Latest / Strictly Business / It's My Money with Maria Smit

Transcript

It's My Money with Maria Smit · Strictly Business

• 0:00
  You're listening to Strictly Business Podcast with Lindsay Williams.
• 0:05
  This edition of It's My Money is brought to you by Brenthurst Wealth, your partner
• 0:11
  for global wealth creation.
• 0:13
  Welcome to It's My Money.
• 0:15
  It's My Money is brought to you by Brenthurst Wealth, South Africa's
• 0:18
  multi-award winning boutique wealth manager.
• 0:20
  Today I'm speaking to Maria Smith from Brenthurst Wealth in Pretoria.
• 0:23
  And it's about building wealth.
• 0:24
  And what Maria is going to do.
• 0:26
  Good morning, Maria, by the way.
• 0:28
  What Maria is going to do.
• 0:30
  is attack wealth building from another side.
• 0:34
  Because what we normally think, don't we Maria,
• 0:36
  we think of wealth building as increasing our monthly income,
• 0:42
  getting a new job or getting a second job or something like that.
• 0:45
  But you're saying that even without that, there is a way to do it.
• 0:49
  So you're coming from a different direction.
• 0:51
  Yes, I think we all, well, our generation definitely grew up in a time where people
• 0:58
  were either wealthy
• 1:00
  because they had a very good job where it paid very well.
• 1:03
  Or people,
• 1:06
  you never thought this person in this line of work could be wealthy if you look at a
• 1:12
  teacher.
• 1:13
  But what I've seen in the past now, that you're already getting wisely,
• 1:19
  helps a lot in building your wealth.
• 1:21
  Then trying to hustle culture isn't going to cause you to.
• 1:25
  You become rich if you don't use your income that you have wisely.
• 1:29
  Very well said.
• 1:30
  And very well said as well when you go to your first point, which is particularly in
• 1:36
  talking to me, by the way.
• 1:38
  Start before you feel ready.
• 1:40
  Now, if you had come to 25-year-old Lizzie Williams and said, you haven't got any
• 1:43
  kids, you haven't got a house,
• 1:45
  you haven't got any responsibilities, you've got a load of disposable income
• 1:50
  relative to what you earn, so start saving.
• 1:52
  I would have just said to you, um, Would you like a drink and change the subject,
• 1:54
  Maria?
• 1:56
  Yes.
• 1:56
  So if you start early,
• 1:58
  it doesn't hurt you as much if you say you do your monthly budget and 10%
• 2:04
  of your monthly budget you're saving.
• 2:07
  So start early,
• 2:08
  set up a debit order from your salary or from your bank account
• 2:15
  and ensure that there is a CPI or a 10% increase every year.
• 2:21
  You're not going to feel that 10% in the first two or three years because it's
• 2:26
  going to be maybe
• 2:28
  300, 400 Rand.
• 2:28
  But over the long term, that monthly debit order,
• 2:32
  you're going to get used to it and it's going to build over time.
• 2:36
  So it's not going to hurt as much as saying, I'm going to invest a million Rand
• 2:40
  now.
• 2:41
  So it's small and it doesn't hurt your pocket as much as starting when you're
• 2:47
  older.
• 2:49
  Okay, so you start young.
• 2:51
  The next thing you do is over the years, you use what's available to you.
• 2:53
  I mean,
• 2:54
  the way that the personal finance sphere has changed over the years is enormous.
• 3:01
  And tax-free savings, for example, are one of those things.
• 3:06
  But there's others, Maria.
• 3:08
  Tell us what we should be doing, what we should be looking out for.
• 3:11
  Yes, so a tax-free savings account is a great way to save.
• 3:18
  Because all the growth in your tax-free savings account is tax-free.
• 3:23
  There are already people who just did that.
• 3:25
  It started out with 3,000.
• 3:27
  Now you have 3,800 grand that you can save monthly on there.
• 3:31
  There are people that are already a millionaire in their tax-free savings
• 3:35
  account.
• 3:37
  And I mean, the tax-free savings account started in 2014, around there.
• 3:43
  So that is one way of saving it.
• 3:44
  The other way is...
• 3:46
  with your classic retirement annuities.
• 3:49
  Important with a retirement annuity is, especially for young people, are you
• 3:54
  planning to immigrate?
• 3:56
  Then that might not be the best option.
• 3:57
  Stick to a tax-free savings account.
• 3:59
  But if you say you're going to stay in South Africa for the rest of your life,
• 4:03
  then look at an RA.
• 4:05
  27.5% of your income tax that you would have paid, you can write off.
• 4:07
  That's extra money in your pocket from the beginning.
• 4:11
  Yes, so there are things that are continuing to...
• 4:15
  be introduced and we should watch out for them through our financial advisor of
• 4:22
  course and they they can they can
• 4:24
  help you in your wealth building process another thing that can help you in your
• 4:29
  wealth building process is getting rid of a four-letter
• 4:31
  word in your vocabulary and that is a debt debt
• 4:32
  is horrible because it's so tempting especially when you're younger and
• 4:39
  reckless to say i'm earning this amount of money and the bank says well why
• 4:41
  don't you get a credit code.
• 4:43
  And we can give you this limit.
• 4:45
  And you say, well, maybe a little bit more.
• 4:47
  And they say, okay, fine.
• 4:49
  Let's go for this amount.
• 4:51
  And then you go to a store and they say, would you like a card?
• 4:53
  And so it goes on.
• 4:55
