Farewell Fatties! (#240)

After five rewarding years as host of The Fat Wallet Show, my time with the show is coming to an end. This episode is a short retrospective of our time together, followed, as usual, by your questions. 

On 30 May 2016 we published the first episode of The Fat Wallet Show. We knew from our personal experience and from our work at Just One Lap that money was such an emotional topic. All so-called financial education came with an assumption that you would already know the jargon and have some basic understanding of how the system worked. Based on the questions we got at Just One Lap, we knew that wasn’t true. 

I had started at Just One Lap a year before that and I was like a toddler, asking a hundred questions a day. These questions weren’t orderly. I’d latch on to one topic, ask every question I could think of, mull it over and come back a few days or weeks later with either the same questions or more questions. I was learning a lot, but I wasn’t learning it all in a straight line, because learning isn’t linear. 

Luckily for me I had a mentor with superhuman patience, who would keep explaining it to me until I got it. I figured if this is how I’m learning about money, this could probably help other people learn too. 

The Fat Wallet Show was an experiment. It was just going to be questions and answers. It was always just going to be two people on the show. We decided to swear in the show, because we swear when we talk to each other normally. We didn’t want any barriers to making the show sound just like our ordinary conversations. We didn’t want experts, we didn’t want to interview CEOs. We just wanted to get together once a week and talk about money.

Since our first episode, the show has been downloaded 717,000 times. We’ve received 2,600 emails. Our Facebook community is 9,000 members strong. We’ve been supported by companies we truly believe in, companies where we have our own money. OUTvest especially has been a true friend to this show. We’ve made friends that I hope we’ll have for life. I’ve been so inspired by the members of this community.

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Ernst, in response to Louise’s question:

Louise is referring to her provisional tax estimates. So there is a timing difference as she will only get her certificate around June but she needs to estimate it now. She needs to run her own calculation and try to get as close as possible taking into account rate adjustments etc. Again tax works on accrual or paid, whichever comes first.

It would seem that she has a considerable amount of interest as she probably uses up her annual exclusion amount. So if she ‘underestimates’ her taxable income she may be liable for penalties if it's too far off. 

She needs to do an excel calc to try calculate her interest so she can estimate accurately before 28 Feb 2021. She cannot wait until she gets paid or gets the certificate.

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Suzanne

I did a little happy dance this week, on reviewing my OUTVEST RA statement. My transferred RA landed @ OUTVEST in May 2020 and the growth YTD has been SUPER! My set R4 500 fee, which is about 0,75% of my investment, has really made a huge difference. I will be saving my butt off over the next 10 years, to reach that minimum 0,2% fee balance.

 This led me down an investment spiral, and after listening to episode 183 again I ended up asking the following question….where are the OUTVEST fixed fee living annuity products?…….

If I am happy with the asset class breakdown, would there be any reason not to be able to continue with my pre-retirement investment strategy, after my retirement date, at the same 0,2% fee?

I have no idea what the general going EAC is for a living annuity, apart from what I have seen on my Dad’s statement – which stated a 1,5% fee.

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Chris

I listened to your Money and Travel episode. Simon mentioned that the SYG4IR is bespoke and doesn’t have a US equivalent - that is partly true.

I fill up my TFSA with SA listed ETFs with risk that I like (STXCHN, STXEMG, SYG4IR, SYG500), build up some cash to make the EasyFX worthwhile and then buy similar exposure in the USD account.

Long story short, SYG4IR tracks the Kensho New Economies Composite Index (KNEX). There is a US-listed ETF, SPDR S&P Kensho New Economies Composite ETF (KOMP US), that tracks the same index. The current hurdle is that KOMP isn’t available on EasyEquities currently, but I have reached out to them to add it to the platform. Perhaps if enough of us chase them it will get listed sooner.

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Doris

I've been a loyal listener since near-inception of the Fat Wallet show (via my spouse, though we tend to listen separately.) 

You kick-started my TFSA journey. Eventually I figured I need to get this RA business sorted (I've been lax due to GEPF; OutVest it was when I eventually got my 💩 together). Going from listening to action is a big step, and I still feel like I'm in process, but getting there. 

The year that was left me with little time to listen to your invaluable show, but #bingelistening ftw.

I've been wondering about marriage (or long term relationships) and investing/saving for a good long time now and cannot find a satisfactory South African-specific answer anywhere. 

As far as I can tell joint accounts aren't really a thing in SA. There's the main account holder and someone else who is granted access.

What are the options for joint savings/investing? If there are any! For instance, saving as a couple for a house: What's the best way to save or invest jointly, in a single place to benefit from two sources of funding, without the account being in one person's name?

As far as I can tell, the main tax implications when getting married is income outside of your salary and how SARS taxes those married/in a civil union. For those married in community of property - this is shared between spouses. For those married out of community of property (with/without accrual) it's only really divorce or death where things have to be figured out. 

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R.C

I have a home that's paid off, a tax free plan with Old Mutual balanced fund (started in 2016). I also have an Old Mutual core balanced fund with a monthly debit order.

