest a normal EM dump. This way I can just search for UPGRADE_KITCHEN on 22seven and I can see how much I've saved up for that particular goal. Extra points for using the same UPGRADE_KITCHEN reference when taking out of that 'fund' so I know how much I've spent and how much I have left. I make sure to keep it simple: Keep those goals as broad and few as possible (I only have 3 at the moment) Don't overthink it. 1 bank account (also 1 banking charge), no excel admin

In honour of Christmas this Friday, this week's episode is the first ever Fat Wallet fairytale, written by Suzanne for her daughter Nina.  Happy Holidays, everyone! Win of the week: Suzanne I just want to say thank you for the great work that you are doing. I know that we as a society tend to use the word EMPOWERING quite loosely, but there is no better way to describe how I personally have experienced this whole journey into personal finance. I also feel it has made me a better parent to my kids – that can now guide and empower them on their own road to financial independence.  I attach a little Christmas Fairytale I wrote for my daughter,  that I hope you will enjoy – and as a little ode to a Fairy Godmother that you may recognize…… A CHRISTMAS FAIRYTALE FOR MY DAUGHTER As smart as a whip, and with a feisty personality to match, Princess Nina was considered by all to be quite the catch. But frowns of worry have been darkening her day, For on the eve of her sixteenth birthday, she was unsure of her way…….   “OH”, she cried, while munching on her two-minute noodles, “This world has to offer me oodles and oodles, Yet I am unsure of what I need to do! I know I am a Princess, and being one too, Cinderella and Rapunzel I should probably like you, And don't forget Snow White, she is in the mix too.”   “But, being rescued has never really been my vibe, I think I am more part of the Katniss Everdeen tribe. I wear my hair in a bob, and can really whack a hockey ball, I don't really mind people, but love dogs more than all.”   “I have no desire to be rescued by a prince, To me that sounds about as appealing as a bowl of pets mince! I don't want to toil away my days in some remote castle tower, I want to learn Korean, travel the world and find my own Power!”   It was then that it happened, in a flash she appeared, The extremely tall fairy godmother, all mothers-in-law feared… She was known through the land from north to south, For her sensible advice ….and her potty mouth.   “Girl”she exclaimed, ”I heard your pleas, And I think you are cooler than the fucking bee's knees, So in your future there will be no dwarfs, prince's or even a count….. What you get is a Tax Free Savings Account.   With the whip of her wand, she quickly set about, to set up an Easy Equities TFSA account…. “That is it”, she cried,” my magic is done!” “Now, my dear princess, starts all the fun.”   “You will go out into the world, and chase those dreams!, But you will also be smart, and live within your means. You will graft at your craft, and your joy will be astounding, You will also be saving a shitload, and experience the magic of compounding.”   “This blessing and wisdom I bestow upon you, Is not one to be horded, but for you to share with other princesses too. So should Cinderella come crying about her boring days, Or Rapunzel curse about her man's whoring ways…….”   “You can exclaim: “Girl, I hear you cries, so let me sort for you, the truth from the lies….. You don't need to live your life as prescribed, Where fate is fate, and choice is denied.   You don't need a blesser, or a large inheritance amount, You need a Tax Free Savings Account!”

Investing history teaches us success is all about asset allocation, as Grant Locke explains in this presentation. History is unfortunately annoyingly silent on what precisely the best asset allocation would be. Where does that leave those of us investing for the long haul? Should we pick a mix and stick to it? Should we adapt our asset allocation mix to suit the current market conditions? While Ash asks this important question in relation to a retirement product, it's a question each DIY investor would have to answer for themselves. This is an excellent way to end our Fat Wallet year, because we're once again reminded that intentionality and mindfulness matter when it comes to money management.  2020 gave us all a lesson in having high expectations of a new year, so this year I won't toast 2021. Instead, let's all raise a glass to the end of 2020 and have that be that. Thanks for listening! Subscribe to our RSS feed here. Subscribe or rate us in iTunes. Ash I get that you partner with Outvest and their Coreshares offering based on their incredibly low fees. I have since been looking at the passive balanced funds available in the market and have picked up that they are not all the same. Could you possibly comment on what is termed a "hard-passive product" which invests in ETFs like the Coreshares OUTmoderate Fund that has a Fixed Asset Allocation? vs a "soft-passive fund" like the Sygnia Skeleton Balanced 70 that is able to adjust its asset allocation on a regular basis however it still uses ETFs and low cost passives in its portfolio. When reading multiple articles online it's seems asset allocation brings in the bulk of your returns over stock picking, so wouldn't it be beneficial being in the Sygnia portfolio that is able to adjust its asset allocation to market risks over time? A prime example being that Sygnia currently doesn't hold any property in its portfolio vs Outvest with 15% exposure to Property (Domestic and Local). When looking at their returns it seems that Sygnia may be more expensive by roughly 0.2% per annum but has managed to deliver far better performance because of its flexibility over the last few years making the 0.2% difference probably worth it. Win of the week: AN I started a Stanlib Unit trust when I was 23 and had stable employment. I injected approximately R100k p.a averaged over the 8 year period. The average returns have been about 7%. However, I suspect that I am being too risk averse and losing out on many opportunities. Please can you help me decide how to progress from this into more diversification. I have opened a TFSA with EE and I will be purchasing ETFS. What amount of my current unit trust should I move over to ETFs as a guideline and what would be the best 2 or 3 ETFS for me to start with? Pascal When you guys mention Interactive Brokers, you imply that it's totally off limits to anyone with less than 100,000 USD. There is no minimum account balance with interactive brokers. Only a small monthly "inactivity" fee if your balance is less than 100K. It costs 10 dollars a month, minus the cost of each trade made in that month (at 1 dollar a trade). So if you buy shares of 2 ETF's each month as I do, your monthly fee is 8 USD (excluding the trades). In other words, aside from the 10 dollars a month, you can buy and sell ETFs for free, up to 10 trades a month, so you're never paying more than ~R160 (at current rates) a month. R160 does not seem like that much for access to global markets though such a feature-rich platform. To put that in perspective, that's less than the fee for some current accounts in SA. When you consider EasyEquites USD fee is 0.56% of each trade value, a 10 dollar fee equates to a trade value of (I think) ~1785 USD. So, IBKR actually becomes cheaper than EasyEquities anytime you invest more than 1785 USD a month. (if my math is correct? Please feel free to check this). Magan If one passes on with a living annuity, can the spouse transfer the amount that is due to her to her own living annuity? What will the tax consequences be, if any? Andy I would like to believe that I was listening before the famous Wilhelm stole the limelight. I was also on the ships and scratched my head on similar issues faced by some of your doctor listeners. I've made so many of the mistakes you have spoken about in your show, but I can certainly say I have learnt some lessons and am getting better. From a horrid financial advisor who had never even heard of ETPs, to being invested in some kak expensive funds on Alan Gray. (Said advisor had also not heard about TFSAs). A lot has transpired since then. I now run my own portfolio except a minimal amount for my RA with GEPF (which I can't control) and 10x, which I am kind of okay with. I'm now 5 years into TFSA. The majority of my other investments are in ETFs and I've had some success (read luck) and some failures (read Woolies) in single stocks. I'm also teaching interns who want to listen about the pitfalls of getting a good starting salary with little financial background and I find this really rewarding. What is the difference between dividends and distributions. What are the tax implications? Which products would be better to hold in the tax free space, one that reinvests distributions or one that pays the dividend?  On a similar vein- if an etf like satrix world reinvests distributions, what are the tax liabilities? Santosh I understand the argument on fees, but one has to also acknowledge that service is worth paying for. When I sold the last lot of my Satrix Property, I experienced the same as most ie. no response to emails, ineffective and incompetent staff on the other side of the telephone, when one could actually speak to an individual. Ask practically any question unrelated to that day's share price and you're greeted with a stunned silence. Then there's the JSE process and it's associated fees and processing times I decided never again!  The level of service, competence and responsiveness of Allan Gray and Coronation, for example, is stupendous to the point where I'm willing to pay a premium. When I have had questions, I've directed it to the individual fund managers themselves and have received detailed, well thought-out responses. Before I invested with Prescient, one of the fund managers actually took the time to meet me over coffee and today still answers my questions directly. Would an ETF provider do this ? Never - not in a million years. The funds are expensive, but the service by the asset managers is worth paying for that is if that is important to you. In 2018 after I met with 10X and he was "blown away" with my interaction with Allan Gray and how professionally and attentive Allan Gray was. Any transaction—irrespective of complexity, local or international—is handled either on the day or 24hrs and really, they respond to EVERY email.  Furthermore, the level of staff knowledge at any of the Asset Managers is incredible! Irrespective of who answers the phone, the competence is assured. I really don't know how these asset managers are able to find and train staff to this level. It seems to be something unique to the asset management industry. Even performance-wise, the Ash1200 is not without its competitors. The 1-year performance of the Ash 1200 against the Coronation Optimum growth fund is practically identical after fees and in this case, the Optimum Growth fared marginally better. Taya I have been contributing to an RA since 2014 through one of the dreaded 'old school' companies. I blame this on a younger, stupider version of me. I am investigating the fees I am paying and will most likely move this to another provider such as 10X / Outvest.  My employer is dead set against RAs. He knows his way around tax (he has a Masters in Tax law and worked for SARS for some time), so I am inclined to give his advice some thought. His view is that by the time I am of retirement age, the government would've gotten their hands on RAs through prescribed assets. In addition, RAs don't typically perform very well. His advice is to take the tax knock and invest your money elsewhere. What are your thoughts on this? If I am going to continue investing in an RA I need to seriously figure out how to contribute more to it monthly, but I am questioning whether this is something I should even be figuring out in the first place.  Laurence We're on the bus to Portugal, due to roles that allow remote working and passports for EU access. I have a question around CGT on offshore funds (e.g the Vanguard.VT USD fund) when becoming a non-tax resident in South Africa.  We plan to become non-tax residents in South Africa, and not financially emigrate (even though we assume we won't return to the country).  I currently own the Vanguard USD fund through Easy Equities. I plan to do a position transfer from EE to Interactive Brokers. I would sell up any remaining South African funds (e.g. Ashburton 1200) and convert to Irish domiciled Vanguard funds. I know that Vanguard is US domiciled and there's some concerns about Estate Tax above $60K without tax treaties, but I'd like to think I can manage it based on the fact that Portugal may not be our final destination.  I've (somewhat) come to terms on taking the CGT hit on the SA funds when leaving, but what happens to the offshore funds (e.g. USD VT) from a CGT perspective when becoming non-tax resident of South Africa? Do you have any insights around the need to pay the CGT on the VT gains (to date) in South Africa when becoming non-tax resident, or would the double taxation agreement with another country mean you only pay CGT in Portugal/EU when selling off the fund in e.g. 15 years time?   Alternatively, am I just complicating the hell out of it and should I sell the VT fund whilst it's of moderate size and take the CGT hit now?  Garry  I am in my early fifties, married and dad to two high-school kids. My wife doesn't earn an income.   I have a good pension fund through work. I have also been contributing to an RA since 2005.   The RA with Momentum is offshore denominated, which avoids over-exposure to section 28 regulations. I have stopped the 10% annual escalation on this so will now pay a fixed amount until my 55th birthday.  We have an additional discretionary investment into unit trusts.  We also have an emergency fund in a USD account. I think by and large we have been doing the right sort of things.  Here are a few things I would like to correct: We have been investing in Unit Trusts rather than Tax Free investments first!   On my older Unit Trusts I have a financial adviser associated with them and I am annoyed that he is getting free money without adding value.  The Unit Trusts are in my name rather than my wife's. She is a stay at home mom, so it seems sensible from a tax perspective that these investments should be in her name.  The Momentum RA is USD denominated. 2 years ago I stopped the annual automatic increase and paid a penalty for that.   I also have a few small paid up RAs from back in the day when I was young,  naïve and exploited. Can you please comment on my proposed corrections: Open tax free investment accounts for my children, my wife and myself (last) before further funding other discretionary investments.  Sell off my unit trusts in annual tranches, keeping the capital gains below the R40k annual limit and use this money to fund the TFIAs. This will have the additional benefit of reducing the free money to my financial adviser. Top up the TFIAs on a monthly basis, keeping below the annual limit.  Put any additional funds into an ETF like an MSCI World fund from one of the providers Do you have a recommendation for what to do with my Momentum RA?  When I reach 55 it seems best to take my various RAs as lump sums and add them to my discretionary savings.  Any thoughts on that?  Mary I wonder if there is such a thing as tax free converting, where you take R36,000 from your retirement annuity to deposit in the tax free account without being penalized. I read this is possible in the US with their version of tax free accounts they call Roths accounts. You transfer money from a 401K to a Roth IRA or Roth401k. It all sounded very interesting. I wondered if you two knew something similar existed here at home.

Although they've fallen out of fashion, we like retirement products. In addition to a generous tax break, retirement funds prevent us from cheating our future selves out of money to do luxurious things like live indoors and eat food.  That said, if you're prioritising investments, retirement products might not be the best place to start, as Dylan points out this week. At the beginning of your career, your tax bracket is quite low. Much as we like tax breaks, it might not be the best use of your investment money. Subscribe to our RSS feed here. Subscribe or rate us in iTunes. Win of the week: Stella Thanks so much for your absolutely fantastic show – I have learned SO much from you and Simon. I think of it as The Gospel According to Bubbles and Chuckles. I'm learning slowly and not there yet, but doing oh so much better with my money. My mother is 89 and has just sold the life rights to her cottage in a retirement village she was living in (she moved to another establishment where she pays a very low monthly rent of R5,900 – can you believe that?? We were so lucky to get this – it's a fabulous place in a small town and working out well). She will receive R451,000 from the sale and I am wondering what she should do with this money to avoid taxes and fees. She really doesn't have much money and her income is very low, between her pension and an annuity she gets just under R10,000/month, so my brother and I supplement her expenses – we split her rent in 3, covering various expenses. Her medical bills are a nightmare – her medical aid and gap cover sets her back R4100/month, and she has just been prescribed heart medication which costs R2,200/month, that the medical aid won't cover. That's R6,300/month on medical shit. Anyhow – she will need to draw on this money to cover said expenses, but it would be great to identify an investment option that allows the money to earn interest, but not have it tied up for years. Dylan If I am responsible enough to not use it for living costs it seems like a good place for my money:  It is saving me on a guaranteed interest rate which (even at this stage where the repo rate is so low) is higher than inflation My understanding is that I will never have any tax implications on these savings since it is not actually interest that I am "earning". The only negative I can see is the whole "don't have all your eggs in one basket" saying, which also seems like it is not exactly applicable in this case. Even if something bad happens to my house or the property market, I would still be liable for the amount owed to the bank. So whether I have big savings in my home loan or in other investments, the loss would be the same. Since I am at the early stage of my career, I benefit the least in terms of tax. I only expect my salary to grow from here on, so later in my career I would benefit much more. So should I not be prioritizing TFSAs? My very basic understanding would explain that RAs let you reap the reward now and pay tax later, where TFSA let you pay now and reap the reward later.  My current idea is to contribute the max of R6k per month between myself and my wife to TFSA. After that we can consider RAs and other investments. Then this ties up with my first question: would it not be a good idea to then take what's left after TFSA and contribute that to my home loan? This way, I could really quickly pay off my home loan and only after that start contributing to an RA again. At that point, I would need a new place for my emergency fund, but cash investments should be fine? If I stop contributing to a RA and rather contribute to a TFSA and my home loan (or any other investment), do I need to tell my employer that? Currently they pay me my salary and I contribute to my RA, but they do specify my RA contribution on my PAYE. Can I leave them and just save the tax I should pay and give the money to SARS at the end of the tax year or is that not legal? Herman I have been contributing to my TFSA the max amount for 5years now.  This has been my only savings after my emergency fund. My student debt was low and I managed to pay it off in 3years. I have recently been approached to work in New Zealand, and now have too many options to consider - please help: What happens to my TSFA monies if i only work overseas, but plan to return to SA some point in the future? Am i still eligible for a TSFA, and can i continue to make my yearly contribution? Is there any advantage for me to file for tax emigration? Relating to above - I understand NZ and SA have a double tax agreement - Does this mean no SA tax? or just SA tax where the NZ tax 'stops'? (So the difference between my SA tax% and NZ% would still be payable in SA?) Tsebang I was invited to a presentation about Bitcoin Mining, the company that is mining the Bitcoin is Mining City I'm not sure if it is a scam or not. Could you please check and advise? I have a bad feeling about this. They are promising huge returns after 3 years. Candice  What I can tell you is that they are not a platform, so there is no option of selecting external funds when you are not happy with performance. They offer only tracker funds which in general are 0.95% and they only have one actively managed unit trust fund. So the potential EAC would be 0.95 for AMF and if there is an advisor you can add a further 0 – 1.15% so potentially they would be very cheap. So it is extremely important to understand what your selected fund is tracking, currently the 1 yr return on their medium equity fund is 0.2% and they do not have any funds that offer guarantees. If you are looking for a similar product from Old Mutual it would be our OM Funds only option through wealth which also does not have an admin fee and our tracker funds come in slightly cheaper than 10x at between 0.55 and 0.9 and with a far superior actively managed fund range including offshore. When you are looking at the optimal plan, you are not buying it because it is cheap, you are buying for possibly the underlying guarantee that your fund may have and then for the future bonuses from year five until maturity. I would think very carefully before considering moving retirement funds to 10X for the reasons given above…in view of NO GUARANTEESand NO BONUSES paid going forward.Shane Thank you for a great show and for making me laugh at least N+1 times during each podcast.  Please share your thoughts on trading with a Tax-free account.  I've dumped R15k in mine a few weeks ago and opened several ETFs, (S&P500, NASDAQ 100, etc.), and split it evenly.  I am a daily trader using equities. I'm wondering if the same can be done with Tax-free ETFs, while staying below the annual contribution limit but maximizing profits?  What implications are there that you are aware of? Tim I'm 43 and my wife and I are debt free since the beginning of this year. House access bond is basically paid off, R10k left to keep the facility open, but it also is my emergency fund. I maxed my TFIA at Standard Bank with a couple of ETFs, I moved my 20 year old RA's from Sanlam and Old Mutual to Outvest – boy did I get shafted in 20 years! I still have a Policy with Sanlam. I want to cash it in, but want to use it to my maximum long term benefit. Should I put it as a lump sum in my RA or rather buy ETFs with it?Ross  I realize it's a massive double up and need to streamline the portfolio, I just can't decide what to hold onto and what to sell.  I have also been quite interested in the SYG4IR. I just can't help but think this is the way of the future: clean tech, autonomous vehicles, drones, solar, space the list goes on. If I put a bit of money into it now and let that grow for 30 years who knows what the value of it might be by then, which brings me to my questions: Is there a way of telling if an index is a value buy? I know that indices trade at "fair value" but is that really the case? Take the S&P 500 right now as an example. There are four or five Tec stocks that are keeping the whole thing afloat, and making new highs, while the Russell 2000 has bearly even touched the March highs. I know your advice is always "time in the market beats trying to time the market" but I'm sitting on my money at the moment and haven't been buying as I just can't help but think the market is way overvalued at the moment?  How have all these massive stimulus packages by governments worldwide affected the markets? Particularly the major indices. Are we now just in a massive debt euphoria pretending that everything is awesome and another crash is inevitable? Could there possibly be a better buying opportunity not far down the road? I'm just a country peasant but even I can see that there's much more to this than meets the eye.Jaco I only recently discovered that I am completely undercooked in terms of retirement. I had some investments, a bad RA, and some unit trusts for my kids with Allan Gray. (expensive AF) But was never aware of TFSA's and ETFs, etc... So I discovered Easy Equities, discovered your podcasts, through advice from my brother in law. Since then I have devised an aggressive plan to get back on track. Paid off my huge credit card debt and now only left with 2 vehicles. So, a couple of questions / thoughts. Priority 1: Max out TFSA for myself and my wife each year. Priority 2: Invest long term for my kids (2) - TFSA and other Priority 3: Save for deposit on my first home Thereafter invest what I can into the market. What would be a highly aggressive 1 year investment to save for a deposit? And what would the TAX implications be on that investment? Prineshen I am 26 and a budding young investor who started around 3 years ago. My strategy is mainly focused on ETFs in my TFSA  with the rest into individual stocks picks and bitcoin for a bit of fun/speculation. I understand the importance of diversification in a portfolio. However given South Africa's history of fraud scandals such as Steinhoff etc, I have tried to implement a further layer of diversification across brokers and therefore tried to diversify my investments across Easy Equites, Satrix and Sygnia, although I know Easy and Satrix are owned by the Purple Group.  What are the chances of one day waking up and seeing all our accounts at 0?  

