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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: October, 2018
Oct 28, 2018

The world has gone mad with talk of a bear market. As someone whose experience of a bull market has to do with how much bullshit it is that the market makes money, facing a bear market seems especially unfair. In this episode we discuss what a bear market is, what it would look like in my portfolio and what I can possibly do about it.


Win of the week is Kay, for being a Fat Wallet Community superstar and for taking charge big time.

I'm stuck on tax. I don't understand it, I'm terrified of it. I'm a freelance artist in the film industry. I'm supposed to pay provisionally.

I've never managed to save for my tax contribution, but I am earning more each year and I'm trying to keep money aside for tax.

I'm mentally budgeting the amount to be about 25% of everything I earn (which seems an enormous amount to catch up to at this stage, but not impossible). 25% also might be too much or too little consideration depending on the earning category I fall into that year.

I heard Kris say that she puts 12% aside for provisional tax - how does that work? Why is there a tax category for 0-195 850 but I apparently don't pay anything if I earn under 350k? How the flip?

I don't mind saving too much since whatever I don't pay in tax will go to topping up other savings goals anyway, but I'd rather just know the workable percentage so it's not a big black hole of devil-math in my budget.

Can I actually reduce my tax liability by contributing to my TFSA? As in, does making that money tax-free potentially put me in a different income tax bracket, like contributing to an RA would?

Also Jonathan for sharing a great hack for emergency funds.

I've been a bit insecure with my investment strategy in my relatively short investment journey but the show has reassured me that I'm heading in the right direction. You can't imagine how encouraging that has been to me.  But I've also have much to learn, so I'm definitely gonna be listening on!

In episode 122 you discussed the balance between paying down debt and starting an emergency fund.  

A potential first step is to build up a mini emergency fund, perhaps R5,000 to R10,000 before contributing more than the minimum towards the debt

That gives you a buffer to cover small emergencies while you're paying down the debt. At some point you will have to grow the emergency fund to 3-6 months of living expenses as you rightly advocate, but it may be helpful to have a small emergency fund before you start to attack the debt. I'd like to hear your views on that.

Alec has saved up a nice nest egg and is getting ready to make a move from Durban to Jozi. He wants to know what he should be doing about his ETFs.

I’ve managed to accumulate just over R1m in investment savings through various actively-managed funds like Coronation and Sygnia in approximately 10 years.

I recently started investing in a passive strategy through ABSA stockbrokers, before they changed their platform fees.

  • NFENOM
  • PTXTEN
  • CSEW40
  • ASHGEQ
  • ASHT40

I also have a tax-free savings with Satrix, and an RA with Liberty (which I am in the process of moving to a more cost effective fund).

  1. Should I continue investing some of my money in my actively managed funds?
  2. Should I wait to see what the market returns are, or should I just continuously buy? For e.g. should I buy 100K of NFENOM ETFs and wait to see the returns before I continue investing in that fund, or should I trust the market value will be higher at a much later date?
  3. Are there any other investment strategies I should be spending my money on (rental property, gold coins, or starting a side business)?


Fried and his partner have R3m debt between them, including a buy-to-let property and some cars.

  1. How do I go about moving my Sanlam stuff away from them? I'm considering moving our RAs and my wife's TFSA to EasyEquities to manage it myself (only platform I care to know).
  1. Life insurance and income protector - I'm thinking of leaving it at Sanlam just because I don't know if I can move it? And if I do, are they going to take my blood again?
  1. I'm selling my "investment" house. Not sure if I should use the money to pay off my wife's car (interest rate of 11.15%) or use all to buy ETFs. The car's settlement amount is around 50% the pre-CGT money I'll get for the house.

Trishen’s family is growing too big for their home.

I have a two bed, two bath apartment in Sandton. As my family expands I’m looking to get something bigger. I am unsure whether to rent out my current place and potentially have an additional income in the future or sell it use the money as a deposit, lower my bond repayment then use the extra cash every month to invest in ETF REITS /shares.


Johannes is getting a gift.

