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The Fat Wallet Show from Just One Lap

The Fat Wallet Show is a show about questions. It’s about admitting that we don’t know everything, but that we’re willing to learn. Most of all, it’s about understanding as much as we can to make us all better investors. Phrases like, “I’m not sure” or, “Let me look that up and get back to you” or, “I don’t know” don’t exist in the financial services industry. If you ever had a financial question you were too embarrassed to ask, you know what we’re talking about. In this business, appearances matter, and nobody wants to seem like they don’t know how things work or what the outlook is for the buchu industry. It’s easy to excuse that little vanity, except that people in the investment industry are meant to service investors - people like you and me who need to figure out what to do with our money. There’s no such thing as a stupid question in this show. If you have unanswered financial questions, this is your opportunity to have them answered in a way that even I can understand. Pop them to us at ask@justonelap.com. Hosted by Kristia van Heerden and Simon Brown
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Now displaying: September, 2018
Sep 30, 2018

Expecting a large amount of money for months on end can only make you crazy. I’ve never been paid a bonus, so I’ve never had to endure months of spending and re-spending the same amount of money. Just thinking about it makes me antsy. Nothing sane can come of it.

This week, we talk about the dangers of spending money before you receive it. If you’re trapped in a debt-to-bonus loop, you want to listen to this episode.



Win of the week: Denzil, who went to work on his financial situation.

Since we last chatted, my RA has been moved. I've opened TFSAs for both my kids and opened a TFSA for the wife. Can I contribute the full R33k per year into my wife’s TFSA on her behalf with no tax Implications? I assume I can as spousal contributions are exempt from tax implications, right?

My wife is a housewife and has no RA. She is 32 and I’d like to get this going for her.

However, I’d like to know if we can use this as a tax benefit on my side, or on her side even though she doesn’t earn an income?

She might start working part-time next year, so she will have some income. If she doesn’t have an income, how can we structure this to get the best tax benefit possible?


Sabrina

I am 32 with no pension fund, so where can I invest?

How much should I invest to retire comfortably?

What fund can give great returns?


WC wants us to discuss bonds.

Can you discuss bonds and bond ETFs? Although I have relatively ok knowledge on shares I am a total novice on bonds.

With the inverse correlation between price and yields, when is a good time to buy an ETF like BND? This is purely for diversifying my investments.


Bosman isn’t sure where his interest goes in the time it takes for transactions to clear.

I have an account with Standard Bank OST and transfer a chunk of my salary from my Capitec account every month.

From the time I make the payment from the Capitec account to the time the money appears in OST, who earns interest on that cash?

Also, if I do an instant payment with Capitec at say 13h00, do I earn interest for a part of the day from Capitec and then the rest of the day from OST?


Jan recently sold a rental property that earned him a nice chunk of rental income every month. He’d like the profits he made to cover his monthly expenses.

I used the money to pay for some monthly expenses. What is the best way to invest the capital to give me an income to pay for the ongoing expenses? And perhaps some growth? I sold the property for R1,5m and I can invest R1.4m. I have monthly expenses of R10,000 to cover.


Douglas wants to know where to grow money for other people.

We’ve been putting aside money for our house managers each month for a few years. We had intended putting the money into Satrix each month, but because of FICA and administrative issues we put the money in a savings account.

We have lump sums of about R7500 and R12500. I want to put these into investments that will pay out on their 60th birthdays - between 6 and 12 years from now. Where could I invest this money that will provide a secure return that won’t eliminate half the capital in commissions?

I’m sure there are parents saving for their kids, or other folk like us, who have the same problem.


Pat wants to know how to invest tax-free.

I hear you guys talking about ETFs, EasyEquities and tax free savings accounts.

I know I need to put R33,000 every year into a tax-free savings account, but I'm stuck on the next step. So I open a TFSA and then what's the next step?

I must open an EasyEquities account? I'm confused on how all that works. Mainly just the next step after opening a TFSA.


Garth wants to know if Simon is financially free.

Simon knows a lot of random things about finance and has been in the game almost as long as I have been alive. I keep on hearing him talk about buying shares when they were tiny, now have grown 300 and more %.


Join the Fat Wallet community group on Facebook.

