Money Rehab

So many people have credit card debt they cannot afford to pay off with their next salary. It started with “I pay it off every month” …💀💀

The introduction of the 2 pot shut a lucrative loophole for high income earners, where they could maximise contributions to their retirement and provident funds, saving 39% to 45%, then cash them in when resigning or changing jobs, and pay lower tax rates

Repost: Why I Love The 2 Pot System

https://www.moneyrehab.blog/post/why-i-love-the-2-pot-system

Tax lesson of the week:

“Tax‑Free” ≠ “Tax‑Free Everywhere”

Completely tax-free status in tax-advantaged accounts(TFSA/Retirement)only applies to investing in South African-domicile assets

Ignoring taxes on transactions, investments generally pay taxes on 2 levels:

1. Individual level
2. Fund/Asset level

If your investment vehicle invests in foreign assets, it will still pay fund/asset level taxes that apply in that domicile country

The inverse is also true for foreign investors that hold South African assets. They will pay foreign taxes even if they are holding assets in their own country’s tax-advantaged accounts

RGB PSA! 📢

New Month! New Rates! WINTER IS HERE! ❄️❄️🥶🤭🫠

Fixed rate investments:
2Y ⬇️⬇️0.25%
3Y ⬇️⬇️ 0.5%
5Y ⬇️⬇️ 0.75%

Inflation Linked Bond Coupon Rates for the next 6 months:
3YR ILB ⬇️⬇️ 0.75%
5YR ILB ⬇️⬇️ 0.25%
10YR ILB ⬇️⬇️ 0.25%

Top Up Bond rate - final month before being adjusted next month.

Good for the economy, slightly disappointing for the investor.

With Repo/Prime rates up, work on paying off your debts!

It’s in the bible! 🤩🤩🤑🤠

Investments that are only good for a certain segment are inherently bad investments.

“Where do I invest if i am in a high tax bracket?” You will end up with suboptimal outcomes

The best investments are ALWAYS on the open market. Anything else has tradeoffs, be it liquidity, limiting growth or something else…. There will be trade-offs!

Wanting FIRE(Financial Independence Retire Early) and wanting to pay less income tax are conflicting goals

Chasing Financial Independence involves increasing your income via passive income streams = higher taxable income during acquisition stage = paying more tax

For the average person, the easiest and most common method of paying less tax is by reducing total taxable income for the year. This usually means contributing more money to retirement investments, i,e. RETIREMENT ANNUITY. This defines your “retirement age”. BYE BYE EARLY RETIREMENT….

Most People don’t have a retirement problem, they have a goal-definition, planning and discipline problem. They have a problem evaluating how choices have trade-offs in the very opportunity set they are faced with.

Most people stop being rational and logical when the TAX topic enters the room. They end up with conflicting choices

Your actions speak louder than your intentions…..

Solve for optionality. Having options. The more options you have, the more freedom you have and the better your quality of life will likely be.

Having few options means you are likely to choose as a result of circumstances, not free will….

Remember, SARS taxes you on your total taxable income

If you get to retirement and you have 2 service providers, each paying you an income of R99 000 per annum, they will not withhold and pay over any tax to SARS as the amounts are below the taxable income threshold.

Your total income for the year will be R198 000. SARS will see this and expect you to pay the commensurate income tax on the full amount.

Most people will become disgruntled and take out their anger and frustration at SARS. Make sure you plan in advance….

I have a coachee saving up to buy their next property CASH…..

I have another who is aggressively paying off their bonds. They really don’t know why they haven’t paid it off sooner…

This genuinely excites me and gives me goosebumps 🤩🤩🤩

You really do not have to be that frog being boiled to financial death….