Advice for a couple investing 300k

[faithfultotheend]

My wife and I are 37 years old and we have about 300k available to invest. Our online business is doing alright so we’re looking at doing this:

Our household expenses are about 20-30k a month, usually on the lower end of that range, so we’re thinking of putting aside 6 months of expenses into a regular FNB savings account for emergencies. That would be 6 months x 30k = 180k. So we’d likely split that as 90k each in saving accounts attached to each of our personal accounts.

With the remaining 120k, to begin, we would max out our TFSA using EasyEquities as the broker, and going by the research I’ve done here, and what I’m reading in the book “Manage your money like a f*cking grown up” - I’ll invest it in some index funds/ETFs (which I’ll research more on as I undertake that step). So to the TFSA would be 36k x 2 of us = 72k.

That leaves 48k which I would likely put in more ETFs etc also on EasyEquities.

So my main questions are:

1. For a couple, do I need 2 separate EasyEquities accounts, so I can do 2 separate TFSA for my wife and for me?
2. For that remaining 48k - would it be better to put it all into one of the EE accounts? Would the compound interest over the very long term mean it’s beneficial for us to invest with one account instead of splitting it?
3. For the emergency fund with 90k in each account - is a standard FNB savings account the best way to go? We’ll need immediate access to this for emergencies.
4. Finally - going forward, we’ll have anywhere from 10k - 15k per month that we can invest. I’ll likely put it in with wherever the 48k mentioned earlier goes. I’ll be looking at splitting the investment into low/medium and high risk allotments - and planning on leaving this in for at least 15 - 20 years. I'm still researching how to divide this.

I’m very new to this, so still wrapping my head around everything. I'd really appreciate it if anyone can let me know if I'm on the right track?

Thanks!

 

[fishivyfish]

@faithfultotheend I would just like to point out that for the TFSA, it is R36k per tax year. So you can deposit R36k before Feb 28, and then another R36k on Mar 1. That will buy you some time while you work out what to do with the investments outside the TFSA.

For any future investments outside of a TFSA or RA, I think it would be better to split it. An individual doesn't pay capital gains tax on the first R40k that you earn. So you could each be earning R40k before worrying about tax.

 

[ashellie]

@fishivyfish Solid advice.

 

[faithfultotheend]

@fishivyfish Thank you! I'm going to get on this right away

 

[max_]

@faithfultotheend

1. Yes
2. For tax purposes probably not.
3. I'd consider Tyme Bank Goalsave for some of the money and have a look at rates at Prescient/Coronation/Sygnia money market as you'll likely get a better interest rate than a bank money market. Splitting between Tyme and other is a diversity thing in case something happens to Tyme which is unlikely but who knows.
4. I would diversify with location and type of ETF and possibly buy a few local individual shares just to keep it interesting. Do some research on some companies you like. Markets are at a big high atm so keeping something in cash in case a pullback happens might be worth the risk.

 

[matthewridder]

@max_ +1 for #3. Tymebank gives you flexibility (as your money is available any time, and you have a debit card for emergencies) and gives much better interest rates than basically any notice deposit/fixed deposit account.

 

[faithfultotheend]

@matthewridder Awesome, I've been seeing Tymebank mentioned a lot on this sub. I'll take a look and make comparisons.

 

[glorybetoourgod]

@max_ 2) Also if you're getting the same return on the two accounts you'll end with exactly the same amount regardless whether it's split or not.

 

[faithfultotheend]

@glorybetoourgod Thanks for this, that makes sense now that I think about it. Really appreciate the help.

 

[faithfultotheend]

@max_ Thanks! I'm getting the 2 EE accounts sorted this week, and depositing the TFSA before the 28th.

I will be looking into a risk strategy that suits us.

 

[amandadelaforce]

@faithfultotheend Use the FNB money maximiser (not savings) if you are putting more than 100k in there.

 

[faithfultotheend]

@amandadelaforce Thanks, I'm going to look into this, as well as Tymebank.

 

[dropkicknick]

@faithfultotheend Consider putting some of your money into crypto as well

 

[ki4jgt]

@dropkicknick THIS!!

Very underappreciated store of wealth that many just look past. I would invest 10% - 15% of your investment portfolio in Ethereum and Bitcoin. (Most stable coins) A nice ratio would be 60/40 eth/btc.

 

[faithfultotheend]

@ki4jgt Thank you.

 

[faithfultotheend]

@dropkicknick Thanks! I'm getting the TFSA sorted out first while I figure out a risk strategy, dividing things amongst index funds and ETFs and maybe a little bit in individual stocks (not too sure I'll tackle that at the beginning though)

 

[airel]

@faithfultotheend for 2) and maybe 4) You can consider an RA (you can put in up to 27.5% of your declared income), and then reinvesting the tax return. I'd suggest Sygnia's Skeleton 70.

There's a lot of argument for and against RA's, the biggest con is that it likely won't perform as well as discrete investing, in the very long run it can even eclipse what you would have gained from the Tax return (including reinvesting it). Its also not normally accessible until you retire. On the pro side it does remove some risk, as not only is it structured to be less risky (less volatile), but you do get a guaranteed short term 'return on investment' because of the tax return, and its also protected from debt collection (and from yourself).

If you'd rather use the money for discrete investing, the simplest strategy is probably to just buy MSCI World. Despite the name MSCI World doesn't invest in any developing countries though, so you could also consider splitting your investment between MSCI World and Emerging Markets for more diversification. Decide on a ratio between the two, and as you put money in try to keep them at those same ratios (they'll likely drift apart over time).

There's also a rough rule of thumb that says [your age as a percent] of your investments should be in something safe like bonds. So in your case 37% in bonds. Up to you if you want to follow that rule. I would just go full equity for now, especially if you plan to retire at 65+.

 

[faithfultotheend]

@airel Thank you for all this info. I'm definitely looking at splitting things between something like MSCI World and Emerging Markets + plus a little bit of crypto.

 

[resjudicata]

@faithfultotheend Look at section12J as an option. Stuck for 5 years but great tax savings.

 

[faithfultotheend]

@resjudicata Thanks for this - I've got some reading to do it seems