Sep 23, 2018

Since my first investment in Mach 2014, the market has done nothing. Inflation, on the other hand, has done enough. My time in the market is making me progressively poorer. I don’t care for it.

In this episode, Simon and I discuss what we can do while the market does nothing. It’s awful, but it does provide a bit of breathing room to pad that emergency fund, figure out how different asset classes behave in different market conditions and really delve into sector exposure in a portfolio.

It’s also a great time to accumulate units in the eternal hope that the market will one day find its will to live.

PS. There's a Fat Wallet community page now. You can join here.


Win of the week is Laurentius Wyngaard. He wins, because his name is epic. He also wins because he asked a very important question.

How do I go about investing in the TFSA EFTs? I have a Satrix 40 ETF and had to invest through Satrix, but where do I access the ones you've listed?

I also want to send a shout-out to Gideon, who is 26 and has all his ducks in a row. In his email he said something that struck me:

"Being a CA I am familiar with most of the concepts, your podcasts and Sam's book has just given me a new perspective on how to implement the theory!"


Vincent has great retirement questions.

With life expectancy increasing, could you out-live the 2/3 annuity?

This is where drawdown rates come in. In a living annuity you have control over how much you can draw down.

What happens to that money when you pass away two years after retiring with regard to estate, beneficiaries and tax?

Could you ever invest too much in an RA, should the focus be to first max out tax friendly investments [RA & TFSA] then trade?

Our friend Herman from Pyfin is working on an algorithm that will help us eventually answer this question. There is a tipping point and once he knows the answer I hope it makes him very rich.

He also wants to know our opinion on the rand in 40 years. 

The drawback of the compulsory annuity after retirement is that you will never see the entire 2/3 value being utilized or have full access to it.

Someone is keeping the money you worked very hard/smart for and there could be massive tax deductions with payout to beneficiaries or issues with access in the event of emergencies.

Retirement annuities are there to help people who struggle to save. The tax incentives are there to encourage us. It this is the only saving you do, keep doing it. If you are a more sophisticated investor, you might want to look at a combination of options.


Aiden has a suggestion for the rebalancing of the Listener Love index.

How about on its anniversary we rebalance it by removing only one company and replacing it with another “loved” share. The reason for removal could be based on a hierarchy of what all the companies did over this last year. Something like :

  1. Committed a crime/ fraud and have been caught out
  2. There is a lot of smoke but no fire, yet.
  3. Impending merger / acquisition / delisting
  4. Poor performance / management over the past year
  5. Lost a LOT of money
  6. We’ve fallen out of love

In most cases a company that commits number one will also have committed number 2, 4, 5 and 6 by the time we rebalance.

I vote for Steinhoff to come out, and a vote for Tawana (lithium producers - i mean come on - Batteries hellloooo) to come in.


Tim also has some suggestions. For one, he wants us to change the name to the JOLLI index, which stands for The index of love that is not jolly.

He wants to include Foschini, Aspen and Bidvest and votes to remove Blue Label, Brait, Gemfields, Lewis and Steinhoff.


Petrus in Germany is thinking about breaking into the German property market. 

If it makes you feel any better, a small starter flat in Munich will set you back around 600k Euro!  Oh, and the banks want a 20% deposit!

What vehicle are you using to save up for your deposit and why?

I know you are a government retail bond fan, but what about ETFs?

Apart from the risk of low, no or negative returns, is there any other reason why you would not invest in ETF for something more short term like a deposit for your first property?

 

 


Darryn is a vet who is starting to take a closer look at some of the products he got sold when he was a student.

I’ve been sold a few products such as an endowment, RA (Liberty) and an income protection (by FMI) but I am still in the process of researching all these products. Any advice on these products from liberty and FMI? For now I'm just paying off my debt and plan to have this done but mid next year. Then look forward to investing after that.

I’ve heard PPS have a profit share account and that Discovery has paybacks if you got medical aid with them (Which I do, and happy there). Does it really matter which one I'm on? Do you think it would be better to be on either PPS or Discovery because of those perks, taking into consideration if their monthly premiums all all the same?

When your emergency fund is hefty enough, you can get rid of income protection.


Our friend Charmaine alerted me to something horrifying. When you pay fees on a sliding scale (when they say you pay less for investments over a certain amount) you actually still pay the higher amount on the investments before you reach the threshold. 

