I’m often curious about the finances of people who want to take on some alternative way of making money in financial markets – be it trading or Bitcoin. More often than not, people who are convinced that a single asset or event will solve all their problems don’t yet have solid a financial foundation. Similarly, people who do have a strong handle on their finances tend to favour simplicity, as this interview with Patrick McKay illustrates.
Just One Lap had its origins as a trading education platform. Even so, trading is not something we encourage most people to do. For one, the amount of money required to start a robust trading account can easily fund a real world small business. Secondly, all the psychological factors that make investing hard are present in trading, but on a daily basis under huge time constraints. Unless you have the time and money to devote your life to it, trading is probably not for you.
A question about a Forex training platform from Nadia inspired a discussion about the realities of trading that most people don’t think about. We mention our Trading Boot Camp series, as well as this series of CFD Conversations.
Clean swearing bleeped out show is below.
Win of the week is Christiaan
I am 17 years old and in Matric now. After listening to so many of your podcasts I have this vision of being financially independent before I am 35.
I am in the process of opening a Tax free saving account at EasyEquities and the plan is to invest my money from the get go.
I will have a good head start when I get to varsity next year as I will receive free tuition at UP and my parents own a house close to the Uni where I will be able to stay. I do odd jobs here and there and save all my money and receive a small amount of money from my parents as pocket money that I have to sustain myself, buy my own food at school and pay for extra murals. This amount is just under the amount I need to pay tax so I am good there.
I worked out that it will take me just a little bit more than 15 years to max out my tax-free savings account if I pay the full R33,000 a year (will be maxed out when I am 33). My problem is, if I do this there will by no more money left for a RA. Is it necessary to open a RA now as I am not even 20 yet and don’t earn a huge amount of money? Or wait until I maxed out my TFSA and then move the budgeted money I used to put there to my RA?
Nadia
I want to please get your opinion on a company called XXX. I’ve been trying to get proper feedback on them for weeks now but I can’t seem to get an answer.
It’s a company that trains people to trade Forex. You pay to access a number of training videos, live sessions, tools they use to trade etc. So it really sounds awesome and apparently the education side of it is really great. But then I find the google reviews that say that it is all a scam and that they just take your money… which is why I am confused. There are some people who say that it is a great product because they really go in depth to show you how trading is done etc.
As far as I know, you pay a monthly subscription fee to be able to use the education platform and then also the tools and programs they use to trade. You can cancel at any time and they money you make from your trades belongs to you. The only way this company makes money is from the monthly subscription you pay. It’s pretty expensive so i’m not sure if I should just go for it and see what happens or if I should forget about it. So yes… i’m pretty confused.
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Our Tax Elf De Wet has decided to give up a cushy corporate to take his Tax Elving more seriously.
I need a strong emergency fund (something which was not as important with my current job).
I’m looking at having 6 to 12 months expenses saved up over time.
Where do I invest this money?
I’m looking to save half myself and keep half in my wife’s, as this makes issues on death easier (joint accounts get frozen and the like). This also potentially spreads the interest exemption.
The plan is to save a percentage of all income on a monthly basis till I reach the threshold / top up as extra income comes in.
Emergency Fund is the main goal in the first year working for myself. I will use some of Sam’s knowledge and save for various items in this fund – car related expenses, emergencies, and other non-fun stuff. We will have a separate fun fund (this will be managed by my wife as she is in charge of fun and I look after life).
Like me, Seilatsatsi is trying to find the perfect balance between RA and bond contributions. They say:
Finding your podcast has so far been the best find of 2019 following the best find of 2018 which was Stealthy’s site when I started my FIRE movement.
I don’t have a company pension fund.
I currently manage my own with an RA, a TFSA and an EE account.
I pay more than double on my bond.
One of your listeners noted that one can submit their RA contribution to HR and have the rebate on a monthly basis compared to once annually. With this option, I am wondering if I should work it out as below:
Stop the extra bond contribution and redirect that to the RA.