I recently turned 21 and received R10,000 from my dad. I want to use this money to help cover my overseas trip (December 2019). I’ll be needing this money to buy a ticket/accommodation.

I’ll probably buy my ticket in the second half of 2019. Where is a good place to "save" this money? I don't want it hanging in my bank account as I know I’ll use some of it. I also don't really want to invest in shares, as the volatility might cause a surprisingly loss in my capital at the time the money is needed. (8 months from now).

I have seen some serious losses in my investment account this past year, including my South African ETFs. So I am a bit afraid of that.

I’m considering putting it in an fixed deposit account at African Bank, seeing that they have great rates OR the ABSA NewFunds TRACI three-month ETF.

What are your opinions and suggestions?


Marc is worried that the CoreShares Dividend Aristocrat ETF’s returns are very unpredictable.

  1. The goal of the ETF is to provide a relatively stable income that should rise with inflation as the underlying companies earnings grow.
  2. If you had to buy this in your TFSA, how would the dividends of the international companies be taxed?

Rui’s mom retired. Her adviser put her savings into unit trusts instead of a pension fund or RA. She has quite a bit of money due to the sale of her house, as well as a TFSA, which is only a small portion of her savings.

Moving any of the funds will incur capital gains, which is tricky - she may save on fees, but it will hurt in the short-term. How does one proceed from here? Leave it as is, and just liquidate the funds as one needs to in order to live? Sell, move them all to EasyEquities, do something intelligent with them there?

I'm beginning to think the only strategy that makes sense is to have a large cash buffer that you replenish via the income from the investments (whether it be dividend, selling some of the funds, or a combination of both.)


 

Oct 21, 2018

There’s nothing intuitive about the stock market. Most of what we discuss on this show relies on a basic grasp of the stock market, which is possibly asking too much. Every year I learn something new about the market. When I do, I get this horrible sense that everyone else already knew that and thinks me dumb for not knowing it. Sound familiar?

An email from Antoine made me realise we’ve never really devoted an episode to how the stock market works. This is one for your bookmarks folder. Here’s what we chat about:

  • What is the stock market?
  • What is it for?
  • How does it work?
  • Who are the players?
  • How do you make money?

Antoine is worried that the stock market is a Ponzi scheme. 

A bank can lend 10 time more money than is physically available. So out of ten dollars virtual value available, nine dollars are a bet on future growth, not on actual value. The same holds true for bonds and capital investments.

I'm really concerned that my children will become irrelevant, despite doing very well in maths and science. Investing in the almighty stock exchange might not save their souls. I'm hoping Simon might have something better than: "Because it worked for a hundred years." I heard that gospel before.



Win of the week is Sebushi for sending such a happy email.

I have been listening to Fat Wallet for more than a year and encouraged my wife to listen as well. Last week she received an email from her employer Vodacom about their YeboYethu share and given three options to choose from.

With the knowledge we received from Just One Lap, it was easy to make not only a choice, but an informed choice.

Thank you guys for the your education it means a lot to me and my family. And thanks to Stealthy Wealth as I found about Kristia from his blog.

From your Number One Fan whose Tax Free, RA and Investments are in order.


Christiaan’s friends are worried about what a crash would mean for those close to retirement.

My friends’ parents are in their 70s. They’ve managed their finances well, are still able to work and live off what they earn. They still save.

They’re worried what a next crash might mean for their savings.

What're your thoughts on the Warren Buffett approach in his will to his wife of 90% in the S&P 500 and 10% in bonds?


Rob is about to receive an inheritance.

I am married and on the verge of starting a family. We currently live in a townhouse which we are paying off. We both have RAs to to which we contribute monthly, and also invest the max each month into our TFSAs. We are about 3/4s of the way towards having a fully topped up emergency fund.

I have also received a nice bump in my monthly pay and plan to invest as much of this as possible into EFTs.

We do potentially want to look a buying a house as we will need the space with kids and it's nice to own somewhere with a garden.

So basically my question is, what would be the best way to use this lump sum to insure financial security for a growing family?

Would it be a good idea to try and pay off the bond on the townhouse and then rent it out and use the money to fund a bond on the house? Or buy a house cash and the rent out the townhouse as a passive income? If we go this route, would it better to keep it all under one bond?

