Latest / The Swan Effect - Creating and Sustaining Your Financial Wellbeing / S3 E1 2024 Explore!

Transcript

S3 E1 2024 Explore! · The Swan Effect - Creating and Sustaining Your Financial Wellbeing

• 0:00
  Arthi Rabikrisson: Your legacy is about more than just investment returns. It's about the peace of mind that comes with knowing your investments are in the right hands, and that you've partnered with an investment manager who has the right skills and experience to grow your wealth. Old mutual wealth is a world class investment destination, offering you a wide range of investment strategies and specialist wealth management solutions. Whether your goal is to grow your wealth, generate income or preserve capital, old mutual wealth selects the best and most suitable investments based on your investment strategy, and their extensive research and insights. Together with your financial planner Old mutual wealth team of experienced specialists go to great lengths to understand what really drives you. Once they know your priorities they model a strategy around your specific needs supported by a multi skilled team dedicated to taking your wealth further, whether your goal is to grow your wealth, generate income or preserve and pass on capital old mutual wealth is here to partner with you on this journey, so that you can do more, have more, leave more and be more. Old mutual wealth is an advice led wealth management business aimed at providing financial planners and their clients with a full suite of industry leading strategies and services. For more information, please visit their website at www.oldmutual.co.za/wealth Hi, there, I'm Arthi Rabikrisson
• 1:50
  Malika Petersen: Hello, I'm Malika Peterson.
• 1:53
  Arthi Rabikrisson: Welcome to
• 1:54
  Malika Petersen: The swan effect podcast.
• 1:56
  Arthi Rabikrisson: Money makes the world go round. Yet it's not so easy to understand its complexities, particularly when it comes to investing.
• 2:05
  Malika Petersen: That's why Arthi and I are using this platform to educate, inspire and help you gain confidence in your relationship with money.
• 2:14
  Arthi Rabikrisson: So that you can better manage your finances and investments.
• 2:19
  Malika Petersen: We are two women in finance.
• 2:21
  Arthi Rabikrisson: That's pretty cool, isn't it?
• 2:23
  Malika Petersen: It certainly is. You've been in stock broking private wealth management, asset management. And now an award winning business woman who is coaching and assisting businesses with capital and strategic advice
• 2:36
  Arthi Rabikrisson: and Malika you have a wealth of experience in well excuse the pun in financial planning, investments and relationship management. So you're also at the coalface when it comes to where and how people are investing both getting it right and getting it wrong
• 2:54
  Malika Petersen: and stuck in the grey areas too. Indeed, I've seen the many phases and moods of financial cycle and how our decisions that those times impact us. So listeners and subscribers if you are looking to get unstuck, feel empowered and make some strides in how you tackle your money. We are here to help you.
• 3:17
  Arthi Rabikrisson: And it all starts with listening to this upcoming episode. Enjoy.
• 3:24
  Arthi Rabikrisson: It's 2024 a whole new story to begin. Do you know what's in store? It could make your finances and head spin. Not to worry. The swan effect podcast is here. Hoping and helping that you will overcome your financial literacy fear. Are you ready to learn some more? Then join us for 2024 Explore.
• 3:52
  Arthi Rabikrisson: Welcome back, everybody. I had to break into poetry, because it's so exciting to be able to launch a new season for you, our wonderful subscribers. And if you're new to the podcast, well welcome, thanks for joining us.
• 4:05
  Arthi Rabikrisson: And of course a very, very warm welcome to my fabulous co host Malika! Hi Malika and welcome back.
• 4:15
  Malika Petersen: Hi Arthi. Thank you. I am so glad to be back. I love our episodes together.
• 4:21
  Malika Petersen: Yeah. And that poem was just fire, if I can say so. And I think it certainly sets the season for us right. Hello to our subscribers and well wishes too, you are really what makes this podcast special. So it's a new year, and I'm feeling very well rested and ready to tackle 2024 with vigour, how about you Arthi?
• 4:47
  Arthi Rabikrisson: I feel exactly the same, and I took some really really great downtime with my family. So it was so lovely and much much needed. I must say.
• 4:56
  Malika Petersen: I'm so glad to hear that I had a really great time to, in fact, I took some of that advice that we shared last year.
• 5:04
  Arthi Rabikrisson: Okay.
