How to think about risk (#165)

Our first ever paid episode of The Fat Wallet Show is courtesy of the Index and Structured Solutions team at Absa CIB. If you see one of them, show them some love. 

In honour of this newfound wealth and the cool products that made them possible, we decided to dedicate this episode to financial risks that aren't market-related. In November we'll follow this up with market-related risks and explain how those freaky new ETFs hope to bypass market risk.

We spend some time in this episode on the most sinister of all non-market risks - inflation. We're all subject to it, yet we so easily forget to account for it. We also cover the risk of losing your income, fraud, counter-party risk, tax, divorce, death, income disparity in households and over-insurance. We offer some ideas to help you prepare for these risks.

• Subscribe to our RSS feed here.
• Subscribe or rate us in iTunes.

E&H

My partner is in his early thirties and I am in my late twenties and we have some questions about offshore investing. 

- we like investing passively in the stock market, ie index funds

- we try to save aggressively and are inspired by the FIRE movement

- we assume that the rand will likely continue to lose value in our lifetime

- we plan to emigrate within the next 5-10 years, partly for lifestyle factors, and partly for the purposes of studying and gaining new skills. We might be keen to return to SA later on. 

- we are hesitant to invest if the investment pays out in rands, and essentially want to start contributing to an offshore fund that we can access in the foreign denominated currency once we've emigrated. 

1. what is the cheapest way to get money offshore?
2. what are the currencies/offshore accounts that you could recommend?
3. what is the best way to invest our money to achieve our goals?

Jon-Luke

I'd love to know what you guys think of this offering from Investec:

Guaranteed 40% over 42 months - Effectively 11.43% P/A (not compounding?) - meaning if you invest R10,000 you will make R4,000 profit.

If you were to put the R10000 into African Bank at 9.20% (Compounding) you would make R4 428,16 profit.

So I guess the Investec offering has the possiblity of making quite a bit more - but how is this worked out exactly… And what are the chances of the S&P 500 going up by that much...