Starting your business is going to get easier!

South Africa is an enterprising and entrepreneurial nation… which is why it’s interesting that it can be so tough to do business here.

Of all new businesses started in South Africa, nine out of ten of them will close their doors within the first two years. Government grants are talked up but are thin on the ground, B-BBEE requirements are onerous and keep changing, and then there’s the red tape.

Bureaucracy has been South Africa’s Achilles’ heel in the corporate sector for a long time, and figures show that it’s hamstrung us in the past. In the 2009 World Bank’s annual ‘Ease of Doing Business’ survey, South Africa was at a not-great-but-comfortable 32nd in the world out of almost 200 nations. But by 2014, just five years later, that figure had slipped to 43rd in the world.

And in 2019? We are now at a nail-biting (and embarrassing) 82nd place out of 190 countries.

So, what’s a business owner to do? Cut and run for easier, greener pastures?

Actually, hanging tight might be a better solution, because it looks as though doing business is about to get far less complicated. Fast!

Orders from the top

When Cyril Ramaphosa became president of South Africa, the corporate sector cheered. Not just because of the alternative, but because of the significant fact that, for the first time in our democratic history as a nation, the man in charge was a seasoned entrepreneur first and a politician second. For example, while previous South African presidents have mentioned ‘boosting business’ in vague terms, President Ramaphosa has been uniquely articulate about his focus.

He said in his most recent SONA speech that government is:

 “urgently working on a set of priority reforms to improve the ease of doing business by consolidating and streamlining regulatory processes, automating permit and other applications, and reducing the cost of compliance.”

“The World Bank’s annual Doing Business Report currently ranks South Africa 82 out of 190 countries. We have set ourselves the target of being among the top 50 global performers within the next three years,” he said again during his second SONA in June – the first mention of the World Bank survey ever by a president during SONA.

These pronouncements are starting to bear fruit. Marginal rallying of SA’s business confidence scores (after decreasing slightly again in July and August) shows that the private sector is willing to change its mind about SA’s business growth prospects, which can only be good news. And during the year, the ‘ease of starting a business’ aspect of South Africa’s World Bank ratings has improved by 1.25 percentage points.

This may seem like a small change, but it’s certainly a start in the right direction! And it is a welcome sign to local businesses that things are getting better and not worse for entrepreneurs here in SA. 

We can be positive about our future – things are about to get better!

Earning more isn’t the answer

When it comes to building your wealth, it’s not about how much you make, it’s about how you work with what you have. You do not need a larger paycheck, you only need to invest and use your money wisely. Yes, more money gives you a larger budget to work from but that simply needs increased consideration.

Here are some tips that will make it easier to build your wealth, even if you do not have a large income.

Adopt better spending habits

Using your money wisely begins with controlling how you spend. If you earn more, and you land up spending more (often on things you may not need), your wealth building plans will never come to fruition. It will simply be: more money in, more money out.

Good spending habits have a positive impact on your wealth building ability. Practically, this looks like a constant assessment, and re-assessment, of your lifestyle choices in order to spend less on current expenses to save more for future expenses. Essentially, if you spend less now, you will have more to spend later! Remember, it’s not about saving for something random; wanting to spend more later is only beneficial if you have a good handle now and what you might like to spend your money on later (like a holiday, car, wedding etc).

Track your spending

To help you adopt better spending habits, actively track your spending. This can seem scary at first, but ultimately this will help you make empowered choices about how and why you spend your money the way that you do.

Automate your savings

Automating your savings is a powerful way to build a large savings pocket without it feeling like a trying chore. When you manually pay into a savings account, you are more tempted to postpone or miss a month. When this happens, it’s easier to miss next month too… and so a pattern develops. However, if it comes off automatically, much like paying tax, you’re more likely to stick to your savings goals.

Seek professional advice

Key to building your wealth is getting professional financial advice. No matter your income level, you can still benefit from consulting with a professional.

Professional financial advice is about more than helping you set up an investment portfolio or sell financial protection products. As part of your financial plan, this advice should assist you with tax planning, goal setting, establishing meaning for your money AND… help you work with what you have instead of ‘always wanting more’ to achieve your goals.

