Podcast: The two-stage FIRE approach

Kristia van HeerdenLatest, The Fat Wallet

If you went into formal employment straight out of university or school, odds are you have some sort of pension fund or retirement annuity. You may since have realised the idea of working until you’re 65 is entirely optional. If you’ve already allocated a large part of your income towards your retirement, you need to find a way to incorporate that money into your early retirement strategy. 

Our friend Kris has been giving some thought to this process. Your challenge lies in balancing two investments. Your discretionary investments should see you through to the age where you can access your retirement fund. The longer your discretionary investments can support you, the longer you can wait before accessing your retirement product.

Once you start tapping into your retirement fund, you need to manage your draw-down rate carefully, so you don’t run out of money before you run out of body.

In this week’s show, Simon and I discuss the merits and pitfalls of this strategy. In general we find it to be Very Good.


I have some questions I thought to send to you guys about a two-stage FIRE – which is very relevant to SA since we cannot access Retirement Funding (Pensions, RA’s) until a certain age. The USA (where more FIRE content comes from) is different since they have some hacks where you can “convert” retirement funding to income before you hit that age. I am surprised its not a bigger topic in the SA FIRE community. 

I had the idea for the two-stage path to FIRE and developed an approach – which basically means accumulating a large enough discretionary investment (DI) pot to last until your retirement funding (RF) income kicks in (say at age 65). This means the DI can be drawn down at a rate higher than 4%, since it need not be as large as 25x annual expenses – it just needs to last until formal retirement age. 

In the background however – your RF needs to grow from the day you stop working to a level that will satisfy the 4% rule at retirement age.

The bleeped show is below:

Win of the week: Ricardo

And Martyn. Check out his business here.

I’m new to the investing world, and it’s pretty exciting. I’m also an active investor in the Netherlands via DeGiro. I’ve been lucky enough to join two online investor groups. These online groups are hosted on a site called Discord Chat. It’s pretty awesome, because everyone can interact and there’s a whole lot of Q & A involved. 

I’ve learnt SO much in the 3 weeks I’ve been in these groups and I think it could be so beneficial for young South-Africans to share their experiences with each other. The chat allows for different categories (i.e medical aid, insurance, passive investing, personal finance, active investing) and categories like “idea’s” where people can share topics on which they want more info on. 

Hope you think this is pretty cool too – and that we can start an awesome online community of people passionate about personal finance. 


I have excess cash in my savings account and want to invest in an ETF. Is it the right time now?

I have been looking at the Allan Gray Balanced Fund which has a nice diversification and 51% SA equities and 29% foreign and is at an all-time low but the 10 year prediction looks good.

I am also looking at the Satrix capped INDI ETF which is equities-heavy and also at an all-time low but the 10 year prediction also looks very promising.

I’d rather invest now than having my money sit in the bank. In these uncertain times, what do you suggest I do?


To curb my wife’s over-reliance on me for income (for her stokvels and cosmetics), we constructed backrooms and for the majority of the Tax Year, they were bringing in R2 200 per month and that has since increased in January 2020 to R4 500.

All this money goes to my wife’s account and the intention is to have it declared as her only income for the Tax Year.

My question is whether SARS would rather have us splitting the rental income as it is coming from our joint property or it is okay for me to file mine as I’ve always done?

Talking about declaring rental income, I am realising that we don’t have lease agreements in place and am wondering what would SARS require as source documents for the income. What sort of documents do we need to have in place before filing?


What are SENS announcements? when are they used? are they mandatory? where can we find them? is it important to know about them to average investors? Any tips or useful info about them?


I took it out in 1999 and not really sure if it’s performing like it should. I don’t even know where to start. They want to put it (by this she means her contributions) up to R18 000 per month which I think is just crazy. I know I will be penalised for cancelling but I just feel like it’s been a waste of  time and investment .

Would you be able to advise on what to do in this situation ?


I’ve got an FNB Share Saver account, which invests into the Ashburton Top40 and Ashburton Midcap for you.

I figured if you invested R1000 they’d send about R500 toward each ETF. But I see they work out how to divide the money so that they buy the same amount of units from each. It struck me as weird ’cause the Top40 costs about R46.16 and the Midcap R5.65 at the time I’m writing this. So R1000 gets me 18 units from each, which means the Rand value of my investment in each ETF is very different.

What’s more important here? Why do they do it this way?


We are currently stuck on site with no prospect of leave seeing as all the borders are closed and our charter flight can’t take us to Uganda. There are no flights leaving from Uganda to SA. We’re here for the foreseeable future, producing gold at full capacity. It’s not the worst place to be, earning in Dollars with the current ZAR/USD exchange rate. More money for ETF’s 🙂

My financial journey started around two years ago – thanks to the book “Manage your money like a fucking grownup”. 

It completely changed the way I think about and manage my money. Before reading the book, I had humongous study loan debt, an awful RA and TSFA sold to me by a greedy Sanlam advisor and no idea on how or where to invest my money. 

I paid off all my debt, fired my advisor and I am in the process of moving my RA to Sygnia (will move to Outvest once I reach R400k) and my TFSA to Easy Equities. I was also able to build up a solid emergency fund. 

I started to listen to your podcast just as the markets crashed – and realised I needed ETFs. Luckily, I had a lot of cash sitting in Money Market funds, and could buy when stuff was dirt cheap. I have chosen an asset allocation of 40% local equities (Satrix 40), 50% offshore (Satrix MSCI World + Emerging Markets and a bit of Sygnia Japan just because it tickled my fancy) and then bits and bobs in bonds, cash, property and a small bit of gold (just to support my industry ;)). 

I will look at the Ashburton 1200 in the near future – hopefully it can rule all of my other offshore ETFs. 

How do you feel about EasyEquities? Is it safe to use as my only investment platform, or should I diversify and use another platform for my TFSA? Do you have any other suggestions for nice/cheap platforms I can check out?

When I am back in SA again, I would love to meet you guys at one of the meet-ups and have little chat. You guys are awesome, and you make the time here on site much easier to bear. Lastly, send me an address and bubbles of choice so that I can courier a bottle or two to you as a thank you. It is the least I could do for the wonderful advice and laughs you have provided to me.

Santosh wants to know whether he should review his portfolio in rands or dollars?

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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