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Have you heard of the term, stealth wealth? It’s all about embracing a lifestyle of modesty and discretion while quietly filling up your coffers. The spotlight has recently highlighted this way of living thanks to popular TV series like Succession.

What’s the underlying philosophy of stealth wealth, and what can we learn from it?

Stealth wealth (say that fast three times!) is basically a decision by wealthy individuals to keep their financial accomplishments on the low-down and reject the conventional trappings of luxury. They avoid flashy displays of wealth, like fast cars and big homes, and rather blend in with the crowd.

Often, these individuals are proponents of mindful spending and investing, and they focus on the value of experiences over the accumulation of material possessions.

Why it’s not only for rich folks

We get that the ultra-rich would like to keep their money low-key for whatever reason, but what does this have to do with me, you might ask? Well, the stealth wealth mindset can help you save more, invest better and spend less.

Stealth wealth means you don’t have to worry about social pressure. You don’t need that flashy watch to ‘prove’ your success. Rather, by deciding to live modestly, you’ll find that you’ll have more resources to devote to your long-term financial goals, which means you’ll achieve them quicker.

Another benefit is less stress! If you don’t care about keeping up appearances, you’ll be more chilled and relaxed in your everyday life. Staying on trend can be so exhausting…

But what if I want to show off a bit?

Yes, okay. You’ve worked hard for your money and you’ll buy that Country Road tote bag just because. But what you really want to avoid is lifestyle creep. This is what happens when you spend more because you earn more – it might be upgrading your gym plan after a promotion at work, trading in your KIA for a BMW, or spending more on those little luxuries like clothes and shoes, just because you have the extra cash in your account.

Final word

Stealth wealth is a refreshing alternative to being flashy. By embracing a more unassuming way of life, you can find peace and focus on yourself. The philosophy encourages mindfulness, humility and achieving long-term financial freedom.

And remember:

“You have nothing to prove. Let your hard work speak as you remain silent.” – Christina Daniels

If you own a set of wheels, insurance is vital. But the terminology used in policies and contracts can be difficult to understand. Here’s what you need to know so that you can maximise your benefits and coverage.

‍Comprehensive insurance

‍The most extensive cover for your vehicle, protecting against damage caused by accidents, theft, fire, natural disasters and vandalism. It often includes third-party liability, too. (See below.) Because of the extent of the coverage, this is typically a more expensive option.

‍Third-party, fire and theft

‍Third-party provides cover for damages to other people's property, or injuries caused by your vehicle. But third-party alone doesn’t cover damages to your own vehicle resulting from an accident. Fire and theft only covers your vehicle in case of fire damage or if your car is stolen. Third-party, fire and theft is typically less expensive than comprehensive insurance and might be suitable for an older vehicle with a lower market value.

‍Excess

‍This is the amount you’re required to pay when you claim, before the insurance company covers the remaining costs. It can be split into two categories: compulsory excess, which is set by the insurer; and voluntary excess, which is an additional amount you choose to pay to reduce your premium. Understanding the excess amount is crucial as it directly affects how much you have to pay from your savings when you file a claim.

‍No-claims bonus (NCB)

‍Some insurance companies offer this discount if you don’t make any claims during a specific period. It’s basically a reward for responsible driving and a way to reduce your premium. The longer you go without making a claim, the higher your NCB and the greater the potential savings. Maintaining a no-claims record can significantly reduce your car insurance costs in the long run.

‍Market value

‍The estimated worth of your vehicle in the current market (what you would get if you sell your car today) – an essential factor in determining the coverage and pay-out in case your car is written-off or stolen. It's important to keep track of your vehicle's market value as it may change over time and affect the adequacy of your coverage.Did you know that if you own a car, 22seven can do all the hard work for you? Just add your car as an asset via our Web App to get an estimate of its current market value. Over time we’ll automatically update its value so you can keep track of those changes inside 22seven alongside all your other money stuff. To get started, visit the add manual account screen on our Web App, choose Vehicle from the account type list and follow the prompts. Don’t forget to also link your vehicle loan to 22seven if you’re still paying off your car so your net worth remains accurate.

‍Underwriting

‍The process an insurer uses to evaluate the risks of insuring your vehicle, which in turn allows them to determine the premium you have to pay. Insurance companies consider factors like the driver's age, driving record, vehicle make and model, location and intended use.

Policy exclusions

‍Specific situations or circumstances that are not covered by your policy. Common exclusions might include racing, illegal activities (duh), intentional damage or using your vehicle for commercial purposes without the appropriate commercial cover. Read the terms and conditions carefully to make sure you understand the limitations of your coverage.

