The Fat Wallet Show from Just One Lap - #67: Investing for immediate income

#67: Investing for immediate income

Explicit content warning

10/01/17 • 57 min

The Fat Wallet Show from Just One Lap

So much of what we discuss on The Fat Wallet has to do with investing for some future date. We never really get around to what to invest in if you need money right away. Unfortunately the first thing you need, for those of you who suddenly perked up, is capital.

Listener (and great guy) Daniel Jacinto is paying for his parents’ medical aid with income from a buy-to-let property. Since discovering The Fat Wallet, Daniel has realised there’s more than one way to skin a cat, and if that way doesn’t have to involve levies and maintenance it’s probably more fun.

This week we discuss Daniel’s options, as well as the cool new products we love and we get to peek inside a very decent investment portfolio. Since we haven’t recorded a Fat Wallet in two weeks and haven’t really had a chance to hang out since Simon’s return from holiday, this one seems to get to the one hour mark without us.

Links and sources

At the beginning of the episode I get a bit lyrical about Stash.

We also talk about a new robo advisor from OUTsurance. Find OUTvest here.

We didn’t think it was possible, but our Listener Love Index seems to be doing worse than before.

Kris

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Links and sources

At the beginning of the episode I get a bit lyrical about Stash.

We also talk about a new robo advisor from OUTsurance. Find OUTvest here.

We didn’t think it was possible, but our Listener Love Index seems to be doing worse than before.

Kris

Subscribe to our RSS feed here.
Subscribe or rate us in iTunes.
Sign up here to receive an email every time a new show goes live.

Previous Episode

#66: The best time for bonds

If you’re a Fat Wallet regular, you know I love thinking about bonds. Despite my fascination with the asset class, I don’t hold any outside of my retirement annuity. If all goes well, I won’t be cashing in my investments for the next 20 years. Bonds are a more conservative asset class. They reduce volatility, but they have an upside limit built in, and I’m a sky’s-the-limit kind of gal.

This week, listener Dale Towert reaches the same conclusion about bonds, “Everyone says a well-diversified portfolio should consist of stocks, bonds, property and cash. At what stage do you think it’s a good idea to start introducing bond ETFs to your portfolio?

I’ve been restructuring my portfolio, and thought it might be a good idea to have at least 10% exposure to bonds. This got me thinking: the purpose of bonds is level out the ups and downs of the rest of the market. At 10%, if things go really badly in the rest of the market, 90% of my portfolio will still go down with the market. At the same time, if things go well, 90% of my portfolio will also go well. In other words, at 10% the effect of the bonds will be fairly minimal.

To have a greater levelling effect, you’d need much more than 10% in bonds – probably closer to 40-50%. But the returns (incl. interest) on bond ETFs is pretty poor over time, so unless you are already, or about to retire, this doesn’t make sense either.

At what stage do you think it’s a good idea to start introducing bond ETFs to your portfolio, and at what percentage (if at all)?”

In this podcast, Simon and I discuss the bond dilemma. We also talk about having more than one retirement annuity, Sygnia funds, what will happen to Steinhoff shares and whether biotech is the future of money.

Links and resources

We pre-recorded this episode on 13 September, so we have no idea where the Listener Love Index is, but if past behaviour is a predictor of future behaviour, I’m not hopeful.

Kris

Next Episode

#68: ETF pricing and side hustle tax

The Sygnia World and Satrix World exchange-traded funds (ETF) both track the MSCI World Index. ETFs are priced on their net asset value. That means the share price is calculated by adding up the prices of the shares within the ETF to arrive at a fair value. Unlike ordinary shares, ETF unit prices are not subject to the forces of supply and demand to the extent that ordinary shares are. When there is demand for ETF units, the market maker produces more units at fair value. When there is too much supply, the market maker buys back units.

How is it then that the share price movements of the SYGWD and STXWDM aren’t equal, asks listener Gerhard Jacobs this week. Simon and I discuss the impact of dividend reinvestment on price, as well as the unreliable nature of the closing auction price.

Aiden Whitaker not only inspired young listener Ernst Jordaan to start making his dreams a reality, his question also got Kenneth Collett and De Wet de Villiers thinking about tax efficiency for a side hustle. Kenneth suggested registering a small business corporation to reduce his effective tax rate from 27.4% to 24.8%. De Wet finds a way to reduce that amount even further, to 21.08%. We discuss this voodoo in this episode.

Links and sources

If you are a South African living abroad, you might want to pay attention to the proposed changes to the 185 day tax resident rule. Thank you to Kim for bringing our attention to this Moneyweb article.

Listener Love Index

It’s a tough time to be in the love business.

Kris