In our second Fast Fatty, we spoke about Suzanne's PPS account. PPS felt our assessment of their product was inaccurate. We offered them a right of reply. Read their reply here. Pru has had a rough start to her investment career. She had a financial advisor she was struggling to shake off. Just as she worked up the courage to let them go, the advisor got fired for committing fraud. This shocking news encouraged Pru to take a closer look at her investments. She was not happy with what she found. Many of you have expressed your frustration at the returns you're getting from your investments this year. In this episode we help you and Pru figure out exactly what happened. As always, we explain how a high fee puts you at a disadvantage from the outset. Next, we discuss asset allocation, diversification and the general madness of the market.  Being able to read investment documents is an important skill to develop. We wrote three articles to help you make sense of these documents. You can find them here, here and here.  Subscribe to our RSS feed here. Subscribe or rate us in iTunes. Pru  Discovery gave me a call and told me they were doing a forensic investigation into my financial advisor. It turns out they forged my signature on a policy document, as such Discovery did the heavy lifting for me and took them off my policies.  The rage regarding the forgery forced me into action. I started the process of moving my TFSA from Sanlam to Easy. This led to me scrutinising my TFSA portfolio and you two won't believe this! (Or maybe you will) My portfolio has done FUCK ALL (Sorry Sean) since I started it in 2017!!!! I have actually lost R 20 000 of my contributions!!! I am so upset!  Where I have gone wrong and what the FUCK happened????!!! Meanwhile, back at the ranch, my demo portfolio on Easy Equities has made a profit of R5000... There are not enough exclamation marks and expletives in this email to describe how I feel right now.  Thank you again for all the help. The two of you are doing the Lord's work, literally.   Dirk How can I determine how safe my investment is with respect to the investment issuer/provider/platform? Many investments are for the longer term. What guarantee can an investor have that the investment provider will still be around in the future? There seems to be an increasing number of issuers, platforms and providers. How can I determine the risk associated with them? What is the situation in the case where I buy an UT or ETF via a platform (e.g. AG/ABSAStockbrokers/EasyEquities/etc/etc/etc) that is issued by another issuer, for example, AG/Satrix/Sygnia? Rudzani Given that cash is no longer king, what is the implication for people like me who have significant equity in our bonds? Should we looking to invest it elsewhere in the meantime? The bond has served as a mechanism to reduce interest rate expense, bond term and easily accessible large sums of savings.  I have ETFs and max out my TFSAs each year. I sadly hold some unit trusts but I got those before I knew about ETFs and have just left them. What are some strategies with the cash currently sitting in the bond? Do I just leave it? Christiaan is intrigued by the new ESG ETFs from Satrix, but he's not convinced that the money will follow the ethics. He wants to know if we have any strong opinions about it. Brent I am investing in ETFs for the long haul. I'm maxing out tax free first, but I'm referring to non-tax free and non RA investments.  Say I buy shares monthly for the next 30 years and then I want to sell some, how is tax worked out on that? I will have been buying shares at different prices over time and now I'm selling them at whatever the price is at the time of sale. Will SARS tell me how much tax I should pay? Will Easy Equities? If I bought shares in Ashburton 1200 for R50 in 2020, then R300 ten years later, then R1000 another few years after that. If I sell them for R1200 the tax on the first shares I bought would be huge, but not so much on the last shares I bought. Sarel I follow the one ETF strategy, buying the world, bought Asburton 1200 and MSCI world. I have resources to add some spice to the mix. Any opinions regarding Sygnia ISO and 4th IR. Suzanne is wondering whether she should continue investing in ETFs once she's maxed out her R500,000 tax-free allowance? Guy I invest using EasyEquities and focus on ETFs primarily (I've been listening to your guidance). My main investments were Satrix Nasdaq, Emerging Markets and recently the Ashburton 1200 (you mention it so often I couldn't ignore). I invest in shares through my USD account on EE but was wondering if it would be best to move the ZAR to USD and buy the MSCI World ETF from iShares / Blackrock. Jason My question is regarding index fund platform offerings in SA. As you know, this would be different to ETFs - not trading live on the exchange - but trading like unit trusts that have updated NAV daily. The Vanguard Index funds are the prime example, having the same constituents as the ETFs but not trading live. This allows one to purchase these passive instruments on auto instruction, without worrying about losing out a spread due to the product not being live on an exchange, like an ETF would.  I have an account with EE and the recurring investment option often sees this spread resulting in some low volume ETFs being bought at a premium, which puts me off and spoils the opportunity of letting my portfolio function truly passively. Anyway, I hope you guys can help with suggestions or at least expand on the conversation about the recurring auto-invest instructions getting spreads horribly wrong from time to time.

We use my long-awaited holiday to catch up to some user questions for the next three weeks. We hope you enjoy the shorter episodes as much as I plan on enjoying my break! IM I have an Old Mutual Endowment policy that matures in November 2020.. I also have a lump sum in a TymeBank account in various GoalSaves, which I don't need to use any time soon. I have another lump sum in an African Bank account.  I'm not sure whether I should pool all the money and put it into a fixed deposit account with African Bank for 5 years (the interest rate is very attractive at 10.01% annual interest payout) and have the interest payout annually, so that it doesn't go over the R23,800 tax exemption. Or should I take the money and invest it into ETFs, split 50/50 into local and international. With the idea of investing for dividends and growth. I know that I won't be sheltered from taxes if I do this. I was thinking of splitting it between the following ETFs (I use the same ETFs for my TFSA): Coreshares Preftrax Coreshares DivTrax Satrix Divi Coreshares Top 50 Coreshares Property Income Coreshares Global DivTrax 1nvest Global REIT Satrix MCSI World Satrix S&P500 Sygnia 4IR If I decide to do the fixed deposit, then I was thinking of using the interest payout each year and invest it in ETFs (and be subjected to taxes). My wife doesn't know anything about RA/TFSA tax benefits or investing, and has absolutely no interest in using her TFSA. I even helped create and set up one for her on Easy Equities. I could use the fixed deposit interest payout and then fund her TFSA each year and then top it up to max it out as well. However, the disadvantage is that on death, then the TFSA will form part of her estate. And then lastly, I could also put it into my RA, which I currently have with Sygnia (Sygnia Skeleton Balanced 70). I won't benefit from a tax return, but will possibly benefit from CGT, DWT and tax on interest earned. I'm finding it difficult to make a decision on what would be most beneficial. Any suggestions on what I could do with this lump sum? Subscribe to our RSS feed here. Subscribe or rate us in iTunes. Ash I switched the Sygnia MSCI USA to their new Health Innovation fund. This is an active fund (with performance fees

We use my long-awaited holiday to catch up to some user questions for the next three weeks. We hope you enjoy the shorter episodes as much as I plan on enjoying my break! Suzanne After finding your podcast during hard lockdown, I have been binge listening …..and can honestly say: You have changed my life! Thank you! I have kicked Sanlam and their 5.4% TIC under the arse, and moved my Retirement Annuity to OUTvest.  The buggers charged me a R30,000 exit fee; but thanks to OUTvest's amazing product – within 5 months I made up the loss; ½ coming from my contributions, and ½ from real returns! Following Nerina Visser's fantastic presentation, I am also spreadsheeting everything, but have run into a bit of a snag and hope you can help. As a medical professional, I hold a PPS Policy which includes a sickness- and disability benefit, as well as life cover. Thanks to Stealthy Wealth, I now know that ‘PPS is a mutual society, and doesn't operate like a normal company. They distribute any profit they make back to the policyholders'. These profits are linked to the above policy, and deposited annually into my PPS Profit Share Account. Annually, PPS provides me with a current Rand value, for the value of my PPS Profit Share Account – and I am happy to say it has been growing steadily. On my policy statement it further states that ‘These accounts do not vest until the policy holder reaches 60 years;….and on this date the Profit Share Account can be taken TAX FREE as a cash lump sum'. Can I safely count this Rand value, and the projected growth, towards my retirement planning? And if so, any suggestions on what would be the best (tax efficient) way to do it? Subscribe to our RSS feed here. Subscribe or rate us in iTunes. Brett If you take out a life policy of a R1 000 000 and nominate a beneficiary. -Then SARS assesses you and says you owe them R800 000. -You don't pay the debt due to SARS. -Can SARS nominate the Insurance Agency as a 3rd party in terms of the Tax Administration Act to collect the outstanding debt from the Insurance provider? -In other words whose money is it/The beneficiary or the policyholder. -I have looked into this a bit and it seems that creditors cannot access life policies which would indicate it belongs to the beneficiary and not the policyholder. Kobus I have offshore funds in a Bank account earning nothing at the moment. I am considering  investing this in the Sanlam Glacier Global Life plan and will do this without a FA to save on costs. What other reputable companies in SA offer this service where you can invest directly without the help of an intermediary? Rudolph I have a decision to make that I am a little confused about. I am wondering about the order that I should give preference to. I am currently first trying to max out my RA for the Tax benefit, but keeping myself from accessing the funds till I am 65. Then I try to max out my TFSA and Finally I allocate the remainder of my extra money to my house bond to pay it off quicker. I am not sure if this is the best order to give preference to. Ken We used to contribute to Little Eden and St Bernhards Hospice as part of our monthly tithe. But with our aging parents, and their lack of retirement savings, we are anticipating needing to help them out in the years to come. So we are diverting our tithe savings into a Allan Gray money market account (lowest fees on the market from what I can tell). But I often have a pang of regret when I think that we are no longer supporting these companies that are working so hard to help others. I wonder. if by no longer supporting them, we have resulted in them having to turn somebody away. My idea is a Charity "ETF". like the "top 40" of non profit worthy (researched and vetted) organisations that are helping others. The Charity "ETF" fact sheet will look a little bit different, with links to all of the top 40 organisations websites and a brief description of what they do. I was daydreaming about it popping up as an option when you are submitting a trade on Easy Equities (like the R2 KFC thing). There would be a management fee for whoever was running the "ETF" I suppose, but ideally all of the contributions go directly to the top 40 organisations.  The main thought behind having the Charity "ETF" is that it may seem silly wanting to send, a once off, R100 to one of these organisations. And even sillier to try and split that R100 up into smaller amounts to spread the contribution to multiple companies. But that is what an ETF does best! take a little bit of everybodies money, combines it into one big pot and distributes it to the top 40 organisations. What would really be nice is if Easy Equities could provide you with a section 18A receipt at the end of the financial year as part of all the other tax certificates they provide. Greta Having recently been paid a lump sum (divorce agreement), and needing to live off the yield of my investments for the rest of my life, I have educated myself on personal wealth. I have a pretty sound understanding of my options and how I would like to invest - again based on sound investing principles that you and Simon live by. My question now is a completely practical one: I have the investment pots - one for growth, one for emergencies, one for income. But how do I give myself a monthly income drawdown (I am not a retiree or of retiree age - still 13 years to go).  What investment vehicles are my options to hold my three years of expenses in from which I will draw my monthly income - is it a bank account? Or is there some other investment vehicle I can use to invest my 3-year-expenses money in and get a monthly income drawdown from?  Robin I'm interested to understand how Bonds work as an investment vehicle.  Can you and Simon dive into when and why one should invest in bonds? Should they be SA or Int. Bonds, and which Bonds should one consider?  In the next month, I will have a maturing fixed investment, where I was getting a reasonable 7.58% compounded return. I want to re-invest these funds. However, with the decline in interest rates this year the bank will now only provide 4% compounded return, which doesn't help my cause at all.  I have Tax Free savings in place, I have a Living Annuity that I recently moved from an RA as I can allocate the full investment to offshore equities rather than on 30% as per Reg 28, where the 2.5% compulsory payout of which I re-allocate to my TFS.  I have a diversified SA ETF portfolio (SYGUK; STXNDQ, STXCHN, GLODIV, ETFPLD, ETFGRE, ETFIT, CSPROP, CSP500, STXEMG, STXRES, STXWDM, SYG4IR SYGEU, all in equal allocations) which I am building on (waiting for lower prices to allocate more funds). I also have an offshore Investment portfolio that I actively manage in both Offshore Equities and ETFs.  My goal is to increase growth over the next three years, therefore I have taken an active investment approach. (I am 57 years old and I live abroad, therefore having both an SA and Overseas Investment Portfolios serves me well) Any pearls of wisdom where I can invest the funds that will be freed up next month? Taking all of the above into consideration.

We use my long-awaited holiday to catch up to some user questions for the next three weeks. We hope you enjoy the shorter episodes as much as I plan on enjoying my break! Willem  I have an endowment in my portfolio which was a five year investment which started in July 2003 with the last payment in July 2007 which matured July 2008.  Tax was deducted on all these investments for this endowment at ACSIS/OLD MUTUAL as per quarterly reports, as well as capital gains tax. When inquiring at Old Mutual recently, they presented me with a figure for CGT if the investment is drawn upon. The investment was 4 payments of R30,000 and the the last one R36,000. The value as at February 2020 was R572,089. Would you be kind enough to let me know how else can I get this investment to work for me in the light of being able to access this investment like a conventional discretionary investment without tax complications. I have a discretionary investment, as well as a living annuity in the same portfolio. Subscribe to our RSS feed here. Subscribe or rate us in iTunes. Sign up here to receive an email every time a new show goes live. Veronica You guys seem to be big fans of ETFs but when I looked into buying one they all recommend an investment period of at least 5 years or more (i.e. they're high-risk and therefore long term investments).  My husband and I are looking to potentially emigrate in about 4-5 years from now. In light of that, where would the best place be for us to invest our savings? I currently have a money market emergency fund and am putting away a bit into an Allan Gray Balanced Fund (both recommended by a financial advisor, although the more I listen to your podcast the more I'm thinking to start handling investments on my own ☺).  ETFs sound like the best place to invest but are suited for way long term, in which case we might be out of the country before the product matures. Is the solution then to keep the savings in something like the money market? Is it still worth opening a tax-free savings account for 5 years? James is wondering about Zambezi preference shares. Can you please discuss the place of this product in a portfolio for someone that is on pension.   Will it help with cash flow during pension? Pieter  The thing people miss about the 4% rule is that the study didn't work on the principle that your money should last forever. Success was measured on the fact that you would have more than $0 after 30 years at a 50:50 equity:bond allocation. That might also mean you have $1 left for year 31 which accounts for the 95% success rate. Another caveat is the study was run during a high interest period in America.  Also just on a correction how the 4% rule worked in the study. You withdraw 4% in year one. After that, you withdraw what you did the year before plus inflation, not 4% of your asset base. Josh I plan to emigrate to the UK at the end of the year.  I have been maxing out my TFSA and contributing to a Provident fund. When I maxed out my TFSA for this year, I started setting aside that cash monthly that was going to the TFSA, and reduced the amount going into my Provident fund monthly with a view of investing it when I got to the UK (after having converted it to pounds obviously). The UK equivalent of a TFSA allows contributions of a max of £20,000 per year (with single shares allowed). I plan to liquidate my TFSA when I move, cash out my Provident fund when I resign (and take the tax hit), and chuck all of that cash into a stocks and shares ISA, probably a Vanguard all world ETF. Also, I'll be using a broker called Trading 212 if anyone is interested. Do you think this is a silly idea? Cashing out of a TFSA and Provident fund is a big decision. And just something separate: I wish I hadn't bought a property now that I'm immigrating. I just want to sell the stupid place but am struggling. Wish I just rented a place.  Conrad  I've requested  information on the OUTvest investment options for a preservation fund. I am not happy with these just by looking at the top 10 holdings in most of these options. I agree with your view on simplified broad-based ETF investments and wondered if these are the only options that Outvest offers or if I can structure a more simplified ETF based combination that will be Regulation 28 compliant. Sean I WAS one of those people who has religiously put monthly money away with a broker who was smiling all the way to the bank from the tender age of 15. I am now 29. In the past three years I have been paying a lot more attention to where my money goes. Thanks to you guys, I had that awkward conversation with said broker and have taken all of my funds away from them and reinvested in a much cheaper, passive investment group. Although this new firm is cheaper, it's not as cheap as Easy Equities, so I have been splitting my monthly contributions for the past year with EE. Things have been going so well that I recently started looking into the TFSA on the EE platform. I have been able to max it out for the last three years. If I had known about it earlier it would have been longer but it turns out they aren't very profitable for high rolling fund managers. With this being said, I did some deeper research on EasyEquities, and I was shocked! I have had a great experience with them so far, however I have not tried to withdraw any of my money yet.  This seems to be a huge problem on the platform, if you have a look at Hello Peter.  It's a scary prospect to have your hard-earned money on such a platform that “doesn't pay out withdrawals and doesn't answer any emails or phone calls” the dreaded word “scam” is even mentioned by one of the disgruntled users. I know Purple Group is a legitimate, listed company that has legal obligations in place but other people's VERY poor experiences are something I cannot look past. It has been an amazing platform for me so far, but there is a big BUT in the back of my mind now.  Is there anything from your side that could put an innocent investor's mind at ease?

With Simon celebrating his birthday on the beach, this week's episode is a tax bonanza. De Wet de Villiers, King of the Tax Elves and Great Guy finally shares with all of you what he shares with me for free every Monday. I love talking about tax, which is why this week's episode is much longer than usual, and much shorter than it could have been. He gives us a useful checklist of things all of us should do when we submit our tax returns, among them:  If you earn less than R500,000 per year, you don't need to file a tax return. You can ask your HR department to factor in your medical aid and retirement contributions, even if you signed up for those services privately.  You should check your details annually, including address, SMS number, email and bank details. Keep a record and declare all income streams available, including directorships and side hustles. Make sure all your investments and bank accounts are included. Provisional taxpayers should keep track of the following expenses: Expenses: Rental property magazine, conferences Side-hustle: Phone calls, data costs,  Business travel: fuel, vehicle expenses Home office: Fibre at home, cleaning costs Don't accept the auto-assessment. It doesn't work yet. Check your prior-year tax return to look for things you may have forgotten. This is especially true if your circumstances haven't changed much. Get a statement of account from SARS from e-filing. Don't do everything in one go - do a tax recon every quarter so it's not so overwhelming. Subscribe to our RSS feed here. Subscribe or rate us in iTunes. Win of the week: Jess Let me start by saying that the Fat Wallet Show and Just One Lap have completely revolutionised the way I think about my personal finances. In fact, I used to avoid thinking about it at all because I found it so overwhelming and confusing. But since listening to your show I actually understand words like "equities" and "diversification" and "All Share Index". I feel like a brand new person, so thank you for that. I was working on cruise ships and earning USD but thanks to Covid I had to come home. I am currently working in the public sector but might go back on board for another contract.  Since listening to your podcast I have corrected some financial errors that the ignorant past-Jess made. Luckily, keeping expenses low and saving money comes naturally to me so I was doing that anyway - but my mistake was saving a lot of cash and being afraid of equities. I have an RA to which I am currently contributing 10% of my income, but other than that all my savings are in cash. Thanks to you, I am now moving my TFSA (currently at max) from cash to ETFs (which I did via EasyEquities much to my financial advisor's annoyance - now she won't reap the benefits of my investment). I also have a home loan on a house that I am renting out. The rest of my savings is in cash (32 day account for emergencies, standard savings account, extra payments into my bond and a USD global account) - I know, really silly!  I want to move more cash to equities but I have a few questions and would like to hear what you think? Should I contribute even more to my RA (which has high fees and a financial advisor fee) first to get the tax benefits or should I rather buy a discretionary investment with lower fees? I stopped paying extra into my bond because of the low interest rates at the moment (in order to keep my rental income profits low and reduce my income tax). Is this wise? Or should I rather continue to put extra into the bond and just pay the income tax but get rid of the debt quicker? Since I have USD I want to open an EasyEquities USD account too. For someone who has no idea where she might live one day, what is a good balance between local and offshore investments? And this might be a stupid one, but what is the difference between investing in global ETFs in ZAR vs buying ETFs via the USD account?  Gerard Can you possibly spend a bit of time on Physical Offshore investment accounts and how these things should be declared to SARS. I have an EasyEquities USD account, and they withhold 15% of  Div tax, so do I get a credit for that or should I apply for a credit? 