‍Optional add-ons

‍Extra items you can add to boost your cover. Roadside assistance might fall into this category, offering a safety net in case of a breakdown or other emergency. Other add-ons might include hail damage, the use of a rental car while yours is being repaired, scratch and dent cover, and more. It’s worth looking through these offerings at various insurers.Remember to review your car insurance often, compare quotes from different insurers, and ask questions! Armed with knowledge, you can ensure you have the appropriate cover at the right price to protect yourself on the road.

An ETF (exchange traded fund) is an investment fund made up of several similar assets that you can purchase as a whole. ETFs are traded on an exchange just like stocks. This can best be described as purchasing a basket of eggs (the ETF), with each individual egg representing an asset such as a commodity, bond, or share.

What makes them so special?

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When you invest in shares, there are a lot of decisions that need to be made, such as which companies or industries to invest in and how to best diversify your portfolio so that you are less affected by market fluctuations. Often, these kinds of decisions are best left to the pros.

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An ETF does that work for you. You can choose to invest in one fund that will track a range of companies or assets that form part of your bundle so that your portfolio is automatically diversified.

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ETFs can also be themed, for example, if you’re conscious of the environment, you can choose an ETF which invests in a range of environmentally sustainable companies.

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The benefits:

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• Investing in an ETF diversifies your investments since you’re exposed to many companies and different asset classes, like property, bonds, or equities(shares).
• Minimum investment amounts are low. Some providers let you invest as little as R5.
• ETFs are passively managed, meaning their costs are very low.
• You can purchase ETFs through your tax-free savings account.

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Choosing an ETF

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Here are some key points to consider: 

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Risk profile

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There are four main asset classes: shares, bonds, cash, and real estate. While it’s essential to invest in a diverse number of shares, investors often aim to have a balanced investment portfolio, which usually includes all asset classes. Different classes have different risk profiles, so deciding how much to invest in which class depends on your own investment style, age, how long you intend to keep the investment open, and other factors. 

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Local vs offshore

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You can choose to invest in the South African market and/or offshore. Although you can gain exposure to various industries by investing in a single ETF, it would be wise to consider a split between South African exposure, such as the JSE Top 40 ETF, and an ETF that tracks an offshore index, like the S&P 500.

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Industry

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You can choose sector-specific ETFs that focus on technology, finance or property. Certain industries are seasonal, performing better in some months compared to others. Consider this when choosing your fund.

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Fees

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When comparing two similar types of ETFs, with similar returns, the one with the lower fee will generally maximise the return due to the smaller expense ratio. An ETF’s total expense ratio (TER) is the total cost of running a fund. It includes management fees and additional costs like legal, trading, and audit fees. The TER is a percentage, calculated by dividing the fund's total costs by its total assets. A fund’s TER is an easy way to compare investment products. 

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Fund fact sheets

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ETFs are always accompanied by a fact sheet that gives an overview of the fund. This gets updated each month and includes how aggressive the fund is, what investment period is ideal and what the TER is. If you are new to fund fact sheets, check out our Slice on learning to read a fund fact sheet and invest like a pro. 

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You can browse through the fact sheets of every fund that’s listed on the JSE.

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Tax season starts on 7 July for the tax year ending on 28 February 2023. For most of us, it’s a confusing time when we hope we did everything right and that we won’t be penalised for something we probably don’t understand! Let’s have a chat about some of the most common concerns about tax.

‍Do it online

‍Gone are the days of waking up at 4am to stand in the queue at SARS. To make tax season easy for you and your tax guy (if you have one), make sure you’re registered for eFiling if you need to submit a tax return. SARS has a landing page with answers to most questions you might have about this – go take a look.

‍Use 22seven to simplify your life

‍Use the date range filter on the Transactions/Tracking page to set the dates for the tax year. This will show you all your income and expenses within the timeframe. You can even filter it per category to see a summary of specific expense types, like commission earned, donations etc. When it comes to medical aid, you can create a custom category for your medical expenses to help you work out how much you can deduct without scrambling through doctor’s e-mails and receipts. You can even export your 22seven data to a spreadsheet and send it to your tax guy, which makes their job so much easier and more accurate. Check out our How to use 22seven to rock your tax return article for more tips and tricks.

‍Don’t pay more than you have to

There are lots of ways that you can pay less tax – we’ve covered them extensively in the past. A retirement fund, for example, comes with three important tax benefits: your contributions are tax-deductible; the returns on your investment are tax-free; and when you retire, you can withdraw a lump sum without paying tax (up to a limit and subject to certain rules). Read our Slice on this topic so you don’t miss out. A tax-free savings account (TFSA) is another great way to save. If you invest in a traditional investment product like a unit trust account, you pay tax on any growth within the investment. Not so with a TFSA: you get to keep all the earnings without giving any of it to SARS.