Or should we just sell the townhouse and buy the house and not worry about having a rental property?

Or is the property idea just a bad one all around?

Is the best use of the money to clear all our debt before we start worrying about investments?

Should we just invest the money and use the interest to pay off debt? Where would be the best place to invest to avoid income tax?

I have only recently started listening to your podcast so if there are other episodes that answer my questions then could you point me in the right direction?


Jonathan sent such a great email. 

Hi legends

Give me a 3 minute for and a 3 minute against endowments, assuming fees aren't bad.

Hooray!


Tim wants to claim back a loss from SARS.

I invested into a scheme that now appears to be a fake scheme (money does not get paid out) am I able to claim the loss against my tax return? If I had made a profit SARS would have asked their share, so surely the inverse must work and if so what proof would i need to substantiate this?

I fortunately on put a bit of FU money in that I could lose (any loss sucks), unfortunately it seems others may have put a lot more in..., so once the dust has settled and I know the outcome ill send a mail as a lesson for all.


Alexander has questions about investing for minors. He wants to know what would happen if family members contributed to a TFSA for a minor and accidentally went above the R33,000 limit.

Would the platform block the transaction (I use EE) or would someone be liable to pay a fine (presumably the legal guardians of said child). It seems better to have a bank account people deposit into and distribute from there.

We want to open an investment account for our godchild, not a TFSA. How would tax around this work? If anything is withdrawn before the child can be a registered tax payer (medical emergency or something), would the parents be responsible for the tax liability, or us?


Shaunton wants to know how the 27.5% tax rebate works for people who work for themselves.

Does this limit also apply if you have your own business, independent contractor? Or how does it work?


Bongani is concerned about capital appreciation due to rand depreciation.

Rand depreciation means capital gain for me as a south African investor on dollar-based ETFs.

If I were to invest in a JSE-listed ETF, the rand depreciation would be considered capital gain and I would be liable for tax. If I buy the MSCI World etf from Vanguard as an offshore investment, would the rand depreciation also be considered capital gain and I be liable for capital gain tax?


Kobus wants to know if higher tiers are worth the rewards.

I’m trying to compare rewards programs of different credit cards. Is it worthwhile to go for a higher tier status so that you can get a bigger rebate on petrol? It seems that there is not one reward program that is the best. Is it best to ignore these reward programmes altogether?

 
Oct 14, 2018

I blame the advertising industry for the idea that living a good life is somehow related to money. Much as I make my living thinking and talking about money, money for its own sake is pretty useless. Back in the bad old debt days, I tried to use money to make me happy. That not only landed me in trouble, it also didn’t work.

When a friend sent me the Guardian article I talk about in this week’s episode, I had bad money days flashbacks. As Kay pointed out in the community group, the woman's language usage is very telling. I remember saying things like, “I think it costs”, “I guess it sets me back”.

What bothers me most about this article is how this woman hasn’t made any choices about what she wants her money to do. She’s living someone else’s idea of a great life. I know it’s not an easy balance to strike, but a little thought can go a long way.

Fried recently had a health scare which got him thinking about this balance too.

I had a terminal illness scare recently. During that time, I really thought a lot about finances, about leaving money for loved ones and my daughter's future.

If I died today, I know that my wife and daughter will be financially safe because of my life insurance policy (thank you SANLAM broker-man), the same thing if I don't die but can't work and earn an income anymore.

What stuck in my mind is that if I died today, I haven't yet lived. No one plans to die, yet everyone does, and most, sooner than expected. Like you, I'd also like to live to 130, but we probably won't. It's very important to live during your breathing-time. And to do this while building a small fortune to carry you through retirement? How do you balance this?!



Win of the week: Darryn, who wants to be a good uncle.

My sister lives in the uk. They have three little boys. I don’t want to spend money on toys and amazon gifts and wanted to do a TFSA for them. They are unlikely to move back to SA. Are there any companies or banks that do this overseas (uk specific) and what methods would one go through? Any other advice on these type of matters?