• 5:05
  Malika Petersen: My break was all of our food family and fellowship.
• 5:09
  Arthi Rabikrisson: That sounds perfect, Malika. Perfect.
• 5:12
  Malika Petersen: And I'm really excited about what we've got planned for Swan Effect for 2024, right? It's not only podcast, but in my personal lives as well. 2024 is the year to explore.
• 5:24
  Arthi Rabikrisson: Definitely, I had a bit of a brainwave over the break, I must say, Does anyone even use that saying anymore. I'm giving my age. But Malika, I love advent calendars, okay, and I'm passing this love on to my son as well. But when we were doing advent calendars over the festive period, I got this idea that this could actually be such a lovely theme for the season of the podcast.
• 5:48
  Arthi Rabikrisson: So just as we explored the moneyverse in the last season, quite practically, in terms of incomes and expenses and savings investments. We even talked to behaviours and biases to which I really enjoyed that piece. I thought, dig a little bit deeper into the investment side of things and create a swan effect podcast, advent calendar of different investment types that we can then empower our listeners to actually consider for the app.
• 6:21
  Malika Petersen: And I must admit, when you share that idea with me, it just sparked a whole host of ideas dive, which for me is awesome. And that is exactly what we're going to explore some out of the box investment thinking. So each upcoming episode is going to cover a range of investments from crypto to real estate, to private equities, things that seem potentially scary to people, but we'll break it down. And we'll simplify it and will boost our listeners confidence to see how and where they could potentially boost the moneyverse with interesting investments. We will also explore from a fresh perspective, and basically share our honest raw findings with our listeners.
• 7:07
  Arthi Rabikrisson: Absolutely. I mean, as always, the caveat for our listeners is that we are empowering you with knowledge.
• 7:15
  Arthi Rabikrisson: But before you act, please do consult a financial planner and advisor that you can make sure, yeah, you can make sure you're investing according to how much risk you're willing to take on, because some of these things can be a bit risky, which should be based on your financial behaviour, even the stage of life that you're in. So there's actually a number of factors to consider. And of course, how much you are willing to consistently invest consistency, everyone is key.
• 7:43
  Malika Petersen: I'm very glad you mentioned that it an accountability partner, as well as someone who is knowledgeable about your portfolio, like advisors or planners are always helpful, right? And they can ensure that you stay the course.
• 7:56
  Malika Petersen: So if you haven't set up your meeting with your advisor for this year, please schedule it right away.
• 8:01
  Arthi Rabikrisson: Mm hmm.
• 8:01
  Arthi Rabikrisson: Absolutely. So now as we're talking Malika, you know, it's actually making me think of the word investment, right? We often forget that one of the definitions of investment is actually the act of devoting time, effort and energy to a very particular undertaking with the expectation we're going to get something worthwhile as a result, right. In South Africa, we've just had children starting school for the year huh, as well as the grade twelves from 2023 even had their results published. And I've suddenly seen in the newspapers, and even on the radio adverts, so many schools now Malika, showcasing how well these students have fared obviously against the different curriculum that they may be doing. And they trying to encourage new learners to come to their school. So education everyone, which is where I'm going with this is actually meeting the definition of investment I've just mentioned, have you ever thought,
• 8:55
  Malika Petersen: yeah, you're absolutely right, that it does.
• 8:58
  Malika Petersen: And it's so topical, right. And I think it's a great place for us to start in 2024. With education, the cost of education becomes more and more daunting every year, according to business day, education, inflation has exceeded the consumer price index by between one and a half in four and a half 4.4% since 2012. Right? So what that means is, is that if you're getting an inflationary linked increase, you're not going to meet the demand of education inflation. Now, a bit later in the episode, we talk a bit about how to combat this using investments and saving But for now, I just want to explore the concept of an investment in personal education for ourselves.
• 9:48
  Arthi Rabikrisson: That is so important, and this actually everyone is one of the non traditional investments that we are talking about, right? And maybe let's split it between adult education as well as the kids education. So adult education is often considered too expensive. It's too time consuming. And I think what Malika and I are saying is this year, we want to explore a bit more information to the podcast so as to debunk any myths that you may be having. And consider not only the results that may be achieved, also to analyse those opportunity costs associated when you don't do something. So for example, if you're choosing not to undertake something on an adult education perspective, what does that mean in terms of cost potential, not just financial, but other costs.
