Podcast: Rand cost averaging

Kristia van HeerdenLatest, The Fat Wallet

Tax rebates, bonuses and inheritances really throw us for a loop. Most of us have every cent of our salary allocated to some higher purpose, but the moment we find ourselves with a big hunk of cash, we get in our own heads. We all know what we should do with the money, except because this is magical unicorn money we don’t.

We get questions about lump sum investments so often that we decided it’s time to devote an entire episode to it. In short: the math says invest it all at once as soon as possible. If your emotions tell you to do otherwise, however, you should probably pay attention to them first.

We talk about our friend Hendrik’s blog tigersonagoldenleash.co.za in this episode.


I just received 10 months worth of salary as a bonus. I currently have money invested in my portfolio. I’m trying to decide how to go about investing my bonus. Should I chuck the entire amount in now? (Keep in mind my TFSA is maxed out for 2018, and I plan on investing R33 000 on 1 March) or should I average it out over a few months? Also keep in mind that I have no debt.

Win of the week: Nadia

I listened to the show about my question and I just want to say thanks a million! You guys helped a lot with my decision and I have decided not to get involved with Forex trading. I first need to focus on my TFSA and make sure I understand all the ETFs I have chosen to invest in.

Cleaned bleeped show is below.


Love the show. I have a question for you relating to picking a Global ETF. I have an Easy Equities Account and have access to investing in ETFs listed on the NYSE.

I was looking at the Vanguard Total World Stock ETF on the USD account and comparing it to the Ashburton 1200 on the ZAR account. The TER is significantly cheaper for the Vanguard ETF – 0.1% vs. 0.45%.

The weighting of the constituents of each ETF are quite similar although the Vanguard has over 8,000 stocks where the Ashburton has over 1,200 stocks which makes it attractive to have more exposure globally.

My feeling is that in the long run, it’s probably worth moving all my investment offshore (into USD) into the Vanguard ETF if I follow the concept of one ETF to rule them all because of the low cost of running the ETF.

What risks other than a strengthen Rand or having a Will in place in the USA to transfer the funds in the event of death would you foresee? How would the tax on dividends / Capital Gains be affected?


I recently received a severance package. This money is considered “tax free income” because of a SARS tax directive, which seems to be common with severance packages. It’s been lying in a savings account, and I’d like to know what you think is the most tax-efficient way to put that money to work.

I don’t have any investments and no emergency fund. The savings referred to above is currently my emergency fund. The only debt I have is car debt, a monthly expense of R2400. No bond either.

The amount is just enough to max out my TFSA for the 2018 tax year ending in February as well as settle my car debt completely, but then I have no more savings / emergency fund left at all. However I can quickly build up an emergency fund, or to rather contribute aggressively to my car debt with a monthly contribution if I decide to not settle.

It seems crazy dropping a huge amount on my car debt to settle it considering the small monthly repayment, but it’s also something I want to get rid of ASAP as it allows for more savings, less essential expenses and more cashflow when I’m rid of the repayment. The risk of course is that I will be stuck without savings / emergency fund for a few months until I can build it up again. I do have a credit card.

Not quite sure what the best course of action is. Should I rather leave the debt as is and invest with this “tax free income”?


I would like to understand how a property-based ETF actually distributes the income that it gets from rentals? How does the ETF distribute this to holders of the product? Is it in the form of a dividend?

Can you explain like I am 5 why some people think investing in REIT properties are a good idea in a TFSA?


I discovered that you can buy REITSs via unit trusts, exchange traded funds or standalones directly from your stockbroker or financial advisor or a site like EasyEquities.  I can see a sort of hierarchy here but just don’t get it. Are earnings from REITs rental income or dividends? I can appreciate that if held in a property owning company the earnings would be in divs.  But if held by a unit trust how would rental earnings be paid?


I love this podcast and this a wonderful public service you’re offering to all South Africa.

Even though I’m in the UK and a lot of the advice can’t be directly applied the thinking still applies and continues to push my thinking.

