2018 Is A Wrap

2018 is a wrap! 

We are fast approaching mid-December, and by now everyone is probably wrapping up (did you see what I did there?) and preparing for some well deserved downtime – myself included.

So this will be the last blog post for the year, and I thought I would use it to look at some off-topic numbers around the blog and to take care of some admin.

The You Being Ripped Lookup Table

Sometimes being ripped is cool,
sometimes it isn't

South Africa has come a long way in the ETF space - 18 years ago the Satrix 40 ETF was the only available option, these days there are more than 70 different ETFs available. As a result, for a lot of indices, there are now multiple providers offering ETF products - for example there are now four Top 40 trackers to choose from.

This is great, because it means that competition is hotting up, and as a result costs have been coming down – for example the original Satrix 40 is now available at a TER (Total Expense Ratio) of just 0.1%. Peanuts!

Why Are South Africans So Bad With Personal Finance?

Since when do they teach noughts and
crosses in Maths?

It’s an interesting question right?

But maybe before diving in, we should discuss the validity of the question. So, are South African’s bad with their finances?

Well a quick glance at the media and some recent research reports seems to indicate that South Africans are not doing the right things when it comes to debt, saving, investing for retirement, and by extension, their personal finances in general.

Home Loan Gymnastics - How Bendy Is Your Bank?

Which home loan providers are willing
to reduce the weight of the ball and
chain?

A few weeks back I wrote a blog post on how I managed to score R83k by sending a simple email to my bank requesting an interest rate reduction on our home loan. As expected, many of the blog's readers, being the money savvy type and not shy to hack their way to a reduced interest bill, got in on the action and contacted their home loan providers with the same request.

These reader's requests were met with varying degrees of eagerness by the banks, ranging from the banking talk equivalent of “we so glad you asked, here’s some free money ” to “kindly f-off!”

Debt – Interest Isn’t The Worst Part

Never pick up heavy percentage
symbols. 

People who read this blog are generally pretty money savvy (and if not, hopefully will be soon). So I’m pretty sure that you already know how bad compound interest working against you can be (for example, how it can result in you buying a car for your bank.)

And then of course there is a lot to be said about about the opportunity cost – if those debt repayments were invested instead, it could leave you with a tidy sum of money as compound interest pushes you forwards instead of holding you back. So I won’t bore you with the numbers because you already know the dismal picture they paint.

The Best Preservation Fund In South Africa

Money for jam. 

Okay, confession time - I think I need to come clean about my dirty little secret.¹

Despite strongly advocating that everyone should keep their investment fees to a minimum, I haven’t exactly been practising what I preach with all my investments – specifically my preservation fund.

How One Email Saved Me R83,000

An email I would love to receive! 

I am feeling pretty chuffed with myself - not only because this post's title is probably the most click-baity one I have ever come up with, but because I recently managed to score myself around R83,000. And with only a tiny amount of effort.

In fact this was probably the single most worthwhile thing I have ever done in terms of the time and effort to reward ratio. And all while taking absolutely 0 risk!

Where's Your Money?

Playing chicken with your investments. 

Diversification is a term that the cool kids investment professionals like to throw around a lot, and for good reason – as Nobel Prize winner Harry Markowitz put it:

“Diversification is the only free lunch in investing.”

Okay, so diversification is important, but what does it mean?

In simple terms, diversification means not putting all your eggs in one basket. But we should probably take this a step further and also avoid putting all our baskets under one roof.

The 4% Rule - Does It Work In South Africa?

4% of the South African flag 

How much money do you need to be financially free?

This is a question that each and every single person should ask themselves.

Putting your head in the sand and hoping that your compulsory monthly contributions to your company's pension fund (if you are lucky enough to have one) is going to be enough for your retirement (early or otherwise) is not a very good strategy.

The Ugly Side Of Home Loans

Home loans - not always fun!

Home loans are sneaky beasts – on the one hand they enable many to reach their dreams of home ownership, but on the other hand you can be sure that the banks aren’t dishing them out for free - there is some good money to be made off of Joe Consumer's home ownership aspirations. The interest bill on a home loan usually ends up being in the millions.

