Podcast: Where budgets fail

In Latest, The Fat Wallet by Kristia van Heerden

Conventional wisdom has it that a budget is at the heart of any successful financial strategy. My wisdom has it that a budget is an excellent tool for self-deception. Nobody was better than drawing up a theoretical map of how money should be spent than me not spending money that way.

In this episode we discuss where budgets fall short. We each share our own approaches to budgeting and offer some more useful alternatives.

Beeped show is below.

Win of the week: Ken from the Fat Wallet Community Group on Facebook.

I’ve looked for a post on STXWDM + STXEMG vs ASHGEQ in various places, including this group but I can’t find one.

In episode #85 ASHGEQ was voted by Kristia and Simon as the one ETF to rule them all.

Stealthy Wealth voted for STXWDM as the one ETF to rule the world.

The argument for ASHGEQ is more diversification + emerging market exposure.

The argument for STXWDM is lower fees.


The argument against STXEMG could be too much Tencent exposure. In episode #72 Simon did some math and determined that there was less Tencent than in a JSE top40 index, so that seems ok.

Does it cost more to hold two EFFs than it does one?

STXWDM has a TER of 0.35%

STXEMG has a TER of 0.40%

For the sake of simplicity, I’ll assume they both have a TER of 0.4% and R100 is bought in a 50/50 ratio.

Holding only one ETF = 0.4% of R100 = R0.40

Holding two ETFs = (0.4% of R50) + (0.4% of R50) = R0.40 i.e. same same but different.

ASHGEQ has a TER of 0.6%

Does this mean that the combined cost of STXWDM + STXEMG is less than ASHGEQ?

I presume there would be the cost of an additional trade? Two trades vs one. I don’t know what that cost would be.

Using EasyEquitites to purchase the ETFs, would buying both still work out cheaper than ASHGEQ after considering both transaction costs and TER?

Assuming that the cost does in fact make it cheaper to buy STXWDM + STXEMG over ASHGEQ, and assuming those are the only two ETFs one buys, I’m interested to hear in what proportion you guys would suggest buying them, assuming a time horizon of 20+ years?

In Stealthy’s article he says, “I estimate the Emerging Market component of the Ashburton 1200 to be 3.5%, but let’s be generous and call it 5%.”

Following that, one might buy 95% STXWDM + 5% STXEMG to emulate to the ‘one ETF to rule them all’.

But just because that’s the ratio of the ASHGEQ, doesn’t necessarily make it the best ratio, and so I’m interested to hear what ratio others would suggest?


I’ve had one for a few years now, and there are the stupid things that they do for me which I can live without. They do help a lot with emails getting lost in the big ship. There have been a few times where I’ve requested cession documents, interest rate adjustments, etc. where it would take very long to sort out, and if I put my private banker on the matter, it’s sorted within a day. I’m busy moving my tax free shares account over to EasyEquities, and I’m battling, this is where he will come in very handy.

I’m soon not going to have one anymore, I’m downgrading my account to save on fees. Slightly ironic that I need this paid service when I want to invest better.


What salary is referred to when people talk about % of salary going to savings. Is it:

  • Cost to company, which Includes employer’s contribution to: Pension/Provident fund (to which her employer contributes 10%) and 60% of medical aid, UIF
  • Gross salary (Cash salary excl employer’s contributions as above)
  • Take-home salary (Deductions: Tax, pension fund contribution (7% of cash salary) , 40% of medical aid, UIF, Group Insurance)

When they ask about “after tax salary”, is that cash salary minus tax but still including my other deductions like PF and Medical aid?

They (her pension fund provider) have a normal one indicating what my annual costs would be if I continue with the policy. Then they say I should use an alternative table if I’m considering moving the RA to compare with the new provider’s costs.

Are they trying to make themselves look better (still horribly expensive) or why would the second table apply?

At the moment I compare the current fund value plus the ongoing fees (table 1) against the termination value (> R50000 penalty) and the new provider’s fees for the remainder of the term 8-11 years( 55-58 age), am I missing some point with this 2nd table?

Column two:


EAC if you are considering replacing your investment

The table below shows the EAC calculation assuming that you terminate your existing investment immediately. The EAC table of the alternative product needs to be compared with

the information below in order to determine whether or not the replacement may be in your best interest from an impact of charges comparison perspective.


With the upcoming elections in the US, there is lots of talk of certain technology companies having to be split up (either by congress or public pressure) (these include Amazon, Facebook etc). What happens to these companies that are major constituents in an ETF?

If Amazon (which is now around 9% of the NASDAQ 100) decides to spin off Amazon Web Services into a different company, what happens to something like the Satrix NASDAQ 100 ETF? Do those new shares simply land up in the constituents immediately, or will it only benefit at the next rebalancing date?

Essentially – do ETFs actually benefit from these occurrences?


An important advantage for new investors in using ETFsa would be the advisory service combined with the no fee on moving products to different providers in the future. It allows new investors to grow and get advice and if in the future with what they have learned they think their money is better off in a different RA product or TFSA then they can move it at no cost. I think this would help avoiding many rookie mistakes. Plus at the beginning the fees of a smallish portfolio will not have a huge effect in the future.

And the one thing that made me the happiest is that they will manage the transfer of existing products my wife had in Old mutual, so we will not have to do any admin! just for that it’s worth it!


The 1nvest product tracks the the MSCI World Index. It has a total investment charge of 0.5%, with a total expense ratio of 0.4%. It’s almost identical to the Satrix product, except it pays dividends, while the Satrix MSCI product is a total return ETF. 

Where can I see where, when and how much my dividends in Asburton will be?


I’ve resigned. I am not sure if I should split my fund into 50/50 between RA and preserve preservation fund. I am 43 and starting a new job in Feb. Which preservation fund and pension is better?


I only discovered your show about a month ago and have been binge listening ever since. I am a scientist with the government. I don’t know if you collect scientists in bottles as well, or is it only engineers? I have a great pension plan and 100% of my expenses will be covered once I retire. My other investments are just bubbles money!

Currently  85% of my discretionary investments are in a RA with shitty returns due to me paying for Old Mutual’s Christmas party every year. I am in the process of fixing this. The other 15% is in the MSCI World ETF.

 I created a spreadsheet with sector distribution for each and then calculated the total % for each.

I want to have at least 15% in Technology,10% in industrials and 15% real estate. This is personal preference only and not based on anything.

To do this I have calculated that I need to invest the following

31.5% in an Industrial fund (like Sygnia ITRIX 4th industrial revolution global fund)

8.5% in REIT

This will leave me with the following:  MSCI World    8.7%

                                                                        RA                     51.1%

                                                                        Industrial fund     31.5%

                                                                        REIT                  8.7%

 What do you think about this kind of approach? does it make sense, or am I going to over expose myself?

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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