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Thursday 11 May 2017

Interview With A Very Stealthy Gal

Not Kristia, but pretty close.
Much like the Carte Blanche music signals the end of your weekend, for those of us with an interest in personal finance, the Fat Wallet jingle signifies that it is Monday morning, and makes the upcoming week feel slightly more bearable.

I managed to persuade Kristia Van Heerden, host of the Fat Wallet podcast, to let me pick her brain in the form of an interview.

In exchange I had to admit that Bonds are awesome and it is better to rent than to buy :) But now that the interview is done I can take it all back :)

I hope you enjoy the read, as she talks horses, going to bed early, and trying to find happiness in Truworths.

1. First up, on a scale of 1 to 10, how much do you love Bonds? :)

I like my money. I’d like to keep it. To do that, I want to minimise market risk. To minimise market risk, I diversify. To diversify, I need equities, cash, property and… bonds. Unfortunately bonds are difficult to understand and difficult to buy. I’ve accidentally become the champion of bonds because in trying to understand them I realised I like how weird they are. All that said, because I don’t need my investments for at least a decade, I don’t own any bonds. I just like thinking about them. DON’T JUDGE ME!

2. Ok seriously, as an introduction, let's hear a little more about you. Where you from, your family, growing up etc?

Not Kristia's horse
I grew up on a smallholding in Vereeniging. I assumed, since we had the space, the only reason I didn’t own a horse was because my parents obviously hated me. 

I only realised last year that horses are unaffordable and felt pretty stupid for carrying around all that resentment. I have an older brother, who lives in Vancouver with his family. My folks still live in my childhood home. 

I still don’t own a horse. 

3. How exactly did you get into hosting a personal finance podcast? Maybe describe your journey from Matric onwards?

I studied linguistics and worked for the campus newspaper at varsity. Being a journalist seemed like a good fit for my talents and personality. I wrote about music and lifestyle for a few years and then worked for a PR agency, where I learned so much about being a good communicator. 

I wasn’t very clear on what my niche would be until I joined Finweek as a copyeditor. I started that job with R100 000 debt and no market knowledge. My time at Finweek made me realise the whole money thing doesn’t have to be so hard. If I could get it, so could everyone else.

At Finweek I met Simon, who founded Just One Lap. He and I once got roaring drunk and spoke about how we hated how people spoke about money like it’s some sort of mystical art. I can’t stand that sort of thing. We thought it might be a good idea to work together. I joined Just One Lap shortly after. The Fat Wallet Show came into being about a year later.

My original idea was The Idiot Investor, but some smart folks we know didn’t love the name. While the show is only a small part of what I do at Just One Lap, I’m so proud of it. We so often hear back from people who struggled with a concept and had an “Eureka!” moment because of the show. That makes me feel like I’m making a real difference.

4 Could you describe a typical Kristia day?

My day starts at 4:30. I train with my ballroom partner from 5:00. I’m very lucky to work remotely, so after training, around 9:00, I get stuck into Just One Lap work. 

I normally start by checking mails and then compiling a to-do list for the day. My daily tasks vary. I write the ETF blog, so I spend time researching ETFs a lot. I prepare for The Fat Wallet Show. I really try my best to respond to everyone who writes us, which can take a while. I’m also constantly thinking about how we can keep Just One Lap free to our users. That involves a lot of strategizing around finding partners, which inevitably leads to the drawing up of proposals. 

Simon and I use Slack to keep in touch. It’s such a great tool for remote working, but no replacement for hanging out. Once a week, on a Monday or Tuesday, we get together to talk about the most pressing matters, to strategize, to catch up and to love coffee together. Typically I go over to his home studio on a Wednesday or Thursday morning to record The Fat Wallet Show. We love coffee together then too.

If we don’t have any JSE events in the evening, I have about two good hours between five and seven to spend with my husband before I start fading hard. Bedtime is around 20:00. 