It’s also worth noting that the fees you see on your table EXCLUDES the TER and VAT.

On the first R500 000 0.65%

On the amount from R500 001 — R1 000 000 0.50%

On the amount over R1 000 000 0.35%


We got feedback from Dr. Woof on the marriage thing. His situation inspired a series of articles I wrote for our OUTstanding Money feature.

After the podcast, we had a straight talk about the whole wedding thing. We are already living together and are effectively married in terms of financial obligations, cooking and cleaning. We’ve decided to hold off on the wedding for now and save until we can both afford the wedding we want i.e. "Platinum wedding".

I have finished reading Sam Beckbessinger’s book and encouraged her to read it also. So we are starting our #couplegoal wedding.

I am so grateful for your advice that one should be open and honest about money matters with your partner. We are much happier after the serious chat and it is all about managing one another's expectations.

I have also downloaded the OUTvest app because you can request contributions on the app. Instead of Birthday and Christmas gifts, I am going to request contributions for the wedding fund. Instead of wedding gifts, people can contribute to the fund.  We already have most household items, so effectively we just require a wedding.


Anonymous is worried about EasyEquities as part of Purple Group.

Purple Group isn't doing so well because of GT247 and Emperor Asset Management. Emperor has had assets under management halved.

How will the continued losses of GT247 and Emperor be contained so that the losses don't 'spill over' to EasyEquities, which was 'saved' by the investment from Sanlam.

Sep 16, 2018

I liked the idea of doing a podcast on inheriting a large sum of money. I’ve dreamed about that kind of good fortune many times, as I’m sure you have. I hope this episode allows you to daydream about the kind of life you would lead if someone left you a small fortune. (Hopefully someone you’ll miss fondly, but not deeply. It’s hard to be happy about anything with a broken heart.)

I’ve said this before, but the most important question you ever have to answer about your money is, “What do I want my money to do?” If you can’t answer that question, your financial life will always feel somewhat unsatisfying. I’ve written about it here.

It’s especially important to be armed with the answer to that question when you inherit a small fortune. To be safe, perhaps think of the the answer now. You never know what might happen tomorrow. If you’re not sure what you want money for, you’ll likely watch it disappear before you can work out your strategy.

Ken inherited R3m. Here’s his story.

Upon hearing you get an unexpected inheritance you really don't know what to do. Googling to look for podcasts really didn't bring up too many good ideas. Most articles very generically state that you need to pay off any debt, pay of your house, have an emergency fund etc etc etc.

I'm in my early 30s. I'm self-employed. At this stage I'm single, no children so I don't have to take anyone else into consideration. I earn a decent salary, I have no debt. I despise debt and was raised in a house where debt was the sworn enemy. Even buying my house a few years ago I felt sick that I had to borrow money.

My house is paid off.  Obviously there are maintenance costs and levies, but I'd rather do this than pay off a bond.

I have money invested in Satrix. I only started contributing to ETFs and not just my RA about two years ago. Before that I made some lump sum deposits when I could. Due to trying to diversify I now own way too many different ETFs, but I'm now more focused on why I buy certain ETFs.

I have an RA with a life insurer (not 10x at this stage). I have an emergency fund in an interest-bearing 24hr notice account. I'm currently saving for a new car in a multi-deposit fixed term savings account at Capitec with 7.6% interest. I don't intend buying a new car with the inheritance. I drive what you'll call a “sensible car”.

I lead a pretty simple life. Fat Wallet has definitely reminded me that keeping your costs down is the best investment you will ever make. I do have a few vices that money gets spent on but I've been fortunate to do so over the last few years.

I intend for the inheritance to provide me with lasting security. Most of it will be invested and I will continue to rely on my own financial strategy (which is basically ETFs) to build my wealth. I will probably spend about R200,000 of it on a trip of a lifetime - this is ridiculous, but given my circumstances I feel it can be justified.

I'm thinking a lot about offshore investments due to the current conditions and political uncertainty in our country.



Win of the week: Jenny Pigeon, who wrote back in episode 92. She got in touch with her friend and advisor after that episode and managed to renegotiate her fees.

“My advisor subsequently dropped her initial fee and halved her annual fee. So this was a good outcome for me.”