Chris is 24 and needs to choose between an RA and a TFSA.

If I have R2500 to invest should I be maxing out a TFSA or putting money into an RA? And is only contributing to an RA when I'm 30 crazy? Generally more conservative over a 30 year period and generally more expensive than an Ashburton 1200. Iit seems like money in an ETF is the answer.  Is this a dangerous thought to only start putting money into an RA once I’m 30 – if I’m still contributing to a discretionary investment?

Do the tax implications of share incentive schemes leave you in a dangerous cash flow position?

If you earn R600 000 and your employer offers you R500 000 worth of share incentives vesting in 3 years’ time.

You have a long term view on the company and wouldn’t want to cash in for at least a couple years after the vesting period.

Effectively in 3 years’ time you are going to have to cough up extra (roughly) R150 000 in cash to SARS, but you are going not going to have any extra cash to show for your bonus?

That would probably force the majority of people to sell their shares as soon as they vest just to cover this?


Sheila shared an anecdote about bonuses gone wrong on The Fat Wallet Community on Facebook.

In UK in early 1960s, Dad expected his discretionary birthday annual bonus .. the Company had a financial bad year and they cancelled. Guess who cancelled Summer Holidays that year. Still a bitter memory as I had bragged at school that we were going to Spain. I've never banked on a bonus or commission in my life though .. lesson learned.


Frank considers himself reasonably financially literate, but he needs help.

I have been managing my money from a young age using what I have read and learned to guide me.

I got RAs, Preservation funds, Provident funds, share portfolios, tax free savings, paid off house, an emergency fund etc

I have done all the spreadsheets, calculated future value on the growth of my portfolio and what I believe to need to live when I retire.

I'm worried that I will be blindsided later in life, because of a knowledge gap, or not truly understanding tax treatments, error in my calculation which will result in a gap at retirement. I have 25 years to retirement and now seems to be a good time to do a proper evaluation of my position.

When looking for a truly independent advisor that aren't aligned to product providers and will have my best interests at heart, I am battling to find one and don't know where to look, as the internet is failing me.

I am clear what I need from them.

Review my plan and calculations and tell me if I'm on the right track. Need Reassurance

Not sell me a product, if I'm short something tell me and source it.

What is the real tax implication of what I'm doing, so that I'm not surprised at retirement

And start a conversation about options of how would I structure my investments at retirement

Any advice you can give me to find an advisor would be great, better if you could give a set of names of people in Johannesburg that I could approach. Or if there is an alternative that I haven't considered that may help me answer my questions.


Matthew has an excellent question about buy-it-for-life shares.

In the last minute of episode 117 you say that you should hold and never sell.

How do you actually realize or extract the money from the portfolio?

If you never sell, your money is just a figure on paper?

So when do you actually make the money from your investments?


We haven’t heard from Sabatha in a while, and now he’s back with an excellent answer to a question we received a long time ago. We spoke about Greg moving his RA in episode 118.

The explanation for Sanlam's waiting period doesn't make sense.  However, the waiting period may be valid if the investment was by debit order. With most banks, an investor can unilaterally reverse a debit order within 30 days.  Thereafter, you need the cooperation of the receiving entity.

When you decide to move your RA, don't forget to cancel the debit order instruction.  You might think it's a given, but it's not. Sanlam will transfer your RA AND continue with the debit order investment as if nothing has changed!  Buggers.


Anonymous has been appointed the executor of their grandparents’ estate, which is in a trust. They really want to do a good job of it.

After episode 118 on inheritance I was reminded that my uncle and I are the executors of my grandparents’ estate, which is in a trust.

It's not a lot of money and there's a good few people between aunts and uncles and cousins, so no unexpected R3mil coming our way. That said, I'd still like to do it right and I don't know where to begin?


Shane

This Ashburton Global 1200 ETF is the bomb. In my days of TFSA investing, I've never picked a selection of ETFs very successfully, but since your 'One ETF to Rule them all'... show 85 I sold all the 'fluff' ETFs that I knew nothing about, and swapped it for the Global. Since then, it's up almost 20%... INSANE!

