Your unit trust doesn’t cost you 1.7% a year it costs you R15 897 a month you fool!

Happy Easter, don't let the bad fish eat all your chocolate

Happy Easter, don’t let the bad fish eat all your chocolate

If you’re thinking that title sounds familiar you’d be right. Once upon a time I wrote an article based on real people called “Your car doesn’t cost you R5800 p/m it costs you a million dollars you fool“. One of those people was my wife, the other, someone I worked with. This didn’t have a good outcome. In the first case, even though I mentioned how both my wife and her Mini had rather sexy rear ends, she wasn’t happy at being used as an example, and promptly let me know that.

In the second case my use of pseudonyms for said colleague’s name was insufficient considering there was no use of a pseudocar in the blog post. The very next day after it was published I had an email in my inbox saying “Nice article” with a link to what I wrote. I felt anything but nice, especially due to the fact that the fast car loving colleague was a person I quite liked, and wasn’t actually remotely a fool, he was simply an Audi nut.

Thanks to that experience, I’ve learnt my lesson on using family and friends as examples. It’s not worth the risk of upsetting a friend or sleeping on the couch. That’s why this post isn’t about a family member. It’s almost certainly also not about a friend. Maybe. Let’s just say it’s about a fictional character named Art. And no Art isn’t short for Arthur, Bartholomew or Stuart. In fact he doesn’t even have a name, he’s completely made up. In the same way that criticism of the president is completely racist…

Now fictional Art is quite astute financially. He’s avoided the trap of buying a house far bigger than he needs. He’s actually even avoided the trap of buying a house, and rents instead. Art has also never bought a new car. In fact, he only recently replaced his completely worn out first car with another boring used Japanese sedan.

These things along with a number of other frugal habits passed on from his parents has resulted in Art being able to save quite a lot. Around R10000 a month lately. Thanks to that he’s recently crossed the R1 million milestone in his investment accounts at the relatively young age of 29 and a bit years, something he is rightly very proud of. What’s even more impressive is that Art achieved all that, while swimming upstream. Not just any stream, but a piranha infested one.

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You actually can buy happiness, but it’s not how you think

"...I want to find out whether there's any truth in the belief that money can't buy happiness."

“…I want to find out whether there’s any truth in the belief that money can’t buy happiness.”

I often write about things I don’t like spending money on:

  • Balloon payments for a car. Remember those, the deposits you still have to pay AFTER you’ve paid for the car for the last 72 months. The Americans have a better term for these types of loans, they call it a bullet loan. Bullets are scary so this makes sense, balloons are happy which you won’t be when your payment is due. Don’t let someone aim a loaded bullet your way when you make a car purchase, it’s going to hurt, a lot.
  • Expensive label clothing. Are your genitals on display? No? Then consider yourself dressed. Feel free to spend money on quality clothing though, if it lasts a long time it is often more cost effective than buying cheap clothing more often.
  • Outrageous unit trust fees. I hate them, the people who dream them up, and all of the suckers who fall for them which means they’re still not extinct. Fortunately they are on the decline, and even Steen Jacobson, the CIO of Saxo Bank knows their days are numbered.
  • Taxes. It probably wouldn’t be so bad if most of the money didn’t go towards Nkandla, #1’s girlfriend at SAA who managed to lose R1.4 billion last year, our international relations minister with a hole in her head or the SABC boss who lied about finishing school, and now forces everyone else to lie about the news and to literally sing his praises. In a less corrupt country I’d have no problem with this. I’d even happily pay the Swedish 60% tax rate if the money would go back into social services rather than the pocket of politically connected hyenas.
  • Bond payments. You can argue with me until you’re blue in the face. Your house is not an investment, finish and klaar. I don’t care if you have one, but don’t kid yourself, it’s a lifestyle purchase, not an investment. The only positive I see is that it force the typical South African’s with money allergies to save.

Today I want to talk about something I love spending money on. It’s appropriate too, because I’ve recently spent a lot on it!

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What percentage of your investments should be offshore?

Dear Investor Challenge,

The guy running my country seems a little daft. He once said that showers cure aids, and thinks that the African continent is so large all the others can fit inside it. I’ve seen him on TV trying to pronounce a not so big number, and while my 5 year old seems to be able to do this quite well in pre-school, this guy took four attempts, and I think one of them included an eleventy.

Now I really don’t have too much of an issue with stupid people, in fact Arnold Schwarzenegger remained one of my favourite movie stars, even after he said that he thinks gay marriage should be between a man and a woman.

The bigger issue for me when dealing with the #1 man of missing marbles, is that when he stuffs up, I lose a lot of money. This is something I don’t like very much. It’s better than losing a limb to carnivorous ants of course, but only just.

I’d like to take some of my assets offshore, somewhere safe from such stupidity. How much should I invest offshore? And any tips on where?

Thanks,

Ivan Tout

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Should you be dollar cost averaging?