You might not be thinking about where your family will be in 2120, but Greg is. This week he shares a mad plan to make a 100-year investment.  Greg I thought about starting an investment with a 100- year time horizon. A lot can happen in 100 years. Maybe we don't use money anymore. Maybe earth explodes. Who knows? But if things still kind of resemble the way they are now and there's still a stock market then once off R10,000 invested in equities could be worth around R30m in 100 years (in today's money). So I think it's worth taking the risk. I'd have to get my offspring onboard when it came to that point and then their offspring, to keep it invested and change the investment vehicle if and when needed. Worst-case scenario, a greedy grandchild decides to cash it all in and blow it on bubbles and a house with a sea view, which is also not a bad outcome.  I started with R10,000 in my EasyEquities USD account and bought the Vanguard S&P500. Ultimate goal - I'm not sure yet, but hopefully it would get used wisely, to help supplement income for a few families, not get depleted and continue to grow. Just curious if you have thought about doing this? Subscribe to our RSS feed here. Subscribe or rate us in iTunes. Win of the week: Nokuthula and  Bea Thank you very much for your thorough answers to my questions. Kristia, I love how you answer questions from the perspective of all - you do not assume that everyone knows all the financial keywords. I appreciate your guidance and the presence of  JOL in our lives. Being new to all of this, both yourself and Simon's ongoing presence is a comfort to me and so many others - I am sure. Simon's answer to my furniture and storage question was classic and was taken to heart. ' Burn it!' This got my attention since family have said things along the same lines. Both of you also seem  to understand life situations, in my case the hold that belongings have and how they really own you. The grim reality is that, like Simon says, these things that we attached so much worth to...end being worth so little - in monetary terms...years later. Ina My brother lives in SA and I'm in the UK. He advised me to listen to some of your podcasts - I think they are truly brilliant!  Could you recommend anything similar in the UK that I can listen to in regards to advise as I really need some tips on the UK market? Get in touch with Garth McKenzie. Peter I listened to your podcast which I enjoyed a lot. Someone asked what to do with a large amount of money- a windfall, obviously keeping tax efficiency in mind. I noticed that buying gold and specifically Krugerrands was not mentioned. Could you explain why not especially with the current Bull phase of gold. Sandy I have a life insurance policy that has age-rated premiums. Looking ahead even just 10 years, these monthly premiums become shocking.   My policy is tied to a dread disease benefit, so maybe that's why. But as I get older, that's when I'll need this benefit, right? Especially with a family history of breast cancer. But how will I afford it? I don't want to pay all this money in and then have to cancel my policy.  Are there alternatives to age-rated premiums, and if so what are they? Could you be insured for a specific amount that doesn't grow each year. But then, what about inflation? Urgh!  Please help. I'm so confused!  Mike A few years before I retired I became aware that I should take responsibility to inform myself about financial issues. At work in a secure enjoyable technical environment I did not have any exposure to financial issues.  I was unprepared to manage the expected pending inadequate pension which I accepted with-out seeking informed advice from anyone. During that time I was introduced to Red Hot Penny shares material.  I was also fortunate enough to have a small amount of capital to open an equities broker account with Imara. This is now Momentum Securities who charge me R40 per month even though I do not seek their advice and make all my own trading decisions. Over the years I have gained an interest in investing as basically a buy and hold investor. However I do now have a share portfolio despite my largely ignorant independent cautious DIY approach. I am a client of Standard Bank dating back to 1990, but I believe the time has come to move my broking account. I have made a feeble attempt to do this before but have failed to complete the exercise.  I find my isolation as a pensioner in the new, to me, digital environment and lack of informed personal interaction is daunting for me such that I have not achieved the move. I know that with change I would have to work on an unfamiliar platform. Before I take the decision to commit to Standard Bank do you know if I am able to use a Demo trading account? Please could I speak to you about who to contact to get the website details and if there is a tutorial I can use to familiarise myself with the platform. Ben Before she even gets going she gets penalised with R20k, not to mention everything else that looks terrible with this option.  Needless to say I put this on hold - I'm careful to meddle but couldn't let this one fly. I will recommend as an alternative a similar split in equity, bonds and cash (the proposed split is appropriate for this portion of her money), but the first two in ETFs. Here are my two questions: The equity ETF portion is easy, but is there also a bond equivalent of the "one ETF to rule them all" for more moderate risk investments that I can consider for the bonds portion in this case? (Bonds in your ETF portfolio.) The product is being sold to her with the benefit that it won't form part of her estate and will be easily transferable and keep going if anything happens. Is there any merit to this? What will happen with her Ashburton 1200 and Bond ETF I buy if something goes wrong that could be avoided with the Glacier option? My first thought is to call BS on this too.  Adam Is it possible to use the R40 000 CGT allowance each year? By selling shares for a profit just before the tax year end at  a profit and then buying them back in the next tax year, would you then recognise the purchase of shares at the new purchase price?  Is this a way to minimise future tax costs since you now recognise future profits off of this higher value? I've seen this being referred to as bed and breakfasting but I'm not sure what regulation is applicable in South Africa and how one would go about it. Marco I have a comment or question in regards to your use of acquiring a foreign currency "hedge" against the rand value declining over time. The problem (as I understand from reading around) is that there is a yearly tax "drag" on this method because any unrealised appreciation in foreign currency is taxed as income, as interpreted here: https://www.rsm.global/southafrica/news/tax-implications-foreign-exchange-differences .   Now, I'm unsure if this is entirely applicable to a "buy and hold", as I have used this method in order to do my own taxes as I do some day trading using USD and not ZAR. Perhaps this doesn't apply if you can show you were buying foreign currency as a "capital" gain if you hold onto it for longer than 3 years?

We spend a lot of time thinking about building an asset base and which assets we should be buying.  As you approach financial independence, getting rid of assets starts to present problems. Which assets should you get rid of first? How do you manage your capital gains liability? How many of your assets should you get rid of and when? How can you use a capital loss to offset your capital gains liability? This week we consider the challenges in living off your investments. If you've spent your whole life accumulating assets, getting rid of them is bound to feel like sacrilege. Subscribe to our RSS feed here. Subscribe or rate us in iTunes. Win of the week: Gert Was listening to your show about the confusing jargon, synonyms and abbreviations/acronyms we use, especially the term “coupon” used in describing the return on a bond.  I seem to remember reading about the etymology years ago and looked it up on Investopedia, but found a better explanation on Wikipedia: The origin of the term "coupon" is that bonds were historically issued in the form of bearer certificates. Physical possession of the certificate was proof of ownership. Several coupons, one for each scheduled interest payment, were printed on the certificate. At the date the coupon was due, the owner would detach the coupon and present it for payment (an act called "clipping the coupon").[2] The certificate often also contained a document called a talon, which (when the original block of coupons had been used up) could be detached and presented in exchange for a block of further coupons.[3] Hannes For equity investments, I've read that it's important that there is a "CSDP account" for each user of the platform. central securities depository participant  They note: "First World Trader Nominees holds a Securities Account with an authorised central securities depository participant (CSDP) admitted to Strate, in the name of FWT Nominees into which Clients' Securities are deposited or stand to be credited." So it sounds like some rights are seeded to EE here. Should I be concerned? Luan I have an RA with work which is invested in Momentum Focus 7 fund of funds which I believe has a TIC of 2.08%. Work contribute 5% and I match that – I have come to the realisation that while they will continue to contribute into that, I can choose not to and rather put my portion into something that works better for me. I do have an RA with etfSA which I have been contributing to and wondered what your thoughts were on topping up into this or whether I should rather put it into ASHGEQ type investment? I am also looking to help my sister start her own additional RA and wondered what your thoughts were on the etfSA RA or Sygnia Skeleton 70 fund? (will be starting fresh so not beneficial to do OUTvest) My sister and I will likely not retire in SA and I wondered what advice you would offer on how to safeguard our future, specifically with the value of the rand (in 15-20 years) when our RA's begin paying and we are in another country? Are we being silly contributing into personal RA's now for the tax benefits and should we rather be buying investment ETFs like ASHGEQ it STXWDM with those monthly contributions (+-R5000)? We do not have offshore investment accounts (do have a UK bank account) and am assuming for now the best route is through EasyEquities USD account until we have a more substantial amount – would you agree? I want to make sure that we are putting our money to work in the right places and can then let that compounding go wild.

I find it odd that so many people fear the stock market and then get lured into financial scams. Inspired by James, who is trying to keep his clan from being conned, we help you figure out when something is just not right.  Here are some tips to get you going: Find out if the company or product is registered with the Financial Services Conduct Authority (FSCA). This is not foolproof, but it takes a diligent kind of con artist to steal money in this way. It does filter out a lot of the scum. Run the opportunity through the Just One Lap five concepts filter: At the end of this experience, will you own an asset?  Will you earn income on that asset and will that income compound?  Will the returns beat inflation?  Compared to what your index of choice did over the same investment period, do the returns seem too good to be true? The promised returns are a huge red flag. If you're new to financial matters, it's hard to know what's a lot and what's a little. As a rule of thumb, when an “investment opportunity” offers monthly returns, be very suspicious. It's industry practice to quote returns for a year.  Google not just the company or product (that's usually fairly easy to control), but also every individual's name associated with the product. Scammers love getting away with scams, so they tend to circle back. If you find media articles about the legitimacy of the product and the person you're dealing with tells you they're taking legal action against the media house, be very suspicious. This is an old trick to put potential investors at ease. Remember, you don't have to be in the right to bring legal action. We also spend a little time on helping you think about alternative, unlisted investments and the place they should have in your portfolio. Subscribe to our RSS feed here. Subscribe or rate us in iTunes. James How do you know you are investing with a fraud? More importantly, how do you convince your friends or family that they are going to get fucked? A friend of mine invited me to listen to a guy that is willing to invest your money through his company.  The returns are absolutely amazing!  77.64% for the year in 2017!  To the untrained ear, this guy sounds lekker.  He explained that they move the money to America and use a computer program (that his son developed) to predict the market.  The level of risk is then adjusted by the amount of gold (held at the bank of England) in a portfolio. They do all of this at a fee of 1%.  I asked him a few questions about custodian accounts, insurance, brokerage, total investment cost, TAX and all kinds of clever shit you and Simon spoke about on the show.  I could see this guy has no idea what I am talking about and then he referred to an ETF as an "Electronic Traded Fund" then I knew this is a fucking keeper!  He told me that he is not here to convince or force anyone to invest with him. But there he was, trying to convince people to invest with him.   I am convinced this guy is a fraud, but my friends are not and eating up every word this guy is saying.  My friends have family invested with him and have seen returns so now they are true believers. What do I do? Win of the week: Martie I enjoy your writing and podcasts. Think the fact that you do not come with a background in finances makes it easier for the ordinary person to relate to you. And the fact that you have learned so much about finances gives us hope that we can do it too. Definitely an inspiration.  You and Simon are a mean team and I am really glad I discovered you.  Ani I have an option to take a pension backed loan. Each month, the payment will be deducted from my salary. Should I default, they will take the money from my pension.  The interest rate for the loan is prime minus 1%, and there are no registration costs (which would be a minimum of R35000 according to the bank should I apply for a 2nd bond). We are expecting the renovations to cost between R300,000 and R400,000, worst case scenario. We are also planning to move overseas within 5 years. We don't want to overcapitalise. Houses similar to ours in our area are in the market for between R2.2 and R2.4 million. We are trying to ensure our house is the most attractive house on the block. If we run into financial trouble, and we need to rent out the house, we shouldn't have a problem finding tenants. If we want to sell, we offer a better house for a similar price to the "outydse" one down the road. If we don't move out of the country, we will stay in this house.  Is the pension-backed loan worth it, or should we take the R35,000 out of our emergency/insurance money(for registration costs) and rather take out a second bond? The Ts and C's indicate that should you leave the retirement fund, you can settle it in cash, or they take it from your pension (thinking about tax implications etc, that's the last thing I want to do). Or should we live with shitty floors and cupboards (and increased spending on sinus meds along with cracked heels) until next year March when we have more certainty on whether there will be salary cuts etc?  Ndida How do I use this cost per use on a running shoe bought for R3,000. Do I use the 12 months I have used the shoe or the kilometers I have done?  I am under debt review working my way to be debt free. I entered debt review in April 2019. In 2016 I bought timeshares with LPA under the impression that I was investing in property. The contract is for seven years until I have paid them in full, plus the annual management fees which are quite steep. I still have five more years to pay. Since I am occupying the place only once per year I am a loser ito cost per use. I am not sure how to untangle myself from this. I am paying a monthly installment of R1,700 and each year there is a seven percent increase. Wesley I have a bog standard TFSA with Standard bank that I've been contributing to for 3 years now. I only recently discovered your site and the opportunity to take this long-term investment and use it to buy ETFs to give me a better interest rate than the minor 3.5% I'm getting from Standard Bank. I want to make this money work harder for me and I don't plan on using it for at least 10 years, probably longer. Is it possible to transfer this TFSA from SB to a place like EasyEquities and start using it to buy ETFs? Is there any tutorial/how to on this process outlining what I need to do at the bank as well as with EE? Chris  I would like to offer the staff some resources to help them with their personal finances, I can offer some help in my personal capacity from what I've learnt from you guys, but can you give some resources/tips on how to deal with reduced income? The school has applied to TERS from day 1, but those F%^&* have paid us diddly squat, and won't tell us why…

Much of what makes investing confusing is that we use different terms to talk about the same thing. This is so frustrating for beginners. This week, we tackle jargon head-on. Not only do we tell you which terms are used interchangeably, but also what they mean. Here are the terms we discussed:  Stocks, equities, shares. Stock market vs stock exchange Coupons and interest. Debt instruments, preference shares and bonds. Index-tracking products, index funds, ETFs and UTs, collective investment schemes, hedge funds Real return, future value. Retirement, financial independence. Brokers, investment platforms. Property, fixed property, REITs Tax-free savings, TFSA, tax-free investments. Tax on income, tax on interest. Listed, on the stock market MDD, fact sheet And then some stuff that's used interchangeably (sometimes by us) that's not. Marginal tax vs effective tax Pension, provident, RA, retirement fund Subscribe to our RSS feed here. Subscribe or rate us in iTunes. André  My initial plan was to have more off-shore equity, of which I put mostly into a global equity ETF. I chose the Satrix MSCI world ETF purely due to its lower cost.  I was wondering why you chose the Ashburton 1200 global ETF for this purpose. However, now that I got my first dividends from my property ETFs, I noticed the meaning of distributions was dividends, and then realized that the Ashburton ETF pays dividends and the Satrix ETF doesn't.  In my mind, I'm thinking that if the dividends of the Ashburton cover the difference in costs between the 2 ETFs, then the Ashburton ETF will outperform Satrix MSCI world in total returns  to me. Is this due to a difference in the type of ETF (feeder ETFs) that the one pays dividends or not, or is that simply a choice of the ETF creator to pass on dividends or not? My question is if you could elaborate a bit in your thoughts comparing the Satrix MSCI world ETF vs the Ashburton 1200 global ETF regarding the dividends. Win of the week: Leonora I have it that Reg 28 doesn't apply to Living Annuities. I have mine with Momentum in Coreshares S&P500 and a small percentage in their money market.  (After asking, my EAC is now down to 0.77%.  Still too bloody much.  I take a minimum 2.5% drawdown. The fee was +/- R2000 per month, now R1700!  For what?) Zanele I wanted to open a tax free savings account but a friend told me that after 15 years I or my Son who is 5 years old will not be able to contribute because a person is only given 15 years to utilise the tax free account. I have researched this and I got no information  on the time limit, please assist if this is true or not. I am currently investing anything from R200 to R500 a month which is what I can afford.

When you've gotten your debt and spending under control, it can be comforting to hold on to your free cash for a while. Taking the leap from that safe pile of money to the Big Bad Market is not easy. However, as we've discussed before, cash is not a risk-free investment. The longer you sit on a lump sum of cash, the more risky it becomes. This is because of inflation. The effects of inflation are difficult to internalise because the rand value of your money stays the same. Let's say you put R100,000 in a low interest cash account today. The interest you earn is enough to cover the annual cost of the account, but nothing more. At an inflation rate of 5.5%, in 10 years you'd only be able to buy what R58,543 can buy you today. The rand amount is still R100,000 so it seems like you haven't lost anything, but you can afford half of what R100,000 can buy you today. In 20 years your bank statement would still reflect R100,000, but you'd be able to buy what R34,272 can buy today. As you can see, the inflation risk increases every year. This week we help three listeners figure out how to put their cash lump sums to use. The checklist we managed to come up with for a cash lump sum is as follows: Fund your tax-free investment vehicle: Commonly referred to as tax-free savings accounts or TFSAs, these products should be every South African's first investment. As an investor you are liable for dividend withholding tax, tax on interest and capital gains tax outside of a tax-free account. As we discuss in this week's episode, these accounts are not meant for cash savings. Don't speculate unless you can afford to lose the money: While cash makes it easier to capitalise on investment opportunities as they present themselves, cash can also make it easier to hop on a bandwagon that's not suitable. Don't invest your cash into a speculative investment (think alternative asset classes, sub-indices or individual companies) unless you can afford to lose that money. Lump sum vs average: While the math shows us investing an entire lump sum in one go makes more financial sense in terms of potential future earnings, going into the market one small investment at a time is a legitimate option if you're scared. If this is your first investment, think of it as a teaching tool initially. Once you feel more confident, you can add the rest. Work out the future value: If cash is giving you a feeling of safety, find an online calculator to work out the future value of your lump sum using a 5.5% inflation rate. Now play around with higher or lower inflation rates. Hopefully seeing the value of your investment deplete will be the motivation you need to get going. Diversify: If you're holding on to a large amount of cash, you are not diversified. Make sure to put your money to work. Subscribe to our RSS feed here. Subscribe or rate us in iTunes Win of the week: Matt: If I earn a salary from a foreign company and then decide to do the nomad thing and travel around low cost of living countries for, say, a year but remain a tax resident in SA. My understanding is the first R1m earned will be tax exempt- is that the case? “Tax residents in South Africa will be taxed on their worldwide income. But that is dependent that they're still SA tax residents. Offshore salary earned is taken into account. R1.25m ito the latest tax amendments will be exempt from tax in SA.” Harry This was mainly due to the fact that I did not know what the best option was, and my new employer only offered a provident fund.. I've been maximizing my tax benefit with my new employer provident fund. I'm also sitting on cash in a savings vehicle with my bank, currently returning around 3-3.5% interest. I'm living rather small (renting only, no debt of any sort) and have quite a bit of money to invest/save every month. What would you advise I do with my portfolio? The preservation fund? Should I keep maximising my provident fund contribution? What about my cash savings account? Should I consider taking money out of the country? Investing offshore? Joe I know we may have missed the boat both with gold and Tesla, would you suggest we go for an ETF with some gold in them? We don't mind going moderately aggressive. Steven I currently have free cash in my TFSA with ABSA Stockbrokers. Besides the fact that its not earning that much in the way of interest, they also charge a 1% service fee annually, which I believe is based on the value of the funds in the account? I'm reluctant to invest in the market right now as I feel there's no value and would prefer to wait for a correction, when it eventually comes? Although I have no previous experience investing in bonds I am thinking this could be a suitable option at this time. Looking specifically at the Stanlib Global Government Bond (ETFGGB), it seems to be doing very well so far but is this mainly due to the Rand's weakness over the past few years as opposed to any other factors? Considering that this is a reasonably low risk product, is it currently a better option than investing in a regular cash instrument which is offering such low yields at the moment? According to the fact sheet the time frame for this ETF is 3 years so assuming my investment period was 1 year or less, would you say that this is not going to be suitable? Santosh Based on FIRE (my FIRE btw is Fuck It, Retire Early) the rule is to have around 250 - 300x monthly income. So Kris, I know your FIRE number is R7M as you've stated this. so assume you have the R7M already and are still work and assume is sort of split into Cash, Bonds, Stocks and Property. If this portfolio yields you a modest 6% PA it amounts to your investments paying you R420,000 PA - Gross. Now this is gonna have a major impact on the tax you'll pay as there's no way that you can "hide" this from SARS and there's no way your PAYE accounts for this. You're gonna have to pay SARS either way. I know one of the solutions is to dump it all into an RA but then you are not liquid and you'll pay the tax in the future anyway. I'm sure the other FIRE guys like Patrick, Stealthy face this. What's the solution ? Does on just lap it up & pay the tax comforted in the knowledge that they're paying tax cause they've made money This tax liability is quite substantial as if you're an average earner, it pushes you 2-3 tax brackets higher and if you're a HNWI, even an increase of 0.2% of your taxable income can add R20000-R50000 to your tax bill for that year. Leon For the inflation linked option, the capital balance would increase by the cpi calculated rate at payment dates and interest is fixed at 5% of capital. The website mentions an index ratio calculated by cpi divided by base ratio or value, do you know where this base value(divisor) is obtained from? It only mentions that the cpi (numerator) is obtained from Stats SA. The fixed rate on the inflation linked 10 year bond is at an all-time high of 5%? Is this an opportunity to lock in a great rate or are the fixed rate bonds still the better option? It seems like there is more upside potential on the inflation linked bonds as it is unlikely cpi will remain at current lows over the 10 year period. I may be incorrect but it seems both options offer the roll over or restart option so you could capture any improvement on the fixed rates either way. Ross There is an awesome book by Andrew Hallam - "Millionaire expat" that details expat investing (He details options for people all around the world) He also has a blog. Another is Bogle heads investing advice and info based on Singaporean expat investing.