I finally see a profit margin on my EasyEquities account, and have a portfolio that's beating inflation.

I’m busy reading Sam's book Manage your Money like a Fucking Grownup - and it's amazing, but I wanted to run something by you to find out what would happen...

If South Africa's economy DID tank (think, Venezuela)... and I had a large portion of my savings in my TFSA... and it was in the Global 1200... because it's a local index, would that be affected by an economic collapse? Or because its invested in global stocks, would it be protected... and what would it do if it was protected (like... would it go up by a bunch)?


José wants to know if there are marijuana shares or ETFs we can invest in from South Africa. He mailed after the concourt ruling that it’s legal to smoke and grow pot at home. But remember it was possible to invest in these shares before it was legal here.


Robyn is in a tight spot with her family.

I listened to your 108th episode and when the supporting family topic came up, I had tears streaming down my face. I come from a single parent family, and I am 31. My 2 siblings are 12 and 14 years older than I am. My mom recently had strokes and can no longer work and my brother has simply turned his back on any responsibility.

My sister earns a pittance and lives with my mom and relied heavily on my mom to feed, clothe and house her. My mom also made the fatal mistake of cashing in her entire provident fund over a decade ago and spent it on clothes, gifts, furniture, etc, so she survives now on her tiny SASSA pension.

All the responsibility falls into my lap. I don't have that many dreams, but because of my poverty-stricken childhood, my main focuses are to have children and raise them in a financially sound household, and to build security and comfort for myself and family (ie: not to feed the cycle of poverty).

Now I am paying for a hospital plan for my mom each month of R1607 and I need to keep cash on hand because they're in a position where disaster is a regular thing. I agreed to put away R1000 per month into a Capitec savings account and if they need it, they have to justify why, etc before I simply hand over the cash (they have always been poor, and are the opposite of me - I tend to never spend anything on myself, whereas they go crazy on luxuries and then can't pay rent).

My husband and I already pay R600 into our access bond each month (which is also serving as our emergency fund, which is still FAR from our goal). I plan to downgrade my medical aid to a hospital plan and pocket the savings of R500 and add that to the access bond (thanks Stealthy Wealth!), and now I am wondering if my family's R1000 pm should also go in there? I figure that if I'm going to be sacrificing this cash in future, I may as well make it work in my favour while I can. Is there such a thing as over-saving in an access bond? Are there real risks to this? Also, can I include saving for my family as part of my spending/saving ratio, or am I fooling myself by doing this?


Liefie has reached retirement age and now wants to take some money offshore.

I am over 55 and I receive capital and interest monthly from the sale of my business and should receive it for the next 3.5 years.  So paying tax on the interest.

I am still saving in case I live to 90 plus.  

I want to do a lump sum payment into an RA for tax efficiency. I want it to be invested 100% offshore so it will have to be a living annuity and I will draw down 2%. (I have transferred my life savings in RAs to S&P 500 through Momentum).

I can’t contribute directly into a living annuity, it has to go to a "normal" RA and then transferred(!). During the previous tax year I almost had my head explode in frustration to get this done.  It was easy to make an RA contribution to 10X, but 10X doesn’t cater for ancients like me to do what I have described above. So I then had to transfer from 10X to Momentum to get into a living annuity invested offshore.  

So far this year I have postponed doing anything about it.  Do you know about a streamlined route to do this? Is it a bad idea?

Oct 7, 2018

It took just over two years to pay back my debt. Debt servicing became such a part of my lifestyle that I was completely unprepared for the last payment. I knew, on some theoretical level, what I wanted to do with my money once the debt was gone. However, a part of me thought it would never happen. I was worried about debt for so many years that I wasn’t prepared for the day I didn’t have any. It was disorienting.

In this episode, we try to prepare you for the next phase of your money that is currently crawling towards you. Keep this episode saved somewhere. It’s a roadmap that will get you to the next step. We do a “what next” for each of the below phases of your money life:

 

  • Debt
  • Recently settled debt
  • Starting out at 0
  • Emergency fund in tact
  • RA in tact
  • ETFs bought


Win of the week: Matome discovered us through Stealthy Wealth.