Building your wealth depends less on how much you earn and more on how wisely you use your earnings. This means that when the time comes, or opportunity affords you a higher income, it won’t be wasted but will instead help you build into your own life and the lives of those around you – providing deeper meaning and purpose for your wealth!

Five inspiring quotes from women to up your hustle game

August is traditionally about celebrating women, but we believe every month should honour the strong ladies that make our world go around.

Here, courtesy of Investec, are five inspiring tidbits of advice to fire you up for slaying the rest of your work week. Like a (woman) boss.

Learn from your mistakes – and everything else

Palesa Moloi, the former accountant, now successful businesswoman and technologist who created parking app ParkUpp, advises, “Never stop exploring, and learn from your experiences, books and other people. All our ideas are usually initially wrong.”

“Your journey as an entrepreneur is about becoming less wrong about what you’re doing and finding out how you can be right over time,” she adds.

It’s all about repetition

“If I could go back and advise my younger self, I’d tell myself to never give up. It’s just a matter of being consistent – I would tell myself to just go out there and make the world your oyster,” says eighteen-year-old Ongeziwe Mali, who was the youngest player in the South African women’s hockey team at the 2018 World Cup.

Don’t focus on the hate

A successful woman is bound to face plenty of hurdles and resistance. Which is why the advice of Mmane Boikanyo, Marketing Manager for TuksSport at the University of Pretoria, is testament to this .

“Don’t get distracted by things like gender inequality, ageism or racism, because what you deliver will be the true judge of your competence and potential,” she says. Her words recall the famous line by the great Reverend Jesse Jackson: ‘Excellence is the best deterrent to racism and sexism.’

Go all in

Freelance photographer Tshepiso Mabula knows that following your heart to find your dream work has ups and downs. Which is why she advises others to commit – to believing 100% in themselves. “When you take the decision to bet on yourself, everything else is bearable, because in the end, all the hard work and tears are going to culminate in success,” she says.

Follow your passion

Kate Groch certainly stands by that. The founder of the Good Work Foundation, which helps educate and inspire rural kids in the Free State, Groch says to follow your heart first, no matter your circumstances.

“We’ve got young people who are studying Fine Art, which is not a normal thing to be studying from a poor community, because the typical mindset is, ‘what’s the job afterwards?’ But you don’t just have to have a job – you can start a career. Kids often haven’t had the luxury of really looking at what they’d love to do, and where they would add the best value to the planet.”

Four often overlooked steps to reducing financial stress

A lot of people are quite financially stressed right now. It’s understandable – it’s been a hard few years for most of us, and the uphill climb back to a bustling economy, both locally and globally, is far from over yet.

Does that mean that we have to be stressed with where SA has been in the past five years? Not necessarily.

You can reduce financial stress with the following tips.

Step 1: Communicate

One of the biggest stressors that comes from money is the negative impact it can have on our relationships. Some of us have been shown by generations before us to suffer in silence and not share the money worries with those close to us.

The effects of that have a deep impact.

Here’s the thing – our partner, kids, parents, friends will always know. We are usually not even aware of the tense face we pull when our child picks the most expensive toy in the shop, or the frosty reception we give when our partner speaks about anything with an expense. The problem is that it’s not easy for them to be sure of whether it’s them or money that we’re frustrated with.

Having an honest, vulnerable conversation with loved ones about finances can be healthy for both family bonds and your bank balance. You might be surprised at how willing your other half supports forgoing certain expenses in order to keep your budget robust. Remember, if you’re anxious about your finances, the people around you probably are too.

Step 2: Get advice

When money is already tight, it may seem unthinkable to get a financial adviser involved. It is important to realize that it means you could end up spending a little more to get access to wealth creation strategies, ideas and investment opportunities that you were completely unaware of and could significantly improve your emotional, mental and financial position.

Going to a financial adviser has the same effect on your spending as keeping a food journal for your diet. With an adviser, you can increase your mindfulness to eliminate waste and focus your expenditure into what really matters to you.