5. I think everyone wants to know - what is it like working with Simon Brown? It seems you guys have way too much fun to call it real work :)

A typical conversation between Kristia Van Heerden and Simon Brown :)
Simon is easy to like. I’ve gotten so used to being around him that I sometimes forget that he’s freakishly smart. While both of us enjoy talking about money and investing, we also enjoy talking and thinking about concepts that are more abstract.

Our conversations are easy and lively, like on The Fat Wallet, but with a lot more swearing. We have similar values, which tends to create a bubble around us. It’s quite jarring when we’re around someone who doesn’t automatically buy into our world view. We’re both very aware of it and I certainly try to expose myself to different points of view when I can so I don’t get too comfortable with my own bullshit. It’s hard, though, because the bubble is nice.

6. Based on some of the feedback I've heard, Just One Lap is quite literally changing lives. That must be incredibly rewarding for you?

My job is engaging and stimulating, so I’m always growing. It’s flexible and modern, so I never feel stifled. It pays well, so I can eat things. When I learn, other people learn, which makes me feel like I’m contributing to the world around me. There’s literally nothing I would change about what I do. 

That freaks me out a little. When I’m not pushing myself to the point of great discomfort, I feel like I’m doing nothing. I’m trying to channel that crazy into other areas of my life so I don’t miss out on any of the joy I get from this job. I’m very lucky. 

7. Which has been your favourite Fat Wallet episode?

I tend to like the episodes that have really practical outcomes. I like the idea of listeners writing down a few points and applying it to their own financial situation immediately. If you’re not coming away from the show better at your own money, what’s the point? I also like episodes where I gain some sort of insight or understanding I didn’t have before. I hope the questions I ask to get to a new insight will serve as a blueprint for people to ask their own questions and have their own insights.

That said, my favourite episode is the one where I wonder if my investments are actually making me poorer. Financial anxiety is something everyone goes through. I’m so worried that I’ll turn into one of those, “Oh, this is how the market works!” types. I am learning a lot about money and the markets, sure, but that doesn’t help me if I can’t apply it to my own situation. I want to do well financially and when the market doesn’t do what it said on the sticker three years (THREE YEARS!) ago, I worry.

The lesson I hope people take from that is that it’s okay to worry, it’s okay not to know, it’s okay to doubt. You have the feeling, you get through it. 

8. And what has been the most popular Fat Wallet episode?  You can define popular as most feedback, most listens, best reviews or whatever other metric you want to cook up? (My guess to your answer is given away in my next question... :))

The Buy vs Rent episode really put the show on the map, but other episodes have come close. Since that show we’ve seen a lot of interest in topics that have to do with how to live from the money you have - whether that be retirement or savings.

I worry about that trend, because I think there’s more than one way to escape the rat race. A topic for another day. 

9. So.........Is it better to Buy Or Rent?

The infamous Buy versus Rent Fat Wallet episode

That question is so situation dependent. What’s more important than the answer is that you sit down and run the numbers. Assumption is the enemy of good money.

The other critical point in this debate is that your primary home is not an income-generating asset. To realise the value of your primary residence (after paying it off for 20 years), you have to sell it. Once sold, you have cash, but nowhere to live. 

My goal is to collect assets that work for me. Until I sell my primary residence, it’s a lazy asset. I expect hustle from my money. Houses, you may have noticed, don’t hussle.

Does that mean I’ll never buy a home? I might. One day. When I have the cash lying around.

10. Where did you pick up your financial acumen from? Was there an influential family member, a book, or did you just pick up lessons from the internet as you went along?

Sadly I had to learn every lesson from making the mistake - starting with debt, ending with buying too many ETFs.

11. You mentioned in one of your podcasts that you are planning on retiring early. What is your target age, and are you on track?

My partner and I set the target age at 40 (for me), when I still had a lot of debt. 

We assumed the market would move a little, which it hasn’t. We inherited some money we didn’t plan on having, which evened things out. If I had to do it alone, I wouldn’t be on track, although I’m hopeful that the market will come to the party soon. If we did it together, we could probably swing it.

However, since we made that decision, we both made lifestyle choices that makes early retirement seem unnecessary. Our goal is a lot less rigid now, although the ultimate aim is making work optional.