‍What about provisional tax?

‍If you have a side hustle or earn income outside of your 9-5 job, you might be required to pay provisional tax – when you pay SARS smaller amounts two or three times a year instead of once a year. This is sometimes also a better tax arrangement for freelancers, or if you have your own business. Provisional tax can get complicated – make sure you know whether you’re supposed to be paying it so that you don’t get penalised.

‍Know what you’re looking at

‍Ah, tax certificates. What on earth do all the codes mean? Here’s a brief description of the most common types you might need to request, or that your employer or broker might send to you.

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‍Final word

‍Don’t stress! If you’re employed by a company and you don’t have a trust fund (if only!) or any side projects, tax season is relatively simple. You’ve probably paid all the tax you need to pay already and you just need to file your return. But if your work situation is more complicated, you might need to spend some time on the SARS website or enlist the help of a professional. Good luck, and fingers crossed you get some money back!

You manage your money and invest using 22seven. But did you know that you can use it to win at taxes too? We’ve made this tax season even easier by partnering with TaxTim. On TaxTim, use the code 22SEVENMYTAX and receive a 25% discount.

TaxTim is your digital tax assistant that asks questions relevant to your personal tax needs. With an easy-to-use conversational interface, you’re basically talking your way through a tax return. And, thanks to an integration with SARS, once you’ve completed your tax return, you can instantly submit it without having to log into eFiling.

Here are a few ways to make your 22seven profile TaxTim ready:

Use categories to allocate your income and expenses

Part of the magic of using 22seven is the predefined categories that allocate a purchase from Pick ‘n Pay to ‘Groceries’, or that card swipe at Engen to ‘Fuel and Transport’. These are important for tracking your monthly budget, but could also play a part in your tax return.

Mighty medical expenses

Take medical expenses for example. It’s one of the most claimed tax deductions as many taxpayers have a medical aid benefit from their company. While these contributions attract a monthly tax credit, you’re also allowed to claim certain medical expenses that were paid by you without being reimbursed by medical aid. To make the most of the medical portion of your tax return, simply create custom categories for your medical expenses. For example:

• Medical (Recurring): Monthly medical aid contributions.
• Medical - Claimed: Medical expenses that medical aid paid, or reimbursed you for, in full.
• Medical - Unclaimed: Medical expenses that you paid for out-of-pocket, or only partially settled by medical aid (you’ll need to use the split transaction feature for this particular instance).

Only the amount over and above 7.5% of your annual taxable income will be considered as claimable for medical expenses, so if it’s only one or two doctors’ appointments it’s probably not worth your while to claim.

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Hands up, commission earners!

If you earn more than 50% of your annual income in the form of commission you’re allowed to claim all expenses directly related to earning your income. This would, no doubt, include all those tank fills, a fair amount on business lunches, and a portion of what you pay in keeping yourself connected to the interwebs and cell phone towers. If you’ve used custom categories cleverly, you can simply export your transactions to an Excel worksheet or quickly tally up the total amounts to claim by using the advanced search. Then when TaxTim asks you about expenses, you simply give him the amount and you’re on to the next section.

Expenses to take note of:

• Interest on car payments.
• Fuel and car maintenance costs (remember to keep a detailed logbook for your mileage too).
• Cell phone contracts / airtime.
• Entertainment expenses (SARS have become sticky with these, so you’ll have to have proof it was a legitimate business expenses that resulted in income and not just a lazy liquid lunch with pals).

Moonlighting / Freelancing / Building an Empire

If you’re part of the growing number of South Africans working two jobs (one full-time for a company and the other building your own aspiring empire on the side) then you can get even smarter by using custom categories to separate out your personal transactions, from those related to your sideline gig.

For example, buying your little Johnny’s school stationery at CNA should be categorised as ‘Stationery – Personal’, whereas paper and printer ink for your freelance gig should be allocated a ‘Stationery – Business’ category. Income earned, or invoices paid from your part-time endeavours should also be split from your “normal” job so you can quickly determine your profit (hooray) or loss (don’t worry, you’ll get there) based on the difference between income and expenses.

What’s your tax season survival tips?

Budgeting is a skill that takes practice to master. You’ll improve as you learn from experience. By avoiding these common mistakes, you’ll cultivate healthy financial habits and become a budgeting pro.

‍Mistake 1: You don’t track your spending

‍If you don’t know where your money is going, you can’t make informed decisions about your finances. With 22seven, you can see all your spending in one place. It’s easy to follow the money and make necessary adjustments to stay on track.