I’ve only recently discovered your podcasts (well actually a few months back but I have been listening to many of the oldies of both the Fat Wallet & JSE Direct) & just want to give you guys a BIG shout out for all the great stuff you are doing.  I have learnt SO MUCH!!! & now I am taking my finances into my control.

I was actually introduced to Stealthy Wealth from a friend, a real miser, but great guy and through his blog I learnt about you guys. So here I am!

I suppose one of my greatest learnings from you guys is that your retirement planning has nothing to do with your income, but everything to do with your expenses. That’s better than real gold!  It doesn’t take millions make it, but you can make millions by knowing that one little sentence! AWESOME STUFF RIGHT THERE.

This is the first of my many mails I will be sending you guys & I am seriously looking forward to learning more, making bigger & better decisions.

Also Phasane for taking charge of his RA situation.

After listening to a number of your podcasts, I finally gathered enough strength to look at what I signed up for on 13 November 2013. These suckers would be charging me an ongoing commission of 5.7% from year 5.

How did I sign up for this? I'm glad I learned about your fat wallet podcast when I did.


Chris submitted an awesome spreadsheet. He’s wondering about his investment strategy, specifically a growth strategy vs a dividend strategy. What makes this hard is the dividend withholding tax, which he bypassed by focussing on a tax-free environment.

Dividend vs Growth


Justine Burnelli is selling a house and downscaling big time.

We've decided to move to sunny Durban and are selling our house. We bought six years ago in a good area so we've had strong growth.

Any tips on selling a home? We're going with one of those online fixed-fee estate agents.

We're planning on renting a much smaller place in Durbs since we came to the realization that there were rooms in our current house that were basically unused.

That leaves us in a bit of a conundrum: how does one get rid of all this stuff? Have a garage sale? But who wants a slightly used toaster?

movingon.co.za

What does one do with this massive pile of cash once the house gets sold?

I'd just like to park the money someplace until we can figure out where to find a more permanent home for it. Feeling really uncomfortable dealing with 7-digit numbers. I'd like to think I'm financially savvy enough to know what to do, but am still feeling out of my depth.

Small mistakes could result in big sums of money going to fees and taxes. Was thinking along the lines of the TRACI or gov retail bonds. What other short term 3-year cash-like instruments are there, besides these two and fixed term deposits at the bank?

If I do invest the house sale proceeds into the MAPPS Protect ETF, will the market allow such a large transaction? Would the market maker simply, automatically create new shares, or would the price just shoot through the roof until all the shares available have been bought up.

What then happens when i want to sell one day? Is an ETF liquid enough to allow transactions of say 5-10% of its market cap to take place?


Wim is making the most of rewards programmes. 

My wife and I are at Investec and we have decided to use our rewards to re-invest in Financial products on rewards program. We have invested almost R30 000 rand over last 5 years in a global Investec equity feeder.

We get R500 voucher for every 10 000 points. Only snag is you have to buy Investec product and have at least R10 000 rand in product. (Lump sum) Initially used money from extra money in home bond. Our cards are credit card but use it as debit card. All reward point goes directly into investing not spending.


Nicole recently scrutinised her retirement fees. She is 52 and she can move her RA without penalty at 55.

I have learnt a lot from your show. Like everyone else I just wish I had had these insights 10, 20 or 30 years ago. For this reason, I am opening TFSA for my children and for every R100 they deposit, I will deposit R150 and then help them to invest it in an index tracker fund.

I contacted my provider (PPS) for a breakdown of fees and found out that I am paying 2% effective annual cost.

I told my advisor I’ve been sensitized to the importance of fees and I want to stop contributing to it and just let it sit there (I am 52 - I could move it with no penalties I presume at 55 years old).

Despite this being an old generation RA, it has done surprisingly well by my calculations. But still - the 2% fees is concerning for me long term.

Anyway, my financial advisor returned with a counter suggestion to decrease my EAC by moving from PPS to AIMS.

I am feeling frustrated, as this suggestion comes only after I say that I am going to stop contributing to my PPS RA due to high fees.