But she wrote us a great email that made my day:

I’ve started a happiness journal and there is a 21 day instruction to send out letters to friends and people that have had a positive effect on your life. It struck me that my happiness levels have really moved up since I have become a regular listener. I think the reason is the sense of empowerment, enthusiasm and curiosity  that this kind of information imparts.

You and Simon turn dry subject matter into something very digestible.

Thank you for making a positive contribution to my happiness.


Gerhard’s wife is about to become an entrepreneur. They are trying to figure out what to do about her pension.

My wife is leaving the comfort of a steady income and starting her own thing.

She has a pension with her current employer. When she leaves her job that pension will be paid out to her; what in your opinion will be the best option?

Here is the list of what we have made while lying in bed awake at three in the morning:

  1.       Pay of our debt and start the new adventure with a clean slate
  2.       Use that money it to fund the start-up
  3.       Open an Easy Equities account for her and save it in RA

Carel wants to know where his fees go when he buys a share.

What are the transaction fees when doing a trade on the JSE? Does all of it go to JSE?

Is JSE Ltd a private company, i.e. would they charge as much as the market would allow, or are there other factors involved?

I personally think that transaction fees are the biggest barrier to entry to the JSE. How much of this is physical labour (infrastructure maintenance) and how much of it is just settlement trust?


Francois wants to know if it’s worth moving an RA for a few percentage point saving.

I am wondering if it’s worth changing my RA provider again?

I’m currently with etfsaRA, paying 1% fees.

Easy Equities RA charge 0.6% exl. Vat. Will it be worth changing to save 0.3% on fees?

Will I pay a penalty if transferred?

A few years ago I section 14 transferred from Sanlam RA to etfsaRA (after listening to Simon). They penalised me, but well worth the saving in fees.

Here's the spreadsheet Hendrik made for us to help you figure it out.


Miles is upset about fee sliding scales.

Why do the likes of Allan Gray, PPS, 10x and most other fund managers charge lower platform fees the more the client invests?

Surely the admin will be the same for a R100,000 client and a R3,000,000 client? So prejudiced IMHO. They have us by the proverbial genitals  and it really makes me the moer in.


Greg has been paying over 4% for his Sanlam RA, so he decided to move it. When he requested the move, they refused to move the last contribution he made.

This week I broke the news to my Sanlam RA "financial advisor" that I want to transfer to 10x. I was given a quote. Surprisingly it said there's only a 0.13% about transfer charge, but my previous monthly contribution of R5000 was also outstanding.

I queried why this R5000 was deducted and they said it had been received, but did not yet reflect on the system due to the general standard 25 days clearance period and that it would not be deducted from my transferable amount.

I could be wrong, but 25 days clearance period just sounds like taking the piss, to me.

So I asked them to then amend the quote to therefore say that this R5000 will not be deducted from my transferable amount. They said they can't do that since the system does not give them that option and "let’s see mid next with a new quotation."


Jaco is earning dollars abroad. He’s got some offshore accounts and local accounts.

I have Isle of Man account and transfer most of money into this account.

I still have monthly obligations in SA and have to transfer some money to SA.

My financial situation is as follows:

I have two paid-off properties from which I earn a monthly income.

I have a TFSA for both me and my wife.

I have dollars invested in the Prescient Global Funds (Integrity) in an offshore account in Ireland through SA Integrity Asset management

I have money invested with Allan Gray in various unit trusts.

I have dollars in Sasfin offshore funds

I have two RAs - OM and Sanlam.

I also have some rands in shares, but feel that I need to get out of it.

The money in Isle of Man account will be invested into the First world hybrid real estate fund through Marriott

The other money I want to invest offshore, but not through a broker in SA. I am interested in investing with Vanguard World - It appears to be a great fund and everyone invests in it.

How do I invest in this fund from Saudi Arabia?

I want to buy Apple shares but don’t know a broker overseas - any advice?

I am not paying income tax at the moment apart from the tax on the rental income. Other income is not taxable at the moment due to me being out of the country.

How do I invest the rest of the income I have in the Isle of man account?

Any other advice on how and where to invest would be appreciated.

This is the Moneyweb article I was referring to in the podcast. 

Ian has made some great changes to his personal portfolio since listening to the show. He’s considering a few more and wants to know if he should have a pension fund and a provident fund or just one or the other.

