I'm a 25 (F) year old Candidate Attorney receiving a stipend of 7k per month

[artsycat]

I live in a small town and stay home, so my fixed monthly expenses aren't that much (approx R 2 500). Every month I invest about 2 000 towards my Easy Equity TFSA and 1800 to my emergency fund using Tyme Bank.

I spend between R 500 - 700 monthly towards electricity, bread, milk and other utilities at home.

I have a Rage clothing store account I pay every month (this monthly payment forms part of the R 2500 of the fixed monthly expenses I mentioned in the beginning).

I have about R 8 000 in my standard bank account. My TFSA currently sits on R 17 000, and the Tyme Bank emergency fund on R 3 600.

I'm looking to complete my articles at the end of this year and get admitted as an Attorney early next year, and start earning a better income. I don't have kids and don't plan on having them in the future.

I want to save towards my retirement; any advice will be appreciated. As per the heading, I receive a stipend, not a salary, so I don't receive any employee benefits such as UIF or pension fund contributions from my employer.

From my understanding, I can only fully reap the benefits of a pension fund if my employer also contributes to it.
In my situation, can my TFSA substitute for a Retirement Annuity?

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[elijah_ride]

@artsycat I just wanted to comment saying your budgeting is very impressive. you've done a wonderful job

 

[faith4l]

@artsycat Great stuff on your savings rate so far and taking the initiative to improve your financial position and ultimately your future...

Given your current salary and situation, I would up the emergency fund until you reach your desired amount. Keep maxing the TFSA in diversified portfolio (which your overall portfolio should be as well) and get rid of that debt!

Then focus on any other short term savings you might need soon (which might even be a higher priority than TFSA given timeframes) like marriage, deposit or cash purchase a car or even deposit on a house etc. If there is any future short term savings that you need to do, the rather save for them before locking money away and end up incurring major debt.

TFSA is already saving for retirement, max it before worrying about an RA, but understand the difference between the two as well. Also, don't touch this. It's an investment vehicle best as one of your last accounts to pull money from in order to maximize growth and the tax free proceeds. So this is not for a 10-20 years investment but rather 30-40 years.

Once you start earning a permanent employment salary, If your company provides a matching contribution, e.g. 5% each then that can be a way to maximize monthly contributions in terms of pension/RA investment vehicles. These are normally in way of group schemes. But if there is no matching contribution, given your current situation, I would max TFSA before even flinching towards retirement wrappers.

 

[artsycat]

@faith4l Thank you, your suggestions are greatly appreciated.

 

[bviller]

@artsycat There are 2 schools of thought here.

If you plan on going the lawyer route, it might be better to spend your expendable income now, so that you live a happy life, since articles is tough. Mental health and a balanced life is NB. When you qualify, you can save more in your first 6 months than what you've saved in all of your articles! When earning a lawyer's salary, typical Pension/Prov/RA aren't the best bang for your buck. You'd be better off taking R10k/R20k pm and buying a flat as an investment property, for example.

On the flip side, the earlier you start saving, the better. Not only does the money compound, but 15 years passes in a blink of an eye and then you'll be very happy about your savings. Most importantly in instill discipline if you do it from a young age.

The right answer is probably somewhere in the middle.

PS, don't underestimate the type of investment a child can be. When you turn 55, money means little, and family is everything - to see you through your last chapter of your life. It's not for everyone, but think it through properly if you haven't.

EDIT: Source: Me, and most of my friends went through articles etc. I've seen it all.

 

[lonnie159]

@bviller Family can also mean spouses, friends, pets etc.

Don't be condescending towards childfree people. Some of us seriously don't think kids are worth it, and are tired of being told otherwise.

 

[conceptualweapon]

@lonnie159 Look forward to go like my aunt. Lived it up child free spending her money on herself.

The last 10 years of her life were the most depressing shit I've seen in my life. The rest of the family was preoccupied with their children and didn't have time to constantly entertain her.