I received the below comment of my financial advisor:

"Going direct to an asset manager is not necessarily cheaper. By going direct, the asset manager will always place you in a more expensive Class. Class A is more expensive than Class B,C and D for example"


We also got an RA question from Robyn, who is in the unfortunate position of having to take care of grown-up family members.

I’d like to open an RA or TFSA for my sister, as I do not think she will have nearly enough to retire on. She is 45. I also cannot trust her with money, so I would like to make investments in her name, but preferably that I control, since it is my money in there anyway.

Would you suggest an RA or a TFSA?


Nduh is from Durban. He is 30 and started investing three years ago. He’s considering a few moves.

I've been investing R2000/month in TFSA since the first month it was introduced with etfSA. 

They are charging me 1% and I want to run away because its means it’s going to cost R1000 per year once I have R100,000. My TFSA with etfSA is an all equity account d other R750 monthly is in property (local & offshore) with our DARLING EASYEQUITIES.

I want to move this R100K to easyequities. Etfsa invested in a number of ETFs. Should I sell all the ETFs after moving to EasyEquities and create something simply that I will understand or keep them?

I recently bought a brand new second hand car on finance and this thing of paying interest stressed me as a result I cancelled a monthly debit order(R1000) to my RA (sygnia) and diverted it to pay extra on my car. I have provident fund with my employer where i contribute 18.5% since the age of 24. What your take on this move?


Clara wrote us about a year ago about a rental flat in Cape Town. 

We sold our home near Cape Town and have moved to the EU with our kids and cats and dog.

I was very interested to listen to your episode with Patrick McKay because he discussed investing overseas, which is something I need to learn about, having sold our house in SA and not yet being ready to buy in Europe (if we ever do).

  1. How do we go about applying for a tax clearance certificate, and do you think I can do it myself or should I hire a tax elf in SA to do it for me? (I have been filing SA taxes myself, but I don't feel very good at it!)
  2. As far as I can tell, I still have to pay SARS tax on any income earned in SA (interest) even though I'm not a resident. Does that sound right?

Ros noticed a new fee. This can’t be good.

On a recent statement of mine from Absa Stockbrokers, I noticed a line item "ETF Fee" for each of the 4 Sygnia Itrix ETFs that I hold. It was the first time I'd seen such an item. I emailed Absa about it, and they pointed me to Sygnia. Sygnia replied:

"The ETF fee item refers to fund fees accumulated between the last two distributions. This period would have been 6 months for most funds, if not all. The fee accumulates monthly and only gets deducted off the distribution. The ETF fee has always been applied but may be been deducted in the background by your service provider."

Can you shed any light on this?


Farhan is 30 and really wants his money offshore.

I save between 10% and 25% of my salary monthly, which is split between:

  • House: R1.1M with 600k debt (10.25 rate)
  • Allan Gray RA
  • EE account
  • EE TFSA
  • Investec 3 year investment: 100 in, 159 out in 2021
  • 280k debt on a car (cough cough) 10.5 rate - should pay it off in a couple years.

Should I pause all investment and just pay off my car? Or do I make good headway but accept 10.5% cost of debt in exchange for portfolio growth?

I don't have a lot of faith in the rand, so have been moving my liquid investments into ETFs with global exposure. That said, I’m very aware that the vast majority of my investment is tied up in my house. Do you think pushing every bit of my portfolio into foreign exposure ETFs is a bad idea? Or a great one? Why?


Wicus made such a good call to save money. 

I’m doing my articles and decided to move in with my parents next year until I finish it.

I’m going to save R5 000.00 per month because I no longer going to pay any rent. I’m very privileged that I don’t have any debt and all the money I save I can use it to benefit for my future.

I already opened a tax free and balanced fund at Allan Gray but only recently discovered that the transaction fees are going to hurt me in the future.

Do I need to move my tax free because I’m planning to use that money when I am 70 years old so still have 46 years left to build that investment.

How do I save the money I’m going to save staying with my parents. I want to save the money for between 8-10 years and want to use that money for a deposit to buy a house in the future.

 

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