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It's My Money with Roné van der Merwe · Strictly Business Podcast

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  You're listening to Strictly Business Podcast with Lindsay Williams.
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  This edition of It's My Money is brought to you by Brenthurst Wealth, your partner
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  for global wealth creation.
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  Welcome to It's My Money.
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  It's My Money is brought to you by Brenthurst Wealth, South Africa's
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  multi-award winning boutique wealth manager.
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  I received a piece of work from the desk of René van der Merwe from Brenthurst
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  Wealth.
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  The headline is as follows, why safe decisions lose women money.
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  There's so many things I want to talk about.
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  but I will stay focused, I promise, Renee.
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  But I just want to ask you one question, and please indulge me on this one.
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  Have you ever had a situation where, it's a hypothetical situation, obviously, where
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  there's a person who is of a
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  certain age, earning a certain amount of money, and comes to see you at Brenthurst
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  Wealth to manage their money, and you see another
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  person, similar sort of background, similar age, everything else, but one is a
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  man and one is a woman, and their
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  aspirations and their goals.
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  and their approach to investments are completely different.
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  Have you ever had that situation?
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  Oh, yes, definitely.
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  We see that quite often.
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  Men are very different.
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  They're more dominant.
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  So they want the high risk, high reward kind of investments.
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  And the women are less likely to make an impulsive decision.
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  They're more conservative.
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  They're more focused on security, and they want to make sure they ultimately are
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  making the right decisions.
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  And you say that in your article, you say that women don't consider themselves to be
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  investors, even though they are essentially investing.
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  When you put money in a savings account, you're investing that money.
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  But the difference between investment through a woman's eyes and a man's eyes,
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  the differences are
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  manifold.
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  Renee, what's the point you're trying to make here?
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  Because I know that there was a recent survey from a very large wealth manager,
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  global wealth manager, that says 51%
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  of...
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  of women put their non-retirement investments into, I don't know, a cheque
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  account or a savings account or the money market or something
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  like that.
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  Is that a problem to you?
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  Women are investing as a very unique case.
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  So they don't associate themselves with investing because they think it's about
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  stock taking, taking big risks,
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  constantly following the markets.
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  But women definitely have the qualities they need to.
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  be an excellent investor and has to be patient, disciplined and long-term
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  thinking ultimately.
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  But the one thing they struggle with is they are more conservative.
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  So their money is in a money market account or a savings account, but that
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  ultimately ruins
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  your growth over the long term.
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  It's very limited.
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  They take very limited risk in a money market fund, basically none.
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  And having your money in a safe place like, well, they say safe place as
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  in a banking account a money market is your cash is protected against volatility
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  but it's not protected against
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  inflation so you see your bank account growing but you don't necessarily have the
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  ability to buy goods
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  and services in the same time now as in the future your your purchasing power is
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  declining every year
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  yeah and you talk about the difference between ignorance and the need to feel
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  safe.
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  It's not that a woman is ignorant of the markets, because that's just simply not
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  the case.
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  It's to do with the safety aspect.
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  And this is a very corny thing, and I'll probably get into huge trouble for this.
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  But there's an old saying that women nest and men hunt.
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  And it seems to me that when it comes to investments, that is exactly what they do
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  as well.
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  And it's not that it's wrong, it's just that it's not quite right.
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  Because to my view, if you've got money in a savings account, That's their...
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  doing something certainly, but it should be doing something else.
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  There's an opportunity cost, Renee.
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  So women, when they lack an investment, they want to feel like they're completely
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  ready when investing their money.
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  So they want to focus on their knowledge and getting the necessary experience.
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  Women wait until they're completely ready and understand everything that has to do
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  with
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  investing.
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  But the reality is the time in the market is the powerful and the most you um
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  important too when it
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  comes to investing because starting early even if your your knowledge is not like
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  perfect or on top of everything
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  if you're not in the market you'll miss valuable growth opportunities so if you
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  have your money like in cash or in a
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  money market it's basically inflation is eating your capital in the future and one
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  thing you need to have is an emergency fund i feel like that's where you need to
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  have your cash An emergency fund will give you ultimately your confidence to
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  invest because you have the capital readily available for unexpected expenses
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  because you don't want to
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  sell your long-term investments at the wrong time just to have the capital ready
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  at hand and I think that's when
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  having three to six months worth of living expenses is the best middle ground.
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  But ultimately, having money more than your living expenses, it needs to have a
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  purpose.
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  And that purpose is definitely not sitting in a money market fund or a bank account.
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  The growth you'll receive from that will definitely not increase in inflation.
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  And that's when your purchasing power will definitely decline.
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  Yeah, the emergency fund is very important.
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  It doesn't matter what gender you are, what your situation is.
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  You've got to have something there because something inevitably and invariably does
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  happen.
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  You need that three to six months, as you say.
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  And you make a very important point about inflation, Renee, because the recent
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  inflation print from the South African economy, the
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  consumer price inflation rate was an annual one of 4.5%.
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  It wasn't that long ago that it was hovering around that 3% mark, which is the
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  Reserve Bank's target.
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  So 4.5%, suddenly you've got to beat that, otherwise your real income is going down
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  every year.
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  Oh, definitely.
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  Inflation risk is the...
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  biggest topic that I feel like it's not very talked about.