‍Mistake 2: You ignore the small expenses

‍Those small expenses add up. Take your daily coffee run – it’s only R30, but add that up over a month and you’re spending nearly R1,000! Keep an eye on seemingly insignificant purchases and try to identify areas where you can cut back. Doing this will free up more money to save and invest.

‍Mistake 3: You neglect your savings

‍Some people only focus on paying urgent bills, but you also have to allocate a percentage of your income towards an emergency fund, a retirement investment and other financial goals. Automate your savings by setting up a debit order – that way you won’t have to think about it, you’ll stay consistent, and you’ll build a safety net for your future.

‍Mistake 4: You don’t plan for irregular expenses

‍Budgeting isn't just about managing your normal monthly expenses, it’s also about planning for unpredictable things like paying for your car to be repaired or fixing a window at home thanks to that errant cricket ball… Set money aside each month specifically for these kinds of things. Bonus: If you don’t need to use the money, you can add it to your emergency fund.

‍Mistake 5: You don’t prioritise debt

‍High-interest debt is a killer. Ignoring your debt repayments or paying only the minimum amount prolongs the debt cycle and increases the total interest you’ll end up paying. Adjust your budget so that you pay more than the minimum whenever possible. You’ll clear your debt faster and free up more money for savings and investments.

‍Mistake 6: You set unrealistic goals

‍A budget only works if you have clearly defined financial goals, but if those goals are unrealistic then the whole process can quickly become demoralising. Be honest with yourself about what you can afford, then break down your long-term goals into smaller, measurable targets that you can track and celebrate as you progress.

‍Mistake 7: You don’t review and adjust

‍A budget is a work in progress. Your life circumstances can change, your income can fluctuate and your priorities can shift. Set a reminder in your calendar to review your budget once a month, or at least once a quarter, and make the necessary changes so that you stay on track.

‍Mistake 8: You don’t negotiate

‍Don’t just settle for the price you’re given – explore every opportunity to save money. Negotiation skills can lead to substantial savings, whether it’s getting a lower interest rate on a loan, a lower premium on your household insurance or a discount on that new washing machine you need to buy… Shop around, get different quotes, do your research and fight for the best price.

Nearly every supermarket and financial service provider has some sort of reward or loyalty programme. Banks, medical aids, insurance companies… Before you sign up, ask yourself these three questions:

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1 How much does it cost?

Some loyalty programmes are free to join, like Clicks Clubcard, Pick n Pay Smart Shopper, Checkers Xtra Savings and Woolworths WRewards. In exchange for some personal info and your purchase history, these retailers may offer you discounts and perhaps some customised weekly deals. 

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Other programmes have a monthly membership fee, or they have an indirect fee where you’re required to pay for certain products like medical aid cover or some form of insurance policy. The question is: Do you already have these products (maybe you already have medical aid through your employer, for example) or are you buying the product just to get access to the rewards? If it’s the latter, you need to make sure that the rewards are worthwhile! Will you get more than what you spend? If not, you’re losing out and simply subsidising the other members.

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2 How are the rewards earned?

A typical reward programme allows you to accumulate rewards or loyalty points based on your spending or engagement. There are usually lots of rules and limits for earning and spending. There will also likely be membership tiers – in order to earn enough rewards to cover your costs, you might need to attain a higher tier, which might require you to spend more actual money or spend more time engaging with the programme. 

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3 Will the programme change? 

Certain goals, like fitness goals for example, might be dynamic. In other words, it gets progressively harder to meet the goals, until you reach a maximum required threshold. At first you’ll find it easy to hit the gym once or twice a week, but soon it won’t be enough even if you go every day – you’ll need to get a fitness device to measure your heart rate and complete specific heart rate and time-related workouts. Before you commit to such a programme, take the time to understand if there’s a goal ‘cap’ in place, and whether you’ll realistically be able to reach it. 

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Spending goals can also increase to a point where you end up purchasing things that you don’t need in order to meet a target, or you try to game the system by artificially inflating your spend. (Raise your hand if you always get the bill at Bootlegger and your friends pay you back…) This can be detrimental to your overall financial health, not to mention a waste of time as you figure out how you can meet a goal that doesn’t fit naturally into your lifestyle.

If you do happen to be in the market for rewards, you can earn with Old Mutual Rewards just by using 22seven – here’s how! There’s no one-size-fits-all solution, but as long as you do your research and don’t overextend yourself (or your wallet), rewards can be a great way to earn a little something extra.

People get into debt for various reasons. Before you take out a loan, here’s what you need to think about.

