Latest / Strictly Business Podcast / It's My Money with Sonia du Plessis

Transcript

It's My Money with Sonia du Plessis · Strictly Business Podcast

• 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
• 0:17
  multi-award winning boutique wealth manager.
• 0:19
  This week I'm speaking to Sonia Duplessis from Brenthurst Wealth.
• 0:21
  And we're going to talk about the biggest investment mistake that can be made and is
• 0:27
  constantly made by
• 0:29
  investors.
• 0:31
  Just tell us what it is first, and then I'll give you an example as well, please,
• 0:32
  Sonia.
• 0:32
  But over to you.
• 0:33
  What is the biggest mistake that we always make?
• 0:37
  Hello, Lindsay, and hello to your listeners.
• 0:39
  Thank you.
• 0:40
  We've talked a lot about this subject on your podcast before,
• 0:44
  but I think it's definitely worthwhile repeating because to me it seems like
• 0:50
  investors
• 0:52
  keep on stepping into this trap, and it is definitely worth reminding investors.
• 0:58
  not to fall into this trap.
• 1:00
  But at the end of the day,
• 1:02
  the most expensive investment mistake you can make is not having money invested into
• 1:09
  equity markets,
• 1:11
  regardless of what the markets are doing.
• 1:13
  One shouldn't be scared and one shouldn't be hesitant to invest your money in growth
• 1:19
  assets.
• 1:21
  Quite right.
• 1:23
  So being out of the market can be very, very costly.
• 1:24
  Now, I used to speak to a woman called Di Turpin.
• 1:27
  She used to be, 20 years ago I think it was now, the head of the Unit Trust
• 1:33
  Association of South Africa, which is something else now,
• 1:35
  but anyway, it was a collective investment organisation that looked after the
• 1:40
  regulatory side of things.
• 1:42
  And she would say, Lindsay, it doesn't matter whether it's a bull market of great
• 1:48
  fundamental consequence
• 1:50
  and people see the market going up.
• 1:50
  Most people will put their money in the money market or fixed income, for example.
• 1:55
  And the statistics were quite staggering.
• 1:57
  As the money went into so-called safe investments, the stock market was going up
• 2:04
  at the same time.
• 2:06
  And money would be coming out of the equity market, which seems rather peculiar
• 2:08
  to me.
• 2:10
  Yeah, look, I mean, Lindsay, if you look at, you know, exactly, if you look at the
• 2:16
  statistics for last year, 2025, you know,
• 2:18
  massive amounts again went into money market.
• 2:20
  and into cash and bond portfolios,
• 2:23
  which is the lowest risk that you can take with your investments.
• 2:28
  And if you just look at the amounts, 56.4 billion went into money market.
• 2:34
  This is now only for South African investors.
• 2:37
  56.4 billion went into money market.
• 2:40
  Another 52 billion went into income funds, which is cash and bond.
• 2:45
  And then 16.5 billion was pulled.
• 2:50
  out of our South African equity markets.
• 2:53
  So, you know, these are large,
• 2:55
  large amounts saying and telling a story that clients or investors were very,
• 3:01
  very nervous of markets last year.
• 3:04
  And they had good reason to be so.
• 3:07
  You know, things politically was very unstable.
• 3:12
  You know, I think we've got three wars going on now at the moment.
• 3:16
  So investors are very scared.
• 3:19
  very hesitant but the fact of the matter is regardless of what's happening in
• 3:26
  social politically
• 3:28
  it's still it definitely is still worthwhile keeping your money invested
• 3:33
  into markets and now if you if you
• 3:35
  pull that you know if you go full circle going back to 2025 and i know hindsight is
• 3:40
  always 2020
• 3:42
  perfect vision but if you look at what markets actually did in 2025 You know,
• 3:46
  the S&P delivered 17% in dollars.
• 3:50
  The NASDAQ, 21% in dollars.
• 3:53
  Emerging markets, 33% in dollars.
• 3:56
  Our own South African JSE did 42% in rands last year.
• 4:00
  So people or clients that pulled their money out of these equity markets
• 4:08
  and moved it to safe havens missed out on all of this growth.
• 4:13
  And, yeah, you know,
• 4:15
  just imagine if these clients kept their money in the markets.
• 4:20
  It's tempting, though.
• 4:21
  It's human nature, isn't it?
• 4:23
  You understand.
• 4:23
  You hear the headlines, war in Iran, and all those years ago when Russia invaded
• 4:28
  Ukraine.
• 4:30
  You think, goodness me, I better get out and let the dust settle.
• 4:32
  The market's going to come off, and then I'll get back in again.
• 4:35
  Wrong.
• 4:35
  You don't get back in again.
• 4:36
  I'll give you another example of that in a moment.
• 4:39
  because I spoke to a fund manager this week, a very, very well-known fund manager
• 4:45
  with 50 years experience in the market.