  And before you know it, if you're not checking every month, you're in debt,
• 4:57
  Maria.
• 4:59
  Yes, and they make it so easy nowadays.
• 5:01
  With this weekend, we were looking at buying a bed, my husband and I, a new bed,
• 5:05
  because our bed is too small for the kids.
• 5:07
  And a lot of the companies say, we'll give you this card,
• 5:12
  and if you finish paying it in six months, it's interest-free.
• 5:16
  But the responsibility is on you to pay it off in six months.
• 5:19
  Otherwise, they levy a 20% interest on that.
• 5:23
  And That's the thing.
• 5:24
  It doesn't help if you're saving monthly in a savings account where you get a 10%
• 5:30
  interest rate if you're lucky and you're paying debt of 20% interest every month.
• 5:36
  Then you are actually just running in the same spot.
• 5:40
  So it's better finding that balance of saying
• 5:44
  I'm going to get an emergency fund and I'm first going to fill it up before I buy
• 5:51
  things that.
• 5:53
  Instagram told me to buy or that I saw in the shop and I want to have.
• 5:58
  So convenient things like a credit card or a personal loan is definitely going to
• 6:05
  cause you to
• 6:07
  take a step back from someone who's just saving every month and not having a higher
• 6:12
  lifestyle than
• 6:14
  what your income can provide.
• 6:16
  Another four letter word is Rand, the South African Rand, the mighty Rand.
• 6:20
  It's been doing well.
• 6:21
  relatively well for the last six months or so, maybe even longer.
• 6:26
  It's taken a wobble, of course, in the last month since the war.
• 6:29
  But long term, look at a graph, go to your financial advisor or look it up online.
• 6:34
  Look at a graph of the performance of the South African rand against a basket of
• 6:41
  currencies, not just the dollar, against all currencies.
• 6:43
  And you'll see that the trend, the long term trend is for the rand to weaken.
• 6:45
  And I always think, Ria, that it's like a tax.
• 6:48
  It's like inflation is a tax.
• 6:50
  A weakening RAND can be a tax as well.
• 6:54
  Yes, and especially now with the last few months where the RAND did good and SA
• 7:00
  Equities did good,
• 7:02
  a question we get a lot is, but why don't I just invest in South Africa?
• 7:05
  Then I like sitting in front of a client and saying, OK, close your eyes.
• 7:09
  Do you see South Africa exporting technology in the next five years?
• 7:14
  Do you see new innovations that's going to happen in South Africa?
• 7:18
  Or do you think we're just going to do...
• 7:19
  the basic services that we have now.
• 7:21
  And most of the time, the answer is there isn't going to be some big technological
• 7:28
  innovation in South
• 7:30
  Africa.
• 7:32
  That's more for countries like the US,
• 7:34
  where they have built this innovation into their economies already, where it pays to
• 7:38
  do stuff like that.
• 7:40
  So it is important to have that offshore exposure so that you can also ride the
• 7:45
  wave of
• 7:45
  innovation and not just be stuck.
• 7:48
  in South Africa where it's basically your commodities that'll do good if the cycle
• 7:55
  is in their favour.
• 7:57
  Sure, so diversification is what's coming through here in that piece of advice,
• 8:00
  Maria.
• 8:02
  Consistency beats everything, you say, in your final point, point number five.
• 8:06
  And I'll just read the first paragraph, if I may.
• 8:08
  Trying to time the market, waiting for the perfect opportunity,
• 8:11
  or constantly adjusting your strategy can feel productive, but it seldom is.
• 8:18
  So what do you mean?
• 8:19
  Stick to your plan?
• 8:20
  Am I reading this right, Maria?
• 8:23
  Yes, stick to your plan.
• 8:26
  And instead of trying to save up a lot of money in your savings account,
• 8:32
  that is very quickly transferred to a bank account so that you can swipe if you go to
• 8:38
  the golf store.
• 8:40
  Instead, have that monthly debit order.
• 8:42
  Every month, let it go off.
• 8:45
  After a while, you get used to that debit order and it doesn't hurt that much.
• 8:50
  And also sticking to your plan.
• 8:52
  Just before I had your call,
• 8:54
  we had a talk with our coronation consultant and he had this very nice graph
• 9:01
  that
• 9:01
  said for quality stock, for you to actually start picking the fruit,
• 9:07
  it takes about eight years for you to...
• 9:12
  get that return that you want.
• 9:14
  And nowadays, people want to see growth in the first six months, so they phone you
• 9:20
  and ask you to change your strategy.
• 9:22
  At the end of the day, for you to get long-term growth, you need to stick to
• 9:28
  your plan.
• 9:28
  If you chop and change the whole time, you're just going to continue buying into
• 9:34
  the highest stock that you can get,
• 9:36
  and then you're going to ride all the way down.
• 9:38
  That eight-year quote is actually very good because it goes straight back to the
• 9:42
  first point that we made.
• 9:44
  And that was rather you made.
• 9:46
  And that was start early.
• 9:48
  So it's not just a little sprint, this whole personal finance business.
• 9:50
  It's a long term race.
• 9:52
  Maria, thank you very much for helping us win that race.
• 9:54
  Maria Smith is from Brentos Wealth in Pretoria.
• 9:56
  And that was It's My Money.
• 9:58
  It's My Money was brought to you by Brenthurst Wealth, an award-winning
• 10:03
  boutique wealth management company.