‍1. Know the difference between good debt and bad debt

‍Good debt helps you acquire things that build wealth or increase your income over time. Some examples include a home loan (if the home will increase in value over time), a car loan (if it will enable you to earn more by having your own transport) and a student loan (if it will help you get a better-paying job).Bad debt comes in various forms, like store cards, credit cards (if you don’t pay them off in full each month) and any other short- to medium-term loans. This debt pays for items that don’t increase your net worth, like clothing and food. Avoid it! You’ll be worse off financially due to interest and fees on the account, and there’s a risk of falling into a debt trap where you need to take out new debt to repay previous debt.

‍2. Compare costs

‍Debt in South Africa is regulated by the National Credit Regulator (NCR) through the National Credit Act. The NCR determines the maximum fees and interest, plus the maximum credit life insurance that can be asked. The interest rates are based on the repo rate plus a percentage. Rates and fees are adjusted from time to time. If you apply for a loan, you’ll receive a pre-agreement and quotation, both of which are valid for five days. The quotation will specify the exact cost of the loan. Too expensive? Shop around! Here’s how the fees work for a typical loan – you need to consider all of them to work out the total cost:Loan value (how much you borrow)  + Once-off initiation fee + Interest + Monthly account fee + VAT + Credit life insurance

‍3. Only borrow what you can afford to pay back

‍This sounds logical but so many people get stuck. If you don’t repay your loan instalments on time each month, you’ll have to pay additional fees and interest. Late payments will also negatively influence your credit record – not to mention the stress of creditors phoning you for money!Remember, you don’t need to prove your success by owning material things. The legendary US investor Warren Buffet has been living in the same house since 1958.

‍4. Pay it back as quickly as possible

‍Try to pay a little bit more each month towards your loan, over and above the minimum amount. This requires discipline but it will dramatically reduce fees and interest in the long term.

‍5. Avoid unplanned debt

‍Plan ahead. At the beginning of each year, note the big expenses that you’ll have to pay, like school fees and bond repayments, and save for them each month. Use 22seven to budget and you’ll soon find ways to save even more, without having to take on bad debt.Savvy savers will also recommend building an emergency fund for life’s whoopsies. You can use this fund instead of taking out a loan if you need to pay for something unexpected like getting a new washing machine or having your car repaired. Just remember to top up your emergency fund again afterward.

FIRE stands for Financial Independence, Retire Early – it’s a strategy focused on saving like a demon and investing as much as you can while you’re young, which will then allow you to retire far earlier than normal. Want to give up the nine-to-five in your 40s? It’s possible!

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The main thing to understand is what ‘financial independence’ means. In the context of FIRE, it’s when the income you get from your investments is sufficient to cover your living expenses, which means you don’t need to work. But just because you don’t need to, doesn’t mean you don’t have to. You could do something that you’ve always wanted to do which might not pay as much, or devote more time to hobbies, volunteer work or travel.  

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Proponents of FIRE typically aim to save and invest at least 50% of their income – far more than the conventional figure of 10-20%. 

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How to do it

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1. Increase your income. Advance your career, start a side business, invest in income-generating assets…

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2. Decrease your expenses. Budget hard! Cut all unnecessary expenses. 

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3. Save aggressively and invest wisely. As mentioned, you’ll need to save at least 50% of your income. Invest all your saved money to take advantage of compound interest.

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Is FIRE right for you?

To be fair, FIRE is not the right strategy for everyone. You have to think clearly about whether this approach aligns with your personal and financial goals. Are you comfortable with reducing your lifestyle expenses to increase your savings? Can you manage the risks associated with market volatility, which could affect your investment returns? Are you prepared to maintain a frugal lifestyle, even after achieving financial independence? 

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Remember, embracing frugality doesn't necessarily mean denying all life's pleasures. It’s about making conscious decisions about what truly brings you happiness – and discarding all the other unnecessary stuff. 

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If you decide that FIRE is for you, remember to reassess your financial goals regularly and adjust your strategies accordingly. There’s no one-size-fits-all solution. Speak to a qualified financial advisor if you need some guidance. 

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That said, even if you just explore a few of the basic principles of FIRE, you’ll be able to address some big financial issues faced by many South Africans, like taking on too much debt, not saving enough for the future, and spending recklessly.

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It’s a marathon, not a sprint

If you're considering going down the FIRE path, start by understanding your financial habits and use 22seven to create a budget that allows you to save as much as you can. It’s fine to start slowly – becoming financially independent might take years, if not decades. Be patient and continuously reassess your budget as your life, income and financial goals change. 

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Remember, you have the power to shape your financial future! Whichever path you choose, patience, discipline and a bit of thriftiness will never do you wrong.

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