You've just won second place in a beauty contest

Yes, well done you uber foxy person you, you now have an extra R1.2 million to invest. This is such a common problem, I thought we should address how to handle it. Firstly, I would like to advise against spending it all on hookers and cocaine like this overly honest guy would do. Sure it’s fun, but how much of that month will you actually remember, and after you’ve lost your job, wife and the bridge of your nose, life might just suck a little afterwards. Ideally you’ll invest your winnings, but should you do it all at once, or should you spread out putting it in investments over a year or more?

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You don’t earn nearly as much as you think you do!

Where did my salary go?When I was 24 I thought I’d made the big league. Thanks to a bit of luck and thanks to having F-You money, I ended up in a contracting position where I was earning R160 an hour. That meant I made R28k per month since I worked about 176 hours a month on average. This is a pretty good salary today, but 13 years ago to a 24 year old who was still pedaling his bicycle to class and eating vetkoek for lunch just over two years previously it was an astronomical amount of money. More than double what my last salary was before I took my extended F-You holiday. So what does a 24 year old earning such a large sum of money do with all of it? Invest it? Not a chance, I bought myself an Audi.
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Selfish Old Man disease

Zuma Fire TruckThe world seems to be suffering an epidemic. This epidemic is known as Andro-Parasitic Geriatricus. Commonly known as Selfish Old Man disease.

This disease seems to be on the increase. I believe that patient zero was first noticed in a neighbouring country. The giant festering arsehole life support system to have first shown these symptoms in our region is known as Robert Mugabe. In 2009 Mugabe attended Zuma’s inauguration, where he promptly passed on the disease to our own steaming pile of horse manure President, the not so honourable Jacob Zuma.

Then in 2010 the after South Africa, armed with a briefcase full of hundred dollar bills, were granted the rights to hold the football world cup, Zuma was re-infected with another strain of APG from a certain Septic Bladder. Continue reading

Let’s all be guilty of tax avoidance

Tax evasionTax evasion is illegal, and will quite likely have you ending up with free accommodation. Sadly while free sounds great, it’s not quite the case when your roommate is a rather hefty heavily tattooed guy named Bubba. And Bubba likes you, a lot! Instead, bypass tax evasion and focus on tax avoidance. I highly encourage it. What’s the difference you might ask? To put it simply, one ends up with you behind bars, the other leaves you with more in your pocket to visit bars. In other words, tax evasion is doing something illegal to not pay taxes while tax avoidance is doing something legal to not pay taxes. Companies pay experts very large sums of money to help them tread this very fine line, saving them even larger sums of money in tax.

Now you might think that this is morally wrong, after all we live in a country that needs our taxes. Figures in a 2013 study indicated that just 3.3 million taxpayers are paying 99% of South Africa’s taxes, so is it right for these 3.3 million to try reduce the amount paid? Continue reading

F-You Money

Keep calm and double my salaryApparently I’ve been getting people a little down with blogs on how much money is tossed aside because we like to have nice things, or because we do stupid things. After my last blog I got sent a message from Moneypenny “Now, for your next blog write about something that is not only a good investment but good for the soul (fun) as well.” Challenge accepted. This one is for you Moneypenny.

I’d been working for just under two years when I asked my boss for a quick chat. “I’d like 50% more pay, and an extra 5 days leave every year, otherwise I’m out of here”. I was quick and to the point. He had a sly grin on his face. “Excellent” he said, “let’s go run it past the director and see how he feels”.

I started my first job in matric, grade 12 for you young’uns, waiting tables at the only Baron in Pretoria. It was fun, earning a few thousand a month, while getting free food and an endless offering of dates from mildly inebriated women. There was also the brief stint as a fast food delivery driver, which was a lot easier, but far less profitable. At least I got to snack on the customers food when I was hungry. If you do order from one of the delivery places, and the guy uses a car to deliver, don’t ever expect to get your full quota of chips. You may lose a tasty chicken nugget in the process too. Continue reading

The last house I’ll ever own…

Mogadishu

Luxury accomodation on the warm indian ocean, going so cheaply you wouldn’t believe it. Come view now… in Mogadishu!

I’ve written before about how I’m really not a fan of a buy to let property as an investment, but what about a buy to live in property? Luckily for you, I’ve done that before too. In the last property article I mentioned the house with a built-in hole in the back yard for pouring cash into. Well now having just sold the property I can provide some real numbers to answer that question.

The numbers: Continue reading

And the winner is…

Be patient, I’ll tell you in a minute after I build up the suspense and drag this post out longer than the Grammy awards shows.

Anyway, 2014 is behind us, the second year of the competition and the first in which you could sell shares. This obviously meant that there was a little wiggle room for people to break the system. To stop this, initially all shares trading less than 16 times a day, and with a value of at least one rand. That kind of worked, but one smart guy realised that it was possible to make huge profits by using live prices on a trading account to get that 15 minute advantage over everyone else. Fortunately he was honest about it, and allowed us to reset his account. It also created a lot of work for me to put the prices in pending mode now, so that if someone does use live pricing, he’ll have his advantage removed 15 minutes later when the prices update themselves.

So let’s check up on how the market did last year… Continue reading