Gepf

R.A

Property unit trust

Old mutual equity

I have an investment that matures in May.

I owe 70k on a car (only debt.

How do I make sense of my financial goals going forward? My divorce really confused me and my goals. Should I continue with my discretionary investments and where should I invest the R650k maturing in May 2021.

Please help to put a plan in place as I was looking at retirement at age 56/57.

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Mr P

Ok, your statement on episode 235 about the request for rate review just reminded me to do mine, I also want prime or less.

So, I sent them FNB Housing Finance an email requesting them to review the interest rate on my bond. Unlike last time where they changed the rate with no hassle, this time they sent me a form. I mean a whole Form that I must print and manually complete, scan it and email it back to them or fax it.

I think they are discouraging us from sending these requests with the paper work. I'm certain only people who listens to the show are the ones sending the requests. 

Is there any Fatty whom FNB responded with a form? Otherwise I'm not deterred, I will gather some strength and fill in the form.

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PJ

I recently requested FNB to adjust my home loan interest rate, 6 years into the 20 year term. They immediately reduced the rate with the below information:

"The rate has been amended from 7.60% (P+0.60%) to 7.30% (P+0.30%). Prime currently is 7.00% and therefore your new rate is 7.30%."

My emergency fund of course comes from the Flexi portion from the bond so I requested that if I restructure R100 000 of this flexi amount if they could give me a further reduction. They then replied with: "Furthermore, should you agree to restructure the prepaid amount of R 100 000.00 the bank is willing to improve the rate to 7.20% (P+0.20%)."

Is it worth the 0.1% reduction and not having this money immediately available to me anymore? The money remaining in the flexi portion is still enough to cover my emergency fund needs.

I have a second Home Loan at Standard bank. The rate is somewhat confusing to me. These figures are from July 2020.

Weighted Average Interest Rate (non-VATable) :7.81

First amount :R 0,00 - R 846 000,00 @ 7.77% pa

Next :R 846 000,00 - R 1 128 000,00 @ 7.82% pa

Balance of the loan :R 1 128 000,00 - R 99 999 999,00 @ 7.92% pa

Registration amount :R 1 410 000,00

So I'm trying to figure out, are the brackets just generic or does it mean the more I pay into the bond the less my interest rate will be? i.e. if the outstanding amount goes below R1 128 000 I will pay less interest.

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Stewart 

invested 250K in feb 2016.

value now jan 2021 184K

 only started taking an interest now.want to retire soon!!!

what can i do now??

still very busy with work,but want to stop now.

ANCHOR GROUP LIMITED -

ADH ADVTECH LTD 

APN ASPEN PHARMACARE HLD

ARA ASTORIA INVESTMENTS 

BAT BRAIT SE 

BTI BRITISH AMERICAN TOB

BVT BIDVEST LTD 

CFR COMPAGNIE FIN RICHEM 

COH CURRO HOLDINGS LIMIT 

EOH EOH HOLDINGS LTD 

FSR FIRSTRAND LTD 

MDC MEDICLINIC INTERNAT 

NPN NASPERS LTD -N-

OML OLD MUTUAL PLC 

REI REINET INVESTMENTS S

RFG RHODES FOOD GRP HLDG

SNH STEINHOFF INT HLDGS 

SRE SIRIUS REAL ESTATE L

STP STENPROP LIMITED 

WHL WOOLWORTHS HOLDINGS

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Louise 

By now all Fatties are aware of the two ways to invest offshore:

1. a) use your foreign investment allowances, and
2. b) via an asset-swap, provided that the FSP has adequate asset swap facility available, as regulated by SARB.

My questions relate to the latter:

1) What determines an FSP's asset swap capacity?

2) How can a retail investor check this?

3) When / how can an FSP replenish this facility?

4) Is it better to stick with product providers with ample such facility?

E.g. Sygnia recently ran out of capacity, which meant that, temporarily, their living annuities could not allow for a large offshore investment component via asset-swap. This was temporarily limited to 30%. Theoretically one can invest 100% offshore in your living annuity, should you wish to do so.

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Jen from Damn Good Looking

My parents have recently sold their house and will have money to invest in the coming weeks.

They are in their mid-70s and they have various bits of income aside from this amount like foreign pensions, my Mom's pension from her job and until covid my Dad ran a business and will hopefully do so again.

They also have a living annuity with Ninety-One that is invested in Nedgroup Investments Property Fund A1, this was comfortably covering their living expenses but they have drastically reduced their drawings because of how horrifically this has performed over the last few years. It is actually nauseating.

My Dad wants to put this money into an income-generating product and has hinted at possibly even just adding it to their existing annuity (if this is possible) - I want to ask what you and Simon would suggest? My feeling is that adding to the existing annuity is a rubbish idea because their timeline is not a long-term. Their living-annuity has really been atrocious and to me this seems like a good chance to find some better and that could add some diversity to their situation.