Info

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
RSS Feed Subscribe in Apple Podcasts
The Fat Wallet Show from Just One Lap
2021
March
February
January


2020
December
November
October
September
August
July
June
May
April
March
February
January


2019
December
November
October
September
August
July
June
May
April
March
February
January


2018
December
November
October
September
August
July
June
May
April
March
February
January


2017
December
November
October
September
August
July
June
May
April
March
February
January


2016
December
November
October
September
August
July
June
May


All Episodes
Archives
Now displaying: August, 2017
Aug 27, 2017

When we discuss financial principles on The Fat Wallet Show, we try to make them a rule of thumb. More often than not, debt is bad and saving is good. Most of the time, retirement and tax-free should be where your money goes first.

Of course there are exceptions to these rules. There are as many unique financial situations as there are people. Sometimes a set of circumstances leads to an opportunity. Other times you do everything exactly the way you’re supposed to and it still doesn’t work out.

This week’s question from Vee M got me thinking how a “bad” rule-of-thumb decision can be a great decision in certain circumstances. Another case in point is Simon borrowing against his bond to buy shares during the 2008 financial crisis. Would I tell my best friend to do that? Hell no! Did it work for Simon? It did.

If you are honest about the risks and possible outcomes, you have your financial base in place and you are a fiscally responsible individual, odds are you’re in the best position to make a call about your finances. Ask for input and advice by all means, but never forget that the success or failure of your financial plan affects you and your family. Whether those you consult agree with you or not, you have to live with the decision.

What I loved about Vee’s question is that she had the following information:

  •   Exact amounts owed on all her debt
  •   Exact amount of tax payable should she cash in her provident fund
  •   Exact amount of interest she will pay should she decide not to settle her debt
  •   Exact amount of cash she would free up should she pay off her debt

This information enables her to:

  •  Assess her net worth by comparing her assets (provident fund, fixed deposit savings and home) to her liabilities (debt on buy-to-let property and car)
  •  Compare the once-off tax liability to the accrued interest over time. Being able to do this makes a complicated decision as easy as, “Which is greater?”
  •  Decide what is important to her. Is the current debt stress better or worse than the stress of providing for her future? Vee understands how quickly she can rebuild her retirement annuity because she knows how much she’ll be able to invest every month.

Data is power when it comes to financial decisions. Data overrides the fear and greed of financial decisions. Vee hit the nail on the head.

Links

We built a spreadsheet to help you work out how long it will take you to make up the penalty you have to pay to move your RA. Click on the link to download it. Moving your RA

Chris de Jager sent a link to a forum discussion on estate duty. The discussion follows on the discussion we had with Candice Paine about investing abroad.

Danie de Waal sent shared an article on how index funds can affect the market. Read that here.

P.S. Our Fat Wallet Listener Love index took a beating at the time of recording. Hopefully by the time you read this things will be looking up!

Kris

 

Aug 20, 2017

Fat Wallet regulars know that index-tracking products are at the heart of our investment philosophy. Even Simon, with his individual shares and trading accounts, prefers having at least half of his portfolio invested in exchange-traded funds (ETFs). ETFs are financial products that track the performance of an index. If you struggle to understand what an index is, you’ll probably find ETFs difficult to grasp.

In the last Fat Wallet episode, we decided to create our own index to illustrate how indices are put together. Zack Bezuidenhoudt from S&P Dow Jones Indices graciously agreed to help us put together an index of Fat Wallet listeners’ favourite companies. The rules of the index were entirely made up by me. I was drunk with power.

We received 22 submissions between Monday and Wednesday morning. Since some listeners liked the same companies, we decided to give more weighting to companies that received more nominations. We are therefore happy to announce the world’s first index weighted by love. Probably.

We capped the exposure of each company at 10% to avoid over-exposure to an individual share. We also opted for a variation on an equal-weighted index. The result is an index as diverse and colourful as the Fat Wallet audience.

You can have a look at the complete working document here. And finally, below for your viewing pleasure, is the Fat Wallet Love Index, organised by weighting.

Kris

Aug 13, 2017

It’s our 60th show! At the time of recording we were also only a few downloads shy of the 70 000 download mark. What a time to be alive! We are so grateful for your support.

This week we received a bunch of related questions about my favourite topic - ETFs. We discuss:

  • TER: How it’s calculated and what it means for your investment. I also wrote an article about it here.
  • Spread: The cost that’s not a cost.
  • The difference between ETFs and ETNs.
  • How to put together an ETF portfolio.
  • How to choose between two similar ETF products.
  • How to understand risk.
  • How to trade (or not trade) the volatility index.

We also decided on a whim to put together a Fat Wallet index. It’s a fun way to see how indices are created and to see if we’re collectively smart enough to beat the market. You can submit your favourite listed company for inclusion in the index by sending a mail to ask@justonelap.com. Maybe we can get some industry peeps to take us through the nuts and bolts in a future episode.

Kris 


 

Aug 6, 2017

Last week, we spoke about the basic concepts you need to understand to make good financial choices. We recap those this week, because understanding these concepts will change the way you think about your money. To recap, they are:

  • Interest
  • Inflation
  • Compounding
  • Assets
  • Indices and index-tracking products

We also discuss the different types of expenses that will impact how you spend your money. They are:

  • Unavoidable expenses that keep you alive
  • Expenses that can be avoided in the short-term, but will ensure your future financial security
  • Expenses that will make your life easier
  • Fees to be part of the formal financial sector. These are unavoidable

This week, we discuss how each of these expense categories will affect your spending in different phases of your life. We start with those who have no financial responsibilities and very few expenses. Then we talk about how to handle debt and finally we deal with family obligations.

The TL;DR version of this episode is:

  • You want your bank statement to reflect your values, so you have to start by asking yourself what you want your money to do for you. That can be traveling the world and discovering new species or building a home for your 12 kids.
  • Everyone needs the same financial base, which includes:
    • An emergency fund equal to at least three months’ expenses
    • A retirement annuity
    • A tax-free savings account
    • Dread and disability cover
  • If you have dependents, your financial base should include life insurance until you’ve accumulated enough assets.
  • You should avoid debt as much as you can and pay back unavoidable debt as soon as possible.

Kris

1