Often the fear of making a mistake keeps us from starting our investment journey. It feels like everything is on the line when we make our first investment, but missteps can be corrected fairly easily. Even the mistake of waiting too long and starting too late can be corrected. This week we think through some of the mistakes new investors fear most and how they can be corrected. Hopefully this episode will give you the courage you need to take the plunge. Subscribe to our RSS feed here. Subscribe or rate us in iTunes. Win of the week: Rory I started learning about the investing world about two months ago and stumbled upon your website within the first week.  Most of the things you discussed in your podcast just flew over my head, but it did direct me to the things I had to go read up about. Two months later I realized I am able to follow your podcasts without any problems. I want to thank you both for that. If I didn't stumble upon your website it would have taken me much longer to actually understand the investing world. I have a friend, he is 25 and about to get married. His plan is to move to New Zealand in the next ten years. I told him he should look at starting to put money away in his TFSA, then the question came up about what happens to that money when he emigrates? I see EasyEquities opened a properties platform, where you can buy shares in buildings and earn your share of the rent. What are your opinions on this? Do you think it would be a good idea to invest some money there and what would the tax implications be? Travis I recently made my first attempt to begin investing using my TFSA. I have been listening to the Fat Wallet show whenever I can.  I decided to invest in the Satrix NASDAQ 100 and the Satrix S&P 500 hoping to acquire some international exposure. I did not realise the NASDAQ has some S&P 500 companies. Now I am wondering whether I have begun on the wrong note, making a mistake and overinvesting or spreading myself too thin in some of these companies in the indices. Is there any way that way that I can correct this "imbalance" in my TFSA or should I even bother? Have I made a blunder in choosing both the NASDAQ and S&P 500?  Ash Like many of my colleagues, I was hopeless with my finances for most of my working life. I had 2 RAs with my insurance broker that were fee- and penalty-laced products that underperformed my cash savings account. Four years ago, I started a tax-free and a discretionary investment with my bank which were both heavy on fees (2-3%) and did not perform as expected (annualized return of 20%), but I understand that this may change with interest rates over time, and may not reflect future performance. Would the combination below in a TFSA wrapper be the best long-term bet? Ashburton Global 1200 Equity ETF (1/3) Ashburton World Government Bond ETF (1/3) CoreShares S&P SA Top 50 ETF (1/3) I have been looking at the RAs offered by EtfSA & their Wealth Enhancer RA seems quite attractive - it includes more commodities (gold in particular), local mid-cap and Africa ex-SA exposure than my current RA holdings. The fees though stand at 1%, similar to 10X. What are your thoughts on this RA & would you recommend adding this to diversify my RA portfolio?  Matt  With many companies transitioning to remote work and deciding to stay that way, it's becoming easier to find a location independent job for a foreign company. If I earn a salary from a foreign company and then decide to do the nomad thing and travel around low cost of living countries for, say, a year but remain a tax resident in SA. My understanding is the first R1m earned will be tax exempt- is that the cae? Am I missing anything and does this seem like a feasible thing to pull off? Access the ETF comparison tool Edwin shared here: https://www.etfrc.com/funds/overlap.php Anne My employer pays into a Liberty Provident Fund on my behalf. For the first time this month I requested my Provident Fund statement.  I saw, with disbelief, that Liberty is taking 12% of my contribution each month in fees! Given what I have learned about fees from your website and podcasts I am dumbfounded.  I queried this with Liberty and they said it's because their fees are based on 0.02% of ‘payroll' i.e my salary, rather than my contribution. I checked with our company CFO and she said these fees are in keeping with what is charged by other companies and I can't go to another provider.    What do other reputable SA companies charge to administer Provident Funds? Why is it so hard (for me, anyway) to find this out? Do you know if my company can compel me to stick with Liberty under SA law? Why can't I leave the company provident fund to go to another provident fund or RA of my choosing? If not, Liberty can just make up a number (as they seem to have done) and charge me what they like and there is nothing I can do about it except leave my job. 

I've been avoiding talking about endowment policies, because what even are they? I haven't come across one in my own investment life. This week, a question from Sandile sent me down the endowment road. I had fun with it. I got the Tax Elves involved. They had fun with it. Fun was had by all. Endowments are the love child of insurance and investments. They have a five-year lock-in period, a tax rate of 30%, a life assured and a beneficiary. If you are in a higher tax bracket and looking for a long-term investment vehicle, endowments are worth investigating. They can also play a role in estate planning. It pays out directly to the beneficiary, which is great if you are leaving someone behind who is financially dependent on you. As De Wet de Villiers pointed out, the fact that they pay out tax-free doesn't mean they're not taxed in the estate. It simply means the estate is liable for the tax, not the beneficiary.  In addition to teaching me a thing or two about endowments, Sandile's question could serve as a template if you're hoping to add new holdings to your portfolio. His clear reasoning and systematic approach to adding this investment is worthy of emulation. Subscribe to our RSS feed here. Subscribe or rate us in iTunes. Win of the week: Pru I've tried to break up with my advisor for the last year, but it has been difficult! Everytime I say to him, we need to talk and I want to move my investments, he takes me out on a nice date, listens to me and then goes on to scare me into staying with him. He tells me EasyEquities is not the right platform for me and I should be careful of companies like 10X. It does not help that he also butters me up and tells me how great I am, while also telling me about his life, so I end up feeling I can't leave him because he confides in me. My people-pleasing self feels bad for wanting to break up with him. It's the perfect emotionally manipulative relationship and I JUST CAN'T LEAVE!  How does one amicably break up with their financial advisor? More importantly, how do you leave them when you have a fear of managing your money independently?  I have listened to your podcast, and some episodes more than once. I read Sam Beckbessinger's book and Vicki Robin's book called Your Money or Your Life. I aspire to be a Patrick Mckay and I have a financial strategy to reach FIRE, but my greatest hurdle is letting my financial advisor go and trusting myself that I can manage my investments myself.  When he is not around I feel as though I can manage my money independently and I do not need him, but after meeting with him, I leave with a great sense of fear about moving my TFSA from Sanlam to Easy and moving my RA from Discovery to TenEx or Outvest. All the financial aspects that do not involve him I have managed relatively well, like my emergency fund. I know I can manage my money, I just fear that if I move my investments to the "big bad world of ETFs" (which is how he makes it sound), I will lose everything! I know he may be playing Jedi mind tricks on me, but how do I stop myself from being tricked! Also, he is not a bad person, he is a very nice guy, but I think this is part of my problem, I am making this whole relationship too personal! I feel defeated!  Sandile I stumbled on this product by Sygnia where you can get direct exposure to Berkshire Hathaway.   Here is why I'm looking into buying into this fund: I believe that Berkshire is going to have ample opportunity to buy really decent businesses at decent prices as Covid continues to decimate some much needed industries.  I believe Berkshire is one of those great businesses that one can buy at a decent price, thanks to Covid; I bought a few units in late Jan through EasyEquities and the costs to transfer funds and transact in USD was rather hefty, so I think I'll leave that to a local fund to handle that; I have looked at the S&P500 (which I hold) and in my view, the Berkshire allocation there is rather small and I'd like more exposure; Sygnia offers this fund for “discretionary savings into a 5-year endowment, a retirement annuity or a living annuity”. I would like to avoid setting up an RA with yet another service provider at the moment and I have no need for a living annuity, which leaves me with the endowment fund option. From the little that I could read up on endowment funds: I am fairly comfortable with the idea of leaving the cash invested for at least five years (if not more); My marginal income tax rate exceeds 41% so at 30% tax, the fund is saving me some element of tax; I have set up an emergency fund (around 6 months' salary) so I think the risk of cancelling the endowment before 5 years is low; TFSA has been maxed for 2021 year of assessment. I contribute far less than the allowed 27.5% into my RA (I am busy assessing contributing into an RA vs increasing my employer-pension fund contributions); I am just uncertain if I'm opening myself up to more unknown risks/complications/costs by using this structure. Kimberley  I am a shareholder for a company who has moved operations to Mauritius. If our company is lucky enough to declare dividends, this will now be paid in USD.  How does this affect my tax?   Is there a way I can get it in ZAR without losing so much to tax or is it better I keep it offshore ?  I like the idea of keeping it offshore for emergencies or as a “life insurance” for me when I pass away to leave to my daughter. Is this possible with only holding a SA passport?   Perhaps I could open an offshore trust and list her as the beneficiary and the dividends get paid into that?  Could I open a USD trading account on EE and get the dividends paid directly to that?  Is what I'm wanting to do by not bringing it into SA even legal?     I feel there are not enough bubbles, chuckles, coffee and chai tea to get me through the questions I have and the changes I need to implement to get my financial ducks in a row.  Right now these ducks have ADHD and when they seem to be in a row, they decide to go off on a fucking tangent.   Anton  I inherited a farm in 1994 and sold it in 2019. I have the value of it when I got it and when I sold it. I did not get a valuation in 2001 when CGT started. I would like to know how to work out the CGT on this transaction.  Download the calculator here.   Moore I am 27 and have a pension/provident plan with my employer. I would like to have an RA for a top up. I would also like to invest in shares. I don't know how to go about doing any of those. I have an EasyEquities account but I don't really know which shares to target, and for which amount every month. I have a R1000 that I can divide for those two financial goals. With that amount of money and my age, I am not even sure if that will be enough to contribute. I've only been exposed recently to this saving and investing movement. I was so ignorant.  Thanks to the Fat wallet Community on Facebook I have managed to put some savings for Emergencies with Tyme bank. Catherine I've tried the Interactive Brokers demo account and find it a little intimidating. I don't know what options or margins are, and I don't want to enact them by mistake by clicking the wrong button. I also imagine their customer service is not catered for noobs like me. Having said that, the platform is becoming less intimidating the more I play with the demo account. Another option is to buy the shares through a Standard Bank Webtrader account, which has broker fees of 0.345% and annual account fees of 0.26%, and then transfer the amount across to my EasyEquities USD account to avoid paying ongoing annual fees. Do you have any thoughts on each of these options, considering that my goal is to pay the lowest fees possible over the next 20 years, but also have a relatively user-friendly experience.  I don't have a credit card. The only time this has ever been a problem is when a hotel or car rental company requires a credit card for a booking or deposit. It is pretty frustrating being at an airport and unable to rent a car. And are there any ways to get around this booking/deposit problem without having a credit card? And do you know of any reasons to have a credit card aside from this (assuming I don't need the credit)? Are credit cards generally better than debit cards for general spending while travelling? Melisha I have two kids in grade 4 and grade 0. I usually save up the school fee money to pay once off and get a 5% discount in December of the previous year. I anticipate a 10% increase in school fees. So essentially I need to save R20k a month for both kids' school fees for the 2021 school year. We usually put the money into a savings account but now the interest rates are so low. At the moment the money is in a Tyme bank account goal save but i was wondering if there was something better out there? Something with low risk, short term and potentially to beat money market type accounts.  Our friend Walter made a site called Rate Compare https://www.ratecompare.co.za/.  Tristan Lately I have been seeing ads on YouTube for a financial service app called Franc. It has 4 stars on the Google Play Store but I was wondering if you had heard of it, seen it or tried it? Lastly, can we trust Franc? Ken  What is all the hype over Mexem Africa about? I have gone to their website but, quite frankly, it looks like a scamsters website (although I thought the same about Easy Equities' website too, before I started using it).  I don't see any info on tax free accounts, and they mention all sorts of foreign currencies but not much about how you convert your rands to Dollars/Euros/etc...  The little section on fees is as clear as mud.  As an ETF investor (tax free and discretionary) should I be looking into it in a bit more detail? Would really appreciate a chat between you and Simon on this. Brian I've been with etfSA since 2012. I am busy updating my etf portfolio and want to know if I should shift some funds or all to Easy Equities. I've already bought MSCI China through my Easy Equities account that I registered a few weeks ago. What is your suggestion? 

Most of us kick our 20-year-old selves for spending all our money making poor decisions in Melville instead of taking full advantage of compounding. The financial independence, retire early (FIRE) movement has given us valuable tools to reach our financial goals despite those late nights in Melville. I discussed that with FIRE-man Patrick McKay here. Since regret over lost investment time is something so many investors grapple with, we wondered whether we could quantify exactly how much we missed out on in order to make it up. It's a simple question, but the solution is hella complicated. I tried to do this for my own situation like this: First I worked out how much money I would have needed today so I could stop contributing to my savings and still reach financial independence in 10 years. I never considered this before, but it's basically the baby version of financial independence. To do this, I multiplied my current expenses by 300 to get to my FIRE number. (I always do this, even though I know that number by heart.) Then, using an average growth rate of 8%, I worked out what that amount would be in today's money. 8% is slightly below the 9.4% annual return the JSE ALSI achieved over the last 10 years. (You can use a future value calculator online to do this.)  Next, I subtracted what I managed to save so far.  I divided the difference by 120 months—10 years—to get to the monthly rand amount. The bad news is it's a lot of money. To add that to my current investments to reach my FIRE-goal, I'd have to take on another job. The good news is, I don't have to stop investing now. Remember, that's the amount of money I would have needed to stop contributing to my investments today. I wanted to arrive at a simple rule of thumb to help us think about making up for lost time. It turned out to be far more complicated than that, but hopefully this discussion gives you something to chew over. I'm excited to hear your thoughts. Subscribe to our RSS feed here. Subscribe or rate us in iTunes. Win of the week: Stippled  I recently listened to your perfect money month podcast.  I for the last 20, and my wife and I for the last 10  years, have followed a very simple "perfect money month" template. We are both 43 now and have recently become financially independent based upon the 4% rule (we are actually aiming for the 3% rule which will probably take another 3 years to achieve). The monthly template has been as follows: Give 10% of after tax income. Save 15% into a Pension, Provident or RA. Budget discretionary spend at the beginning of each month. [We use 22seven] Initially pay down debt, then Invest, the extra money [after we became debt free 7 years ago redirected to global broad based ETF . .  no individual shares]. One great dinner out each month . . .  but only one :-) General rules No debt except for housing [This means we still driving "student" cars] Automate as much as we possibly can Review insurance, cell phone and medical aid annually [In November for us] Review wills annually [In June for us] Balance investments evenly between each other to maximise tax benefits later on. Married out of community of property with accrual This has really been an unsexy and boring process to follow month in and month out.  However the results have astounded us.   They are: My wife was able to resign from her job when our first child was born seven years ago to be at home with our kids (we now have 2) which was always a dream of hers. We are now financially independent and we have made more money from our investments over the last three years than from my full time employment! We are able to afford to send our kids to any school of our choice which was always an important goal for us [Not that we automatically chose the most expensive, we just never wanted money to dictate the choice]. We are able to support friends and family financially if and when the need arises [Never a loan, always a gift] We also recognise how luck and privilege have played a very large part in our journey.  We both have tertiary education and have never been unemployed unwillingly.  But we have not wasted that good fortune and rather used it to create stability and choices for us and our family. Just in case I give the impression of all work and no fun . . .  I took a year off work in my mid to late twenties and spent it backpacking from Cape Town to Addis Ababa and climbing mountains in South America.  We take regular holidays locally to the beach and have taken 4 great international holidays in the last 10 years [We were even able to take my mom inlaw to Venice - It was her first trip out of SA]. We can honestly not recommend more strongly the boring "Perfect money month" idea.  It has benefits far in excess of what you can imagine when you start.  Approximately 240 months in, and we can say that without any hesitation.  Mike  The TERs of our global index trackers are extremely high compared with for example Vanguard. Is it not better to purchase them directly through the USD Account rather than purchasing a global tracker from one of our local providers at more than 6 times the fees? Eg. Vanguard VOO is 0.03% and the cheapest S&P500 tracker in SA is I think Sygnia @ 0.2%. I wonder why our RA providers use global trackers from local providers if the fees so much are higher? Maybe it is just easier for them cause they don't have to move any money offshore but surely it would be worth their while to do it? Edwin I have been wondering if you or Simon have some tips or observations regarding the income side. I have been a salaried employee for most of my 15 year career and have spent a total of 6 weeks in my working life unemployed. I am currently employed.  My question, therefore, is what else can you advise me to do in the area of increasing income, besides simply starting a side gig. I have tried a few side gig ventures before. Some are still going, but could never replace my income. It's a lot of work and I'm wondering if it's worth giving up on this and just focus on being indispensable to my employer. Should I be job hopping multiple times maybe? Is increasing your income supposed to be this hard? Is it a worthy goal to actively chase? Hans If Jared is doing contract work in Kuwait and spends some of the year in SA, he might owe SARS tax on his foreign earnings over R1m. This is a change in the tax code as of March this year. Satrix has an ALSI Unit trust. Given that Satrix and Easy Equities (same platform) already treat ETFs as Unit trusts, i.e. aggregate buys and execute them in bulk, how would this be any different? Terence  Many companies will be taking on that strategy in the future instead of paying bonusses etc. In fact retainer shares, bonus shares & even shares relating to ROCE (return on capital employed), BEE scorecard achievements etc are included in share awards these days. We are probably going to get to a position in SA where inflationary  increases will be negligible (like Europe as an eg) and there will have to be creative ways to retain good staff.  If your friend is working for a good company and believes that the potential can be achieved during his tenure, why should he not participate in a share scheme? Many employees are in the pound seats when the company lists on the JSE as they potentially make buckets of cash at vesting. Agree, many don't as well, but you should rather encourage that thorough homework prior to participating and or limiting the amount you purchase. Normally they discounted shares anyway and Management knows the upside on vesting or buyout occurs. Marielle  My grandmother was drawing her dividends from Ecsponent on a monthly basis to sustain herself. She does not have a lot of money. I believe she has around 300k. She is 68 years old and in good health. What would be the best way forward? Any ideas on where to invest so that she can draw an income and have funds available for a rainy day. Nico decided to move his RA from Momentum, where he pays 3.2% per year, to OUTvest because he qualifies for the R4,500 fixed fee. Momentum want to charge 15% of this lump sum to move his RA. It's double the growth he achieved over the past 10 years. I know you went through this process recently and I really need help.

There's more guesswork involved in retirement planning than we'd like to admit. If you've ever gone through the retirement planning process with a financial advisor, you know what I mean. To calculate how much money you'll need for retirement, you need to factor in the expected inflation rate as well as the expected growth rate of your investments. If you had the ability to know those things with any degree of certainty, you wouldn't need to do any retirement planning because you'd be psychic.  One of the most crucial guesses you have to make is how much money you'll need in retirement. It's hard for us to imagine our lives a week from now, much less decades into the future. How do we tackle this dilemma? The Financial Independence, Retire Early (FIRE) movement offers a useful rule of thumb to help here. To ensure you have enough money to retire and never run out of money, you need 300 times your monthly expenses. This is an excellent shorthand, because it forces you to put as much effort as possible towards controlling what leaves your account every month. However, using your current expenses would be to over-prepare. Some of your current expenses go towards preparing for your retirement. Your long-term savings and your long-term insurance products exist solely for this purpose. Once you reach financial independence, you go from having to look to others for an income to paying yourself.  That means your cost of living will automatically reduce by the amount of money you put towards retirement the minute you reach financial independence. Once you've accumulated enough assets, self-insurance becomes a reality. Stealthy Wealth does an excellent job of explaining how that works in this post. That's another expense you can take off the list. But what about the hobbies you plan to take up once you have more time? How should you plan on paying for those? What if you wanted to take a holiday? In this week's episode, we talk through how you can think about your expenses in retirement when you're working out your financial independence number.  We are once again so grateful to OUTvest for funding this week's episode. If you're looking for a place to save towards your retirement goals, have a look at their excellent product here. Subscribe to our RSS feed here. Subscribe or rate us in iTunes. Win of the week: Joy I think another example of upside risk is in studying. It is possible to work so hard at school and university to get top grades which give you a suite of distinctions and awards, but at what cost to friendships, hobbies, physical and mental health?  I know many adults who because of the sacrifices they made to achieve those things have always had that as a huge part of their identity. I'm sure you know, for example, middle aged men who are still called by their nickname from school or are part of the old boys club. Really?  Your qualifications are only important so far as you can actually make practical use of them. Who cares if you qualified as a doctor cum laude from Cambridge university if you are unprofessional, unkind and thoughtless? Or if you can't even balance your personal finances

What is diversification? Should you care about it? If you do care about it, how do you do it? In this week's episode of The Fat Wallet Show, we spend some time at the intersection between risk and diversification. We help you think through the role of cash in a portfolio and once again reject the idea that your portfolio should start de-risking in your fifties. Coronavirus or no, modern humans live for a long time. Very few people can afford a multi-decade low-growth portfolio. We spend a little more time than usual on inflation risk. Inflation is the silent wealth killer. It's so stealthy, those risk-tolerance questionnaires financial companies make you fill out don't even ask about it. Just like shares held in the short-term introduces a lot of risk, cash held for a long time introduces risk to your portfolio. We play with the idea of diversifying into other currencies as an inflation hedge. We even have a little section for those who want to build their wealth with blueberries. For alternative investments, ask yourself: Who is the price maker? How liquid is the investment? How likely is it to beat inflation? We hope this episode gives you some tools to think through some of these issues in your own portfolio. Subscribe to our RSS feed here. Subscribe or rate us in iTunes. Win of the week: Nokuthula After discovering the podcast, I went through a phase of being giddy and hysterical for two weeks catching up on all the episodes. I started my savings journey late. I am not paying extra into my home loan and rather choosing to invest, I still have upcoming university fees for my niece and nephew who I'm partially supporting and will continue to support until they are independent. I can only do that from my salary as I am not putting any money away for them for future expenses. It is not a watertight plan, but I had to be realistic. There are many holes to plug but I had to be decisive. Being able to fund my own retirement is paramount. I am continuously working to change things for the better and nothing is off the table, including selling the house and working beyond age 55, but this is where I am now. Most of my money is saved in Reg. 28 accounts. I only started my TFSA in 2018 and I have been contributing the maximum allowed. I will only start contributing to my USD account in July so it is at zero right now. The breakdown as a percentage of my total monthly contributions is: Pension fund: 43% RA: 32% TFSA: 13% EE USD: 13%. Provident preservation: 0% Considering that the TFSA is the last to spend I think the preservation fund will be first, the current legislation allows that I can withdraw the full amount at retirement, but it will only last me a few years. That means my Reg. 28 accounts will have a bit of time to grow outside of the Reg. 28 restrictions. Then I guess it will be EE USD next. In a South African context, what should one think about in terms of a retirement drawdown strategy? What accounts should one have set up whether it is for FIRE or just FI? Should one also consider a South African discretionary account? I am also wondering if an endowment plan can also be part of the retirement mix. The ones I have seen are being marketed as being good for tax planning for people with a marginal tax rate of 30% or more. I would only go for one that is passively managed with low fees and if such does not exist then I will pass.