• 4:47
  And he said to me, Lindsay, for the first time, I got my team together and I said,
• 4:53
  if you want to take some money off the table,
• 4:55
  and this is mainly S&P 500 and NASDAQ.
• 4:56
  If you want to take some money off the table, it's entirely justified.
• 5:00
  Bond yields are rising in the United States.
• 5:02
  Inflation is rising and projected to rise even further.
• 5:05
  interest rates going up, and that's usually bad for the stock market, etc.
• 5:09
  So you can go ahead and do it if you want to.
• 5:11
  And at the end of the conversation, I said, did you do it as well?
• 5:14
  Did you did you take your own advice?
• 5:16
  He says, no, not a chance.
• 5:17
  Until the market tells me until the market starts to turn down.
• 5:21
  I don't mind if I miss the first three or 4%.
• 5:24
  Because I've been in for years.
• 5:25
  If I lose the first three or 4% to the downside, it doesn't matter.
• 5:29
  I'm staying in.
• 5:31
  But people don't do that.
• 5:32
  Imagine if you'd sold you Just over a year ago,
• 5:35
  when Trump made his famous or infamous Liberation Day tariff speech, if he'd gone
• 5:41
  out the market then,
• 5:43
  you would never have had the chance to get back in, Sonia, because it was only a
• 5:46
  three, four day phenomenon.
• 5:48
  Yeah, yeah, exactly, Lindsay.
• 5:49
  And like you said now, once you pull that plug on taking the money out of the
• 5:53
  market,
• 5:54
  when do you actually step back into the market again?
• 5:57
  And I mean, you'll never get it right.
• 6:01
  The clever people out there, if you look at the fund managers, if you look at the
• 6:07
  people that's got years and years of experience behind them,
• 6:09
  they just leave their money in the market and ride the waves, the ups and downs of
• 6:14
  the market.
• 6:14
  The other thing that I do want to mention, Lindsay, is that now if you look back at
• 6:21
  what markets did last year,
• 6:23
  if you just look at the S&P who did 17% in dollar terms,
• 6:28
  You might have other investors now saying, but look, Sonia, I only got 8% in dollars.
• 6:35
  Why didn't I get my 17%?
• 6:39
  And that's also human nature.
• 6:44
  We tend to compare what we got over the last year with benchmarks and with
• 6:51
  indexes.
• 6:53
  And that's also a trap that you shouldn't fall into because a lot of the time...
• 6:57
  most of the time, especially if you look at clients of branches,
• 7:01
  we won't invest a client's money fully into the S&P or into the NASDAQ.
• 7:06
  It is a diversified portfolio that's got a couple of asset classes
• 7:13
  where if it goes into a unit trust,
• 7:17
  just a portion of that will be exposed to the S&P or to the NASDAQ.
• 7:22
  So just be mindful not to...
• 7:26
  or be mindful to compare apples with apples and not look at your investment.
• 7:31
  If you only got 8% in dollars and the S&P did 17%, just be fair.
• 7:37
  Don't go to your advisor and say, listen, why didn't I get my 17%?
• 7:41
  And that's, you know, at the end of the day, Lindsay, that's why it's so important
• 7:45
  to,
• 7:45
  if you've got a diversified approach and if you're following in a diversified
• 7:51
  investment philosophy,
• 7:53
  then you don't have to move in and out the market.
• 7:55
  Then you've got your fund managers doing the buying and selling and making that
• 8:01
  call on behalf of you.
• 8:03
  You give four reasons why equities are a good idea.
• 8:05
  And these are very basic principles.
• 8:07
  For example, one of them is equities usually outpace inflation.
• 8:11
  And if you look at it over whether it be 10 years or 60 years, the fact is that
• 8:17
  that is the truth.
• 8:19
  And if you stay in the market, as you've said repeatedly, that if you stay in the
• 8:23
  market, then compounding.
• 8:25
  will work in your favour over the years.
• 8:26
  I don't think we need to go through those four points that you make, Sonia.
• 8:30
  I think what's more powerful is that 60 years of proof paragraph that you kindly
• 8:36
  sent me in your article.
• 8:38
  The numbers are really staggering.
• 8:40
  Perhaps you want to go through the different comparisons of different asset
• 8:42
  classes for us.
• 8:44
  Yeah, so in a nutshell, Lindsay,
• 8:45
  it basically says that there's 60 years of proof showing that equity markets...
• 8:52
  or stock markets perform better over the long term compared to cash bonds and
• 8:58
  property and
• 9:00
  I mean it just takes a very simple hundred dollars that's been invested
• 9:04
  60 years ago so that would be 1965 that hundred dollars will be worth a thousand
• 9:11
  five
• 9:13
  hundred.
• 9:15
  So that's an average of 4.5% return.
