This week, two listeners help Simon score free wine and free petrol using loyalty programmes. Here’s a new Fat Wallet rule: if it gets us free wine, you are automatically the win of the week. No questions asked.
We discuss medical aid and how much to save towards the education of two toddlers. We received a question about the Warren Buffett indicator. I figure out halfway through the discussion that it’s basically the P/E ratio of a country and nearly die of pride. I just love those moments where my brain makes a connection that I didn’t know it was capable of making.
By the way, Craig Gradidge blew my mind this week when he explained a very complicated principle in a way that made it clear as day. This, to me, is the mark of true intelligence.
Jonathan de Freitas found an awesome workaround for price alerts on the If This Then That (IFTTT) service. Check that out here.
Lastly, we read through all of your tips and suggestions in our survey and we spend the episode talking about the things you guys want. We’ve had many requests for show transcripts, for example, to make the site more searchable and help people who are hard of hearing.
We dedicate this episode to the ideas we loved, the suggestions we don’t agree with and our listeners’ wicked sense of humour. Thank you all, one last time, for taking the time to help us serve you better.
Remember to join us IRL on 7 December for our final Power Hour of the year. It is always our favourite event. We can’t wait to hang out with you.
How it happened that November turned into the retirement annuity month, I’m not sure. Following our previous two episodes, we were bombarded by questions and concerns around RAs. It seems our episode on choosing an RA spurred many of you into action.
We hear from an 86-year-old listener how far the 15% savings rate actually gets you. Hint: not very.
We help two listeners figure out if they’re paying too much for their annuities. One listener is struggling to find the right answers to his retirement question from his provider, Discovery. We also discuss Stealthy’s reasons for not loving RAs.
I can send virtual dirty looks to expensive providers for days, but the last three episodes reiterated the importance of keeping a very close eye on my investments. I contribute more to my retirement annuity than any other investment. We’ve seen providers won’t be brought to book for selling expensive, wealth-depleting products. We’ve seen legislation change. My future financial security rests solely with me, as yours does with you.
P.S. Our survey results are in. Check them out here.
I’ve had a great time chatting retirement at two separate events last week. Both times I came away feeling uneasy about the go-to 15% savings rate for retirement. I suspect we’ve been anchored at that number because that used to be the tax break. I also suspect that number is only correct under very specific conditions.
If you started saving 15% of your salary since your first pay cheque and you plan to retire at 65, 15% might be enough. Then again, it might not be. How would you know?
Here’s what you need to work out how much you’ll need to retire.
At my current savings rate, I’ll be able to retire in 17 years. At a 15% savings rate, I’d only be able to retire in 25 years. That’s taking into account the 27.5% I’ve been putting towards my RA already and my current tax-free savings.
I could still retire before 65, but I’m a long way away from my early retirement goal. Even at my current savings rate I miss my retirement goal by 10 years. There was a time I was set on retiring at 40. Guess that ship has sailed.
I have two options to reach my retirement goals. Save more, or cut down on my cost of living. Saving more means earning more, which is largely out of my control. What I can control is my cost of living. Time for some planning!
The point of this episode is that the perfect retirement savings number will be different for everybody. Run the numbers for your goals and make sure you’re on track. Do this once a year to make sure you are where you need to be.
In a previous episode of The Fat Wallet Show we discussed how to compile your own ETF portfolio. In theory, once you know which factors to consider and understand all the information, you can make informed choices about your investments. However, putting together an ETF investment is child’s play compared to choosing a retirement annuity.
Unless you’re an outlier, your retirement annuity is the most important financial decision you’ll make. It’s not only the largest sum of money you’ll ever invest, but it’s also the investment decision with the least room for error. I don’t mean to overstate this, but it’s the decision that’s going to determine how the second half of your life pans out. If you’re lucky enough to die somewhere between 80 and 90. Live to 130 and you’re on your own.
This week, we try to unpack some of the factors you should consider when choosing an RA. We talk about moving existing pensions and annuities and completely fail to distinguish between them. You’ll be unsurprised to learn that fees play a major role in our decision-making process.
We asked 10X to help us think through some of the factors to consider when it comes to RAs. They identified five parameters by way of very helpful questions. They are:
I also decided on a whim to make listener Jaco Marais rich. If you are planning on signing up for Stash next year, use Jaco’s promo code. He gets R10 every time someone new signs up. Code: JAC8747
We also share the story of a man who found R400 000 he didn’t know he had.