Podcast: Investing for your parents

In Latest, The Fat Wallet by Kristia van Heerden

FW_020919The biggest challenge in supplementing a parent’s retirement income is whether to save in their name or your own. This week, we help Kim and her sister think through their options to help their mother in retirement. 


I cannot describe to you how empowering The Fat Wallet Show has been in my life. You have made such a profound impact I can’t thank you enough. I grew up in a home with ZERO financial education. Throughout my engineering degree there were no lectures or exposure to the topic of personal financial management. 

As a result of your show, I now have a financial strategy for myself, I feel I am in control and I sleep well at night! I can find and read an MDD and understand it, without feeling overwhelmed and confused. A few months ago I struggled to distinguish between financial products, all these names I didn’t know – TFSA, RA, ETF etc. Now I can eat them for breakfast 🙂 You have helped me bring a real sense of peace and security into my life and I will always appreciate it. I recommend your podcast to anyone whom I think would find it beneficial.  

Her mom is turning 60. She started her discretionary investments late, because she was in a marriage where she didn’t have an eye on her finances. When she finally did, she realized she owed SARS a lot of money, which she has paid back. 

She has a company pension fund and started saving some money in a tax-free account, but at a very high fee over over 3%. 

Kim is concerned that her mother will fall short in her investments based on the rule of 300, by about half.

My sister and I want to both invest on behalf of my mother, to improve her circumstances going forward. 

I know you have both said go into safe investments as you near retirement, but my mother needs good growth.

We can collectively invest a lump sum of R80,000 and then a further monthly sum of R10,000/ month.

Invest heavily into local equity. 

If the SA market dips / crashes in the next  5 – 10 years, we’re screwed. However, if we assume that mom keeps this for a full 10 – 15 years and only withdraws it when she is 70 – 75 yrs old, perhaps it will provide a nice boost for her later. 

Invest heavily into foreign equity to avoid a local crash.

Is an offshore ETF that invests in international equity still based on the JSE? In the case of an SA Stock Market crash, will this ETF still hold its’ selling value ? OR if we want foreign, is it better to invest in USD? We are worried about currency conversion & fees the EE USD option.

Invest 50% in equity and 50 % in bonds.

If the stock market crashes / SA politics goes south, is there be a risk of the government not being able to repay its’ retail bonds?

Don’t do so much investing on her behalf

If both my sister and I focus on building our portfolios, we can reach a point in five yrs where our dividends/ growth can be withdrawn and given to mom. This is of course not the best idea i.t.o. compound interest so more practically we will stop contributing to our investments and pay mom out of our salaries. 

My mom has no other assets. Even though it will be a huge drain, my sister and I are considering buying her flat to give her security and reduce her expenses.

In a TFSA, if you keep reinvesting your dividends, in addition to your annual contribution, won’t you end up exceeding your maximum contribution? If you’re in funds that don’t pay dividends, your growth will also push above the threshold. I am assuming the limit is on your contribution and not the value of your account?

The bleeped version is below.


When you invest offshore directly, you only pay CGT on the investment’s gain, not on the currency devaluation.  If you on the other hand invest indirectly like with an offshore ETF, you WILL pay CGT on both the investment growth AND the currency devaluation.


I have an RA and TFSA with the same broker. I have noticed that some of my ETFs in my TFSA had dividend payments (yay!!) but the same ETFs in my RA did not. I am not sure if I am missing something but it just seems kinda strange. How do dividends work with RAs?


I have my TFSA ETFs amounts and allocations bedded down. I am now reviewing my provident fund. Is one able to cash out a provident fund and put it into an ETF? Will there be tax implications for the early cash out? 

Would it be better to decrease the % contribution and start my own ETF investments on the side. My employer does not contribute towards the provident fund. I don’t have an RA.


In an attempt to diversify my portfolio fully, I thought I would buy some bonds.

The fixed rate bond (5 years) is currently at 8.25 % according to treasury website, which is very similar to interest rate offered by Capitec for I think > 100K for 49 month term.

Any advantage of the one over the other?

How are bonds handled in your estate?

How are bonds treated in terms of tax?

If no gov retail bonds have no tax advantage, why would people choose them over fixed deposit?

I am worried I am missing something as surely the government would tempt people into lending them money by making bonds in some way more attractive than fixed deposit.


Do you guys suggest using an IG account and buying foreign shares listed on other stock markets? or Should I open an online account as a citizen of an EU Country? 

What are the tax implications? 

I have some extra cash I’d like to invest. The ROI on my investments have been greatest in my business although it is somewhat high risk. Do I reinvest in the business and buy more equipment and try expand or do I look for ways to build up a stronger financial portfolio while I am still young?


I plucked up the courage to stop two debit orders for an RA that I held at Sygnia and a unit trust at Coronation (which charges -1.74% fees). I wanted to contribute to my tax-free account only. I do contribute to a pension fund with the organisation that I work for (8% employee and 15% employer).

My husband and I want to get out of our car and home loan debt within the next six years. We bought the house this year. 

The extra money after the debit orders are cancelled will go towards the debt repayments. We do have about 2-3 months worth of expenses as an emergency fund.

Is it better to put all money into getting rid of debt and then focus on saving/investing as much as possible thereafter?

If we were to do this, it would mean no ETF investing for six years. However, all extra money after the debt has been repaid will go into saving and investing as much as possible. What about the time aspect?

If we don’t put all the extra money we have into paying debt, we won’t meet such an aggressive target of six years to eliminate the debt.


My husband and I have historically had a terrible relationship with cash and anything finance-related.

We have recently had a baby.

My one requirement for having this baby was that we do it debt-free. We are in our last month of paying off debt and then we are free. We don’t own our cars (corporate cars) and we currently rent our home.

Do I use a broker to start off with or do I try to go at investing on my own and figure it as I go? We both currently have RAs (with the big green company you despise) and medical aid. We have a savings account with 24 hours access for emergencies and a 32-day call. 

I would like to get a tax free savings open for our baby now and then stop contributing to the above savings and rather invest the cash elsewhere, but have no idea where to start?

How do I know where to invest, what to invest and how to trade? Is it not better to use a broker who can advise better?


I managed to save R100,000 in a savings account. Finally got brave enough to transfer the money to my brokerage account. The plan was to buy Satrix Msci World and Satrix 40. Now I’m just staring at the money. What’s the best plan? Invest all the money on one day? R5000 per month or per week in each fund?

Second question is FNB or Capitec? I earn a salary, have a few debit orders, card transactions draw money once or twice a month and have an emergency fund.


I opened an ETFSA investment account six years ago and have a monthly debit order of R500.   The account is in my seven-year-old grandson’s name, but I pay the debit order and his mother is listed as his parent/legal guardian and she has to sign any transaction forms.  

I know it would make more sense to contribute to a TFSA, but I don’t know what to do with the existing account. Should I sell off R33000 worth this tax year and the rest next year to close the account? My daughter has never declared the ETFSA account to SARS.

I’m told I can’t contribute directly into a tax-free account unless it’s in my name.  I wanted to have a little nest egg for him for later but now I’m thinking there must be a better way to invest for him. 

Should I open a TFSA in my name and leave it to him in my will (which would require a trust if he is still a minor when I die) or should his mother open an account for him and pay into it every month from money I give her.  

I already assist with his expensive therapy costs every month as she doesn’t earn much and I am aware there is a limit of R100,000 allowed before tax is payable on donations.

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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