What should I do with R10k

[PPLdude]

Well...

I have 0 debt and 0 expenses (for now). Should I just leave it in my Capitec account?

 

[Idiosyncratic]

Well...

I have 0 debt and 0 expenses (for now). Should I just leave it in my Capitec account?

Depends. If you have emergency savings already, then consider investing

 

[Zukat]

First, build up your emergency savings account of 3-4 times your monthly salary. After that TFSA is the best option (act quickly to make use of your R30,000 limit before end of the financial year).

 

[Thor]

Put it in a 32 day notice account and built up an emergency fund that you can live off from for a few months should you lose your job today.

 

[Diesal]

Buy some material items? - Jokes

I'd say have a look at a Money Market account (yields are better than retail banks) or as thor mentioned a 32 day notice, just bear in mind Capitec Rate: 5.35 % p.a while inflation is 6.6% year-on-year. Ideally aim for a product with a return higher than inflation.

 

[backstreetboy]

10k will not even get you hookers and blow.

 

[Geoff.D]

I could always offer to invest it for you? Would you like me to send you a PM?

Lock it away in an investment which is not easy to get to. that way you protect it from the "natural attrition" that will happen if it is left in your current account.

 

[Tomtomtom]

Well...

I have 0 debt and 0 expenses (for now). Should I just leave it in my Capitec account?

Lucky! You can even skip the emergency fund for now and set up a TFSA, and go a lot more aggressive than a money-market investment.

This is assuming expenses are really zero, like you live at home, and if you are sure you won't have to start paying your way until you start earning an income. At that point, get to building the emergency fund in the money market from day one.

 

[diapason]

Lucky! You can even skip the emergency fund for now and set up a TFSA, and go a lot more aggressive than a money-market investment.

This is assuming expenses are really zero, like you live at home, and if you are sure you won't have to start paying your way until you start earning an income. At that point, get to building the emergency fund in the money market from day one.

A TFSA is probably not advisable at this stage as I think it is reasonable to assume that he will be saving for a car, house, etc somewhere in the future. Money in the TFSA should be left there as long as possible, preferably until retirement, since money withdrawn from it cannot be replaced in the tax-free framework.

 

[DanDango]

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[Thor]

Lucky! You can even skip the emergency fund for now and set up a TFSA, and go a lot more aggressive than a money-market investment.

This is assuming expenses are really zero, like you live at home, and if you are sure you won't have to start paying your way until you start earning an income. At that point, get to building the emergency fund in the money market from day one.

^OP do not do this. Ever.

Get the emergency fund going.

 

[Tomtomtom]

A TFSA is probably not advisable at this stage as I think it is reasonable to assume that he will be saving for a car, house, etc somewhere in the future. Money in the TFSA should be left there as long as possible, preferably until retirement, since money withdrawn from it cannot be replaced in the tax-free framework.

Indeed. But the disincentive to withdraw is a good thing. Unlike an RA, it's not an impossibility.

I think this potential future "loss" is being oversold. The no-replacement treatment of withdrawals is supposed to be a disincentive to impulse spending, not a disincentive to invest. It's a shame if people are foregoing the benefit now because of aversion to a contingent restriction on getting a lesser benefit in future.

IMO, OP should start the TFSA asap. If he wanted to save for a car, he would have said so. If/when he does want to start saving for a particular goal, he can think about whether he needs to save new funds for that, rather than dipping in to existing savings. It's easy to mentally relabel your emergency account, "car deposit". Not so easy with a TFSA. That's good.

^OP do not do this. Ever.

Get the emergency fund going.

An emergency fund is for covering unexpected expenses or lost income. The OP doesn't have any expenses to cover. His 3-6 months * salary = 0 right now. In any case, a TFSA can be used in an emergency, it just forces you to think twice.

 

[skeptic_SA]

Monte. Roulette. All on black. One spin. Thank me later.

 

[Gtx Gaming]

https://www.easyequities.co.za/

Buy 5k of DIVTRX and 5k PTXTEN

 

[Thor]

Indeed. But the disincentive to withdraw is a good thing. Unlike an RA, it's not an impossibility.

I think this potential future "loss" is being oversold. The no-replacement treatment of withdrawals is supposed to be a disincentive to impulse spending, not a disincentive to invest. It's a shame if people are foregoing the benefit now because of aversion to a contingent restriction on getting a lesser benefit in future.

IMO, OP should start the TFSA asap. If he wanted to save for a car, he would have said so. If/when he does want to start saving for a particular goal, he can think about whether he needs to save new funds for that, rather than dipping in to existing savings. It's easy to mentally relabel your emergency account, "car deposit". Not so easy with a TFSA. That's good.



An emergency fund is for covering unexpected expenses or lost income. The OP doesn't have any expenses to cover. His 3-6 months * salary = 0 right now. In any case, a TFSA can be used in an emergency, it just forces you to think twice.

So much red flags.

A TFSA under no circumstances should be used as an emergency fund. God please op rather not do this.

32 day notice account and consult with a registered professional for your goals forward.

 

[Thor]

First, build up your emergency savings account of 3-4 times your monthly salary. After that TFSA is the best option (act quickly to make use of your R30,000 limit before end of the financial year).

Follow this advice.

 

[Diesal]

32 day notice account and consult with a registered professional for your goals forward.

+1 this is where it gets dangerous...

 

[Tomtomtom]

So much red flags.

A TFSA under no circumstances should be used as an emergency fund. God please op rather not do this.

32 day notice account and consult with a registered professional for your goals forward.

Thor, have you noted the fact that the OP has no expenses. Which implies no income. So what is the point of an emergency fund?

And anyway, I'm not suggesting using a TFSA as an emergency fund. I've contrasted it with RAs which lock the capital away.

A TFSA benefits most from the earliest contributions. You are telling the OP to defer his contributions in case he one day needs to withdraw, which means he might not be able to contribute that amount again. This is a minor caveat compared to the advantage of early compounding.

Also, by the time OP wants to withdraw, the rules will probably have changed in his favour. TFSAs in other jurisdictions allow you to add back any withdrawn amount from the prior year to your current year's contribution limit. Pretty sure we will follow suit within a few years, not least because of people seeing a "red flag" on what is actually a great account.

 

[Aghori]

Pay off your debt if you have any.

If you have no debt, put it in a 30 day notice account and just forget about it.

 

[Tomtomtom]

Pay off your debt if you have any.

Do you even bother reading the OP before posting? He said 0 debt in the first sentence.