12. Was there a distinct turning point where like a switch flipped and you knew you didn't want to go down the same road everybody else was going? Or was it more like a number of events that made you realise you wanted to do the early retirement thing?

Paying off my debt made me realise two things. Firstly, having the things that got me into debt didn’t make me happier. I need very little to be happy, and nothing I need for happiness can be found in Truworths. Secondly, once I realised that things don’t make me happy, I realised how much extra money I have to save. Paying off the debt forced me to really think about how I lived. It was a life-changing experience.

13. The readers of the blog know full well that there is no financial advice here - but what are you currently investing in?

Within my tax-free account, I hold the DBXWD and the CSP500. I’m also going to be buying the GLPROP soon. Outside of the my tax-free investments I hold the CSEW40. My retirement annuity is also fully invested in index trackers with 10X.

14. I like asking my ETF police question, so I am going to hit you with it. Lets say the ETF police came around and said, "Okay Kristia, these ETF's are getting out of hand, we are going to shut them all down except for one. Pick which one gets to stay"

The CSEW40. I’ll invest where I spend and earn, I won’t be over-exposed to a single share and I have offshore exposure built in. It’s a one-stop shop.

15. Do you invest directly in any shares and are there any in particular you like at the moment?

I did, but I sold them all. Simon likes to think about what companies are doing and how much they cost and what management is up to. I don’t. I’m an ordinary person who hopes not to die poor. It doesn’t make me happy to think about individual companies. I want my money to work while I think about things that do make me happy. Like bonds.

16. Confession time. What do you spend way too much money on? 

It used to be eating out. Since I started going to bed at the same time as very small children, it’s become eating in. My nights are short and my time with my partner precious. We used to be very good at keeping our grocery spending very low, but these days we like to buy pre-cut Woolies things that can be easily assembled. I also eat more Futurelife bars than anybody should ever eat. Pod people food isn’t cheap.

17. What would you say has been your biggest mistake? Or put another way, if you could go back to when you were 21 again, what would you do differently?

My biggest mistake was vanity. I was afraid of asking questions about money, because I didn’t want to look dumb. These days I’m much more resilient. I’ve accepted the only way to be really smart, as opposed to just seeming smart, is to ask questions. Getting into debt taught me extremely valuable lessons about money. Expensive, yes, but effective.

18. What do you think is the single one thing that people waste their money on?

If you imagine yourself happier owning something, that thing is going to be a waste of money. Things should make your life easier and more pleasant, sure, but they hold no happiness. I include investments in this. If you’re not content, you’re not going to find contentment when you buy something. It’s a dreadful thing to accept, but it’s true. Buying is often a Band-Aid for a bullet wound. That said, money buys therapy, and therapy can help you figure all of this out. 

19. What is your top personal finance tip?

Keep your lifestyle costs low. Every other financial decision becomes easier when you do.

20. How do you balance experiences with saving - e.g. travelling, concerts etc? You have those that say experiences last forever and you should never miss out, and then you get those that say you can never get the money you spent back so don't waste it.

I think your spending should reflect your values.

When you understand what really matters to you, it’s easy to realise that R500 is too much for a meal, but R5 000 is not too much for a dance dress. Saving is something you do for your future, but you don’t live in the future. The trick is to allow yourself to live now without stealing from your future. That’s a balancing act I don’t always get it right. Aside from impulse purchases, however, I do tend to be pretty good at knowing what really matters because I know what serves me. 

Could be Kristia's goat
21. Where do you plan to retire?

I’d love to live near water - the ocean or a lake. I hope for simple surroundings and pet goats and the company of people I love. 

22. What are your hobbies and interests? And I guess at the same time this is probably also going to be the answer to what you plan to do with your time once you no longer need to work.

I love ballroom dancing. It’s a great hobby, because I have no aspirations of earning my living doing it. It forces me not to throw myself in too deep, as I’m wont to do.

Ballroom dancing led me to an obsession with learning. How do we become better? How do we become more effective? All of my reading currently is along those lines. It’s been a cool journey. 