Not all investment products are created equal. This week, listener JP was struggling to understand why his RA was performing so poorly while his tax-free account was making money. The answer is important for everyone who holds more than one investment product.  This week we help you (and JP) work out what exactly you should be looking at to ensure you're comparing apples with apples. We discuss the role of Regulation 28 in the performance of retirement products, how different asset classes behave, the role of active managers and what the rand/dollar exchange rate has to do with it all. Subscribe to our RSS feed here. Subscribe or rate us in iTunes JP  I need some clarity on how an RA can perform so poorly when an ETF does so well.  Firstly rate of returns: Investec is -17.58 where my Satrix is +6.4 percent over this troubling period. That's a difference of almost 24% in the same market.  The one with Investec is with a financial advisor who charges 2.8% fees (that includes Investec platform, admin, etc) and is supposed to be a Inflation + 6% growth portfolio. My Satrix platform charges less than 1% fees. He holds the following Satrix ETFs: Divi, property, 40, World and S&P 500. How is it that financial institutions and professionally trained people can't get investment right but an index investor does?   Win of the week: Alida When are dividend distributions assigned? I've noticed that most ETFs will only distribute the dividends for a financial quarter a few weeks after the end of the quarter and it has me wondering: If I own some ASH 1200 at the end of the quarter, but then sell that before the dividends are distributed, do I still get the dividends for that quarter or not? Do I have to hold the shares until the dividends are distributed a month or so after the end of the quarter? Similarly, let's say I buy after the end of the 1st quarter, but before the distributions, would I then get the dividends for the 1st quarter? Pascal  I've spent time reading as much as I can find about all three of our global property ETFs to make a decision on which one to hold. Even though it will form a small part of my overall portfolio, this will be one of only 3 ETFs I ever hold, and plan to hold it forever, so it's important for me to make the right choice now.  The 1nvest product seems like the clear winner and I'm buying it currently. They simply chuck your funds directly into the iShares Global Property REIT ETF in the US, which seems like one of the best and most widely used ETFs in its class. It tracks the FTSE EPRA/NAREIT Global REIT Index. The index is used by a ton of other ETFs around the world. The CoreShares and Sygnia products track some other arbitrary thing: The S&P Global Property 40, which sounds super official until you google it and the rest of the world is like.. "nah dude, that's not a real thing" It seems that these are the only two products on the globe that I can find that actually track this 'global index'.  If you look into ASHGEQ's S&P1200, you get charts, factsheets, methodology documents, everything. But there's almost no information online on this one. It's basically a ghost index. Something about this just makes me feel uneasy, but maybe I'm being too pedantic? What are your thoughts?  Also, and this was the final kicker for me, they pay dividends bi-annually instead of quarterly like the 1nvest product or any other self-respecting, well-to-do fund.  If the 1nvest product is basically just rolling up my funds and passing it to the US iShares ETF, is that hefty US withholding tax already baked into all my dividends before they come full circle into my account?  If that's the case: Am I being a dumbass holding this thing in my TFSA instead of one of the fully locally-crafted products like the Sygnia? Now, I understand that any global ETF has a certain amount of baked-in withholding tax from other countries, but if the 1nvest fund is basically a middle-man for a totally foreign ETF, am I needlessly adding an entire second layer of unavoidable withholding tax into my supposedly tax-free portfolio? Or perhaps is this all pretty negligible in the grand scheme of things? It's okay (in fact preferable) to tell me that all of this is literally a non-issue and it's just my lock-down brain overthinking literally everything. You guys mention the CoreShares one a lot, but... its more than twice as expensive as the Sygnia (in terms of TER). Why would I go for something that does the same thing for more than double the price? What am I missing here? Bea I have only recently started earning a relatively large amount of money abroad. At 61 I have to make sound investment decisions - there is very little margin for error at this stage!  The kind folks over at the Fat Wallet FB group have assisted, but I still feel the need of some more practical pointers to guide me. My situation is as follows: * I have around R38k monthly to invest * My Emergency Fund is available and will most likely use Tyme Bank. * I am going to choose Brightrock for disability and dread disease cover - heard about them on the Fat Wallet FB group. Are there other providers which you could suggest I try for the cover mentioned?  * I have no debt...however: * ...I pay R2 500.00 monthly for storage of my things in South Africa and shuddered when I heard Kristia's definition of an asset. It's a nightmare cost and really don't know what else to do with beloved items of furniture. * I plan to open TFSA and have R36k available for tax year 2020/21 deposit as soon as I can. I have no idea what to invest in. ETFs sound good since in this case I will hopefully have no need to touch this money, hopefully not for a  long time. * I have around R300k ready to invest at present - the foundation for the house savings.  I have opened a Sygnia Money Market Fund to invest this. However, I am concerned that I could do better in terms of interest elsewhere! Would I be keeping abreast of inflation etc?  * I would like to buy house in around 4 years in SA, hopefully cash - with the money I hope to have saved from now until this point. In this case,  I wil need to work until age 70 to save in order to cover my living expenses ( age 65 - 70). This is the reason I have been advised to use a money market vehicle - safety and availability, but could I not do better elsewhere? Do you think that this is the best course of action in my case? There is a need to both grow and protect my funds. However, I have heard Kristia talk about Index Funds and wondered if these applied in my case. They sound wonderful. Someone mentioned that I should be careful of my asset allocation - specifically stocks because of the time factor? * I have heard Simon mention that he has an RA. Should I have one?  * What are your thoughts on a living annuity in my case and how does this product work? * I have been advise to rather place the salary I earn in the Gulf country into a USD account and not bring it into ZAR. I haven't a clue on how to do this and wonder how safe this is? Interactive Brokers and Degiro not applicable - the former's fees are too expensive and I don't feel confident about Degiro. I get paid in a Gulf currency and most likely have the option to transfer funds to another account  in any of the major currencies. John Are European joint accounts included in your estate upon death? Also are they subject to SITUS tax from foreign jurisdictions? Santosh  Do we invest as much as possible and never enjoy it? Presumably most people want to leave a fortune to their heirs, thus amassing a stash and never actually drawing down for purchases - yes like a car, holiday or some other significant purchase.  At what point does one reach a "number" and after this anything more, whether you actively add or it grows via its own momentum, do you start just taking out ? I suppose this is really relevant for those without dependents and singles where there really is no one to leave it to.

Those of us slowly building a portfolio every month accept our investments will be determined by our overall strategy. This strategy would include our ultimate financial goal, plans around asset allocation, diversification, tax planning and future drawdown management. We understand we have to consider these variables throughout our portfolio, including our retirement products. New money coming in goes towards old strategies. It's boring, but effective. Those who just came into a large amount of money are subjected to a terror to which the rest of us are immune. Where is this money supposed to go? The bigger the amount of money, the more flimsy former investment strategies seem. Oddly, new investors with only tiny amounts of money to invest seem to experience a lot of the same anxieties. At the extremes these decisions feel very large indeed. The one difference between making a choice about your first investment and the biggest investment lies in tax planning. Your first challenge is to hang on to as much of that money as possible. From there we're sad to say it all comes down to your strategy. What do you want this money to achieve? Which products are most likely to get you there? Subscribe to our RSS feed here. Subscribe or rate us in iTunes. Jacques  I sold shares in a small private company.  I now have to decide what to do with it and to invest it wisely for the future. I am 50 years old and married with two 8 year old twin daughters (having waited for kids for 20 years!).  I have current income streams and do not have to use any of the capital to supplement income.  We are renting and own a plot hat has been paid for in full.  I need to decide to build a house now on the plot or invest the share money in a diversified portfolio for strong capital growth in the 15 years to come before retirement at say 65. I have an RA currently invested in a portfolio of shares.  I looked at Simon's portfolio. I like his allocation of shares to “Death do us Part”, Second Tier, ETF and Tax Free groupings.  I read about the “Ashburton Global 1200 ETF” (ASHGEQ) fund that Simon proposes and the low fees of Outvest.   I need to decide how to structure the capital as the current levels of some share prices may present a once in life-time opportunity for me to buy low PEs (e.g Firstrand, etc.). I am willing to move the RA from Sanlam Private Wealth to Outvest.  I need to get Tax Free Investment accounts for the kids, my wife (perhaps all 4 of us) and also invest more into my wife's RA (very small and also willing to move that to Outvest). I can afford to be aggressive and have no debts. I am however scared of my own emotions whilst trading so I want to follow a long-term passive strategy and not trade for the short term (speculate).  I have opened a brokerage account, but have not purchased any shares or instruments yet. Win of the week: Albert In podcast episode number 169, I had asked whether you would set up a Patreon. The rationale given for not having one seemed sensible at the time. Nonetheless, since August last year, following your sound advice regarding financial planning and cost management in general, I have saved quite a bit more than I would have otherwise.  For the most part, this means I do contribute more to my savings and investments, but I have also been growing a side savings account, for your benefit. Attached to this email is a Takealot Voucher, spend however you wish. I would recommend allocating it towards chuckles and bubbles, because I enjoy the somewhat more chaotic tipsy episodes, but you know it's a free world, I know there may well be more pressing matters at hand. I am glad to have an emergency fund, and am currently parking my Covid-19 shut in lifestyle savings into a Tyme bank account. I currently have just over 8 months' worth of expenses in cash, but perhaps it would be prudent to be in a similar situation to Simon, by having the maximum allowable tax-free amount on the balance sheet. Ordinarily I would like to carry on contributing to Tyme, but their savings limit per customer sits at R100 000, a number I will reach shortly if WFH continues. It seems that the ultra-competitive bank savings account offerings from last year have all but shriveled up. The most competitive 32-day account is African Bank's with a 5.85% per annum. This bothered me, as I know that the New Funds Traci ETF yields about 7.4%.  I would like to know what the cost implications would be for the ETF, as it would sit in my discretionary brokerage account. I know I would be paying Brokerage commission, the Investor Protection Levy and VAT on costs every time I increase my savings or cash out, but what are the tax implications? As this is a total return ETF, I would not get paid the interest into my account as this would be re-invested into the ETF. Presumably I would have to sit down and spreadsheet the actual interest earned for that tax year.  Should an emergency arise, and I need to sell some units, would I be required to pay SARS capital gains tax on the interest earned as well? Your 2019 article about it on J1L also pondered the same question, so I wondered whether you had already received a response from one of the magical tax elves. Old Mutual offers the ability to save in one of its money market unit trusts which also tracks the STeFI, it comes linked to a transactional bank account. It is a unit trust, so it has a higher TER, but if it eliminates capital gains tax, the other exchange costs and the added admin around tax year end by giving me an account statement for the unit trust, I would be willing to give up 0.1% of the yield difference between it and the Traci. I would like to travel overseas after I get jabbed with a Covid vaccine. I have put money aside in a separate goal save. I get quite queasy when looking at ZAR exchange rates and what they may do between now and when I wish to travel, so I looked into SA based dollar/euro denominated accounts. Their interest rates on these are about as exciting as a finding a fly in one's soup. Would it be better to save for travel expenditure in dollars/euros in a hedge against a rand drop, or is it better to save in rands and suck up the volatility for the next 12 - 18 months for this purpose? I'm thinking of splitting the difference 50/50. Marco So question on Market Value Adjusters: Are they bullshit? I suspect that they are. My wife is moving her RA from the big mean green machine to Sygnia. She received a notification that an MVA has been applied to her RA to transfer and that it will reduce the amount that she is expecting by 5%. Is this just a way to keep people from transferring, or another penalty that's added on top? I sort of understand what an MVA is: save from the good years to prop up the bad--but why add this extra "bonus" to a financial asset? To me it sounds like a turd wrapped in a sparkly bonus wrapper that just hides how bad active managers treat customers. Mark I have 20% of my Tax free investment and ETF portfolios dedicated to CSPROP and STXPRO, but every month when I buy these, I feel I might be throwing my money down the drain. Should I keep buying property ETFs as part of my TFIA and ETF portfolios or am I better to just hold what I have for a few years and not buy more every month? Should I drop my 20% allocation to 10% or less? Alexander  Having just opened a Tax Free account, I'm ready to jump in with my entire 36k.  I know Simon's advocated in the past for putting it all in at once, but has the current situation changed that approach at all? With my RA pretty much maxed out for last tax year, and this year looking to do the same, should I still be weighting my TF more to international markets? Or is it the case that since the rand is very weak against these markets that I'll be doing myself a disservice in buying now?  I am 25 so as an investment I plan to leave (probably till retirement) it may not be do or die, either way I would like to make an informed decision. Is perhaps this year the year to focus locally with my investment and then return to my international focus with my TFSA at a later stage? Uncertain of how to proceed during this shaky and tumultuous moment. What do you recommend one does with an emergency lump sum of around 250k? I was surprised to see my Depositor Plus account with Absa having lowered interest rates as of April 2020. I was wondering whether you can recommend a few accounts or platforms to look at during this time now that interest rates are fluctuating? How would one start investing in the UK/&/Europe if one has a bank account in the UK, but no national insurance number? I occasionally get paid into that account by European clients and was thinking of using that channel to invest offshore, paying any applicable tax through my local accounts. Let me know if you have service providers you would recommend for something like this as well please. Shailesh I listened to "Five concepts that will make you rich". Simon mentioned in passing if you committed to your R33k annually (at that time) one could have as much as R25 million in 25 year's time.  How is this possible? My understanding is that your earnings are calculated on the amount it was initially bought and hence it is not really compounded except for the dividends that will be reinvested.  Should one sell their ETFs and re-buy them annually to compound it? This is a question about how shares make money. We wrote an article about that here. 

The financial services industry has done nobody any favours. Not only were many of our parents sold retirement products with exorbitant fees, they are also offered the same awful choices now they've reached retirement age. They have learned the hard way you can spend your life doing everything right and still lose because of bad products with high fees. This week we received five different questions from listeners who are trying to help their parents navigate the terrifying world of retirement money. For many of us, this is the biggest financial decision we would ever have to make. If you've been told you aren't qualified or equipped to make these decisions your whole life, odds are you're not going to start trying at 65.  Our parents need our help navigating this terrain. Hopefully this episode also helps us help each other. Subscribe to our RSS feed here. Subscribe or rate us in iTunes. Win of the week: Emma I am a proudly SA opera singer with a penchant to be a financially stable artist. I started my finance journey properly from last year, and was educated about Just One Lap by my mother, who was your winner of the week a while back. I wrote a blog post this month, hoping to encourage a culture of saving and financial savviness amongst my followers, and thought perhaps you might want to feature it in your podcast. Kenya My mom has recently left her job to take a few months off. Her pension fund (currently held with Old Mutual) needs to be transferred to a preservation fund until she retires in two years. A financial advisor offered her a once-off fee of 1.7% to give advice on which preservation fund to choose (and to help her complete the forms- which according to her are actually very simple). Initially it didn't sound like much, but I was shocked when I calculated the rand value of this fee. The fund he's recommending still falls within the Old Mutual stable and has these costs:   Total investment charge: 0.63% p.a  Fund access: 0.18% p.a  Admin fee: 0.31% p.a  Totalling: 1.12% p.a  Alternatively, he has suggested a fund with Coronation with fees not dissimilar to the above.  Is this a fair offer? Are either of you aware of a better lower- cost preservation fund that she can choose? Bearing in mind she has two years before she will be required to access it and it is required to go to a preservation fund.  Jenna I started listening to your show this year and have become completely addicted. I went back to your old podcasts and have listened to about 50 hours already. My mother has never been great with money. However, she has somehow managed to pull through. She will run out of money soon and may need to go into debt. I'd like to help in any way I can, so I've helped her reduce her costs and get a better overview of her finances. She is 63 years old. She has no retirement fund or any savings aside from R100k in cash in a money market account. She has a brand new car, so her expenses shouldn't be too high for a few years.  She has a home loan that she can access at any time. She has a house valued at about R2.5 - R3m, paid off.  The house has a back section that, if she renovated it, she could possibly rent out, however this would be expensive.  Asset-wise she seems to be in a ok position, but her expenses are more than her income and she'd like to retire soon. I don't think that she would be able to manage a large amount of money (if she were to sell her house.)  How can she continue generating income for the rest of her life while losing money each month? What's the best strategy for this situation? Brendt I recently had a look at my parents' financial situation. They already have a RA that has been converted to a living annuity.  When I inquired as to the fees that are charged on the living annuity, I almost fell off my chair. This got me thinking: we are so focussed on getting a low fee RA going that we totally forget that the RA forces you into a living annuity. When choosing to invest in a RA one must also consider the fees that will eventually be charged on the living annuity. The current high fees on living annuities (the cheapest I could find was Sygnia at 0.86%) makes RAs less palatable. Nicole My mom's money is currently with old mutual but she's retiring at the end of July. The living annuity they suggest will cost 2.2% per year and encompasses funds like Allan gray, coronation, ninety one etc.  I'm tempted to recommend that she rather go with 10x/etfsa or sygnia /the new retirement solution platform by Nedgroup (brand new so not a lot of info there but more choice than the other 2). With one of the first pair she just needs to choose a path and thereafter it's very little input from her side which makes her more at ease but I'm not sure there's enough diversification and control. With the others there might be too many options and the wrong funds chosen. Is it sufficient to take the same approach as I would in my regular investments but lean slightly towards the conservative side? Like a world etf and then one that has more cash and bonds? Ross  I am 35. My dad has a farm and a will that is so out of date it's frightening. He's unfortunately really bad with his own finances and paperwork. I'm trying to find out what the best options are to safeguard against all the legal fees, estate duty etc etc in the event of his death and not to have to sell off pieces of the farm in order to cover all the fees and taxes involved.  I am looking at life insurance policies but at my dad's age (70) they are not cheap. I suppose it's better than trying to find that liquidity out of your own pocket or selling off assets to pay all the legal fees and bullshit when the time comes. There's a company called Capital Legacy that my insurer put me in touch with that deal with all the above mentioned woes. They draft the will, have a legal team, executors etc and cover all the legal fees and taxes in your monthly premium. It sounds all well and good I just wanted to find out if you guys know the company at all, and how legit they are? And if you have any better suggestions? I have listened to the "what happens when I die" podcast, but living in the Corona era maybe things have changed since then?    Richard Now that we've entered unprecedented times, including the exponential use of the word 'unprecedented' how much of the old rules are still completely relevant. Is renting still better than buying, considering interest rate cuts?  Is a broad ETF still the best option? Or should we focus on post-COVID winners in tech? How big should our emergency fund be, when the entire country is in a state of emergency? Marco I am looking to move my R.A to Outvest.  According to my latest investment summary: My value on 1st of January 2019 was R228 797.72 and 16 months later on 1st of May 2020 is R297 692.17. In that period my administration and advice fees were R6510.21. With my current R.A invested in the Coronation Balanced Plus A fund from June 2005 , are the fees of the fund (which is 1.25% excl VAT) included in that admin and advice fees? Or am I paying that 1.25% excl VAT on top of the R6510.21? Are there any other fees I am paying that I am missing? The Coronation Balanced Fund appears to have done well, I think? Not really sure how to read the performance well, taking everything into account. Ie fees etc Would you recommend I pull my chute with the above mentioned R.A? Also , Outvest have four funds that are available for their R.A They are: Coreshares OUTcautious Index Fund Coreshares OUTstable Index Fund Coreshares OUTmoderate Index Fund Granate Money Market Fund Can you shed any light on these? Which would you recommend? 