• 10:36
  Arthi Rabikrisson: So if you're now thinking, and we're putting it squarely in your mind, everybody about maybe I need to undertake something this year, here's a couple of things you want to consider.
• 10:44
  Arthi Rabikrisson: Okay? Now, first of all, there's so many options available out there, right. And this can include things like formal study, informal personal development. So maybe let's consider the latter that, okay, if we're looking at informal personal development, there's a multitude of books, online articles, videos, podcasts, like ours, that help you shape your thinking. Right. And also, it broadens your horizon, which is like, I know that, in this case, the time, the effort that's associated with undertaking this, of course, it is considered a big cost, but the results are often quite phenomenal. So these personal development initiatives allow us to think differently and as a result, we just open our minds to opportunities that actually we may not have considered before. And that could potentially result in increased income for us. Or we may actually perform more efficiently at the work that we do. And that can actually result perhaps in a promotion, or a bonus. I don't know if you've seen this app called the headway app. Malika.
• 11:51
  Arthi Rabikrisson: And I've noticed recently, their current marketing campaign is around, become the smartest person in the room and almost guarantee your performance bonus and promotion. What they're basically saying is, instead of Mindlessly scrolling on our phones, through social media, rather download the app, do the quick summaries on the book, and go and talk to people at work about what you've learned. And suddenly, people that are higher up and can influence how well you do at the office can suddenly result in maybe an increase, maybe a promotion, as I said, so I thought there was this quite clever marketing.
• 12:30
  Malika Petersen: Yeah it is clever marketing.
• 12:31
  Arthi Rabikrisson: Very clever marketing. And of course, if you embark on formal studies, yes, there's a fixed cost. There's also again, the time and the effort, but at the end of it, you're going to end up with a diploma certificate, and something recognisable and tangible, along with, of course, that wonderful academic knowledge that you're going to get from course So the second thing to consider is that, as I said, this, that financial caution that needs to be considered, but actually, if we think about it, the options that could help us offset some of that financial burdens. For example, I know many companies actually offer free in house training that staff can access.
• 13:07
  Arthi Rabikrisson: And actually, they might even be open to paying for certain external training as well, especially if it's in line with upselling. Your upskilling you in the area that you working in, or perhaps more from an organisational perspective could offer the company a bit of a tax relief as well. So after considering all the options, everyone, it's really important to consider those opportunity costs. And what we're essentially saying is that we need to establish what is the true cost of not doing something education or actually doing it right. And it's made me think of what Tony Robbins always says, right? He says, if you're not growing, you are dying, little bit direct, right. But it's true in terms of what he's saying, we need to build up our skills. So what I believe I have to think about it almost from a neuroscience perspective is we could be operating in our comfort zones, everyone, right?
• 13:58
  Arthi Rabikrisson: And if you're in your comfort zone, you're very comfortable in almost like a little fishbowl effect, right? You know, what's known whether you like it or not, but over time, everybody doesn't serve us, it actually diminishes our capacity, because it means we're not able to connect dots over time, or relate perhaps to other people might be moving ahead in terms of what they learning and discovering. And that can make us retreat even more, right?
• 14:26
  Arthi Rabikrisson: Because the world is just going to speed up ahead without us. So the reality is everyone if you actually think about it, is we actually do need to embark on this journey of wider self improvement, including this education piece and think about what actually sacrificing now but for a much brighter future that we could have.
• 14:44
  Malika Petersen: Yeah, Arthi, I think it's so important. And I think we parents, we know that.
• 14:46
  Malika Petersen: We think about our kids. And we often say that we want to ensure that their future is brighter than the one that we have right.
• 14:55
  Malika Petersen: Now I would rargue that achieving this is twofold, we need to ensure that our circumstances are improved our personal circumstances, right so that we won't burden our kids when we are in retirement. As well as at the same time, we need to ensure that they have the best education possible so that they are able to achieve the financial future that we've envisioned for them. Now, I wanted to talk a bit about education for our children. Like we said, this is our year of exploration. And I find that I, for one often underestimate the actual costs associated with the children's education. But at the beginning of the all I've heard on social media, and my friends was around what are the actual costs associated with the kids going back to school, and the general consensus is all the same. Everybody commented on how much more things ended up costing than what they're budgeted for? Now, I want us to ensure that we are equipping our listeners to be in a position to not have the same situation at the beginning of 2025. So here's a couple of tips and tricks that may bring some relief to the existing education expenses,
• 16:15
  Arthi Rabikrisson: we love our tips, definitely bring it up Malika these are all awesome practical ideas.