• 9:16
  Now, this is looking at actual data, so it's not pulled out of thin air.
• 9:22
  If you look at government bonds,
• 9:24
  that $100 will be worth $2,800 in 60 years'
• 9:30
  time.
• 9:31
  That's about 5, 5.5% average return.
• 9:36
  And then if you look at something like gold, where you bring in a little bit
• 9:41
  more...
• 9:41
  little bit more risk gold after 60 years that hundred dollars would be worth twelve
• 9:48
  thousand dollars and that is about seven and a half percent but now if you look at
• 9:55
  that hundred
• 9:55
  dollars invested into equity markets or in stocks in
• 9:59
  comparison that would be worth forty three thousand dollars in 60 years time and
• 10:06
  that's an
• 10:06
  average of ten ten and a half percent annual return
• 10:10
  So it's actual proof showing that if you just left your money in the market, 60
• 10:17
  years is a very, very long time,
• 10:19
  Lindsay.
• 10:21
  But even if you just halve that to 30 years, it still makes sense.
• 10:22
  And if you're going to have your COVID-19 in between, you're going to have your wars
• 10:27
  in between,
• 10:29
  and it's quite normal for markets to fluctuate.
• 10:30
  The main thing is just to sit tight and not move in and out.
• 10:34
  Quite right.
• 10:36
  the Question that you ask also in the article, you say, who should be in
• 10:40
  equities?
• 10:40
  A lot of people say, well, I'm retired now.
• 10:42
  I can't take the risk of being in equities.
• 10:45
  It's a risky asset class.
• 10:46
  And you say, well, OK, you're 60 years old or you're 65 years old, and your family
• 10:52
  history suggests that,
• 10:54
  and medical advancements mean that you're going to live for another 20, 25, even 30
• 10:58
  years.
• 11:00
  Over that period, being out of the market just because you think it's too risky is
• 11:04
  exactly the wrong.
• 11:06
  It's risk.
• 11:08
  It's actually in some ways, Sonia.
• 11:10
  it's too risky not being in the market.
• 11:12
  Yeah.
• 11:14
  Yeah, no, exactly, Lindsay.
• 11:16
  It's a massive opportunity cost.
• 11:18
  And you still do get a lot of clients saying that, you know, once I go in
• 11:20
  retirement, I want to de-risk.
• 11:22
  But what you have to do is, I mean, you need that growth engine in your living
• 11:28
  annuity or in your retirement capital.
• 11:30
  And data also shows that you at least need 55% to 60% in equities.
• 11:35
  And then, you know, we can go on about the bucket approach as well.
• 11:39
  You know, we usually put like one to three years money aside in money markets.
• 11:45
  So that will provide your income in the short term.
• 11:48
  Then we go, then we cater for the medium term and then for the long term.
• 11:52
  So, you know, Lindsay, I know it sounds stupid because we've talked about this so
• 11:58
  many times.
• 12:00
  But investors, you know, it's definitely worth repeating because investors, they do
• 12:04
  not.
• 12:04
  think of it.
• 12:06
  They do not think of their retirement plan as a long-term strategy as well.
• 12:12
  So, yeah, and even if you boil down to the equity exposure, if you've got that 55 to
• 12:18
  60% equities,
• 12:20
  you also need a very healthy balance between local equities and offshore
• 12:23
  equities.
• 12:25
  Don't just go and put everything offshore or everything local JSC equities.
• 12:27
  You need a good chunk of that if you're a South African to go into offshore
• 12:31
  equities.
• 12:33
  I think it's worth making the point as well that it's not one size fits all.
• 12:35
  It's not the sort of cookie cutter approach, as the Americans would say.
• 12:39
  Everyone has a different time horizon.
• 12:42
  Everyone has different financial aspirations.
• 12:45
  So you've got to go to a financial advisor and sit down and say, this is how much
• 12:49
  money I've got.
• 12:51
  This is how much money I need after retirement, etc.
• 12:53
  And it's a tailored plan.
• 12:54
  Is that good advice?
• 12:55
  Yes.
• 12:56
  Yeah, no, exactly, Lindsay.
• 12:58
  And that's what we are.
• 12:59
  trying to educate our clients with.
• 13:03
  And definitely, it's worthwhile having a plan.
• 13:06
  It's worthwhile reviewing that plan.
• 13:08
  So important to review it on an annual basis to see if you're still on track.
• 13:12
  And yeah, then, you know, if there's a plan in place, then everything is sorted.
• 13:18
  Sonia, thanks so much for your time and your expertise.
• 13:20
  Sonia Duplessis is head of Brenthurst Wealth in beautiful Stellenbosch.
• 13:24
  And that was It's My Money.
• 13:26
  It's My Money was brought to you by Brenthurst Wealth, an award-winning
• 13:31
  boutique Wealth Management Company.