You may not be very happy with your workplace pension fund. In this week's episode, we think through some of the things you can do to remedy that situation. Pension funds, like all other retirement products, have to be Regulation 28-compliant. That means you don't have much control over what's inside. However, you can control your contributions and the fee you're willing to pay. You can also insert yourself into how your workplace pension is managed by becoming a pension fund trustee.  You can find Gerrie's article on maintenance we mention at the top of the show here. Subscribe to our RSS feed here. Subscribe or rate us in iTunes. Kyle  I've been curious about forced pension fund contributions in the workplace. Is there any way we can direct portions and where this gets invested?  When stocks are discounted, would I not be able to take a more aggressive approach and direct this more towards equities? Alexander Forbes deals with my pension fund. Win of the week: Steve  Been meaning to request the move my RA from Liberty somewhere else for a while now, so I requested a quote. They quoted me on moving to their new Agile platform after I specifically asked for a section 14 transfer quote. Anyways, these are the fees quoted for their new platform.   Best part: it's 2.8% all the way to maturity. Pretty sure it doesn't matter what the penalty will be, I will move it. Jason  You said it is "illegal to record someone without telling them". This is sort of true but in the context described it's not. This is actually covered in the RICA act. It is illegal to record someone without prior consent. However, the Act sets out the following exceptions to the rule: you are a party to the conversation you have the prior written consent of at least one of the parties to the conversation; or the conversation relates to, or occurs in the course of, the carrying on of your business Since you are an active participant in the phone call that means you are "party to the conversation" and not eavesdropping and thus can record regardless. It is still considered polite to tell people they are being recorded, but even if they say decline it's not illegal. If you think the person is going to lie then maybe you shouldn't ask. I'm not a lawyer but this advice was given to me by one of my company's lawyers after I recorded a conversation we had with a client who was blatantly lying to us over the phone and I needed proof. Dhiraj  One can hold cash in an interest bearing bank account or invest in a money market with a fund manager at a small fee. Is it safer to hold cash with a fund manager even if one has to pay the small fee? Specifically is one more likely to retrieve the money from an asset manager than a bank if both were declared insolvent? Eugene wants to know why one would choose a preservation fund instead of an RA. Meryl  How can you find the interest rates of the bond ETF? Obviously this depends on the price but where do you access the return? On my Standard Bank investment account I have quite a few Sygnia ETFs. In my statements it shows a deduction for ETF fee whenever there is a dividend or interest payment. Have you any idea what this is? Eric For a relatively new retail investor like myself the information on your site is priceless, thanks again.   I just listened to your podcast on Covid bonds and the 11.5% interest sounds very appealing, my concern is SA Inc. In your opinion what is the chances of a default…thinking Greece and Argentina where a haircut was imposed on sovereign bonds. Nolomo Besides buying shares, what other assets can one accumulate with a budget of less than R2000p/m.  My dream is owning a house where I can live and raise my family. Is it possible to afford a bond with a salary of R10000p/m with monthly expenses of R4500 over a 20year period? I have a R30,000 lump sump Is a bond the only way to own a physical house with a salary of R10000p/m and R4500p/m expenses? Nadine I was just listening to an episode when I heard you say you paid $16 for a kindle book! Kindle automatically makes the US store your default store but you can change that to the U.K. store (www.amazon.co.uk). I did this myself and I usually only pay £3-5 for a book on kindle now. The U.K. store is just SO MUCH CHEAPER!  Google how to do it - I can't remember the exact steps, it's somewhere in settings on the kindle. You need to open a U.K. account and connect your card etc. but it's worth it.  Ndida wants to know if there are any benefits to using offshore investment platforms over local platforms offering offshore exposure. John I hear SASOL may be forced in doing a Rights Issue in the future.. I have SASOL shares that I picked up at the lows in march and now am thinking of offloading them before the Right Issue occurs. 

There seems to be a battle for dominance raging between medical professionals and engineers on this show. This week we happened to receive emails from four healthcare professionals. Considering what's happening in our hospitals at the moment, we decided to dedicate this week's show to these heroes. Subscribe to our RSS feed here. Subscribe or rate us in iTunes. Win of the week: Busi I am a doctor who has worked in both the public and private sectors. I have a stockbroking account and always wondered what these random amounts of money popping up in my account were. Nonetheless would use the surprise money to buy more etfs and go on with life. Now that that I listen to you guys, I realise that these are dividends. I felt so stupid when I came to this realisation but thrilled at these little rewards. I also had a chat with an older colleague of mine nearing retirement age. He advised me that the biggest hindrance to one's retirement plans are kids. His advice to me was not to have any. Fortunately for me, unfortunately for my retirement plans, I already have a rugrat and I'm not planning on sending her back!!!  I thought I'd help the lady who had a question about medical aids in episode 186. There are medical aid 'brokers', the company Optivest comes to mind. They don't deal with all medical companies however, so like insurance brokers, they have their pool of companies they deal with and so any quotations you get are based on that handful of companies.  My advice is that since she already gets a subsidy from work on Discovery, to rather remain on there. Switching to another medical aid has implications as waiting periods may apply which is not idealnsince she has a chronic condition with expensive treatment. And much aa it pains me to say this, Discovery is one of the better medical aids. She should prescribe to the chronic programme, opt to collect her medication from a network pharmacy like clicks or Dischem or something, and can even look at switching options within discovery. The advantage of living in KZN is the coastal options work out somewhat cheaper.  A listener had mentioned considering switching to medical insurance. A medical aid scheme and medical insurance are 2 different things, and though the insurance is cheaper, its best to go with a medical aid scheme if one can afford.  P.S. What are Chuckles? Kendra I have a financial planner who advised me to go with Sanlam Echo Bonus as my RA. My current contributions are about 5% of my income. I only recently started doubting what my financial adviser has recommended. I have seen the very high EAC of this RA. Is it true that the Echo Bonus is reliant on Sanlam's performance as a company and is not guaranteed at my retirement? I could be wasting money in an RA with high EACs without this buffer of the Echobonus. I understand I will forfeit a fee if I make changes to my RA now, but I would rather do it sooner than later if there are better long term investment options available. Please help!  The information I shared in this episode was found on the Sanlam Echo Bonus page. Double-check me there. Carlo  I am a young doctor. I just started working with one of the big cruise ship companies before the covid 19 apocalypse hit. Currently I am drifting in the pacific on a mission to repatriate some Asian crew members with no idea when I myself will be getting home. Having some extra time on my hands (to say the least) I stumbled upon your podcast and proceeded to binge it religiously. My mind has truly been blown by your wit, charm, judicious use of swearing, and of course financial wisdom. Somehow you guys have had a calming effect during these difficult times, please keep up the good work. I have just completed 2 years of internship and 1 year of community service in the pandemonium which we like to call the South African Public Health Service, and promptly decided to head out for the high seas. I almost fell off my chair when I saw what the rand had done just before my new paycheck on the cruise ship (getting paid in USD) - Despite being trapped in a floating prison I feel quite happy about it. I opened an easy equities account and decided to split my savings between the USD account and ZAR account, buying similar ETFs.  Does it make sense for me to buy S&P 500 in ZAR and USD? Should I try to time my contributions by buying ZAR ETFs when the rand is weak and USD ones when the rand is strong (for example if we head back down to R15 to a dollar?)  If the rand does strengthen again I feel like I will get hit double because my salary will decrease and the ZAR ETFs that have offshore exposure will surely also take a knock. How can I protect myself against this? Is it stupid if my TFSA and my discretionary investments mirror each other? Should I be throwing specific types of ETFs into my TFSA? I see that some sectoral ETFs like the Satrix FINI have been "klapped" - do you think any of these have room for growth (which sector should I buy with my "F you" money?)  On the offshore side of things, are there any interesting USD ETFs which could offer interesting types of exposure that we can't necessarily get access to from rand based products? I see there is an iShares HealthCare ETF and an INDIA ETF for example. I am wishing everyone back home the best of luck and I can't wait for Cyril to open the airports so I can come home and help with the fight. Mary  I work in healthcare. Believe it or not, our job and salary are precarious right about now. I was fortunate to receive a bonus now and my question is : Do I pay off my credit card of R12,500 or save the money to prepare for the unknown.  Can you talk a bit more in depth about rebalancing the portfolio. If one uses the Satrix platform and EasyEquities to invest, do we still need to rebalance and how? Thank you for all you do. I look forward to listening to all your shows. You are appreciated. Skhumbuzo What effect does junk status have on RSA retail bonds? Does the interest rate get better or worse? Here's a link to my friend's drive-in. https://www.facebook.com/DineInDriveIn/

If you went into formal employment straight out of university or school, odds are you have some sort of pension fund or retirement annuity. You may since have realised the idea of working until you're 65 is entirely optional. If you've already allocated a large part of your income towards your retirement, you need to find a way to incorporate that money into your early retirement strategy.  Our friend Kris has been giving some thought to this process. Your challenge lies in balancing two investments. Your discretionary investments should see you through to the age where you can access your retirement fund. The longer your discretionary investments can support you, the longer you can wait before accessing your retirement product. Once you start tapping into your retirement fund, you need to manage your draw-down rate carefully, so you don't run out of money before you run out of body. In this week's show, Simon and I discuss the merits and pitfalls of this strategy. In general we find it to be Very Good. Kris I have some questions I thought to send to you guys about a two-stage FIRE - which is very relevant to SA since we cannot access Retirement Funding (Pensions, RA's) until a certain age. The USA (where more FIRE content comes from) is different since they have some hacks where you can "convert" retirement funding to income before you hit that age. I am surprised its not a bigger topic in the SA FIRE community.  I had the idea for the two-stage path to FIRE and developed an approach - which basically means accumulating a large enough discretionary investment (DI) pot to last until your retirement funding (RF) income kicks in (say at age 65). This means the DI can be drawn down at a rate higher than 4%, since it need not be as large as 25x annual expenses - it just needs to last until formal retirement age.  In the background however - your RF needs to grow from the day you stop working to a level that will satisfy the 4% rule at retirement age. Subscribe to our RSS feed here. Subscribe or rate us in iTunes. Win of the week: Ricardo And Martyn. Check out his business here. I'm new to the investing world, and it's pretty exciting. I'm also an active investor in the Netherlands via DeGiro. I've been lucky enough to join two online investor groups. These online groups are hosted on a site called Discord Chat. It's pretty awesome, because everyone can interact and there's a whole lot of Q & A involved.  I've learnt SO much in the 3 weeks I've been in these groups and I think it could be so beneficial for young South-Africans to share their experiences with each other. The chat allows for different categories (i.e medical aid, insurance, passive investing, personal finance, active investing) and categories like "idea's" where people can share topics on which they want more info on.  Hope you think this is pretty cool too - and that we can start an awesome online community of people passionate about personal finance.  Peter I have excess cash in my savings account and want to invest in an ETF. Is it the right time now? I have been looking at the Allan Gray Balanced Fund which has a nice diversification and 51% SA equities and 29% foreign and is at an all-time low but the 10 year prediction looks good. I am also looking at the Satrix capped INDI ETF which is equities-heavy and also at an all-time low but the 10 year prediction also looks very promising. I'd rather invest now than having my money sit in the bank. In these uncertain times, what do you suggest I do? Darth To curb my wife's over-reliance on me for income (for her stokvels and cosmetics), we constructed backrooms and for the majority of the Tax Year, they were bringing in R2 200 per month and that has since increased in January 2020 to R4 500. All this money goes to my wife's account and the intention is to have it declared as her only income for the Tax Year. My question is whether SARS would rather have us splitting the rental income as it is coming from our joint property or it is okay for me to file mine as I've always done? Talking about declaring rental income, I am realising that we don't have lease agreements in place and am wondering what would SARS require as source documents for the income. What sort of documents do we need to have in place before filing? Javier What are SENS announcements? when are they used? are they mandatory? where can we find them? is it important to know about them to average investors? Any tips or useful info about them? Elaine I took it out in 1999 and not really sure if it's performing like it should. I don't even know where to start. They want to put it (by this she means her contributions) up to R18 000 per month which I think is just crazy. I know I will be penalised for cancelling but I just feel like it's been a waste of  time and investment . Would you be able to advise on what to do in this situation ? Mari I've got an FNB Share Saver account, which invests into the Ashburton Top40 and Ashburton Midcap for you. I figured if you invested R1000 they'd send about R500 toward each ETF. But I see they work out how to divide the money so that they buy the same amount of units from each. It struck me as weird 'cause the Top40 costs about R46.16 and the Midcap R5.65 at the time I'm writing this. So R1000 gets me 18 units from each, which means the Rand value of my investment in each ETF is very different. What's more important here? Why do they do it this way? Wiehan We are currently stuck on site with no prospect of leave seeing as all the borders are closed and our charter flight can't take us to Uganda. There are no flights leaving from Uganda to SA. We're here for the foreseeable future, producing gold at full capacity. It's not the worst place to be, earning in Dollars with the current ZAR/USD exchange rate. More money for ETF's :) My financial journey started around two years ago - thanks to the book "Manage your money like a fucking grownup".  It completely changed the way I think about and manage my money. Before reading the book, I had humongous study loan debt, an awful RA and TSFA sold to me by a greedy Sanlam advisor and no idea on how or where to invest my money.  I paid off all my debt, fired my advisor and I am in the process of moving my RA to Sygnia (will move to Outvest once I reach R400k) and my TFSA to Easy Equities. I was also able to build up a solid emergency fund.  I started to listen to your podcast just as the markets crashed - and realised I needed ETFs. Luckily, I had a lot of cash sitting in Money Market funds, and could buy when stuff was dirt cheap. I have chosen an asset allocation of 40% local equities (Satrix 40), 50% offshore (Satrix MSCI World + Emerging Markets and a bit of Sygnia Japan just because it tickled my fancy) and then bits and bobs in bonds, cash, property and a small bit of gold (just to support my industry ;)).  I will look at the Ashburton 1200 in the near future - hopefully it can rule all of my other offshore ETFs.  How do you feel about EasyEquities? Is it safe to use as my only investment platform, or should I diversify and use another platform for my TFSA? Do you have any other suggestions for nice/cheap platforms I can check out? When I am back in SA again, I would love to meet you guys at one of the meet-ups and have little chat. You guys are awesome, and you make the time here on site much easier to bear. Lastly, send me an address and bubbles of choice so that I can courier a bottle or two to you as a thank you. It is the least I could do for the wonderful advice and laughs you have provided to me. Santosh wants to know whether he should review his portfolio in rands or dollars?

If you listened to this episode on a single ETF strategy, you know my investment philosophy. This simple approach to investing saves me a lot of drama. When a new product comes to the market, I ask myself if it fits with my original philosophy. If it doesn't, I can satisfy my curiosity about the product without touching my investments. This is a good way to live.  The new China ETF from Satrix disturbed my Zen approach. If my philosophy is to invest in all the companies in the world according to their market capitalisation, China should have much larger representation in my portfolio. I never thought about it before, since we had no direct way of investing in that economy. This new ETF changes that and gives me a lot to think about. In this episode of The Fat Wallet Show, Simon Chuckles Brown and I think about how to factor in the corporate governance risk that comes from investing in China. How do we get the right amount of Chinese exposure without betting the farm? Subscribe to our RSS feed here. Subscribe or rate us in iTunes. Lady Kabelo: I just got an email about the Satrix MSCI China ETF IPO.  My interest is piqued because China's growth has been all the rage for years - pre-COVID anyway. I'm sure it will be again. But I have a TFSA strategy that includes the Top40, SA Property Income, and the Global 1200 so I have emerging market exposure. Also, I'm not really an early adopter. I'd probably watch what goes on with this for a while before buying. What would be a good reason to buy this China-specific ETF? I'm pretty sure I know you and Simon well enough to guess that you would stick with your global 1200. But might there be any merit in buying this? I broadly understand what an IPO is, mainly from the news on interesting IPO drama like Uber and WeWork. What is the virtue of buying at the IPO stage? For example, is there a discount there that might be worth deviating from your strategy to get good value at a bargain price? I would be afraid of buying this at IPO at an inflated price only for it to sink. Is that a real risk? If so, why do people do it? What is the appeal of this offer supposed to be? Looks to me like the only upside is being first to get it, which seems a weak benefit.  Win of the week: Herman In this week's podcast ‘Spend money to save money', Andrew mentioned how, whilst poor, he had to be the King of cheap, and paid the price. You made a comment about the poor being pigeon holed into buying cheap, and it costing them. And I agree. How often has it not been shown that the poor suffer the brunt of recessions, tax hikes, interest rate changes, and inefficient governments much more than the middle class or the rich. THIS got me thinking: One of the reasons we should take charge of our finances, is to prevent being at the mercy of others. Be it to a horrible boss, or service providers/retailers with nasty products. One of the many ‘luxuries' afforded to the rich or middle class, is to have a choice in our spending. Thanks for making me think of this, and playing a role in helping me take charge of my financial situation. Anet I own both Naspers and Prosus. Would it not be better to sell and be in cash right now? I know that there is an Income Tax implication, but am more worried about the bigger picture right now.  Similarly, my gold ETF (NewGold) is doing well due to markets crashing and ZAR weakness but this could all reverse in the next 6 months.  Alistair I've been getting all my financial advice from a podcast called howtomoney, which is in American. I wanted a South African perspective and I love your show. I've been binge listening for three days now during Lockdown. How do you guys feel about the EasyProperties platform?

You can find the Satrix webinar we mention at the top of the show here. Isn't it odd how few money conversations centre around mundane financial choices? Surely our net worth is a reflection of the small financial decisions we make every day. A rather typical experience with a contractor has me questioning my decision-making this week. Do I need to think differently about the intersection between price and quality? I asked your help and got some really excellent ideas. Simon and I think through many of them in this week's episode of The Fat Wallet Show.  I loved all the feedback we got. Unfortunately my favourite new way of thinking came in after we recorded the show, but here it is: Subscribe to our RSS feed here. Subscribe or rate us in iTunes. Your feedback: Figure out the average price and look 10-20% above that and compare features/requirements. I usually end up with something on the upper end of mid range, with the reliability of the higher end, but none of the "its the best" tax. Cost per use is the other dominant factor. — z3llin (@z3llin) June 25, 2020   Oscar: If the price difference is marginal, I'd go for convenience, or for good service, or both. If the price difference is sizable, there is bound to be third party published material where this difference is explained [in detail]. Tamara: Depends on the thing. Some things are worth paying more for because they yield a better experience or last longer than cheap alternatives (e.g. decent tools, leather boots). Other things, I take the best price I can get (e.g. refill on my gas bottle, cat scratching block)... There's also an element of risk that gets factored in to value equations on some stuff. I'm not going to go hunting for cut-rate medical specialists or the cheapest backyard mechanic. I'll willingly pay more if I believe it translates to better care. Duke of Prunes: Generally the cheapest thing with the most favourable reviews possible. Manus: My problem is to figure out if I really do need the thing, if I do need the thing I have to figure out how important the quality is. If quality is important I will overpay if need be. Overpaying because it is pretty isn't reason enough to overpay. Daniel: How much I will be using it will also determine how much Im willing to spend. The more I will use something the more Im willing to pay for better quality versions. Rudi: If it separates you from the ground, go for quality (shoes, bed, tyres) Facebook: Sheila: Depends .. may buy cheapest item, find it is inefficient, and revert to an expensive product. For instance - dishwashing tablets. Wilhelm: Some brands offer amazing quality products but also at a increased price. If I know the product will last a lifetime, I don't mind paying extra (Stanley Flasks, LED lenser headlamps). Greg: I generally go for quality, my big exception is cell phones, in my mind they do the same job, so I just buy the cheaper Chinese brands for cash; I just can't justify shelling out 15k plus for a cellphone. Wynand: Here I actually differ. I feel I interact with this device for HOURS everyday so I soend money to make that experience a pleasant one. Shane: in the kitchen i can tell the difference between a R1000 pan and R90 pan. the latter is so wobbly it barely touches the stove. no more skimping on kitchenware for me , no matter what the cost

A while back my smart and handsome co-host Simon Brown did a presentation about the perfect trade. Even though I don't trade myself, I found the presentation inspiring. As we often advocate, when it comes to this money business it's best to focus only on what you can control. A conversation with Cash Club writer Njabulo Nsibande made me realise we can apply the idea of a perfect trade to our investments too. As Simon and I flesh out that idea in this podcast, we realise you can aim for a perfect month in your own finances, regardless of what you're currently focusing on.  Here's the template for the perfect money month we came up with: The first money that leaves your account after every pay cheque goes towards your future. Look at your money: A broad overview of your whole portfolio, as well as your individual expenses every month.  Don't use the money you set aside. Every month you do all three of these things is a perfect month. Your challenge is to see how many months you can get in a row. Who's game? Subscribe to our RSS feed here. Subscribe or rate us in iTunes. Win of the week: Linka I found "Just one lap podcasts" via Stealthy's blog where I ended up after not agreeing with a financial adviser about an investment strategy and deciding if other people can understand this stuff, I can too.  Vigorous amounts of googling and reading showed that as I guessed, none of this stuff is rocket science, its just the way that the information is presented that precludes the general public from accessing it. Thanks for all you and Simon's contribution to unraveling the unnecessary verbose complexity the industry uses. In short, just want to say, I really enjoy the podcasts. Have started to listen to the JSE direct one as well and surprisingly, I can understand most of it! I recently started working for myself and registered a company. Mainly to enable future tax deductions and to keep company and personal equity separate.  I opened a business account with FNB. At the time it made sense to me since I was already with them. I wanted a 7 days fixed deposit account to stash the incoming payments to keep this money from being lazy money. However - After looking at the bank fees for the gold account (personal) + business account I am starting to dislike the numbers. Also the extra charges I missed somewhere in the fine print is really starting to annoy me. If I don't need to have a business account, I can open two accounts at Capitec, which would probably be much cheaper. If this is not contrary to SARS' requirements - Capitec does not do business accounts yet. While being employed I was able to cover my bank charges with Ebucks, but with an irregular income, I doubt whether I will be able to maintain that level. Brendon My wife and I purchase the Ashburton World Government Bond ETF. The initial thinking was simply to get exposure to bonds. But I've been trying to figure out if we should rather purchase SA retail bonds instead of a bond ETF. Could you go through some differences and pros and cons of SA retail bonds versus bond ETFs. I understand that retail bonds provide you with a fixed interest rate (coupon), but I'm interested to know in what situations you would purchase one over the other. Marina We recently had a baby and decided to start saving for her immediately. The purpose of saving is mainly for her tertiary education.  We decided to go 50/50 into Discretionary and her TFSA. She can choose where to draw the money from when she starts University. It will be a good learning opportunity for her.  For the discretionary investment we want to do cash. FNB has a “my first savings” product at 5.75% interest and no monthly or transactional fees. However, our broker also pays interest on money not invested at a rate of around 6%, but Simons says it is illegal to do this. Why is it illegal? Can I invest the money into a cash ETF with similar returns? The main concern is whether she will be paying tax (in any form) as a minor. If the money was invested into a money market she would only need to pay tax on interest received when she starts earning and declaring an income. Would she be paying tax on interest received as a minor inside a cash ETF without a means to claim it back? And if she sells off the ETF would she be paying capital gains (even if it is a cash ETF)? Gregg  When you draw up your will, include a clause that if your children or spouse are to receive your inheritance, it cannot be taken by their respective spouses (in your children's case) and your wife's new spouse should she remarry.  You spoke of a separate will to manage your offshore assets. I have a US Equities Portfolio through EasyEquities. Would this qualify as offshore assets and require a separate will? You spoke of a life policy paid directly to my estate and/or directly to my beneficiaries. And that one should have a policy that takes care of the debt, duties, taxes and executor/legal fees in your estate. If I owe 500 000 on my house when I die, and my wife (not the estate) receives a life policy for 700 000. Is the estate going to sell/liquidate my assets in order to pay the 500 000 on the bond, or can my wife pay the 500 000 into the estate to settle the bond?  I'm trying to figure out if I need a separate life policy made out to the estate as beneficiary to cater for the debt in the estate? I don't want the estate to sell the assets to pay off the estate debt if I have left my wife sufficient funds to settle any debts. If I don't pay estate duties etc. on an estate less than R3M, does it mean if my estate is worth R3,1M, will I pay estate duty on the full R3,1M or only on the portion over and above the R3M limit, in this example 100k? If I own a second property, can I specify in my will that said property is not to be part of my estate but is ceded directly to my beneficiaries? If I wanted it not to form part of my estate, what would I need to do?