If the monthly rebate works through my employer, I can put the extra monthly tax break back into the bond. I am very disciplined and this would actually be done.
Another Engineer has some questions regarding tax on property and RA emigration.
You mentioned that one can transfer an RA offshore, to another type of pension, and I understood that you meant that you wouldn’t have to pay the tax. I’ve looked it up, and one cannot ‘transfer’ an RA offshore before retirement; you can have it paid out in cash, take the tax knock, and then take it offshore, IF you have financially emigrated. However, if you have a work pension fund, it seems you can take the cash (minus tax) when you resign, without having to have financially emigrated.
I assume after 55, if you wanted to cash it out, you also have to turn it to cash, take the tax knock (which will be less than before 55), and then take it out.
You mentioned that listed property distributions are taxed as interest. I think it’s actually taxed straight as income, not interest? Unless I’m not understanding what you meant. The property distributions are not part of your interest exemption etc, I think it gets added straight to your “gross income”, with your salary etc.
Edward is currently living in Australia but planning to move back home soon.
I currently live in Australia but will likely have to return to South Africa a few years from now to look after my parents.
I want to start contributing to a tax free savings account but I don’t have a South African address which is required for FICA.
Is there any way to open a tax free savings account while living in another country? Could I maybe use my parents’ address? Would EasyEquities be an option for my TFSA?
Phemelo could relate to last week’s episode on starting over.
The podcast “starting over” summarises what I have been trying to do from end of July to now.
I thought I had a formula, the grand idea that was going to save me, namely to Increase my income by a huge margin.
A prospective employer entertained my suggested offer of a huge increase in my annually CTC.
In Dec 2018 I was flown to Cape Town for final interview. The interview went well, but then the phone call came on 18:38 Friday evening, telling me they “will not be advancing the offer”. I was distraught and shattered. All my plans went out the window. This one job was supposed to take me to the promised land and now “I am starting over”, but I remain positive.
Darryn wants to know what account he should use to save for fun stuff.
I struggle reading financial products at the best of times due to time and also pure laziness, my questions are:
- Is there a specific a account or company you use yourself for this? Can I just use a savings account on the 22/7 app? Are they good?
- Is there a specific type of account to use?
- If saving for a new car and a holiday to Cuba would you put those in separate accounts?
Steve is planning to do some tax harvesting.
I heard about the EasyEquities inter-account transfers function between normal accounts and TFSA, so I sold enough ETFs from my other account to transfer to TFSA. I know ETFs are not sold and converted instantly – I figured T+2 or T+3. When the money didn’t appear, I logged a ticket. I got a reply that the money would only be cleared on 13 Feb, which would be 8 business days later. Is this normal and if so, why so long?
I am building my kids’ education funds in ETFs, but am mindful of the CGT I will need to pay when cashing in.
Considering there is a 40k per year allowance, I was planning on selling and rebasing the funds at times when the CGT liability would be close to the 40k. I am buying 6 ETFs per month for next 15 to 20 years.
How would you suggest managing the CGT liability?
I could keep a spreadsheet of each account and each ETF purchase ( x 3 per child per month etc – for 15 years ) – or is there an easier way? For instance are the providers required to keep the CGT calculation updated for me?
Always Abundant isn’t so sure about the investment potential of property.
I’ve compared the listed property index (J253 – since STXPRO does not go as far back) against the Satrix 40 over a 10 year period and found that property has performed half as well as equities. If this is generally the case in the long term, are there any merits to investing in a listed property ETF other than for diversification? The reason i am considering this is the added tax advantage for listed property in a TFSA.
Hannes wants to know why your friend who sold everything in 2008 missed out.
In episode 124 Simon talks about an acquaintance who sold everything in 2008, and asked to re-buy a few months ago. In that episode he states that “she missed everything”, but I’m confused about this.
I understand there was a massive market swing over the past 11 years, but long term investing dictates that you should hold, so why would she have missed everything if she would have just held through the swing to end up where the market was X years ago due to recent poor performance? Am I missing something here?
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The 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 [email protected].