  • The funds are both administered by the same company, and our group requires us to be on them so I can't move.

Nipun has some ETFs in the US and has questions about the impact on his estate.

I have a Webtrader account with Standard Bank and have purchased USD denominated ETFs listed in the US in this account.

Would estate taxes be paid for this investment in SA or US & the rate of tax? I understand that assets over $60000 are taxed in the US.

Do I require a Will in the US or is my SA Will applicable?

What’s the most tax efficient way to invest offshore, can I continue with Webtrader of find another vehicle for investments?

Sep 9, 2018

It is the job of a salesperson to convince you you can't live without the thing they're selling. This is as much true in personal finance as in consumer products. If engaging with your money scares you too much, your only hope is finding someone whose approach to your money happens to be legitimate, effective and affordable.

If you hope to manage your own money, collecting information on the best thing to do with your money is also tricky. If you ask someone with a vested interest in a product, they are going to try to convince you it's the best product. If you ask someone who recently over-committed to a certain type of investment, they are going to try to convince themselves it's the best decision by trying to convince you it's the best decision.

This week's episode of The Fat Wallet Show is very special for two reasons. First, we recorded it live at the JSE as part of our JSE Power Hour series. Secondly, One Lappers Njabulo Nsibande and De Wet de Villiers joined us as guests. Our hope for this episode is to illustrate that there are many ways to construct an investment portfolio and all of them can be right. De Wet doesn't manage his own investment portfolio and he's happy with that. Njabulo manages three investment portfolios and he's happy with each one. What matters most is that you understand your portfolio, that you have a strategy and that you remember what it is. We're all making it up as we go.



Win of the week: Roxanne.

A year ago I was retrenched, sitting on my couch, wondering how I was going to get through the next month as I was living pay check to pay check.

My husband was earning a gross income of R18,000 a month and things were looking grim. We had medical bills, store accounts and a student loan. A truck had also hit the side of my car - we had reached rock bottom.

I started listening to your podcast all day, every day. My family started to think I had joined a cult!

I started putting a plan in place and started working on my FINANCIAL INDEPENDENCE to not be at the mercy of any employer, bank or creditor again!

Since then I have done the following:

  • Found a new job and career path
  • Started an emergency fund
  • Drew up a budget and started budgeting every single rand!
  • I discovered EasyEquities thanks to your show and started investing
  • I have paid off R40,000 in debt. I still have a student loan of R33,000 left which I am attacking - Balls to the wall on this one!
  • I cut up my credit card and lived without it. I cut up all my store cards and have lived without those. I never thought the day would come for this.
  • I have eaten a lot of peanut butter and 2 min noodles - thanks Shoprite!
  • Used every student discount I can find. Shoprite is good with this

But where to from here!?

I would like to invest in a tax free account but don't know where to start - if I choose the coreshares S&P 500 - how do I work out the fees I would be paying?

The naspers weighting in the Top 40 index makes me weary.

How much insurance is enough insurance?

Life cover, dread disease cover, home contents insurance, retrenchment cover, car insurance, gap cover, cellphone insurance, pet insurance - why are there so many products!!

Sep 2, 2018

A friend recently discovered a financially dependent parent had a huge amount of credit card debt. This revelation turned the dinner table conversation to the financial health of our parents. Of the seven of us, only two weren’t worried about their parents’ financial future. Naturally we proceeded to drink heavily. 

I find it much harder to speak to family members about money than to anyone else. Our parents managed to raise functional, financially secure members of society. After that significant achievement it can’t be easy to admit that you need help from the sprouts you raised.

I hope this week’s episode will provide a glimmer of hope if you happen to find yourself in a similar situation with your parents. Nothing can be done about the late hour, we admit, but if you can find a way to speak to your parent about their situation (I haven’t yet worked this out), you might just be able to find a creative solution.

Ruben asked:

My father is turning 60 next year with no pension/investments or even a house. I estimate he could work for another 5-10 years at his own business. How can I invest to help him with income for retirement?

Twitter Daniele asked:

I pay my mom rent. Should I put it in a TFSA for her instead? She has a company pension fund so this would supplement it. I am having a hard time convincing her that it is still a good idea to invest in a TFSA even though she is nearing retirement. 

