With the festive season upon us, many South Africans are in line to receive an annual bonus. Instead of a flurry of spending, some people choose to allocate a portion of this extra money to investing.
We spoke to six South Africans, all under the age of 40, who have invested on the JSE. They account how they began, their challenges, tips and the lessons that they’ve learnt along the way.
- Fikile Shabangu
- -Tell us a bit more about yourself?
I am 28 years old and live in Paulshof, Johannesburg. I work for an asset management company in the Institutional Business development team. Within that team I am involved in client servicing, business development and the marketing of our products to institutional businesses.
- In life, what is your motto?"
“If you want something, all the universe conspires to help you achieve it” - the Alchemist by Paulo Coelho
- -How did you get started in investing?
With my pension fund through my company. I soon realised my pension contributions were not enough so I started investing on a personal basis. I joined an Investment Club which was started with a friend of mine who introduced me to Exchange Traded Funds (ETFs).
- -What made you consider investing in the stock market?
The potential great returns that the stock market offered coupled with the compounding effect of long term investing.
- -Why did you choose to invest in ETFs?
This type of investment gives an investor exposure to a basket of stocks so risk is diversified. ETFs are also the cheapest option and offers the least risk compared to asset managers who try to find ‘alpha’ through investing in specific stocks. The point is that not all those asset managers will find ‘alpha’.
- -What ETF did you invest in? How did you choose your ETF?
I belong to an Investment Club and we have invested in a number of ETFs to diversify our portfolio – such as the Top 40,e RAFI, property, foreign equity, cash, gold etc. Each member of the club comes with an investment suggestion which all members consider and discuss.
- -What would you say is the most important rule of investing?
Investing is a long term game - avoid the short term noise.
- -What was the best way to find information on stocks?
You have to be alert and informed. Read financial publications like the Financial Mail and watch/listen to TV and radio business programmes.
- -Do you use any online trading facilities? Do you believe it is safe to trade online?
Yes to both questions.
- -What were the biggest challenges you faced when you began investing?
Not understanding how ETF's work and cutting down my expenses to provide for my intended investment.
- -What tips would you give others who are interested in investing?
Start now. . . .while you have the time to do so.
- -Tell us a bit more about yourself?
- Senzi Dlamini
- -Tell us a bit more about yourself?
My name is Senzi Dlamini and I am 25 years old. I was born and raised in Soweto. I am an outgoing person who enjoys a game of chess. I work in Public Relations specialising in Media Relations. I don’t have a family to support but I do help out family relatives now and then.
- -In life, what is your motto?
Work hard, enjoy life and live to the fullest. You only get to live once.
- -How did you get started in investing?
I wanted to buy a house and a car so I took out a number of short term investments to save up for the deposits and lawyers’ fees. I was presented with an opportunity to buy BEE shares through a BEE share scheme. The offer was impressive and I went for it.
- -What would you say is the most important rule of investing?
Know why you are investing. Investing in shares is not a ‘get rich quick’ mechanism. When investing in shares always remember that there are risks involved.
- -What was the best way to find information on stocks?
Subscribing to Sharenet and reading Business Day on a daily basis to keep up to speed with what is happening in the various markets.
- -What were the biggest challenges you faced when you began investing?
Quite a few! Firstly, not knowing how much to invest.
Secondly, sourcing the right advice over and above that which is available on the internet. Thirdly, taking that leap of faith, not knowing whether I am throwing away my money or whether I will get a return.
- -What tips would you give others who are interested in investing?
If you are a beginner go for low risk investments. Getting the right information is also important. If you want to buy some shares, start by doing research, find out about the historical performance of the shares and the investment case of the company concerned. For example, if you are investing in a newly listed mining exploration company, you have to understand that the company will make a loss for a couple of years before it can actually become profitable and pay dividends. Lastly, always remember that investing in shares won’t make you rich overnight!
- -Tell us a bit more about yourself?
- Christeen Erwee
- -Tell us a bit more about yourself?