Step 3: Be honest

We need to be upfront and honest in financial planning meetings and conversations. Speak up when it’s hard and you don’t feel ready to make changes. It’s important to talk about what we can no longer afford and what we’d like to achieve. Any change that happens before we are ready for it is often not sustainable.

It is these kinds of conversations that bring value to our financial journey and makes financial advice come alive. We can respond with enthusiasm, find new ideas and forger stronger relationships.

Step 4: Use this time to fine-tune and keep honing

Instead of seeing a financially stressful time as a never-ending pit, rather see it as an opportunity for new growth. Economic downturns, bearish economies, recession and all forms of headwinds always come to an end.

What they provide is the opportunity to get our mindset and wealth creation strategy into a lean, mean machine that will skyrocket when conditions improve!

Why we need to remain patient

2019 has been a financially hard year for many and for South Africa. Investors in particular, have seen low returns in a high-risk (election) year after several lean years.

In financial climates like this, many panic and thoughts of losing money can lead to impulsively pulling out of investments.

In the words of Warren Buffett: “The investor of today does not profit from yesterday’s growth.”

Past performance is no guarantee of future returns. Stock investors sometimes closely watch how certain funds performed over the previous 12 months, then switch to higher performing funds thinking the following 12 months will be exactly the same.

However, it is important to stick it out. We need to resist acting out of emotion and impulse when it comes to selecting investment funds. It helps to gather all relevant information and really understand our goals, investment horizon and how the funds are affected before taking the jump.

A successful investment strategy needs a level head and requires due diligence to understand everything rather than pulling out at the first sign of danger.

Economies also move through seasons. In stormy seas, you don’t jump ship. This is different to discovering your own ship has a leak – Steinhoff or Enron, ‘ships’ with serious ethical problems, come to mind – this is about uncertain and unkind macroeconomic conditions and various headwinds that slow progress down. That’s stormy.

And in a storm, everyone’s ship is getting tossed and turned, however calm their crew may look. It’s about sitting tight and riding it out, the priority of stormy weather is staying safe and in the game.

The good news is, sooner or later, better conditions always come – and patience pays out.

Diversifying happiness

The ancient philosopher Aristotle came up with a single word for what every person wants: ‘Eudaimonia’.
Eudaimonia means happiness but more than that it alludes to a sense of fulfillment.

Many people have viewed financial planning as the management of financial goals and resources. Typical conversations would include questions like: “How much will my assets grow, how can I get X amount by the time I am this age and what will my retirement look like?”

Whilst these have been helpful questions, we are learning that they are only part of a fuller conversation. There are different questions that are starting to emerge in our conversations that are focussing more on meaning and purpose. They are not as easy to answer (sometimes they don’t need answers just yet…) but they help us frame the bigger picture of how we’d like to use our wealth for a fulfilling life.

It’s not only our wealth strategies that need to be diversified for healthy growth but our happiness strategy too.

This Spring, we suggest these happiness diversification exercises.

Exercise your way to happiness

Now that it’s getting warmer outside, it’s time to get our bodies moving again. According to a recent research study, exercise makes people happier than money does. People who stay active are better equipped to deal with stress and have less days when they feel down or depressed.

That’s not too say that too much exercise isn’t a bad thing – it’s important to have a balance and not over-exercise. Either extreme can be detrimental to our experience of happiness, but a healthy balance is a powerful way to experience eudaimonia.

Prioritise experiences and people over possessions

Invest in making priceless memories in life. Instead of buying that luxury car you do not need, try saving up for a family holiday. Going out with friends or family to concerts, movies or picnics are just some of the happy experiences you can give yourself in life. Prioritise taking walks in nature, reading a book or playing a game with your kids.

Believe in something bigger than yourself

As we spend time with other people outside of a working relationship, it becomes easier to see and believe in something bigger than our own reality. It’s not about faith or religion, it’s about connectedness. If we want to find more ways to invest in our fulfilment we need to experience generosity to causes that are bigger than ourselves.