I want to share stuff that changed my financial life which was given a wake-up call after I took a massive hit on RA when I financially emigrated and was confronted with just how far behind I was. Painful stuff, and wish I had a podcast like yours to point me in the right direction at the time.

I wanted to share some references I use in the UK that I think would be very useful for reference in your offering to the public as well:

– The go-to reddit (I know, don’t take advice from unknown muppets, but it’s good) for me is  /r/ukpersonalfinance/. In particular I love the UK Personal Finance Flowchart and it’s interactive version (which is opensource on github btw…). This flowchart is awesome for visualising where you are on the maturity scale. Super helped my wife with her “O, fok!” moment.

– The second source I love is  moneysavingexpert.com. It’s a bit of a marketing-hidden-like-advice site, but it’s got some gold-level guides on finance basics for people who were never shown how the basics work.

– The more extreme sites are FIRE the based, but drastically shifted my thinking on what retirement means, in particular @firevlondon on twitter is an interesting feed I follow with monevator.com to frame my thinking on passive investment.



I already have some investments with Easy Equities, so just decided to move some funds around so that I can put the full R33 000 in for the 2018 tax year.

I am a bit confused about the limit of R33 000 and the fees involved. When I bought my TFSA ETFs the admin/brokerage fees were deducted and my investment amount only shows as R32 877 (R123 admin fee). I know it is a small difference, but I would like to utilise the full R33 000 that I am allowed for the year. Easy equities however does not allow me to invest any more funds into this account.

Do you have any clarity whether this R33k limit includes the administration fees?


I heard you say you had to re-open your FNB account because you have and FNB flexi bond.

Not sure what the exact reason is but thought I will share this. You do not need an FNB account to withdraw from your FNB bond. I also have an FNB flexi bond and I nominated an account at a different institution and I have withdrawn from the bond directly into that account.


I’m nearly 70 and earn the biggest part of my income from the following ETFs: PREFTX, PTXTEN and STPROP.

You mentioned that because PREFTX consist of many banking pref shares there is a risk should we get downgraded to junk status by all the  rating agencies. I understand that a junk grading will affect our total banking system negatively in that interest rates will go up. What do you think will be the effect of a downgrade on my income from PREFTX.


What stops me from opening a tax free savings account with a overseas fund managers like JP Morgan, Investco, Black Rock etc?

What are the tax implications for me as a non-resident in an international based etf tfsa?

What are the risks and is it something worth investigating?


I am 55 and work for a big bank group, with lots of good benefits.

My emergency funds sorted out and bond debt almost covered.

I want to open a Tax Free Savings (ETFs) account with Easy Equities .

I please need your assistance in my ETF selection? I intend not to ‘touch’ the investment in the next 15 to 20 years.


I am in the process of shifting my RA around and moving away from unit trusts and into ETFs.

I started investing in an RA as soon as I started working, but unfortunately I thought they were very one size fits all and so it’s all sitting in unit trusts with fees of around 3.8%.

While digging more into finance I came across a TED talk by a doctor in Australia who pointed out that most people’s retirement funds are invested in British American Tobacco (BAT). So I looked up the current funds I am invested in and my current unit trust, my work provident fund and the new ETF I was looking into for my RA all invest more than 1% into BAT.

This is pretty disappointing to me. I can guarantee that a large percentage of the general populace wouldn’t invest in tobacco if they had the option. And yet they are unwittingly helping fund the industry.

I have tried to do some googling for green funds in SA but haven’t really come across anything. I realize that I could just build my own RA by picking shares but would much rather choose an ETF. I would also not like to pay exorbitant fees just to avoid investing in unethical companies. Maybe I will have to suck it up and offset my investment in BAT with charitable donations to cancer research. 😉


Is it possible to transfer ETFs that you already own into your Tax Free Savings without having to sell them first?

Rudolph wants to know if yield rise or fall with quantitative easing.

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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