23. Looking a little bit ahead, what are your plans for the next 1-3 years?

I’d love to spend the next three years nursing The Fat Wallet Show into something with wider reach. The first step is to get it to pay for itself. It’s currently a very charming, but ultimately broke, tenant. The trick is to stay true to the spirit of the show while keeping commercial interests happy. I haven’t figured that one out yet.

24. Time to give yourself/Just One Lap a good punt. Hit us with all the URL's, social media stuff etc.

All of the good stuff happens at justonelap.com.

You can subscribe to The Fat Wallet Show on iTunes here: https://itunes.apple.com/us/podcast/the-fat-wallet-show-from-just-one-lap/id1133460357?mt=2. An archive is also available on Just One Lap: https://justonelap.com/fatwallet/

You can find me on Twitter at @kristiavh.

You can submit your money questions - great and small - to ask@justonelap.com and Simon and I will try to answer them on The Fat Wallet Show.

If you have any interest in ETFs, our ETF blog is a cool resource to help you along: https://justonelap.com/etfs


So that was it for my questions.

I also gave the subscribers of the blog a chance to send through some questions of their own for Kristia. Thanks to everyone who took the time to submit questions, much appreciated. I selected three of them and passed them along.

1. What's the best RA at the moment?

More than any financial decision, you should firmly understand your reasons for choosing an RA. For most people this is the biggest, or even the only, investment they'll make in their lifetime.

I'm with 10X. I chose them because I understand exactly where my money is invested and they have low fees. That's pretty much all I want from an RA. As soon as there's complexity, there's room for money to fall down a hole. At the bottom of that hole is cat food. Do. Not. Want. Over-research and under-commit until you're sure.

2. How do you see the political risk for next 20 years and  how to cover it?

I don't think anybody who got asked this question 20 years ago would have come close to the veritable clustercuss that is South African politics. I won't presume to take any guesses about the next 20. What I can say, however, is that you can position your portfolio for risk. The first step is to ensure that you don't have all your eggs in one basket. Local equity does offer a degree of offshore exposure, so look at a top 40 index-tracker. Throw in some offshore equity to cash in on rand weakness. Make sure you have some property in there - here you can also get a bit of offshore exposure, but don't overdo it. A bond tracker won't hurt. Have cash in the bank. Diversify to protect your money and leave the chaos to the politicians.

3. How much diversification is enough, at what point does it starts to adversely affect your portfolio?

You run the risk of over-diversifying when you don't have a clear investment strategy. Because I understand which asset classes are most likely to deliver the types of returns I want, I can diversify without preventing my assets from doing their work. In diversification, as in all things, I favour simplicity.

Asset classes, local and offshore exposure and sector exposure are the most important elements in my diversification strategy. I like to run hypothetical scenarios to determine whether I'm comfortable with my exposure to each of those elements.

If the market collapses catastrophically, how much of my portfolio would be affected? How will this affect my ability to retire? Will the rest of my portfolio be able to carry the load until the market recovers? Will I be able to earn an income until my portfolio recovers from a crash? What if there's a property bubble? What if there's a coup?

At this point the majority of my exposure is to equity. However, I'm willing to live with that risk because my investment horizon in greater than a decade. Short of a catastrophic financial crisis, the diversification I have within that asset class puts me at ease. I have some local exposure, I have some offshore exposure. Because I'm invested in index-trackers, the sector exposure happens automatically. I have some property. I have some cash. As I get closer to cashing in my portfolio, I will rebalance my asset class exposure to reduce risk. Until then, I walk on the wild side.

The point is, know thine money. Have a plan, even if it's a bad one. If you have a financial road map, you can learn from your mistakes and adjust your course. If you don't, impulsive decisions fueled by fear, greed and panic will run amok with your money.


Many thanks to Kristia for taking the time out of her busy schedule to answer the questions (and all this before her 20h00 bedtime :-P).

Lot's of great insights in this one, hope you enjoyed!

Till next time, Stay Stealthy!
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