Dear Investor Challenge
I love my job, it’s easily the best thing since the slow motion running scenes on Baywatch. I love the office politics and the free food I get during the endless hours of meetings discussing nothing in particular, and the hours spent behind my desk trying to find the balance between actual productivity and complete boredom.
I’m just scared that eventually I’ll have too much money and won’t need to go in to work every day. Once my wife sees that, she’ll definitely want me to retire, and that will mean I’ll go from being the big man at the office, to replacing her handbag yorkie taking instructions, all day long.
My days will then be spent getting dragged around Mr Price Home trying to decide which of the two identical shades of blue towels would best match our guest bathroom, and cleaning my perfectly disorganised garage so that it has space for the treadmill my wife has recently developed an allergy to.
All this while being called Schmoopie is already too much, but it will also almost certainly mean I won’t be able to get drunk at the annual Christmas party, and flirt with my inappropriately young secretary.
Is there any way I can avoid this disastrous chain of events from becoming a reality?
My wife is very persuasive. Somehow she managed to overturn my one foreign holiday per year policy this year. Actually she’s done it two years in a row. Last year we had our fantastic bike trip through 5 European countries, and then a few months later we were off to Mozambique for her sisters wedding.
For the last two weeks we’ve been traveling through Chile and Argentina, and we’ve already booked our return flights to go to Portugal and Spain in September. Fortunately we don’t really throw much money away on other luxuries, otherwise we’d be totally broke. Plus, with my recent shock realisation that my imported dress collecting better half did in fact out-save me last year, I thought I’d better not argue.
Their house? No but it’s a good guess. Houses are expensive, but this expense can cost you more than your house.
Beer? Boerewors? Biltong? No it’s not one of the 3 B’s either.
The wife? Hopefully not…
No I’m not here to sell you on some crazy pyramid scheme, in fact I’m going to recommend you completely forget anything related to pyramid schemes or multi-level marketing (MLM) exists, because well researched evidence points to the fact that 99% of participants involved in MLMs lose money. Even if you don’t you’re almost certainly going to annoy your family, and alienate your friends, just don’t do it. Starting one can be very profitable though if you don’t mind the risk of jail time, like this smart lady who managed to convince thousands of people to buy a cheese making kit earning her €145 million…
No, none of that rubbish, just an honest way to earn a few extra Rand so that you have more to save and invest. But first I’ll start off with a statement. It’s far easier to save more than it is to make more. That’s why whenever someone asks how they can get their finances in order, I always recommend they look at the burn side of their budget rather than the earn. It’s something you have complete control over, and in most cases is filled with excess, waste and debt repayments. There’s bound to be some low hanging fruit, so most people can find money to save somewhere. My wife did that last year, and though I still can’t figure out how, she managed to out-save me without even trying. We figured this out weeks ago, and I still get almost daily reminders…
But sometimes trimming the budget isn’t enough to get ahead, and you just need to earn more.
1) You’re bad at maths because you bought a new car
Quite a few of my friends read my blog. Some of them like Wendy* are even on board with the whole save enough to retire really young idea, but maths isn’t her forte as the following conversation should show:
Wendy: Can you believe Bill* just bought that big BMW*. So stupid, he makes less than I do. What do you think it cost?
Patrick: Well it was about 2 years old, so it’s probably worth around R300 000.
Wendy: R300 000! I’d never spend that on a used car. I’d much rather get a new one for that price. What an idiot.
Patrick: Well the minute you drove out of the showroom in a new R300k car you’d lose R60 000. After one year of owning it your total loss would be around R90 000. After a year of owning his used car, Bill would only lose R30 000.
Conversations like that often have a lot of uncomfortable silence following them, especially when Ms want to be frugal bought a brand new (though much cheaper) Kia a few months back.
*Names and even cars have been changed. I’ve learnt my lesson on using even relatively similar examples before.
I’d like to be rich one day. Properly rich, not just the “If you have a roof over your head and food in the fridge you’re richer than most of the world” rich, but actually very wealthy. A millionaire just won’t cut it, I’m aiming for a huge stash of cash. R10 million should do quite nicely.
I’m in Matric at the moment, and I have a part time job waiting tables on weekends. I make a fortune there, at least a couple of hundred a shift…
Next year I’m starting a teaching degree. I know it doesn’t pay well, but it really is what I want to do. The reasonable hours and long holidays are also going to be a bonus too.
