The Fat Wallet Show with Kristia van Heerden

Podcast: What’s next for my money?

In Latest, The Fat Wallet by Kristia van Heerden

It took just over two years to pay back my debt. Debt servicing became such a part of my lifestyle that I was completely unprepared for the last payment. I knew, on some theoretical level, what I wanted to do with my money once the debt was gone. However, a part of me thought it would never happen. I was worried about debt for so many years that I wasn’t prepared for the day I didn’t have any. It was disorienting.

In this episode, we try to prepare you for the next phase of your money that is currently crawling towards you. Keep this episode saved somewhere. It’s a roadmap that will get you to the next step. We do a “what next” for each of the below phases of your money life:

 

  • Debt
  • Recently settled debt
  • Starting out at 0
  • Emergency fund in tact
  • RA in tact
  • ETFs bought

Clean swearing bleeped out show is below.


Win of the week: Matome discovered us through Stealthy Wealth.

I’ve only recently discovered your podcasts (well actually a few months back but I have been listening to many of the oldies of both the Fat Wallet & JSE Direct) & just want to give you guys a BIG shout out for all the great stuff you are doing.  I have learnt SO MUCH!!! & now I am taking my finances into my control.

I was actually introduced to Stealthy Wealth from a friend, a real miser, but great guy and through his blog I learnt about you guys. So here I am!

I suppose one of my greatest learnings from you guys is that your retirement planning has nothing to do with your income, but everything to do with your expenses. That’s better than real gold!  It doesn’t take millions make it, but you can make millions by knowing that one little sentence! AWESOME STUFF RIGHT THERE.

This is the first of my many mails I will be sending you guys & I am seriously looking forward to learning more, making bigger & better decisions.

Also Phasane for taking charge of his RA situation.

After listening to a number of your podcasts, I finally gathered enough strength to look at what I signed up for on 13 November 2013. These suckers would be charging me an ongoing commission of 5.7% from year 5.

How did I sign up for this? I’m glad I learned about your fat wallet podcast when I did.


Chris submitted an awesome spreadsheet. He’s wondering about his investment strategy, specifically a growth strategy vs a dividend strategy. What makes this hard is the dividend withholding tax, which he bypassed by focussing on a tax-free environment.

Dividend vs Growth


Justine Burnelli is selling a house and downscaling big time.

We’ve decided to move to sunny Durban and are selling our house. We bought six years ago in a good area so we’ve had strong growth.

Any tips on selling a home? We’re going with one of those online fixed-fee estate agents.

We’re planning on renting a much smaller place in Durbs since we came to the realization that there were rooms in our current house that were basically unused.

That leaves us in a bit of a conundrum: how does one get rid of all this stuff? Have a garage sale? But who wants a slightly used toaster?

movingon.co.za

What does one do with this massive pile of cash once the house gets sold?

I’d just like to park the money someplace until we can figure out where to find a more permanent home for it. Feeling really uncomfortable dealing with 7-digit numbers. I’d like to think I’m financially savvy enough to know what to do, but am still feeling out of my depth.

Small mistakes could result in big sums of money going to fees and taxes. Was thinking along the lines of the TRACI or gov retail bonds. What other short term 3-year cash-like instruments are there, besides these two and fixed term deposits at the bank?

If I do invest the house sale proceeds into the MAPPS Protect ETF, will the market allow such a large transaction? Would the market maker simply, automatically create new shares, or would the price just shoot through the roof until all the shares available have been bought up.

What then happens when i want to sell one day? Is an ETF liquid enough to allow transactions of say 5-10% of its market cap to take place?


Wim is making the most of rewards programmes. 

My wife and I are at Investec and we have decided to use our rewards to re-invest in Financial products on rewards program. We have invested almost R30 000 rand over last 5 years in a global Investec equity feeder.

We get R500 voucher for every 10 000 points. Only snag is you have to buy Investec product and have at least R10 000 rand in product. (Lump sum) Initially used money from extra money in home bond. Our cards are credit card but use it as debit card. All reward point goes directly into investing not spending.


Nicole recently scrutinised her retirement fees. She is 52 and she can move her RA without penalty at 55.

I have learnt a lot from your show. Like everyone else I just wish I had had these insights 10, 20 or 30 years ago. For this reason, I am opening TFSA for my children and for every R100 they deposit, I will deposit R150 and then help them to invest it in an index tracker fund.

I contacted my provider (PPS) for a breakdown of fees and found out that I am paying 2% effective annual cost.

