THE TOP 8 MONEY QUESTIONS we googled
These days, you can learn just about anything from the internet: how to fold a fitted sheet, the name of that actor in that movie and the cause of the mysterious illness you may be suffering from (although Dr Google probably does more harm than good, sending many a hypochondriac into a flat panic).
Here in SA, we also turn to Google for financial advice. And according to information gathered by Budget Insurance, our top questions last year were all about earning a bit extra. We asked Kristia van Heerden, CEO of financial resource Just One Lap and co-host of the podcast The Fat Wallet Show, to answer them.
1 WHERE CAN I GET A LOAN IF I’M UNDER DEBT REVIEW?
Debt review is meant to be a bit of a reprieve, a way to come up for air when you’re unable to meet your financial obligations. This means that once your application is accepted, your creditors can’t take any legal action against you for 60 days – BUT you also aren’t allowed to get any further into debt.
‘Since so many of us can’t make it through the month on our income, the temptation is to seek informal debt – either from family members or, worse, mashonisas (unregulated informal lenders who charge exorbitant interest rates),’ says Kristia. ‘Adding unregulated debt to your formal debt burden will only make the situation worse.’
When you go into debt review, the process usually involves some sort of debt counselling. ‘Be sure to make use of this service as much as you can, as you are paying for it,’ she says.
Because over-indebtedness means your expenses exceed your income, there are really only two ways to fix the problem: decrease your expenses or increase your income. ‘Ask your debt counsellor to help you formulate a strategy that is achievable under your circumstances.’
2 WHERE CAN I CHECK MY CREDIT STATUS FOR FREE?
‘Checking your credit status is like visiting the dentist – you have to do it once a year to ensure things don’t get out of hand,’ says Kristia. You’re entitled to one free credit check every year, so use it. You can check your credit record for free on TransUnion or VeriCred’s websites.
The main purpose of a credit check is to make sure that you haven’t been the victim of identity fraud, she explains. So what do you do if you think someone has taken on credit using your identity? Report the fraud to the nearest police station immediately and, once you have a case number, alert the companies where accounts were opened in your name. ‘Finally, apply for Protective Registration from the South African Fraud Prevention Service.’
3 WHERE CAN I SELL R5 COINS?
Banks offer higher interest rates on fixed deposits because the bank is rewarding you for committing to keep your money saved for longer.
‘There is a prevailing myth that certain coins are collectors’ items, and worth a lot of money,’ says Kristia. While coin collecting is a legitimate hobby, she cautions that fraudsters are tricking people into sending them coins, then disappearing. ‘It’s unlikely that a R5 coin will be worth much more than R5. If someone is offering 10 or 100 times more, it is likely that they’re trying to get you to send them the R5 coin. They make R5 and you lose a coin.’
4 WHERE SHOULD I INVEST MY MONEY TO GET GOOD RETURNS?
For Kristia, investing is the only way to beat inflation over the long term. ‘Unfortunately investing requires your savings and patience,’ she says. ‘When people ask about “good returns” what they generally mean is “fast returns”. Sadly, this is how many get ensnared in pyramid schemes and other scams.’
So what is step one? Kristia recommends dread and disability cover in case you lose your ability to earn an income. ‘Once that’s sorted out, save three to six months’ worth of your monthly expenses in cash to see you through an emergency.’
While you’re building your emergency fund, start reading up on exchange-traded funds (ETFs). ‘These index-tracking products are listed on the JSE, can be bought through a registered broker and will grow your money as much as the market grows over time.’
5 WHICH BANK HAS THE HIGHEST INTEREST RATE FOR A FIXED DEPOSIT?
Banks typically offer higher interest rates on fixed deposits because the bank is rewarding you for committing to keep your money saved for longer. ‘African Bank and TymeBank both offer excellent interest rates for fixed deposits,’ says Kristia.
‘However, it is important not to leave all your savings in cash. With a cash account, you can earn only the interest your bank is offering you, whereas an investment is technically infinite.’
Forex trading is when you make money by trading one currency for another. But it’s not as fast and easy as it’s made out to be.
Also, it’s important that you don’t just lock up your emergency fund in a fixed deposit account, unless you have access to credit to see you through an emergency. ‘The purpose of an emergency fund is to get you out of a bind. When your money is locked in, there’s a waiting period before you can access it.’
6 WHAT IS FOREX TRADING?
You’ve probably seen loads of Facebook ads promising it will make you rich enough to buy a Lamborghini: Forex trading is when you make money by trading one currency for another. However, it’s not as fast and easy as it’s made out to be – it comes with risks. ‘You can lose more money than you invested, for example,’ cautions Kristia.
‘Furthermore, trading is a so-called “zero-sum game”, which means after every trade there is one winner and one loser.’ Think about it: all major financial institutions around the world have professionals who spend their entire working lives trading Forex; the odds are stacked against you. ‘You wouldn’t enter a race against Usain Bolt,’ she adds. ‘So why would you risk your hard-earned cash going up against a trained professional?’
7 WHERE CAN I SELL GOLD JEWELLERY?
What could be safer than gold as an investment? Quite a lot, actually. ‘An investment in an index-tracking product like an ETF spreads your risk across a few companies, while an investment in gold puts all your eggs in one basket,’ says Kristia. ‘The gold price fluctuates wildly for reasons that aren’t always obvious.’
Again, don’t bet on something you don’t know anything about. ‘You can figure out investing and the stock market by listening to The Fat Wallet Show or spending some time on YouTube,’ she says.
8 WHICH BANK OFFERS THE BEST INTEREST RATE FOR SAVINGS?
‘Capitec offers excellent rates on a working account as well as three free sub-accounts, and TymeBank offers high interest rates with low banking fees,’ says Kristia. ‘Shop around for an account with a low monthly fee and a high interest rate.’ ■