So what are my chances of getting to R10 million with the totally shameful teachers salary I’m expecting to earn one day?
Teach to be
Dear Investor Challenge,
We really need investment in South Africa. It’ll create jobs, stimulate the economy and drive innovation which could one day cure AIDS, Malaria and Cancer. It’ll even end the current scourge of crime we’re suffering so much under. But be warned, as fantastic as that sounds, if you do invest in South Africa I’m going to punish you.
Yes, I’m going to punish you, hard. And not in the 50 shades kind of way but really miserable pain. Exclusively to your rear pocket, where you carry your already heavily punished wallet. Of course I will still punish you for investing internationally, but it’ll be so much worse if you keep your money in SA.
But please, ignore the fact that keeping all your investments here is bad for your wealth, terrible diversification and completely ignores the efficient market hypothesis, just invest locally, it’s the right thing to do. Like paying your TV license so Hlaudi can get his next bonus or raise. Or both.
The South African Revenue Service.
This work thing can be a royal pain in the ass sometimes. People are supposed to listen to me, but I really get no respect. When I wanted to sign a new deal with the Russians, my accountant stopped me. He did the same thing when I asked him to fund my girlfriends travel company, now she’s all upset with me too. Then a couple of months back I was told that I’d have to pay for my swimming pool and farmyard, even after they were all promised to me as perks for a job well done, it’s totally ridiculous!
Now last week my three best friends decided to leave my business. I’m going to miss them so much, they were always so generous, and then just the other day, even the youngsters around here said they want me out. It just feels like everyone around here hates me. There’s really no reason for me to stay here anymore, which brings me to the point in this letter.
How much money do I need to have saved up and invested before I’m good to go? I really don’t want to come up short and have to try live on that measly excuse for a state pension we have.
I often write about things I don’t like spending money on:
- Balloon payments for a car. Remember those, the deposits you still have to pay AFTER you’ve paid for the car for the last 72 months. The Americans have a better term for these types of loans, they call it a bullet loan. Bullets are scary so this makes sense, balloons are happy which you won’t be when your payment is due. Don’t let someone aim a loaded bullet your way when you make a car purchase, it’s going to hurt, a lot.
- Expensive label clothing. Are your genitals on display? No? Then consider yourself dressed. Feel free to spend money on quality clothing though, if it lasts a long time it is often more cost effective than buying cheap clothing more often.
- Outrageous unit trust fees. I hate them, the people who dream them up, and all of the suckers who fall for them which means they’re still not extinct. Fortunately they are on the decline, and even Steen Jacobson, the CIO of Saxo Bank knows their days are numbered.
- Taxes. It probably wouldn’t be so bad if most of the money didn’t go towards Nkandla, #1’s girlfriend at SAA who managed to lose R1.4 billion last year, our international relations minister with a hole in her head or the SABC boss who lied about finishing school, and now forces everyone else to lie about the news and to literally sing his praises. In a less corrupt country I’d have no problem with this. I’d even happily pay the Swedish 60% tax rate if the money would go back into social services rather than the pocket of politically connected hyenas.
- Bond payments. You can argue with me until you’re blue in the face. Your house is not an investment, finish and klaar. I don’t care if you have one, but don’t kid yourself, it’s a lifestyle purchase, not an investment. The only positive I see is that it force the typical South African’s with money allergies to save.
Today I want to talk about something I love spending money on. It’s appropriate too, because I’ve recently spent a lot on it!
Dear Investor Challenge,
The guy running my country seems a little daft. He once said that showers cure aids, and thinks that the African continent is so large all the others can fit inside it. I’ve seen him on TV trying to pronounce a not so big number, and while my 5 year old seems to be able to do this quite well in pre-school, this guy took four attempts, and I think one of them included an eleventy.
Now I really don’t have too much of an issue with stupid people, in fact Arnold Schwarzenegger remained one of my favourite movie stars, even after he said that he thinks gay marriage should be between a man and a woman.
The bigger issue for me when dealing with the #1 man of missing marbles, is that when he stuffs up, I lose a lot of money. This is something I don’t like very much. It’s better than losing a limb to carnivorous ants of course, but only just.
I’d like to take some of my assets offshore, somewhere safe from such stupidity. How much should I invest offshore? And any tips on where?