• 16:18
  Malika Petersen: Ya I like these topical ones so yeah, Arthi it every time you visit a store, or you shop online, add a book, a Thank you so much for sharing them and this last one is so pen, any little piece of stationery into your cart, and packet of colour pencil, this will add maybe R20 to R50 to your end bowl. But during the year, when your child stationary needs need to be stocked up, you will have a stock ready to go or at the beginning of the following year, when the stationery list come out, you'll only have to buy the few things that you don't have stocked up.
• 16:48
  Malika Petersen: So you'll end up actually spending less at the beginning of the year on stationery, which is pretty cool. Secondly buy secondhand and uniforms and textbook. There are so many well looked after pre owned uniforms and textbooks that can be purchased from the school shops.
• 17:08
  Malika Petersen: Now, the reason I like this idea is that as a society, we human beings are quite wasteful. And if we use secondhand clothing, secondhand text books will reduce the amount of waste that's out there. So I think this is a really awesome idea. I really like this one even better kind of network with parents of older kids. So when you go to parent teacher events when you go to school events network with parents who have kids in higher grades, so that you can start to build those relationships that will as the kids are leaving the school or leaving the grade allow you to purchase from them, their kids older stuff. And then always remember linked to this to donate clothing and books that your children may have outgrown out to the less fortunate. Remember, one of our key kind of guiding principles that we've used throughout this podcast is that when your hand is open to give, it is open to receive. So always remember to donate your kids the stuff that they've grown up to. Number three, have an extremural planning session with your child. Now this is quite a big one because I know there are so many parents out there their kids are doing four and five extramural activities. They've got the full swimming kit, they've got the full soccer kit, they've got the fullcricket kit, they've got the pool, and it just adds to expenses. And very often, the kids are not really interested in all the extramural right. So if you have a planning session with your child, it allows the child to prioritise the extramural activities that are really interesting, their top one or two and therefor your investment in that activity is more likely to give you returns because the child is invested in that activity. So sit down, have the planning session with him, let him choose the top one or two extramural activity. Lastly, if you receive any extra money, whether that be from bonuses, extra income from a windfall side hustles like we've been talking about any extra income that you receive, use a portion of that additional money into your school fee account and save towards the following year school fees right. Many schools offer a discount when you pay upfront. And often this is like 10 15%. When you calculate that have a year's worth of school fees, that's a significant amount of money. So taking additional earnings and putting a portion of it into a savings account for specifically for school fees is a great way to achieve important because it actually does help you everybody. If you're doing this and you're adding another little bit more into that school fee account.
• 20:00
  Malika Petersen: Oh, that discount that can help you with other things, even those extracurricular things that need to be done post the planning session. So beautiful.
• 20:10
  Malika Petersen: Love it.
• 20:11
  Malika Petersen: So Malikanow let's make chatting about the future education expenses. Okay, so many of us have little, sometimes even no idea of what future education costs will be. And therefore we don't really plan soon enough for that it becomes more reactive in terms of Oh, suddenly, I've got a big school fee to pay or anything associated with education. This unfortunately then means we're taking out debt, we're using credit cards, finding other means other than our own cash that we've saved up in some shape to be able to cover these expenses. So I think it's definitely important that we planning ahead as well, to ensure that these surprises don't just come out of the blue.
• 20:53
  Malika Petersen: Yeah, I used to have a colleague who used to joke and say, you need to start the education investment plan as soon as you find out you're pregnant has the right to start, I use any education cost calculator that allows me to calculate that the actual cost for future education, and what they're going to be over the next few years. If we use education inflation as an indicator. Now, what this allows me to do is to plan for the immediate future, as well as to start investing and saving towards future education costs that may be I want my kid to go to a different school, or I desire something different for them from a tertiary education perspective. Now, let's use an example to put this practically.