I am 27 year old, unmarried and without any kids. I live in Sundowner at the moment and work for a company that operates mainly in the utilities industry.
- -In life, what is your motto?
Passion, dedication, integrity and honesty is the driving forces to success
- -How did you get started in investing?
Through an investment club that a few friends setup.
- -What made you consider investing in the stock market?
I wanted to learn more about investments and the various products available to me on the JSE.
- -Why did you choose to invest in ETFs?
I believe ETFs give you a more stable investment with exposure to more industry performers than would be possible when making investments in individual companies.
- -What ETF did you invest in? How did you choose your ETF?
I’ve invested in various different kinds of ETFs. I am a member of an Investment Club and normally each one of us gets a chance to research a certain ETF while motivating for our choice to the rest of the group. The group then evaluate the proposal and we vote on whether to invest on the proposed ETF or not.
- -What would you say is the most important rule of investing?
Follow what you believe to be a good investment, which requires you to understand why you are making the investment. You should have, for instance, a passion for a certain industry and/or company, prior to making an investment in a particular industry and follow the progress. Secondly, I would say that it is important to have a long term view when investing.
- -What was the best way to find information on stocks?
The internet, although it is not as if I always understand what I am reading.
- -Do you use any online trading facilities? Do you believe it is safe to trade online?
No although I do believe it is safe to trade online.
- -What were the biggest challenges you faced when you began investing?
Looking for information.
- -What tips would you give others who are interested in investing?
You have read up on your investment before investing and follow the various market and economic trends.
- -Tell us a bit more about yourself?
- Alex Ridley
- -Tell us about yourself?
My name is Alexander Ridley and I’m 24 years old. I’m an IT Technician and live in Bryanston. I do not have a family to support as yet.
- -In life, what is your motto?
Not everyone who chased the zebra caught it, but he who caught it chased it, i.e. the price of discipline is always less than the pain of regret.
- -How did you get started in investing?
I didn’t start investing for a long time as I thought you needed a large sum of money, and a broker and that would incur additional costs. I started about two years ago. I heard about online share trading and it became much simpler, no brokers, no huge costs, you can invest with whatever you want, whenever you want. I started researching companies that I believed had value and potential as well as companies performing consistently. When I felt I had done my homework, I started. My first investment went extremely well, gaining 25% in two weeks.
- -What made you consider investing in the stock market?
I knew from a young age that the interest rates that you get on simple savings accounts can’t compete with inflation and the only way to get good returns on your savings is by investing, i.e. to make your money work for you. I suppose I enjoyed the “romantic” idea of being a successful investor – fast cars, beautiful woman, investing in the morning then relaxing for the rest of the day. It’s not as grand in the real world, but it is fun and great to see your capital growing. I found inspiration through people like Warren Buffet, and what he has achieved through investments. I also wanted to generate an additional income, and investing allows you to do that without time restrictions.
- -Why did you choose to invest in ETFs?
I feel it’s a safer way to invest long term. If you’re not looking for much risk but want a decent return ETF’s such as the Satrix 40 are a good place to put your money. Buying the top 40 shares spreads your risk across the South African economy as opposed to the riskier option of investing in only one share. Diversification is the name of the game.
- -What ETF did you invest in? How did you choose your ETF?
I invested in the Satrix 40. Once again you need to do your research, see what’s best suited for you. Satrix 40 is well rounded and reasonably safe, but it is a long term investment.
- -What would you say is the most important rule of investing?
Research and patience. Also, diversify your portfolio.
- -What was the best way to find information on stocks?
Well, you actually need to combine multiple sources to really get a good ‘feel’ for the stock. Online share trading sites usually have huge amounts of information about all their companies listed. Otherwise, the company’s website, newspapers, and any financial magazines are helpful. It’s important to constantly keep up to date with business news, and reading a few of these every day will keep you in good stead.
- -Do you use any online trading facilities? Do you believe it is safe to trade online?