And although my Early Retirement Plan dictates that I will be putting almost all my discretionary savings into equity investments, the numbers in this article have certainly given me some food for thought…

Medical Aid - Why I Stay Away From A PMSA

What an album!*

Although it was around a 10 years ago, I remember the day very well. I walked into the Doctors rooms for my appointment, flashing my medical aid card around like a magic wand, comfortable that I had more than enough in my PMSA to cover the doctors visit as well as any medicines which may be prescribed.

I felt like quite the VIP (although in this case the abbreviation should probably be amended to Very Infected Person)

Do You Know Your Inflation Rate?

The inflation monster - hungry for
your money! 

It’s a gripe people have had ever since I can remember - the official South African Inflation Number does not accurately reflect the actual inflation people experience. And I guess it is a fair point.

The way the inflation number is calculated, is by keeping track of a number of items in an imaginary "inflation basket". Every month Stats SA checks the total cost of that basket and releases this number as the CPI (Consumer Price Index). The change in CPI is then pretty much what we call the inflation rate.

I'm 21 Again!

The key to some important financial
decisions

I recently turned 33 years old, which in itself may not seem very significant. However there is a totally lame pretty cool way you can make yourself feel young again – by converting your current age into hexadecimal¹ (it doesn’t always work, because you sometimes end up with letters in your age, but when it does, the psychological injection of youth has been know to put a smile on anyone's face.)

Anyways, after doing the conversion, it turns out that I just recently had my 0x21st²  birthday.

Hacking Tertiary Education

B.Sc. Computer Science?

Tertiary Education is expensive – old news. And it is only going to get worse with tertiary inflation averaging around 9% per annum, and even brushing up against double digits in some years.

It is something that was on my mind from before Stealthy Junior was even born, and for that reason I started putting money away for his possible Tertiary education from pretty much the first month after he was born.

Is 86c Expensive?

Who remembers these?

A while back I listed the ETF’s with the highest Total Expense Ratios (TER) in a post on my Facebook page. The most expensive one came in with a TER of 0.86%.

Someone commented on the post asking what a TER was, and so I explained the concept and used an example which equated to saying you pay around 86c per R100 you have invested every year. Someone else then commented saying that that is really not bad if we consider that to be expensive.

When Is The Right Time To Invest In Cryptocurrencies?

Well, that's one way to short a circuit
board... 

The incredible buzz (with associated rise in price) and then subsequent return to some semblance of normality (and related price drop) of Bitcoin reminded me a lot of a graphic I came across a few years ago.

The graphic was meant to illustrate how new tech generally goes through a cycle.

I Love Capital Gains Tax

Said no one...ever!

If all goes according to plan, I will be financially free in around 12 years from now.

The idea is that, at this point, I will be able to cover my living expenses by drawing an income from my investments.

This income could come from a number of sources including (but possibly not limited to):

The Easiest Way To Pay Off Your House In 15 Years

It's Home-Loan-Free 'O Clock

This is not an article about finding an extra couple of hundred bucks and putting it into your bond each month. It is not about moving your debit order from the 1st to the 25th, or putting half your annual bonus into your home loan. And it also has nothing to do with allocating a portion of your annual increase towards your bond each year.

50 Shades Of Brown

Simon says 

My apologies to Simon for the title, but I just couldn’t resist!

A couple of years ago, I found myself at an event which I really should not have been at - I was a proper finance noob. But as luck would have it, I was there, and one of the speakers at the event was a man named Simon Brown.

I found his talk that evening to be both informative and entertaining, and so the next day I went and checked out this Just One Lap website thing he mentioned.

Flipping Property

Low TER you win, high spread you
lose. 

My preferred ETF for local equity exposure is the CoreShares Equally Weighted 40. But something that has been bugging me for a while, and which I saw again during my latest round of monthly buying, is that the spread on this ETF is pretty high – especially compared to similar(ish) ETF’s like the Satrix 40.

(For more information on spreads, there is a great write up here )

It seems that the CoreShares Equally Weighted 40 market maker consistently has a spread of over 1.6%. By comparison, the Satrix 40 market maker has a spread of around 0.4% - that is 4 times less¹!

A Reader's Story - Debt Free

Winning at Scrabble finances 

A few weeks ago I opened my inbox and found an email titled “Debt And DSTV Free!”

The email was from one of the blog's long time reader's, Chris, and he was happily wafting his new found debt freedom in my face. (You may remember Chris as the guy who sent in the query which resulted in the "Pay Off Bond Or Invest" post - I guess it is obvious now which way he went.)

