My favourite computer game as a child (yes we had computers back then, much to my son’s disbelief) was Lemmings. In this game you’d have to rescue these humanoid lemmings who were too stupid to do anything else except follow their leader to their doom. Sounds pretty much like our government at the moment doesn’t it?
It’s April fools day, but since I’m still upset that I fell for two of them (Heyneke Meyer returning as springbok coach and myBroadBand launching uncapped fibre for R99 a month) I thought I’d spare you any more stupid practical jokes.
Instead, I’m offering you an antidote to the madness. A kind of an unApril fools joke. I’m going to list out the top seven financial products so dumb, we should all be wishing they were practical jokes instead of reality. So let’s count them down:
Yes, well done you uber foxy person you, you now have an extra R1.2 million to invest. This is such a common problem, I thought we should address how to handle it. Firstly, I would like to advise against spending it all on hookers and cocaine like this overly honest guy would do. Sure it’s fun, but how much of that month will you actually remember, and after you’ve lost your job, wife and the bridge of your nose, life might just suck a little afterwards. Ideally you’ll invest your winnings, but should you do it all at once, or should you spread out putting it in investments over a year or more?
When I was 24 I thought I’d made the big league. Thanks to a bit of luck and thanks to having F-You money, I ended up in a contracting position where I was earning R160 an hour. That meant I made R28k per month since I worked about 176 hours a month on average. This is a pretty good salary today, but 13 years ago to a 24 year old who was still pedaling his bicycle to class and eating vetkoek for lunch just over two years previously it was an astronomical amount of money. More than double what my last salary was before I took my extended F-You holiday. So what does a 24 year old earning such a large sum of money do with all of it? Invest it? Not a chance, I bought myself an Audi.
OK hands up, who still owns unit trusts? My goodness there are a lot of you on that side of the screen. Unfortunately there’s one on this side of the screen too. And another in the family, hi mom! We’re all a bunch of idiots. Great big foolish money hating idiots. I’m a completely self taught idiot. Nobody does that anymore, we all use coaches and gurus called financial advisers to guide us into idiocy. Before I graduated to idiocy I only used to save and not invest, so I was a moron then. One day soon I plan to leave idiocy behind and move on to madness. Madness is the Cum Laude of intelligence.
So why is it that I’m calling us a um, what is the collective noun for idiots? If we were American I’d vote for a trump of idiots, but since we live in Mzansi maybe it should be a malema of idiots, or perhaps a kraal of idiots. Back on track now, why do I think that ETFs are the holy grail and that unit trusts are the financial equivalent of a Kardashian? Well there are two main reasons I dislike unit trusts, and as someone who gets weird satisfaction in pointing out my current and former reasons for idiocy, I’m going to elaborate on both. Continue reading
Fees must fall, yes #feesmustfall! I actually planned this month’s blog post on a play on words regarding investment fees which must fall, over University fees which (also) must fall, but to be quite honest the University fees falling probably has as big if not a bigger impact on us than investment fees, so I’ve bumped that post on to another time.
So, let’s look at what the impact is of the whole University fee issue. You see, the students are rightly upset that they have to pay far too much in University fees. The government on the other hand is saying there just isn’t money to give free tuition, and they right, it’s pretty hard to find money when you’re throwing so much of it away on things we really don’t need, like the arms deal, nuclear power stations and of course Nkaaaanndla.
I know I’ve said it before, but for some reason it just seems that governments don’t understand basic finance. Firstly you need to make sure you spend less than you earn, and then you need to invest some of the difference. It’s my belief that the #feesmustfall movement is simply the governments lack of understanding around making an investment in it’s future. Delaying gratification now for huge rewards in future is ground zero for investing.
As you might already know, I like numbers, so let’s look at an example:
In August, my beautiful new wife and I eloped to Paris to have a combo wedding and honeymoon. It was just the two of us, so we didn’t have to worry about what colour the napkins should be. We also didn’t have to worry that mad uncle Eric would drink too much and try join the band, or that someone would knock over the ridiculously ostentatious wedding cake. I was also fairly confident that I wouldn’t end up in a runaway bride skit, because I’m not Richard Gere!
Dear investor Challenge,
Why are your posts always so damn complicated. You keep posting numbers and graphs, but I’m not a numbers girl, unless of course you’re cute in which case my number is 555… Why don’t you come out with some financial advice for dummies like me? I want finance de-complicated.
The names Blonde, Jane Blonde.
Good call miss Blonde. You know, I think this whole industry is built around making people believe finances are only for accounting nerds, or worse, actuaries, but to be quite honest, there’s nothing complicated about it at all. In fact, I’m pretty certain that all the experts and snake oil salesman specifically designed it as a giant smoke screen to keep you thinking it’s complicated so they can keep their high paying jobs, six figure bonuses and holiday homes in Umhlanga, all thanks to the money they take from us while we’re not paying attention. Mark my words, the only interest the majority of financial product sales people have in your wealth, is in how much of it they can transfer to themselves as fees for a service probably badly rendered.
Ignore them. Everything you need to know is so simple anyone can take control of it. So here it is, the three most important rules of personal finance: Continue reading
It all comes down to how much money you need. If you can live on R178 500 a year, or R14 875 a month, then it’s easy. Need more than that? Well if you’re married, you can double that, and more than likely not double your costs. You should hopefully be sharing a room with your spouse, and even if you’re a massive snorer, renting a two bedroom house is still way cheaper than renting two one bedroom houses. Also you can most likely survive with one car post retirement. With all your new free time it would be a good time to start getting around by bicycle. That will also mean you’ll spend far less on health related items. Could you and your significant other live together on R357 000 a year or R29 750 a month? Well you should be able to, after all that’s far more than most South African households live on…
So why did I pick those numbers? Continue reading
Once upon a time there were twin girls living in the beautiful city of Cape Town. While they were twins, they had very different personalities. Alyssa was carefree and adventurous, while Rachael was responsible and level headed. Due to the gift of good genetics, both were also really beautiful, and very smart. So beautiful and so smart, that both were accepted into medical school, and also offered modelling contracts.
Now here’s where the lives of these two girls took a detour. You see Rachael knew that she wouldn’t be able to start modelling and do well at med school, so she decided to focus on her studies, the responsible choice, her family was very proud. Alyssa on the other hand managed to convince her parents that as you only live once, you should take opportunities to go and see what life is all about. And so they went off in their different life paths as soon as school finished. Continue reading