• 21:36
  Malika Petersen: I'm gonna pull up the calculator. Let's open. So let's talk about your son Arthi. Oh, is about 12 years from needing tertiary education.
• 21:45
  Arthi Rabikrisson: Indeed, it seems far away, but it's actually not away. Yeah, ya. I mean, he wants to be an astronaut, Malika. Yeah. And he's just fascinated by space.
• 21:56
  Arthi Rabikrisson: But again, he's six years old, it's very variable. And other days, he wants to drive a bus.
• 22:00
  Arthi Rabikrisson: So at this stage he's obviously not really settled on anything other than what he thinks is very cool at this point in time.
• 22:08
  Arthi Rabikrisson: But also, he may very well end up doing everything he likes.
• 22:13
  Arthi Rabikrisson: But that can only be possible with some really strategic goals and where we need to focus. So you know, your point about that planning session, it's very important for us to be even doing that just around our kids understanding what are options out there for them? Where could they be an interest, but now, let's assume he decides to choose the astronaut route, right? It's likely he'll have to go and study abroad for some amount of time ahead of joining any additional kind of space programmes, right. And, you know, as a parent, I want to be in a position to offer that opportunity to him. But this is the key thing. I also feel it needs to be a joint effort, meaning it's not just me having to keep forking out forking forking out because this is his career. This is what he wants to do. So he needs to be invested in the process. So it's something we do, talk about fairly regularly about what does it look like for you wanting to go to space school, if you're going to go there? And also, how are you going to contribute and pull your weight to ensure that we can actually have the cash to get something like this done?
• 23:18
  Arthi Rabikrisson: Should it go there? I feel it's so important for us to instil financial literacy and investment savvy, that's important one in our kids as early as possible, so nurturing that curiosity, that innovative spirit, turning it into something entrepreneurial, and you know, Malika, we live in an age where anything is possible.
• 23:37
  Arthi Rabikrisson: So why not engage with that? It certainly wasn't the case. When I was growing up. I must tell I mean, we saw right that the the world is an oyster for kids, you right. And it comes with a financial burden. And as parents, often grain that we want to give our kids everything we never had as kids. Right now, you and I have often spoken about how this podcast is to help some people and learn some of the bad habits that we may have learned growing up. And I think I'm so excited to hear that you have the kind of conversation that you're having with him already. Because when your children are invested, and understand that they're invested in the future, some of the tougher conversations around what you may need to sacrifice in the future to be able to have that study becomes easier.
• 24:30
  Arthi Rabikrisson: Right? So let's use an example studying abroad cost anything between $3,650 - $19,968 This is according to the Council of International Education Exchange. Okay, so let's assume a cost of about 150,000 per year and five years of study, we being conservative when we talk about five years of study. Now if we account for inflation for your son you would need about R870,000 in total to accommodate a five year programme overseas for him right. Now, your reaction, and I can see your face is one of sharp, which is completely normal. But according to the calculator that I just looked at, if you start investing R3500 per month now, in an inflation plus targeting investment, you will achieve that goal, by the time that he needs to go to tertiary, tertiary, so now it starts to sound a little bit more palatable, right. And listeners, I just want to tell you, you can Google any education saving tool to be able to calculate the approximate investment required to achieve the goal associated with your specific circumstances, the old mutual tool does give you any indication of different university, so you're able to actually choose specific universities and it gives you a cost indicator, which is quite nice. But if the university is not on the table, you can Google the university and go and have a look at what the fees are. So just to make your planning a little bit more realistic, right.Now, it's such a game changer, in terms of the multiplier that you will have, when it's combined, or the joint experience of investing your cash if your son, for example, ends up creating a little entrepreneurial venture that allows him to invest, and additional R1000 as an example, or he says to you, Mum for go the big Lego I wanted for Christmas that cost R12,000 , I'm okay with the Lego that costs R2000 and put the additional 10 into my education, I mean, I'm using an example right, you can reach your goal so much faster. And it also mean that they are now jointly invested with you. They won't underestimate the value of that education. Think about it. So many first years drop out, because they underestimate the value of education. But if they're building with you towards that, they'll be more invested. So yeah, Malika, wonderful. I mean, you brought it to light in such practical