I told my advisor I’ve been sensitized to the importance of fees and I want to stop contributing to it and just let it sit there (I am 52 – I could move it with no penalties I presume at 55 years old).

Despite this being an old generation RA, it has done surprisingly well by my calculations. But still – the 2% fees is concerning for me long term.

Anyway, my financial advisor returned with a counter suggestion to decrease my EAC by moving from PPS to AIMS.

I am feeling frustrated, as this suggestion comes only after I say that I am going to stop contributing to my PPS RA due to high fees.

I received the below comment of my financial advisor:

“Going direct to an asset manager is not necessarily cheaper. By going direct, the asset manager will always place you in a more expensive Class. Class A is more expensive than Class B,C and D for example”


We also got an RA question from Robyn, who is in the unfortunate position of having to take care of grown-up family members.

I’d like to open an RA or TFSA for my sister, as I do not think she will have nearly enough to retire on. She is 45. I also cannot trust her with money, so I would like to make investments in her name, but preferably that I control, since it is my money in there anyway.

Would you suggest an RA or a TFSA?


Nduh is from Durban. He is 30 and started investing three years ago. He’s considering a few moves.

I’ve been investing R2000/month in TFSA since the first month it was introduced with etfSA. 

They are charging me 1% and I want to run away because its means it’s going to cost R1000 per year once I have R100,000. My TFSA with etfSA is an all equity account d other R750 monthly is in property (local & offshore) with our DARLING EASYEQUITIES.

I want to move this R100K to easyequities. Etfsa invested in a number of ETFs. Should I sell all the ETFs after moving to EasyEquities and create something simply that I will understand or keep them?

I recently bought a brand new second hand car on finance and this thing of paying interest stressed me as a result I cancelled a monthly debit order(R1000) to my RA (sygnia) and diverted it to pay extra on my car. I have provident fund with my employer where i contribute 18.5% since the age of 24. What your take on this move?


Clara wrote us about a year ago about a rental flat in Cape Town. 

We sold our home near Cape Town and have moved to the EU with our kids and cats and dog.

I was very interested to listen to your episode with Patrick McKay because he discussed investing overseas, which is something I need to learn about, having sold our house in SA and not yet being ready to buy in Europe (if we ever do).

  1. How do we go about applying for a tax clearance certificate, and do you think I can do it myself or should I hire a tax elf in SA to do it for me? (I have been filing SA taxes myself, but I don’t feel very good at it!)
  2. As far as I can tell, I still have to pay SARS tax on any income earned in SA (interest) even though I’m not a resident. Does that sound right?

Ros noticed a new fee. This can’t be good.

On a recent statement of mine from Absa Stockbrokers, I noticed a line item “ETF Fee” for each of the 4 Sygnia Itrix ETFs that I hold. It was the first time I’d seen such an item. I emailed Absa about it, and they pointed me to Sygnia. Sygnia replied:

“The ETF fee item refers to fund fees accumulated between the last two distributions. This period would have been 6 months for most funds, if not all. The fee accumulates monthly and only gets deducted off the distribution. The ETF fee has always been applied but may be been deducted in the background by your service provider.”

Can you shed any light on this?


Farhan is 30 and really wants his money offshore.

I save between 10% and 25% of my salary monthly, which is split between:

  • House: R1.1M with 600k debt (10.25 rate)
  • Allan Gray RA
  • EE account
  • EE TFSA
  • Investec 3 year investment: 100 in, 159 out in 2021
  • 280k debt on a car (cough cough) 10.5 rate – should pay it off in a couple years.

Should I pause all investment and just pay off my car? Or do I make good headway but accept 10.5% cost of debt in exchange for portfolio growth?

I don’t have a lot of faith in the rand, so have been moving my liquid investments into ETFs with global exposure. That said, I’m very aware that the vast majority of my investment is tied up in my house. Do you think pushing every bit of my portfolio into foreign exposure ETFs is a bad idea? Or a great one? Why?


Wicus made such a good call to save money. 

I’m doing my articles and decided to move in with my parents next year until I finish it.

I’m going to save R5 000.00 per month because I no longer going to pay any rent. I’m very privileged that I don’t have any debt and all the money I save I can use it to benefit for my future.

I already opened a tax free and balanced fund at Allan Gray but only recently discovered that the transaction fees are going to hurt me in the future.

Do I need to move my tax free because I’m planning to use that money when I am 70 years old so still have 46 years left to build that investment.

How do I save the money I’m going to save staying with my parents. I want to save the money for between 8-10 years and want to use that money for a deposit to buy a house in the future.

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