She works for a bank’s investment arm. Would they allow her to open up an account with another provider like EasyEquitites? The TFSA and UT fund options (no ETFs) for her bank are pathetic (fees).


Get Down Adam 

I am 32, I graduated as a doctor two years ago. Financial people with various levels of qualification and pizazz came to sell us their products. The bottom line was that you had to have started investing at 24 (which was the age of my peers). I was already 6 years behind so I went into panic mode. 

Two years into the real working world again, I’ve paid off my student loan of R110,000. I only have about R60,000 left on my car loan. I have sadly given up on buying coffees, and I’m back to that instant coffee shit. I limit my spending as far as possible. 22seven is my most used app. 

Because I didn’t understand what was happening when I started my investment journey, I signed up for a Liberty RA investing in Liberty Medium Equity (C) as well as a Stanlib Tax Free Global Equities Feeder (A).

I recently bought the Coronation Market Plus Fund simply because they had a promotional sign up bonus of 10% which I thought couldn’t hurt. 

I own a flat with my sister (which our parents bought for us). We rent it out and receive about R6,000 income a month from that. Recently we have been putting R500 a month into Easy Equities and playing around with ETFs.

I have tiny amounts in:

I also have fuck you money shares/FSR in:

  • Netcare (what a disaster)
  • Montauk Energy
  • Capitec

We also have some cash stashed in an ABSA fixed deposit to cover maintenance etc. 

My own emergency funds are modest for now, but I’m building in a 32 day fixed deposit in FNB. 

Am I playing with too many variables? Are there too many ETFs? 

How do I know if I have saved enough

What’s the difference between building a portfolio and just sommer buying shit and hoping you’re right?

Please fix me, or at the very least tell me I can drink decent coffee again.


Frank shared a great graph he found of a married couple’s shared finances. I’ll include a link in the show notes. There’s a line item in the graph called “blackmagicfuckery” which is how they account for money that fell through the cracks. 


Jorge wants to know if he can withdraw profits from his tax-free account without affecting his lifetime limit.


Jon-Luke is a freelancer in his 40s. He has no debt except for a house he’d like to renovate. He works in TV when there is work, but the industry has been going through a dry spell. He had money saved for renovations on his house, but he’s had to use all of that last year when work dried up. He aims for an emergency fund of 8% of his portfolio, but he’s currently sitting at just over 2.5%. 

In the next few years I can envision a bumpy ride in my chosen profession. 

The probability is high that I may need to draw my emergency fund down again it won’t last as long as I need it to. 

Should I do what I would have done in the past and go into my overdraft and credit cards or should I draw out of my Share Portfolio?

Keep in mind that this would be for short term periods of 3 to 9 months. My instinct would be to leave my shares alone and give them the chance to grow.

I am also on a strict plan to downscale my spending and to save more…

My goal is to be saving 25% of my earnings by the end of next year, but getting there is a bit of a delicate process especially considering the current conditions in the Film Industry. 

Also I am loathe to sell my current house until I’ve had a chance to do the renovations I planned. There’s some money to be made here for sure!


G-Boi has taken his expensive RA by the horns.

I’ve moved my RA from Sanlam to EE and opened a TFSA with EE.

Should I max out my TFSA, then contribute to my RA? Or equally contribute to both my RA and TFSA. You and Simon made me feel so shit about the RA trap, at least I made the move to EE so that I can control it and don’t have to pay 4% Ter every year.


Luvuyo wants to know if we think rewards programmes are worthwhile. 

Do you think certain rewards points is to your benefit financially?

I have an Investec Account which gives decent rewards points (obviously not as great as ebucks that everyone tells me about), a Dischem, Clicks, Woolies & a The Entertainer account and I only buy clothing through a family member that works at a clothing store at a massive discount. 

Do you think that using discount and reward offerings can materially affect keeping lifestyle costs low so that you free up funds to invest or am I just a cheapskate that gets slightly marginal benefits from the above?


Johannes wants to know if I’ll do a spreadsheet on all the costs involved in purchasing a home. I’d be happy to do this if the purchase goes through. So far I’ve spent R453 on sectional title and title deed reports. If the home loan gets approved, I’ll spend a further  R2,875 on an inspection. That brings me to R3,300 before anything has actually happened.

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