When you buy a locally-listed ETF based in another currency, two transactions happen in the background. First, your rands are converted to the other currency. The new currency is then used to buy the ETF units. Buying an ETF based in a different currency is therefore an easy way to introduce currency diversification into your portfolio.  In this episode we help you understand the impact of these two transactions on your portfolio when there's currency movement. If, for example, you bought a dollar-based ETF and the rand weakens against the dollar, do you have more money or less money? We explore hedging and why this strategy might be seen as a currency hedge. If you're looking at offshore ETFs for your portfolio, you don't want to miss this episode. Subscribe to our RSS feed here. Subscribe or rate us in iTunes. Tony  If you invest in an ETF like the SP500, does this give you protection against the value of the rand? Does the value of the ETF adjust along with the value of the rand? If yes, how does this process work? Are there any dollar based ETFs in SA that can be used in a tax free account? Win of the week: Boitomelo Thank you so much for your good content that has allowed most of us to make life-changing financial decisions. I cannot thank you enough.  Are you guys not able to have a Patreon account where those who wish to contribute to your content can do so?  Carel  I guess it goes without saying that any negative credit events would be tied to each of our names. If we get the bond in our own names, we (and not the business) would own the property. If we try to have the business receive the rent as income on a property we own in our own names (if such a thing is in any way even possible), SARS could see this as some kind of attempt at tax evasion? As I mentioned before - only completely above-board practices would suffice.  If we purchase the property in our own names, we could each be held fully liable for the full amount, then it would be up to the person held liable to take the other to court to recoup the balance. Brendan If I were to start now, with mayhem in the market, are ETFs cheaper / a great price right now, or is there anticipation of an even bigger dip, creating even better buying power? I'm specifically looking at Satrix MSCI / Top 40, Asburton Global 1200 and Sygnia MSCI World. To confuse the question even more, is there some kind of daily / weekly 'tracking number' - to gauge if ETFs are getting more affordable? Gerhard I discovered dividends aren't taxed at all when shares are held in a company. However, capital gains tax is 28% on 80% of your capital gains, which is quite high.  I have a small company from which I pay myself a salary. From time to time I have a bit of extra money in this company. I've been buying ETFs in the company: 40% local equity (Coreshares top 50), 40% world equity (MSCI World); 10% Global property and 10% local property. This was before I knew about the free dividends. Now I'm thinking I should buy whatever pays the highest possible dividend - without undue capital risk and definitely not property because the distributions are taxed as income. In my mind, I should probably be buying the: PREFTRAX Do you think I should sell the above ETFs and move it all over to PrefTrax or whatever else might be better?  Jarrett I am 31 and based in Kuwait, which offers great earning and saving potential.  How do I best use this money? My first investment was in property back in South Africa, which is paying for itself. I was looking to invest in a second property this year. However, some friends in the finance game suggested this was not such a great idea. They recommended I diversify investments and look into ETFs specifically. Would you suggest trying to open up an account with an international broker, such as interactive brokers, or rather stay with a South African-based company? I have bank accounts in both SA and Kuwait, does that have any impact?  I have a fair amount of money saved up, just sitting there (I know, not great). Honestly, I don't really have the knowledge to know what to do with it. Apart from ETFs, what other options should I be looking at?  Ben Like you, I've been investing in the Ashburton 1200. With the rand weakening quite a bit in the last while, and the S&P not really weakening that much, I was wondering if there might be other investment opportunities that are more opportunistic?  If my thinking is correct, a stronger rand or weakening economy is good for buying (with potentially more growth), but it feels like buying 1200 now is a bit meh because the rand should strengthen and the 1200's price will go up, which would leave me not really winning.  Hans The fund tracks the S&P South Africa Composite Property Capped index, which is described as tracking all funds in the S&P South Africa Composite index that are classed as property.  This means that if one REIT in this fund goes bust, there's nothing replacing it. What happens to the fund?  Does the NAV drop and the fund price drop accordingly?  Do the investors just eat the loss? Jonathan I have an under-performing unit trust which has only gained 3.7% after fees with momentum since 2012 before the crash. It's now -12%. It's not my RA, but it's invested into a lot of RA-like products ie. only 30% international equity. Conversely, I have an EE account with SYG500. Before the crash it was returning 7-8%, including currency movement. Its maximum before the crash was 12% but it's currently -10%. (This was on 24 March. 23 March was the bottom for the SP500). I'm currently 36 so I can deal with the volatility. I would like to increase my offshore exposure. I already have a fairly-sized RA to give me more than enough local or EM exposure. During this downturn, should one consider accepting losses in loss-making accounts, sell and transfer them to another account that has future growth prospects far healthier? In other words, move from balanced funds to ETFs? From expensive 2.4% to cheaper 0.2%? I'll take a heavy hit at -12% on momentum, but the pros are that I buy SYG500 at -10% and pay less CGT on selling the momentum as well. Plus of course, I pay less ongoing fees (2.5% versus 0.9%). Stiaan I've been investing in a tax free savings account the past three years at Investec (managed by Anchor Capital). The growth was extremely low! After listening to your show I wanted to move that TFSA to ETFs.  I made the move in January, but struggled a lot with moving the money. It transferred in the beginning of March just before the crash. I see this as a great opportunity to buy. I moved the money to the Satrix platform and I am curious what would be the best ETFs to buy at this time? My other investments include: * A retirement annuity with Alan Gray * A property I rent out (financed with a home loan) Jessica wants to know how Patrick managed to invest in the Vanguard World ETF. Tafadzwa I finally started investing in US ETFs on the 9th of March 2020, just as the bottom was falling out of global markets. I was tempted to wait for a further drop but later decided that it's a fool's game.  Like you guys said, the moment when you place your first buy order was scary. Having a couple of demo accounts in the past few months helped a lot.  I plan on investing in: Vanguard Dividend Appreciation ETF VIG 20%,  Vanguard Growth ETF VUG 30%,  Vanguard Information Technology ETF VGT 30%,  Prime Mobile Payments ETF IPAY 8%,  VanEck Vectors Semiconductors ETF SMH 8%, and  iShares MSCI Real Estate Index ETF FREL 4%.  I started with VIG 20%, VUG 30%,VGT 40%, and IPAY 10%.  I am aware of the overlap and concentration risk between some of the ETFs and can live with that. It's great investing with TD Ameritrade because ETF trades have zero commission! I've been thinking about complexity vs simplicity vs chasing returns. Is this portfolio too complex? Is it still truly a passive strategy or am I making active decisions in a passive space?  I have also been considering having this core of ETFs complemented by single stocks capped at 20% of total portfolio value. I have about 10 single stocks in my watch list which I really like but am hesitant to take the plunge. I have the stocks already in my ETFs in small percentages but would like more exposure to them. This would make my portfolio a strange mix of passive and active, which would require me to rewrite my initial financial plan.  What do you guys think? Is investing in single stocks evil? I am considering breaking the rules and trying to beat the market, but from a foundation of ETFs. 

Under normal circumstances we would strongly caution against withdrawing from your pension fund. The reason is quite simple: the tax will make your eyes water. One decision can slash your hard-earned net worth by hundreds of thousands of rands. That's not even factoring for opportunity cost. However, since we're currently living through the apocalypse, we might have to soften our stance on this. Some members of the financial services industry are lobbying for access to pension funds during this crisis. If you're no longer able to earn an income, you might have to make a smart decision about this.  In this week's episode, we give you a sense of the different factors you have to consider before withdrawing from your pension fund. Naturally, we start with tax. We also consider the opportunity cost of the withdrawal, as well as the opportunity cost of taking on debt instead of withdrawing.  We also spend some time making sense of the benefits of share incentive schemes. At the beginning of the episode, we mention emergency loans. These are the conditions you have to meet to qualify, and these are credit providers registered with the National Credit Regulator. Subscribe to our RSS feed here. Subscribe or rate us in iTunes. Clara I am currently in my notice month. I've worked in local government for 13 years. I'm quite in a spin as to whether I should cash out my pension before 55, leave it or move to a provident fund.  After long deliberation and getting some financial advice, I have decided to take the plunge and withdraw the cash, pay the tax, cut my losses and move on.   Firstly I wanted to ensure that my pension will not be used to fund our government-owned companies, the possibility of junk status, the weakening rand after junk status and the management /administration fees that will be due to my portfolio manager for my provident fund if I choose to go that route.  I wanted to "do the right thing" - to give my 30days notice as required by employment act, but this honorable decision has bitten me in the back and I have lost R200,000 in my pension fund in the last 30 days.  I don't want to make hasty decisions in ‘'panic mode'' and withdraw as quickly as possible. The withdrawal will only happen in 2 -3 weeks, so I'll lose much more, pay taxes on the little I have left after our market dropped.  At this stage I am thinking of not withdrawing the funds, moving it to a provident fund, letting it recover as much as it can for a year or so, monitor the Rand/CAD$ exchange rate and take it from there. But I'm afraid all the current negative elements such as junk status etc will have a much more negative impact.  If I pay my pension fund into a provident fund it will still be affected by the markets, but maybe it will recover a bit before withdrawing the funds. I don't need the funds and thought to put it in a pension fund in Canada. Although I am aware that all markets are affected, growth will probably not be better in Canada. Win of the week: Kerry Also Serena You can do a transfer of the units held in your Allan Gray fund to an Allan Gray fund held on the  Sygnia platform. Sygnia offers a number of Allan Gray Funds on their alchemy platform.  I did a section 14 transfer in September 2019 of the units held in my Allan Gray Balanced fund. Allan Gray need to convert it from a Class A to a Class C first before transfer.  I did this for two reasons . I held this balanced fund in Allan Gray for over 15 years and did not want to lock in lack of performance of the last five years. I was also concerned about the volatility of the market during the time of the transfer process. Over the following 7 months, I've switched out of the Allan Gray Balanced fund on the Sygnia platform when the price was appropriate. I switched into a combination of ETFs and the Skeleton 70 fund, according to my Long term Asset allocation strategy. Now everything has gone to hell in a basket, but at least I am in the passive ETFs and a fund I want to be in for the next at least 10 years at a fraction of the cost . With regard to interest earned on cash kept in overseas brokerage accounts: I have a Degiro brokerage account and they don't hold the cash themselves. Euros are held in a Morgan Stanley money market fund and the interest rate is -0.54%.  Gary  I'm in my early 40s. Until two years ago I was a financial newbie. I made all the classic big mistakes. High fees, head in the ground investing. Between your podcast and Sam Beckbessinger's book I'm busy with a big turn-around. I moved everything to broad low fee ETFs, maxing RA and TFSA, I am aiming for a 50% save/investing rate. My question is on a potential TFSA hack : Putting the full R500K lifetime limit into your TFSA in one go, and accepting the 40% tax hit from SARS. I have a medical condition that will only allow me to work for another 10 years. I was thinking this would be a great way to max out my TFSA and give it the longest amount of time to grow.  Jon From 1966 for 25 years, the SP500 was ultimately flat.  From 1954 for 28 years, the SP500 was also flat. From 1969 for just over 10 years, the SP500 lost almost 2rds of its value. From 1929, over about 20 years, the SP500 lost about 2/3rds of its value. These are long enough periods that it brings into question how risky a long term equity investment actually is. I am diversified across regions, but it would be really interesting to hear you guys really engage with this on the pod. The black and white rules about average gains over long periods aren't really bulletproof.

Many of you come to us fresh as daisies. You start listening in anticipation of your first pay cheque. A clean slate means you can set your financial situation up in a way that makes sense to you at the outset. Those of us who aren't so lucky have to turn our financial patchwork into a structure of some integrity. This episode is about that. Inspired by 39-year-old Dunga, we help you figure out what might be missing from the financial setup you already have. We cover everything from debt as a risk to protecting your assets to how to analyse your ETF portfolio.  Amazingly, we don't touch on fees. Since that's most of what we talk about most of the time, why we miss it in this episode I can't say. We do, however, cover the amount at which you should consider moving your retirement annuity to OUTvest, who is our preferred partner in all things retirement. (Because we're cheap and they're cheap.) Cheers! Subscribe to our RSS feed here. Subscribe or rate us in iTunes. Dunga My biggest fear isn't the markets or that my portfolio isn't balanced enough, but that I may be stuck in the habit of withdrawing my investments every 3-5 years.  The temptation is to withdraw my investments and use them for short-term needs. I've never had or received twenty, thirty or forty thousand rand. The longer my investment grows, the bigger my temptation becomes. What I feel I really need are ways to avoid this temptation because I think it will only become bigger as my investments grow. He has disability cover, a hospital plan and he's taking out critical illness cover in July. He has 8 ETFs and 1 ETN, an RA with iTransact which is made up of 8 different ETFs. He holds Satrix Indi, CSSP500 and 1nvest SP infotech in both.  He also has three long-term savings products with Old Mutual. One is to save for a house deposit, one is to save for his kids' education and one is to save for a wedding.  My motivation for still buying Old Mutual is that it gives me the discipline to save because of the penalties for early withdrawals. The etfs are a welcome distraction so I end up forgetting about the old mutual products. In August he wants to start a new portfolio with an additional 10 ETF products, which includes gold, palladium, rhodium, Africa and Global property, the Nasdaq 100 and world government bonds. If he implements this strategy, he will hold 27 different ETFs. My reasoning for buying so many ETFs is first diversification and secondly to see for myself those which will perform better than others. in 3-5 years I may weed those which I feel are not doing good. Win of the week: Zola I was listening to the latest podcast episode and I was shocked to hear Javid wanting to invest in defence stocks, because of the war that could have taken place between the US and Iran. I know that by listening to this podcast we are all capitalists trying to make money but goodness, surely, we shouldn't be trying to make money off people being bombed. Which brings me to my question: how does one try to invest in ETFs that are in line with one's beliefs? Is there a way of finding a collection of stocks for example that invest in renewables or even companies owned by women? Something like Shariah-compliant funds? Gregg So I have an RA with 10x. Recently Outvest have released an interesting product in the RA space. Can you possibly do the number crunching for me, by virtue of an example, and tell me at what minimum value should my RA with 10x be before I switch it over to Outvest? What I'm implying is that up until a certain value, my RA will do better with 10x. But then when it surpasses that value, it will do better with OUTvest. Rudolph I bought a property last week. I'll have to put down a big deposit within the next 2 months. In order to pay my deposit I will have to sell my ETFs and unit trusts. Because of the Market crash I lost a big chunk of my Investment that is needed for my deposit.  Would you recommend I sell my investments ASAP because markets might get worse or do I wait it out for another month and a half with the hopes that the market might kick back? Robert My sister has fallen on hard times. She attempted to emigrate but things didn't work out. She quit her job and rented out her two properties, which still have substantial debt outstanding.  Because of the long period of unemployment with costs in foreign currency her emergency fund has run out. She now has a shortfall every month. Her rental income doesn't cover all the costs of owning the properties.  She has no other savings or retirement funds to draw from and is unemployed.  I suggested that she sell at least one of her properties and reduce her debt exposure, but she is adamant that with no pension plan, owning these properties is her retirement plan. We don't think she will be able to clear all her debt with the sale, however, the outstanding amount will be much smaller (and less scary).   She says that her unemployment situation is temporary and when she does get a job she will easily be able to cover off the shortfall. She has been job hunting for a year unsuccessfully. In the meantime she is living cost free with friends and family. She plays cat and mouse with the banks every month and is currently negotiating to either pause her installments for some time or get the period extended so she pays less every month.  My question is, therefore, is it better to live cash positive today with zero debt (sell the properties) or is it better to go through the pain today with huge debt, in the hope that one day in the future everything will work out? I'm so passionate about getting out of debt myself, but I do wonder if my sister's short term pain view has any merit at all. 

Financial planning isn't just for people who earn money. In single-income households, it's the responsibility of everyone in the household to work towards financial goals. It's also everyone's responsibility to protect those not earning an income. Naturally, dread disease and disability cover and life insurance are critical in these situations. A question from Denzil had us considering the benefits of taking out a retirement annuity in the name of the non-working partner. It means the growth of the investment is tax-free, even though there's no short-term tax benefit. It also means drawdown in retirement will be taxed at a lower rate, as Denzil predicted. As an added benefit, a retirement product protects the assets from creditors and contributes to the financial security of the non-working partner in retirement. As our friends at OUTvest pointed out, it's an employment benefit to partners not earning an income.  Financial independence is certainly within the reach of those in single-income partnerships. It might require more time and careful planning, but it can be done. Subscribe to our RSS feed here. Subscribe or rate us in iTunes. Denzil My wife is a Home Executive and therefore has no income. Are we able to open an RA for her that I can contribute to even though she has no income?  Would it be better for me to contribute the MAX to my RA and get the tax benefit now? Is there any way come retirement age we are able to split my RA funds, be it a Guaranteed Annuity, or Living Annuity etc between my wife and myself to limit the tax implications? Would we be able to pay no tax to SARS on RA withdrawals up to the threshold (based on new 2021 Tables) of R128,650 for the wife once over 65 or R83,100 between 55 and 65?  This would drastically lower the Tax Implications, especially if we add in the R23,800 for interest income. This equates to over R12k per month after 65 and almost R9k per month between 55 & 65 that would be Tax free...This will drastically lower the Tax Implication and therefore amount required to reach financial independence.  We are nowhere near Retirement / FI yet, but i'm just thinking about this now and what Tax implications there will be later on when we do eventually hit the age for retirement or the amount to be FI. Win of the week: Reno I just wanted to share with you how you saved me R162 000. A few months ago I was looking to trade in my old car as it had some mechanical issues. After looking at some cars online I felt that I “deserved” a nice car with a touchscreen and reverse camera with all the nice features, as I had driven a not so lekker car for a while.  I finally settled on a car that I would have financed over 72 months at a cost of R4500 p/m.  Then I was scrolling on YouTube and stumbled upon an interview you did with Tim Modise some years ago. In the interview you were speaking about your money journey and how you got into and out of debt.  That video shook something inside of me.   I decided I do not want to pay a car off over 6 years. When I went to the car dealer I saw the nice car I initially wanted, walked past it and asked if I could have a cheaper car which I financed over 36 months at a cost of R4500 p/m.   After the first few months of driving this car I am very satisfied with it and glad that I did not finance the other car over 6 years. So I have saved R4500 p/m over three years equating to R162 000.   Even though I have financed this cheaper car over 36 months I am paying extra onto it every month to pay it off even sooner. All this came from an interview you did years ago in which you shared your money journey. Thank you for speaking about a topic which no one in my family speaks about. You have changed my perspective on money and debt. Leonora Babies, due to high growth hormones, easily double their weight and increase the number of teeth in no time. Everyone is delighted, but growth slows down eventually. If a mature person (company) doubles in weight, it could potentially be very bad for its health. Better to only pick up weight by working out, flexing those same muscles to make it stronger and more efficient. Radhini I was hoping that you would be able to share some information on the transfers of TFSA accounts. I am trying to transfer my account from FNB to Easy Equities. From my understanding, I can transfer my account with the shares between service providers, or is my understanding incorrect? According to FNB, I first have to sell the shares in my account before I can transfer my account, is this correct? Rudolph I am currently 27 years old I am looking for an ETF that will be suitable for us, maybe high equity and more aggressive since we are young and are looking to invest for the Long term.  Is there any ETF that you guys like that matches my profile?  JJ I've been investing in my TFSA for the last 2 years. I've been buying ETFs in big chunks, mostly the MSCI World ETF.  I wanted to add another R10k onto my current 30k and thought if I buy again now I'll be moving up my average price quite significantly. When do you stop adding on?  If I'm planning on investing in the same ETF for 25 years, does it make sense to keep adding monthly (or however) for 25 years? Surely at some point you have to stop and think that adding monthly will always carry on increasing my average buy price and is slowing down growth. At what point do I just stop and let it grow?  If it was normal trading I would be piling on shares when I think it's right and offloading accordingly, but for a long term investment that doesn't make sense to me. Santosh Thanks to Coronavirus, global markets tanked on a daily basis and are still sinking - which is similar to the global sell-off in Q418 and just shy of 2008 GFC. This was not only in South Africa - but internationally (Local stocks, local stocks that track the USD and hard currency stocks). I'm in all ! On paper, I'm about $40,000 or R600,000 poorer ! Even currency diversification didn't help. The takeout for me, in a financial crisis, I'd rather weather the storm "at home". Wim  I have received dividends into the tax-free account since it does not get re-invested automatically. My question is if I now re-invest the odd R800 in the holding account, my contribution will be an additional R800. I will not be taxed because I exceeded the R2750 a month contribution. Nic The way I understand total return ETFs, the dividends are reinvested back into the ETF, saving on brokerage but the dividend withholding tax still gets deducted. For a tax free account how does this work - there are not two versions of the total ETF, one for tax free and one for non tax free accounts? In my mind it's not worth having total return ETFs in a tax free account - am I missing something. Gregg I currently put my full monthly TFSA allocation of 3000 into my bond. At the end of the tax year I draw out my full allocation of what was R33000 and is now R36000 and pay this lump sum into my TFSA. This way I save mega interest on my bond and the term also reduces. But, my bond is at  9.25% interest (which means by putting extra money in, I am saving 9,25%), whereas I can get 10% interest from TYME bank. So it kinda seems that I save more in TYME, but psychologically I like seeing my bond interest and term come down. Will I really be saving more by putting my R3,000 into TYME bank each month at 10% or is it still more beneficial to put it into my bond because of the  compounding effect of the interest coming down?

