Unlocking Financial Efficiency: Phasing In Investments and Using Access Bonds

You know what's the best way to phase in , and I think you've got two things to consider . One will be the costs of your transactions , and I'll explain that now and then . The second part , which you've identified , is the interest that you're going to earn on the cash while you're phasing in .

You've identified is the interest that you're going to earn on the cash while you're phasing in . So let's just talk about the costs for a second .

If your bank charges you a transaction fee for transferring money from your savings account to your brokerage account , then you want to try and limit that transaction , the number of transactions , so that you're only paying one transaction fee . If it's a fixed , random amount per transaction , then you definitely want to do one transaction once and save on the costs .

If it's a percentage fee , where they charge you 0.5% or something of the value , then the transaction costs are not such a big issue . But I think most banks will charge a random amount per transaction and then they'll scale up . The bigger the amount , the more they'll charge you . So I think , just check those costs .

You just don't want all the interest saving that you're getting on one place to be eroded by paying the bank lots of transaction fees . So understand your costs before you do anything . And then I think the second question will be the interest that you earn .

So some of the brokerage accounts , especially if it's a kind of a traditional stock broker , they will pay you interest , and it's usually not bad .

I mean , I don't know exactly what it is today , but let's just say it's around 8% a year and so then it's worthwhile doing one transaction , transferring all the money to the brokerage and then once a month , feeding it in from your cash account into the ETF that you want to buy .

Some of the newer platforms where they're doing fractional shareholding and fractional ownership . They might not give you interest or they give you pathetic interest , and in that case to me it doesn't make sense to store your cash with them . And in that case to me it doesn't make sense to store your cash with them .

It makes sense to keep it and transfer it when you're ready .

So I think understanding interest and costs are important , one of the strategies you can follow is if your bank charges you transaction costs and it's a random amount per transaction and you're in a place where there is no interest that you can earn on the cash , then you might want to consider doing transactions every second month so you don't phase in monthly .

Let's say your goal was to phase in over six months , then what you could do is , instead of doing one transaction per month for six months , you do three transactions every second month , so that you still phase in over six months , but you're just doing it in bigger amounts , and that might be a good combination of reducing your transaction costs and earning

interest . So I think have a look and then work out the interest you know . Work out what that is . If they're going to pay you 8% actually , work out the RAND amount and compare that to the RAND amount of the costs that you're going to be paying the bank for transactions and break this down right to actual RANDs and cents .

Don't get fixated on percentages , because you might find the amount of cash that you're going to store is quite low and so the actual RAND amount of interest would be low , and then you're keeping it at the bank and doing lots of transactions and actually all of the savings that you would have got on the one side , you've lost on the other .

So I think it's a good question . It's a good way to kind of just focus your mind on making sure that you're getting every advantage you can without overcomplicating your life and , equally , without making the shareholders of the banks rich . You want to do this for yourself and make sure that you're growing your capital as fast as you can .

So thanks so much for your voice note . I just want to say we absolutely love voice notes , so please send voice notes . Messages are boring because I've got to read them and you can't hear them , and so the more voice notes we get , the better .