Yes I do believe it is very safe.
- -What were the biggest challenges you faced when you began investing?
Finding the right stock is difficult in the beginning. There are hundreds of companies to choose from and I didn’t know much about most of them. So initially a lot of research is needed to single out companies you see value in and companies that have potential to grow in the future. Companies with vision and consistent growth are also good bets. One also needs to gain perspective on how the economy is moving, and this is only gained through keeping up to date with the news.
- -What tips would you give others who are interested in investing?
Well firstly one needs to ask, why am I investing? Is it to create an additional income, grow your capital, are you investing for your retirement. If you want a little extra moola every month then you’re looking at shares that pay dividends or you’re looking at riskier options such as derivatives or even forex. If you’re there for the long term then you want safer options such as Satrix 40, or established companies producing consistent gains over long periods. It’s important to stay up to date with the business news and do your research. Don’t trade on tips from other people without doing your research. It’s important to cut your losses, don’t sit waiting for the trend to change, unless you firmly believe its temporary and can afford to wait as well as incur the cost should you be wrong.
- -Tell us about yourself?
- Mabel Mbatha
- -Tell us a little about yourself?
I am 36 years old and live in Cosmo City and am married with 3 kids. I am in client relationship management and ensure the successful operation of our products to our clients.
- -In life, what is your motto?
To the pure, things are pure – I believe that positive minded people attract positive things into their life and the opposite is true of negative minded people.
- -How did you get started in investing?
I worked for National Savings and Loans in 1994 and it was then that I realised the need for financial security and the importance of investing.
- -What made you consider investing in the stock market?
To be honest I was ‘duped’ into using investment software and that was my first introduction to the stock market. I would like to own shares though and am interested in the long term investment that the stock market offers.
- -Why did you choose to invest in ETFs?
It was an opportunity to own shares and build on my investments.
- -What would you say is the most important rule of investing?
Be Careful!
- -What was the best way to find information on stocks?
On the internet. Subscribing to Sharenet helps.
- -What were the biggest challenges you faced when you began investing?
My biggest challenge lies in understanding the terminology used in this world of financial markets.
- -What tips would you give others who are interested in investing?
Don’t invest unless you have an understanding of your investment – the Investment Club is a great way to learn from each other. I would also advise that if you are considering investing on the stock market that you shouldn’t be greedy and see it as a long term investment. Diversify your portfolio – invest in insurance policies and stocks.
- -Tell us a little about yourself?
- isa-Mari Renen
- -Tell us a bit more about yourself?
I am 27 years old and am unmarried with no kids. I live in Randburg, Jhb and work for an engineering firm as a project administrator.
- -In life, what is your motto?
Well-behaved women rarely make history.
- -How did you get started in investing?
I joined an Investment Club.
- -What made you consider investing in the stock market?
As part of the Investment Club each month we consider different ETFs to invest in. Every month we collect a certain amount of money and decide amongst ourselves which ETF we will invest in. A person from the group is able to suggest an ETF and will present to the group why that ETF is a good investment. It is discussed within the group and voted on. We have invested in about 10-15 ETFs thus far.
- -Why did you choose to invest in ETFs?
It was the Club’s choice to invest in ETFs.
- -What ETF did you invest in? How did you choose your ETF?
Approx. 10-15 ETFs
- -What would you say is the most important rule of investing?
Many people consider the short-term gains but in order to be successful on the stock market you should look at your investment as a long term.
- -What was the best way to find information on stocks?
My biggest challenge revolved around finding information about different types of ETFs. I would use the internet but the information was insufficient. I’d love to know where to get more information.
- -What were the biggest challenges you faced when you began investing?
Like I said gathering relevant available information was an issue for me. And to add to the frustration is my lack of understanding of the concepts and information itself – I’m still unsure as to what an ETF is?
- -What tips would you give others who are interested in investing?
You get different types of investors with different approaches to investing although for a beginner I would say understanding is key!
- -Tell us a bit more about yourself?