terms of the numbers, the joint sort of investment around, here's what we're aiming for. And we can achieve it if we go together. And you're right. I mean, that is my ultimate goal, what you said at the end, I want my little boy to be able to be in a position to say, I've thought about this, I'm gonna forego this for now. Because there's a bigger plan in place, if we can get all of our kids talking along those lines. I mean, firstly, how proud as a parent, but secondly, it means we're setting them up to be so discerning with their financial decisions into the future, as well as creating that legacy. I love it. So what we're saying is when you undertake exercises, like what we've just given you an example of it really makes it quite stark, and it helps you to think through very carefully about what is possible, what are your next action steps as well, one could very easily look at these numbers, and then say, Oh, this is too much. And then it's almost a million Rand, that's a lot of money. And instead of maybe international studies, we then look at something keeps the pocket, maybe it covers the key subject areas for that particular space programme or the astronaut one, as we were using, we could look at local, rather local tertiary institutions, it's going to cost a fraction, it's about a third of what it would require to be overseas and that can be used, you can then reduce your investment amount to help you get towards that goal even quicker. And of course, if my son wants to look at other options to reduce that financial burden, then the onus then becomes on him that accountability becomes on him, for example, to be able to achieve good results that could warrant a scholarship or bursary. And these will all help along the way. So again, that joint conversation, that joint kind of investment into the process pays a lot more dividends than I suppose what we're suggesting. Yeah,
• 29:01
  Malika Petersen: yeah, I think the most important thing about this exercise is that the children are part of the conversation. So that not only teaches them how to plan financially, as you've said, but also allows them to be part of the financial decisions that impact a future rise. And I think that's the epitome of my parting shot. Knowledge is power and when we plan sufficiently, it not only empowers act, but in the process of educating our children about financial matters, so that they are better equipped when they're adults to be able to handle these things.
• 29:37
  Malika Petersen: What about you Arthi,what is your parting shot?
• 29:41
  Arthi Rabikrisson: Now, I believe with the time and so quickly, we're already in parting shot There's obviously something very close to our hearts when it comes to education. But everyone I think education as an investment really unlocks other investment options. Okay. My parents would always say education is the key to future was very different time was a very different type of society when you and I were growing up Malika for our parents, the best that they could give us was the key to unlock our future. And that is education. But I truly believe it is as well, because it not only allows you, for example, to be employed in a good paying possibly a steady job, but more importantly gives you far more choices to consider myself, for example, I've migrated into my own business. So could I have done that without some level of education? Perhaps Yes. But at the end of the day, what I have learned, along with the experiences I've had, and of course, what I continue to learn, because I always am in some form of education around myself allows me to make different choices and decisions and opportunities as a result come that way. So I think what I'm suggesting everybody is just be more curious like me and get to know more about what are the variety of choices, the smorgasbord of options that could be available to you when you do choose to further along and investing in education. And of course, from there, we then select what is going to be most appropriate for you at that point in time.
• 31:10
  Malika Petersen: I love this metaphor Arthi the key to unlocking the trail option, because we do have a full menu of investments options that can be considered
• 31:20
  Arthi Rabikrisson: Absolutely.
• 31:20
  Arthi Rabikrisson: Such a great conversation today.
• 31:24
  Arthi Rabikrisson: Malika, thank you so much for sharing all of your practical ideas and tips. And thank you listeners for joining us.
• 31:29
  Malika Petersen: Heres wishing you a greater investment into yours and your family's education.
• 31:35
  Arthi Rabikrisson: Thank you Till next time, everyone, ciao,
• 31:38
  Malika Petersen: ciao.
• 31:43
  Malika Petersen: Sharing is caring
• 31:44
  Arthi Rabikrisson: and knowledge is power.
• 31:46
  Malika Petersen: Time for you to be daring
• 31:48
  Arthi Rabikrisson: and let your money confidence bloom like a sunflower.
• 31:54
  Malika Petersen: Thanks for joining us. We hope you found these ideas and guidance useful
• 31:58
  Arthi Rabikrisson: do subscribe, share and write a review or send us comments. We would love to hear from you.
• 32:05
  Malika Petersen: Catch you on the next episode
• 32:07
  Arthi Rabikrisson: of the Swan effect podcast.
• 32:09
  Malika Petersen: Bye for now.
• 32:10
  Arthi Rabikrisson: Ciao.