As we mentioned at the top of the show, today's episode was made possible by a new financial education initiative by Momentum-Metropolitan. You can play the FinEazy game here and register for the story-driven educational programme called FunDza here.  This is the 200th time Simon Chuckles Brown and I sit down to record a Fat Wallet Show (more or less). Every episode is a privilege because every episode is made possible by your engagement and contributions. We are eternally grateful for the support, encouragement and enthusiasm you have for this work.  As of 13 May 2020, you have contributed to 542,433 hours of listening time. 365 of you have emailed ask@justonelap.com. This excludes mails sent to us directly and questions submitted via social channels.  [adrotate banner="9"] Subscribe to our RSS feed here. Subscribe or rate us in iTunes. The shows that have helped you the most are: #46: Five concepts that will make you rich FIRE at any age (#156) How to set portfolio up for financial freedom (#144) #58: How to structure your pay cheque Keeping your living expenses low (#166) Based on the Fat Wallet Survey we conducted last year, you guys moved between R78m and R400m between providers as a result of the information you received in this show.  What I've learned in 200 episodes is that we help most by helping you think through your decisions.  Here's to the next 200!             View this post on Instagram                     200 Fat Wallets! This is also the longest we've gone without seeing each other in five years. Today was a Good Day. #thefatwalletshow #justonelap #bubblesandchuckles A post shared by Kristia Van Heerden (@fatwalletkris) on May 14, 2020 at 5:58am PDT   Garth Chad Sparkle Is there a Cheat Sheet when working for a bank? I don't think I've been fully exploiting all the benefits, if any, that I have working for an FSP. The more I think about it the more I get excited at the fact that there is a way to game the system and set myself up financially whilst working here.  What did Simon do to take advantage of the benefits? How wise is it to buy a house and car whilst working here to take advantage of the staff rates? Surely by using the benefits at my disposal as an employee and diligently managing my finances I should come out the better when all is said and done? Taahir wants to invest in a Shariah-compliant RA.  Nihaad: I'm a medical doctor working in an emergency centre during these pandemic times. These last few weeks, and all the uncertainty associated with the lockdown and our futures, have made me really think about getting my financial state in order.  I know very little about finances but I am trying to learn through your show. I am looking into investing, but as I am muslim, I would like more information on Shari'ah compliant ETFs available to South Africans as these are technically the only ETFs I am allowed to invest in due to my religion.  These ETFs do not include equities that are linked to banking, alcohol, or gambling, to name a few, and I am sure that affects the performance of these types of ETFs compared to its top 40 or global counterparts. Would you be able to chat a bit about these types of ETFs, which ones you'd recommend, how they perform in the market and how to maximize my returns on these types of investments? Thank you for your knowledge and help, I really look forward to your show every week! Joy I was listening to your #159 podcast.  Simon said you should never invest into a single asset or share beyond 5% of your portfolio. He said when one thing starts growing too much he sells down to below the 5%.  I understand that this is to minimize risk of being heavily invested in just one thing. I looked at my portfolio. I've got a house-sized question sitting right there. I do consider my home an investment and part of my portfolio.  It has gone up nicely in value following much elbow grease and fixing up... but... sadly... according to 5% portfolio risk rules... not only is a home 100% in the one asset class (property), it is also 100% in one property micro market (my suburb) and worse still 100% in only one property (my home).  Surely that means (unless your investment portfolio is cruising around R50 mill) buying your own property as an investment just blows all sensible, unbiased, risk management thinking out the window? What's the alternative? A person has to live somewhere. Pamela There is a lot of pressure in buying a house and paying off the bond, but I am honestly not very sold on the idea. It sounds like it will be more expensive for me and is the housing market as lucrative as it was some 20 years back? Is buying a property worth it for me and paying off the bond? Would it be better to invest money in funds that take advantage of compound interest? What other investment vehicles can l use that will be beneficial in the long run? I am single and do not have any kids. l'd like to make great financial decisions now and set the foundation for when I have a family. I have tried to really reduce my expenses and it's still work in progress to get to only the basics. My car is probably my worst purchase, I did not need it and now I have to pay it off. Other than that I have refrained from making any other large purchases. Do you have any advice on how I can reduce my expenses, or something I can incorporate to reduce my expenses even further? Listen to our homeownership podcast and the follow-up.  Rudi The premise of the product is for every transaction on your account they take "the change," rounding up to the nearest R10 and invest it in a Liberty Top 40 ETF, which I can find no MDD for anywhere, through a tax free savings account. They also have some gimmicky feature that deposits extra money if the weather is good, seemingly meaning that it is extra savings for a rainy-day fund.  I do not think a tax free savings account should ever be considered a rainy day fund, considering the lifetime deposit limits and the major impact withdrawing can have on compounding. Fees are mentioned twice on the website: "Stash is absolutely FREE! You will see ‘Hello Stash' transactions on your bank statement, but these are just transfers to and from your Stash" on the Help page A zero TER, on the Past Performance page. Besides only being able to have one product in your TFSA and having that TFSA handled by Liberty, I feel there must be some additional catch? How else could they offer a TER of zero? Watch the presentation on fees, as mentioned in the show.

After two brutal years of obsessive debt repayments and a year of hard saving I finally made my first investment in March 2014. Six years of watching paint dry was followed, finally, by a stock market crash so brutal I'm still suffering a nosebleed. In my short investment career I've experienced every market condition but growth. As a result of this less-than-illustrious track record, it's probably not surprising that the growth I'm currently seeing in my portfolio is freaking me out completely. My CoreShares S&P500 ETF is 70% up and I don't know what to do with myself. I want desperately to lock in this growth, which is what Simon's trying to talk me out of in this week's episode. Watch the presentation Simon did last week. It's really good! We've been blessed by the tech fairies since we started recording remotely on 19 March. However, the gremlins found us this week, cutting short our usual recording time. Forgive us, please! If we're lucky we can record Episode 200 together. We hope you are excited too. Subscribe to our RSS feed here. Subscribe or rate us in iTunes. Win of the week: Philip.  Every Monday morning we send out a newsletter and every Monday morning Philip sends me an encouraging email or compliment about the newsletter. I've come to look forward to it every Monday, so I think Philip deserves to win for making me happy on a weekly basis.

We've all had a few weeks to come to terms with Reality: Version 2020. Those of us who had our sights set on financial independence have watched our independence day creep a few years further down the line.  The uncertainty we are currently facing has surely also made converts of those who didn't know financial independence was something worth striving for. Imagine how differently you would have approached this crisis if you knew you could continue to support yourself if you lost your day job.  Life is happening to us in shouty capital letters at the moment, but a good financial plan is an adaptable financial plan precisely because life tends to happen to us all the time. If you had your sights set on a financial target that is no longer viable, now is the time to regroup and think of another plan. In this week's episode we help you think through some strategies to get back on track once the crisis is over. We help you with some of the maths, but also offer some guidance on how to be adaptable if maths alone won't help. P.S. We are very happy to announce that this week's episode was made possible by our preferred partner, OUTvest. To read more about our preferred partner programme, click here. Subscribe to our RSS feed here. Subscribe or rate us in iTunes. Win of the week: Dee-dee  My parents' investments aren't looking so lekker at this point.  They just got access to their RAs. They have no emergency fund. They own their own company, that is very volatile and heavily based on tourism.  I am finishing my honours. I have younger siblings who will remain dependent on them for at least another six years. They are spending about R300,000 in bank fees, interest on credit card debt, bond and car payments to the bank per year. This is crazy!  My dad mentioned the idea of using some (all that they can take out with the 1/3 cash withdrawal option) of their RA, as well as using the contributions they would be making to their RAs to attack their debt.  The idea of taking money out of their RAs does not sit well with me at all, but if it means paying off the house quicker, they would have that as an investment property. The house is definitely worth more than they can get with their RA investments in 15 years. But this would be INCREDIBLE concentration risk!  What worries me the most is their debt. It keeps accumulating and only minimums are being paid.  The business is also not easily convertible, as it depends on my dad's skill. They still have about 10/15 years to go. There will be a bit of money from my grandparents going their way, but this is definitely a story of lifestyle creep and a few unfortunate business moves that may bite them hard if they don't look at this aggressively now.  Given the great big market drop and my plan to move their RA to Sygnia (OUTvest isn't the cheapest since they aren't in that bracket yet), I am now thinking that I probably should not move the money at the moment, because I'd be selling and then re-buying, which would mean I'd be selling low....on the other hand I'd also be buying lowish... But I'd imagine now is just not a great time to move, which is sad, since that RA with Investec is not doing them any favours! Keegan Please explain a practical example of how somebody can transfer their RA if they are unhappy with their fees. Some of the things that would guide me greatly: - finding out if your RA is screwing you - How to go about stopping and transferring the RA - What are the penalties included I have been contributing per month to my annuity for almost a year now and am 28, so feel young enough to make changes, but old enough to make bad mistakes and errors in this all.  Reeve I would like to start investing with OUTvest, it will be my first retirement annuity. I understand the fees are R4500 for the year if your investment is under 300k.  Does it make sense for me to start investing with them immediately, or would the fees be lower if I start investing with other retirement annuities initially, and then move over the OUTvest after I've reached 300K?  From what I understand, fees only start getting steep the greater the value of your investment. Since my investment value will be low initially, the R4500 fees applied every year by OUTvest is a bit much. For example: I want to contribute R2000 a month to OUTvest, by December I would have contributed R24 000, if we minus the R4500 fees from that, it's quite a big chunk that's going towards fees? Jorge wants to know if it's worth moving his RA from 10X to OUTvest or if he should wait and see if other providers also rise to challenge.

With the markets in a flat spin, even the bond market is looking a bit peaky. How can it be when bonds are supposed to give us stability and predictable income? It turns out not all bonds are created equal. In this week's episode we revisit how bonds work and what they're supposed to do in your portfolio.  If you are as intrigued by retail bonds as I am, you can buy some here. Subscribe to our RSS feed here. Subscribe or rate us in iTunes. Win of the week: Tee I am happy to report that the only debt I currently have is my monthly car payment. I still have 2 years to pay off my car, but would like to try and push in more every month to bring the time period down (as well as the interest). Because of this approach I have taken, I now have no RA funds yet and no other savings to my name. I would like to build up an emergency fund, start an RA and open a TFSA account within the next year or two. Would you still recommend 10x for an RA? Or someplace else? 10X and Sygnia to start off, OUTvest once you have upwards of R500k. How do I go about knowing which TFSA is best for me and where is the best to open up a TFSA account in your opinion? Should I start doing all three these steps at once so they overlap, or take it one by one? Matthew I was listening to the latest video from Just One Lap on "Creating Wealth in a Low Growth World"  and was once again reminded by a finance expert that I require bonds in my portfolio. I identify as a DIY investor and Simon did cover this topic in an article of Fin24 where he recommends that DIY investors stay away from bonds due to the tax implications. My understanding is that bonds can complicate your tax return as the interest (or coupons) are added to your income for the year and taxed at your marginal tax rate. This occurs even if the ETF reinvest the funds.[6] Then when you sell the ETF, you realize a capital gain and pay tax on that [6]. This means you can pay tax twice. So as a DIY investor who is no where near retirement, what should I do with regards to bonds? Possible ideas are: Substitute bonds requirement with cash in a bank savings account. Find bonds that do not incur this tax problem. (I do not believe there are ETFs in SA that can do that.) Take bonds and manage the tax implications. (any advice?) Leonora Momentum replied to say that Nedgroup are reviewing fees and I should get an answer (I asked for lower fees) in the next 2-6 weeks.  My LA is with Momentum. They were the only provider we could find four years ago that would allow our own choice of funds.  If I transfer to Sygnia admin is 0.4% if I leave it in Coreshares, 0.2% if I have it moved to Sygnia's own S&P 500 ETF.   I am planning for the next 30 years (if I die sooner, so be it). From all accounts it seems the route to take. Anything I have missed in this 2-step process?  (I have contacted Momentum to ask for reduction in fees, waiting for an answer. Their person did not sound hopeful. For interest: I take minimal withdrawal of 2.5%. Admin monthly is equivalent to 12% of what I receive after PAYE!  And this for the next 30 years!!!!) Wesley I was under the impression that if there was a written agreement in place, it can be structured so that the interest on the loan when not paid, is deemed interest. That deemed interest can be attributed to your annual donation allowance, and the balance of the allowance can be written off against the capital amount of the loan.

It's going to take more than a good plan and discipline to cope with the financial impact of this lockdown. Some of us are lucky to retain all or some of our income, but for many of us this period is a financial catastrophe. There is no good news, no upside, no silver lining. We are in crisis mode and the goal is survival.  In this week's episode we think through some lesser-of-two-evils scenarios. Should you take a loan repayment holiday? Should you sell an investment or take on debt? Should you borrow money from the bank or your family? I wish we could offer some hope or some solutions, but for the moment all we can offer is how to make the best of a bad situation. Subscribe to our RSS feed here. Subscribe or rate us in iTunes. Pieter I have all my cash in my access bond, with the exclusion of about a week's worth of expenses. I realized with ABSA, every time there is a rate adjustment they recalculate the payment to the same term. That's the outstanding balance, including the money you stored in your access bond.  I've been calculating what I should have been paying all along. I pay that over to an investment account. The idea is once that's enough to clear the bond, we'll do that. In the meantime we'll see when that happens if we'll do it or continue to grow the investment. When a debt collection agency purchases all your debt from the original company at a few cents to the rand. And at that stage you sometimes can get up to 90% off your debt depending on the type and how close it is to prescription. From your first default, your interest and costs may not be more than the amount at default. If you defaulted at R2,000, the max debt may be R4,000. If you pay back say R500 they are still not allowed to add additional cost and interest.  Celma I have a little flat that I rent out.  I declare that and I claim a portion of my electricity, services etc and give SARS what is due to SARS.   I also have a few investments and pay fees on the administration thereof.  This is a substantial amount of money. Just as me paying for electricity, water, providing wi-fi enables me to make the money on the little flat,  paying the admin fees on the investment enables me to grow my savings. I want to deduct the fees as a taxable expense and I am hitting a concrete wall.  I really don't see the difference in the expenses as it both has the same result. Will really appreciate it if you could assist by explaining this to me or tell me who I need to contact to try and rectify what I view as double standards. Henk My parents (64 & 72) have been advised that they shouldn't open a TFSA because they are too old and it won't help them. Is this correct?  Combined they have a portfolio of property, share portfolios with various finance houses and trusts which they obviously don't want to donate to the tax man.  Could they each contribute to a TFSA for the next 15 years, and when they are no longer with us, will that investment become part of their estate and therefore be liable for estate duties or will the accounts just cede to whoever they decide to leave them to, and continue being TFSAs? We kinda want to know before the end of Feb so we can open one this year.  How best can they distribute their wealth before they die so that their estate doesn't take forever to be wound up and pay a huge amount in estate duties?

Isn't it fascinating how quickly we adapt? When the market first started its epic nose dive, we were all ready to jump with it. However, over the past month or so we've become so accustomed to a crisis environment that we can almost forget about our investment accounts. The last lockdown challenge was initially scheduled for the last week of lockdown. The lockdown extension happened after I recorded the podcast. To be honest, I don't have the emotional energy to engage with the extension at the moment. As a result, we're looking at our investments this week. Like our previous two challenges, we are using this time to go through our investments with a fine-tooth comb. Aside from padding your emergency fund, this challenge is not about taking action. It's about reviewing the choices you made now that you can compare your portfolio before the crash to your portfolio after the crash. You've really earned your stripes this month. How did you do? Win of the week: Nomusa I bought a car in 2014 without a deposit. I never read the fine print or informed myself about the process. Never again! The car almost got repossessed when I was living hand to mouth. I am back on track now. In process to get back my peace, I opted for a debt review. I soon discovered this was a rip off 3 months into the trap. There was no agreement with my creditor as they had agreed to do. She ended up cancelling this. We talk about debt review in our Debt series, which you can find at justonelap.com/debt I have applied the snowball method to pay off debt and its working, I should be off the hook in December 2020. You pay the smallest amount first, add that to the second-smallest. Also find our article on the DIY debt repayment plan. I opened a Tyme Bank account for an emergency fund. I want this amount to not just sit but grow —even if it's just by 1%. I looove rewards programmes., I know I need to heal from the financial trauma I suffered back in the years. I used to get R200 worth of UCount when it started, which I would be getting because I was using my credit card a lot, and I would then buy lunch and food from fresh stop and KFC when I ran out of money mid-month. I have since stopped using the credit card (because I was handed over really, for non-payment). I am not planning to carry on with standard bank because their fees are ridiculous—R105 cheque card and let alone debits and all extras. I have since opened a Capitec account which is reasonable (R30-35) as I have moved some debits orders to them for insurance, funeral, tracker and the likes. I have these reward programs -Ucount -Freshstop -Clicks -PnP smart shopper -My School days -ThankU -All garage outlets reward trust me and use associated stores for others as I travel a lot.  I have noted all further useful hints on credit cards like having a virgin money one because of fewer fees, but  my ucount rewards make me wanna go back and this time, use my credit to my benefit, deposit to spend in it, etc, I know rewards are just there to keep us loyal and I am the culprit. Are they really worth it, do you and Chuckles even care about them? I also love the affiliation things and referring people on stash, easy equities and all? Will this really buy me bubbles later? Sorry for the long email am just excited.  Guillym  With regards to people saving for their kids, time in the market is the best, right? So why put money into the market for your kids if you are going to take it out? Rather save more for yourself now, and lower your saving rate when the kid comes to needing money age.  As an example, my wife and I have disposable income that all goes into paying off the bond. When that is done in about 5 years, it will go into something else for us.  When any monthly expense comes along (for Sadie) we can save less, rather than draw from savings, to cover school fees or whatnot. If Sadie becomes more expsensive, we can give ourselves a raise. We are super lucky to be able to put away more than 40%. We certainly don't take this for granted. This won't work for everyone, but I feel it's a better option than saving for children just to take it out of the market later. Joy I listened to your podcast about first investments. You recommended Ashburton 1200. Because this is a foreign product investing in foreign stocks, surely it is not tax free in the real sense of the word?  I will still be paying taxes and fees into that product? Considering the 40+ years that I hope this account will be running the small 0.1% fees/taxes here and there do need to be considered in light of compounding.  Is it not best to do TSFA into SA products and then discretionary into foreign like the Ashburton 1200? I hope to use my annual tax free donations allowance of R100,000 split between my two children so I would do R33,000 TFSA each and R17,000 discretionary each.