She died alone and broke after squandering the last of her money trying to find some meaning to her superficial existence.

The dildo of consequences rarely comes lubed.

 

[lonnie159]

@conceptualweapon Dude, your kids will be too preoccupied with THEIR lives to entertain you. Go visit an old age home and ask the people there how often their children visit, and if it's enough to 'entertain' them.

Maybe check out the 'I regret having kids' Facebook page as well, so you can understand that children are NOT all rosy and fun, many people would rather die than have kids and some unfortunately only realized that after the fact.

I have an autoimmune disease so it's hard to even get out of bed sometimes. Kids would make my life HELL, and potentially lead to an early death due to the stress of raising them as well as the lack of sleep and physical exertion needed to raise a child.

It's okay to get your head out of your ass and realise that sometimes people have alternative life paths, and having kids isn't the default anymore. There are other avenues to take besides ‐ graduate - get married - have kids - retire.

 

[conceptualweapon]

@lonnie159 Maybe that's what you expect because you are a POS, I speak to my parents every week, and they visit at least once a month.

I've got a cottage on my property where they will live when they are too old to look after themselves.

So you can kindly go get f-ed with your dysfunctional family.

 

[lonnie159]

@conceptualweapon I visit my parents twice a week, so by your standards we have a more functional family life than you do.

Never ONCE did I say that's actually my life, I said it does happen often, but great job with the baseless personal attacks

Its super weird that you're so upset I'm never going to have children. Are you that obsessed with my reproductive system? Is it a cultural thing? Does your religion force you to have as many babies as possible? Why are you so angry that some people just want to relax and live their lives the way they want to?

You need to join a yoga class or something bru, this negativity isn't healthy for your heart

 

[conceptualweapon]

@lonnie159 Pfff I'm not upset. I'm saying you're going to be unhappy af. It's going to be your miserable life when you are older, go for it.

The dildo of consequences will visit you soon enough.

 

[pragyana]

@artsycat Can add R36000 PA to your TFSA account, R3000 per month. Can use TFSA as retirement account max in a lifetime is R500000 at the moment

 

[skylaradams]

@artsycat And protect you income through an income protector as you are a professional person!

 

[artsycat]

@skylaradams Yes, this is something I've been looking into. Which financial institutions offer the best income protection insurance?

 

[passingsnowbutterfly]

@artsycat Bidvest Life (Google it)

 

[skylaradams]

@artsycat What line of business are you in?

 

[tegbaker42]

@artsycat With that savings rate and discipline on maintaining a budget you are probably going to be better off than most.

If you manage life creep as your salary increases you’ll be set no matter where you put your money (provided you don’t start gambling your entire portfolio on individual stocks/crypto)

The only tip I would give is that a TFSA and RA actually go hand in hand. TFSA alone unfortunately isn’t enough.

You’d want to seriously consider an RA or pension fund once you start being taxed, the tax savings on these products is basically free money even without the employer contributions.

Whilst you have such low expenses and basically no tax — after maxing out your TFSA you’d be best putting that extra cash in the S&P 500 or some other global index.

Tangential financial tip as well:

Went from a small town to a big town because big towns pay bigger salaries. But making that move is costly. You might want to consider bumping your emergency fund for something like that (down payment on car for reliable transport, deposit on rent, kitchen appliances etc etc).

 

[zvikisum]

@artsycat Not sure if you're paying fees on your STB account, but I'd recommend looking at thyme or bankzero

 

[artsycat]

@zvikisum Never heard of bank zero, will look into it.

 

[zvikisum]

@artsycat Bankzero is relatively new, think they allowed the public to join enmass in 2021. Started by Michael Jordaan ex FNB CEO and CTO. Other ex FNB senior ppl there as well. No bank branches, completely digital.

When I was a trustee the building had a STB business account. We were paying R800+ a month for the worst service. I can't imagine their individual accounts being better.