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  And I feel like I'm very passionate about it.
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  For example, we have a client who's doing their retirement planning and we sit with
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  them and doing their cashflow analysis.
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  We have two columns in our cashflow we really focus on, and that is your nominal
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  value and your real value.
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  Your nominal value is the money you will definitely have in the future, that
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  capital, but the real value is what is that money really
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  worth in like 20 years time when you retire.
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  And inflation risk is unfortunately permanent where your market volatility is
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  temporary.
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  So that is the thing you really need to focus on.
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  Women do think a little bit shy about not perceiving themselves to have the
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  knowledge of the
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  market.
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  I mean, some people might listen to this podcast and I said consumer price
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  inflation.
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  They might say, well, what is consumer price inflation?
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  It needs to be explained.
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  Do you find that women are sort of reticent and sort of reluctant?
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  to come to you and say, please, could you explain that, Renee?
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  Is that the case?
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  Because they feel as though they're ignorant and therefore feel stupid.
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  We definitely get clients in our office saying, I'm so sorry.
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  Can you please explain to me again?
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  Because they don't have the necessary knowledge and experience to have it.
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  So they are uncomfortable with the whole investing industry.
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  And it's very important to have a financial advisor who will hold your hand,
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  take you through all of the steps, explain everything to you in luck.
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  plain English what do you need to do and ultimately that's why you need to have a
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  good advisor because they need to help you
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  with your strategy planning it's not only about choosing the right funds for you
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  it's ultimately explaining every little
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  aspect you feel like people need to understand is some people they are unaware
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  of this I feel the same way
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  I've been interviewing you and your colleagues for a number of years now and I
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  still don't quite understand the benefits
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  of different types of annuities.
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  But that's a secret between you and me, Renee.
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  You say separate risk from recklessness.
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  I mean, being risky is to the detriment of the returns that you aspire to.
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  So you've got to be cautious with your risk.
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  But on the other hand, you've got to balance it between being so conservative
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  and a little bit risky.
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  And I think that's where you come in as a financial advisor.
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  Oh, definitely.
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  Risk is a very funny thing.
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  You need to have risk in order to grow.
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  And then you don't want risk because you're scared you're losing money.
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  But I think fear is completely normal in this industry.
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  The risk you're willing to take is ultimately how much you will grow.
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  But the reality is a well-diversified portfolio is the best way to go.
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  Because people think when you need to have the best performance, you think of
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  offshore investments.
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  You need to be invested in equities or high-risk investments like crypto.
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  They have absolutely no knowledge of it.
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  So this is a very scary place to be.
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  But having a good advisor, building you a well-diversified portfolio is the best way
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  to go.
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  You talk about currency as well.
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  You're quite passionate about inflation.
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  What about currency?
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  By exposing yourself entirely to the round, you are, of course, exposing
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  yourself entirely to the South African political economy.
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  And also the way the international investors perceive South Africa, because
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  that will manifest itself.
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  In the dollar-rand exchange rate, for example.
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  So you, I think, advocate diversifying currency-wise as well.
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  We
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  believe in diversification because if you have all your money in South Africa in a
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  cash account or money market account,
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  you're only exposed to South Africa asset allocations.
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  When you are diversified, you are getting exposure from offshore businesses,
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  offshore markets.
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  That is the best possible way to go.
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  You, of course, when one part of the market crashes, you have a other aspect
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  that's been lifting you.
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  So it's a world of others, but portfolio is.
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  is the best being overly aggressive in your portfolios like only offshore like
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  for example now the
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  markets have been crashing it's the the performance is extremely low while people
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  having
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  diversified portfolios or more balanced portfolios are really picking the fruit
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  now it's those um asked
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  allocations and having balanced portfolios is giving like 80 90 performance so that
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  is
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  You can see like...
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  Don't need to be invested in one.
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  Being invested in balanced portfolios is the best way to go now with the
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  uncertainty in the market.
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  For example, the offshore investments is doing really badly.
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  It's because of the uncertainty and market fluctuations and everything going on.
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  The final point that you make, you make a few points, but the one that I'm focusing
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  on now is that you say your savings account keeps your
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  money safe.
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  And there's nothing wrong with that.
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  If you want to be safe.
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  And you feel as though you're doing well elsewhere and that works for you.
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  OK, but a well-structured portfolio makes it grow and you deserve both.
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  And this comes to my final question.
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  And again, it's an intensely personal one.
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  If a couple comes in to see you, Renee, and they're starting their journey with
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  Brenthurst Wealth, do you find that
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  the man takes over and the woman sort of sits in the background nodding?
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  Again, it's a very stereotypical image that I've just conjured up there.
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  But sometimes do you find that?
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  No, I understand your question.
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  It's not anything to do with stereotyping.
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  The man definitely takes the lead and they are the one who wants the most
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  information.
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  And the woman is usually sitting there basically for moral support.
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  But we want to get that out there and women need to be more independent and we
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  want more women to be
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  comfortable with investing.
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  Good.
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  That's a great message on which to end the podcast.
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  Thank you very much, Renee.
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  It was a good chat.
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  Thank you so much.
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  Renee van der Merwe is from Brenthurst Wealth, and that was It's My Money.
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  It's My Money was brought to you by Brenthurst Wealth, an award-winning
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  boutique wealth management company.