Podcast: Build your own financial plan

Kristia van HeerdenLatest, The Fat Wallet

If you are earning money, you probably know you should have an idea of where your money should go and why. Most of us avoid drawing up a financial plan because we think we don’t know enough to make good decisions. For some reason, the head-in-the-sand approach is the only comfortable thing about money when we start out.

In this episode we argue even a terrible financial plan is better than no plan at all. Without a financial plan, it’s so easy to fall prey to noise. Sometimes the events that inform our financial decisions have nothing to do with money. In these moments we make emotional decisions that could very well destroy our wealth over time.

You are welcome to copy my financial plan until you come up with your own. Here it is.

  1. Get assets

An asset is something that can earn more money in the future. Since I’m only at the start of my journey, my brain is my biggest asset, because that’s what I use to earn an income. Educating myself is a further investment in this asset.

The income that I earn is a consumable until I turn it into an asset. I do that by buying shares. Shares are assets that will bring in more money in the future by going up in value. They also pay dividends as long as I hold them.

I buy shares using my retirement annuity and through my EasyEquities account. In my EasyEquities account I’m buying the Ashburton 1200. You can find out why here.

  1. Protect the assets

Accumulating assets is what wealth creation is all about. Once you manage to get your hands on an asset, you want to hold on to it so you can earn an income from it. Most of the time, you need to protect your assets from yourself.

I protect my hardest-working asset, my brain, by having a medical aid and dread and disability cover. Should something bad happen and I can no longer earn an income, I have insurance that can take care of me.

I protect my income by managing my tax burden. I do this through my retirement annuity allocation. Because I pay less tax, I have more money to turn into assets.

I protect my shares with my emergency fund. I want to sell my shares on my terms at a price that I find acceptable. If I need to sell my shares to take care of myself in an emergency, I have to accept whatever price I can get in the market, which means I might lose money. Selling shares can also trigger a tax event.

I further protect my shares by using a tax-free account. All the income and profit from selling shares at a higher price than I paid for them goes directly into my pocket, tax-free.

That’s my entire strategy. This strategy holds up, no matter what’s going on in the market or in politics.

Win of the week: Gerrie

When I realised every R300 in my hand on the day I retire gives me R1 per month for the rest of my life! Screw the 300 rule. Don’t see it as a rule. Make it practical. Even better… Since I’m a good few years from retirement the number is even better. Every R200 I put away today will get me R1 per month from age 60 till I check out much much later. I now check all my non-critical expenses against that number. Servicing my car last week was necessary, but it stole R25 per month from my retirement. So my next car should be simpler and cheaper to service.

See the full conversation here.


I recently became a US citizen, I have a 401(k) and a small equity portfolio with some single stocks that pay divvies, some ETFs and flyers I took on recent IPOs.

The rest of my family is still in SA and unfortunately my dad is sick so I’m thinking about coming back to the Republic at least semi-permanently or chasing the summer months between the Northern and Southern Hemisphere.

I have zero assets in SA, not even a bank account, but I’m fo’ sho jumping in on the TFSA. I’ll still be working for a US company remotely from SA, earning dollars.

Will SARS come after me for money I earn while living in SA for less than six months out of the year? Should I skip the advantage of a TFSA to remain “off the books” for SA tax purposes and just be liable to Uncle Sam? I suppose a tax pro will help but I’m trying to tap into the wisdom of the crowd here with your excellent podcast.


Quick one on one of your adages on working towards financial independence. Make sure you are well covered for medical expenses – at the very least have a hospital plan.

My son was recently admitted to hospital – he ended up in the NICU for almost a month. Throughout the process I continually checked with the clinic about our “tab” just to make sure things were fine. He was diagnosed with a very rare blood disease (1 in millions) and passed away after fighting for four weeks.

We were left with all the invoices to start making their way through and the bill ended up around R1.3 million. Thankfully Discovery (who have been very cool throughout everything) paid over 95% of that. Small blessing, especially when one of your frequent reminders of his fight are the bills that come afterwards.

Just wanted to put things into perspective for the larger crowd. These things DO happen.

There’s an organisation called Rare Diseases which acts as a support group for parents with children diagnosed with a rare disease. But within that organisation is something called Rare Assist who support parents (for a small monthly fee) with the administration of dealing with medical aids. I kid you not we were getting around 10 daily notifications when my son was in hospital and eventually you just left it to white noise.

Anyway, this organisation helps ensure all the invoicing was done correctly, all in-hospital expenses are carried out accordingly and they even motivate for additional costs to be paid. Such as the 200% / 300% scenario where they motivate the gap to be paid. In our cases they recouped close to R15,000 for us. Not bad for a R270 monthly fee. Also, they can support even typical households – it needn’t be rare disease.

You never knew such organisations exist unless you are caught up in that world. Call this part testimonial / advice for parents out there.


I’m not a first-time buyer. I’m selling a property that will give me R1m in my pocket to invest.

A crappy house costs R3m and entry point is closer to R4m. These same houses can be rented long-term for R15-20k per month, vs the R22k a bond would cost.

I’m trying to work out if it is better to invest the R1m or to put this down against a bond of R3.5m on one of these expensive houses.

If we rent for R15k and invest our cash elsewhere, we have flexibility and save a whack on maintenance and property taxes, which can be as high as R2k in these areas.

It seems like a no-brainer, except you eventually end up with a “valuable asset” at the end of the bond where I am not sure my R1m will grow as well?


I have a preservation fund that can wipe out my home loan.

Would it be wise to take a tax knock to pay off my home loan and use the free money to add to my TFSA account? I want to contribute the full R33k and max it out as quickly as possible.


Until now I’ve been maxing out my TFSA in a savings account at Investec earning 8.62% per year. I didn’t know anything about ETFs,  but still wanted to save TFSA money.

I then discovered your podcast, stopped contributing monthly towards my Investec TFSA and started contributing to an EasyEquities TFSA (Satrix Rafi 40 and Satrix MSCI World).

Do I leave the money with Investec or transfer it over to EasyEquities to buy ETFs? Do I stick with the Rafi 40 and MSCI or do I diversify a bit more?

The Fat Wallet Show with Kristia van HeerdenThe Fat Wallet Show is a no-nonsense personal finance and investment podcast hosted by Kristia van Heerden and Simon Brown. Every week we answer questions by a growing audience of finance enthusiasts. Submit your pressing money and investment questions to ask@justonelap.com.

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