A Retirement Plan No One Will Tell You About

Stealthy Junior's latest creation 

For those of you who do not know what a TFSA is, it is basically Government’s way of giving you money encouraging people to save and invest. Everything you put into a Tax Free Savings Account is…well….tax free (can’t imagine how they came up with the name…)

So you won’t pay any Capital Gains Tax, and you wont be taxed on any interest, income or dividends. In short TFSA’s are pretty awesome.

A Reader's Story - 1 Year After A Car Downgrade

It's simple Maths 

Long-time readers of the blog (Stealthites?) may recall this blog post from around a year ago dealing with a Reader’s car dilemma. The long and short of the persons query was whether they should downgrade their expensive car or not?

The answer seemed obvious – ditch the expensive car and get a cheaper one.

Reducing Your Tax By Investing Offshore

By the time high tide arrives, your
money is gone. 

Like most people, I am all for reducing my Tax bill (legally of course – apparently prison isn’t fun!) So whenever I see a tip or a trick to go one up on the Tax man, of course I get curious. One such Tax hack, which I have seen mentioned a few times, is minimising Capital Gains Tax by investing directly offshore in a foreign currency, such as Dollars (instead of buying locally based offshore products Rands).

So I had a look to see if it was something worth pursuing.

What's New In Stealthville?

New - like Ramaphosa's cabinet

There have been some developments on our ever changing, unpredictable and exciting road to financial freedom. The latest being that a few months back my wife and I took the decision that she should apply for the toughest, but probably most rewarding job known to mankind.

She submitted her application, and since it was obvious that she was the most qualified and, without a doubt, the best person for the job, it came as no surprise that she was accepted.

She put in her notice, and made the switch.

How To Become A Millionaire - It's Easier Than You Think

I guess that's one way of doing it! 

Ah yes, the magical 7 figures. The stuff dreams are made of!

Being able to call yourself a millionaire is something that many aspire to (or at least those who aren't there yet!) And it is definitely something worth aiming for because, as they say, the first million is the hardest!

So practically speaking - is it possible for someone to become a millionaire, and how long will it take to get there?

How To Save Money - 300% Returns From A Geyser Blanket

Not my geyser blanket, and definitely

not my arms! 

It’s Frugal February time again!

After last years #FrugalFeb post, there was a bit of a backlash from the readers based on their perception that my diet had degraded into one consisting of sweetcorn on toast three times a day. As a result, I have decided to keep this years' post away from dietary cutbacks and more towards manly D.I.Y. work.

The Best RA In South Africa

And the winner is... 

I can see why people often sign up for Retirement Annuities (RA’s) through a financial adviser (paying away a lot of their returns in the process). The RA landscape is quite literally a minefield of hidden charges, commissions, poor performance and what-the-hell-is-going-on-under-the-hood?

Who wouldn't want some help?

So when a Financial Adviser presents someone with a nice glossy brochure showing them that everything is going to be okay, you can’t blame them for asking where to sign.

(N)aiming To Confuse

Seems legit. 

Long time readers of this blog will know that I stay close to the Centurion Gautrain Station. This has proved more than useful on a number of occasions.

And it seems that other people also appreciate the benefits of what I think is a pretty reliable and efficient service, because over the past 2 and half years that we have lived here, I have noticed that the Centurion Station seems to have become busier and busier - evident by the increasing number of cars which end up parking outside the station on the grass, on curbs and in all sorts of hidden corners and spaces.

Some Housekeeping

Housekeeping. 

So it turns out that there are quite a lot of people out there wanting to do better with their finances. You know - reduce expenses, kill debt, get investing, and make sure there is ample for retirement, or even early retirement.

Fantastic!

As a result, this blog now has over 790 subscribers.

Fantastic!

My Early Retirement Plan - 2 Years Down

Counting backwards... 

2 down and 13 to go!

Time flies when you're having fun, and I can't believe I am already 2 years into my Early Retirement Plan. That’s a little over 13% done, 13 years to go, and in keeping with the 13's -  I am unfortunately 13% behind were I hoped to be.

I am disappointed, especially considering that 2017 was an above average year for markets. Oh well! Still plenty of runway left to try make it up.

Let's take a quick look at the scorecard.