Fulfilment, happiness and productivity should grow when we contribute to others. It’s a healthy circle of sustainable growth that is not reliant on market performance or bank balances. Being willing to ask bigger questions and find deeper meaning to our wealth is where we can begin to experience eudaimonia.

When it comes to Wills, don’t wing it.

September celebrates National Wills Week, a reminder to us all about the importance and necessity to create a Last Will and Testament. According to recent statistics, only 30% of South Africans have a will – which means that we have to be talking about this a lot more!

We have seen countless movies and TV series detailing the hijinx that can occur without a will. Unfortunately, in the movies all people with wills are either rich or eccentric, leaving many of us with the impression that a formal Last Will and Testament isn’t really for ordinary people.

However, it’s an essential element of a robust portfolio.

If you have loved ones and/or any possessions to your name, or children who would need to be cared for – you would greatly benefit from a professionally drafted will.

The dangers of DIY

Some may feel that it’s cheaper to simply write up their own will and keep it as general as possible so that ‘everything is covered’. The reality is that it’s generally not expensive and having sweeping generalities only complicates matters.

Legal details and regulations change regularly regarding wills. Unless it’s your job, it can be hard to understand and keep up with the constant changes. Even a small detail in a will that’s incorrect or not in line with legislation can leave your loved ones paying extra legal fees and waiting months and even years to iron out the details – or worse, left without enough income to cover monthly expenses.

Vague wording like “I leave my cars to my sons” is typical of a DIY will, and may be disputed – turning into an expensive and lengthy legal battle. What if the one car is worth R80,000 and another is worth R300,000? What if someone arrives, claiming to be a son? Words like ‘descendants’, ‘my business’ or ‘personal items’ are also legally vague, pitfalls and loopholes are hard to spot if you’re not a trained lawyer.

Legal terminology like “bequest of the residue” are terms you may have never heard of and would certainly not put in your Last Will and Testament – all the more reason to hire a professional and save your family the additional heartache and stress later.

Microsavings: when a little goes a long way

There is a lot of good financial advice out there which goes something like this: ‘you know that money you don’t use every month? Well, take R50,000 and invest it in X now, and you’’ be happy later.’

Sound familiar?

The problem with this advice is that it’s incredibly alienating for the other 92 percent of people out there who a) don’t have money left over at the end of the month and b) would laugh and rub their hands with glee like Scrooge if 50,000 unaccounted-for rands came calling. That’s not real life, for the average Joe. So, where does one find financial advice for people without the silver spoon?

This blog post is for you. It’s about a term which may well answer many of your problems: microsaving.

What is microsaving?

Just like the name says, this is putting small bits of money aside. Think of it as the digital equivalent of what your grandparents did with a kitty back in the day, dropping spare coins regularly.

Microsaving is about taking whatever amount of money is small and unnoticeable to you and tucking that away in a place you can’t spend it. So, for instance, you buy a weekly wrap at work that costs R35 and so your microsaving method of choice squirrels away the R5 into a savings pocket, separate account or another wealth preservation vehicle like your RA. If you know that you regularly come out at the end of the month with about R900 aside for your daughter’s ballet things, which often comes to R800 actually, microsavings pockets that extra hundred.

These are by no means big amounts and – caution – no microsaving tool will get you the returns that investing R50,000 in a reputable vehicle would, but they are certainly better than not using microsavings. Here’s why.

Mindfulness matters

For most of the people that can’t afford to save or invest traditionally, it’s not entirely true that they don’t have one single spare cent unaccounted for each month. It’s more a mindfulness issue. Money coming in like salaries are given vague budgets at the beginning of the month and then, like a black hole, it juts vanishes into a million little things and unforeseen expenses. Do you have an emergency fund each month? Do you estimate and account for how much you spend tipping car guards and paying for parking? And because savings and investing are often the last in line, the if-I-have-enough amounts, by the time their turn rolls around there is no money to save or invest.

A microsaving app, banking feature or some other investment vehicle (Liberty’s Stash and FNB’s Bank Your Change are quite good) takes into account this lack of mindfulness by taking off that R5 from the wrap, R100 from the ballet recitals money, knowing you won’t notice. And then you have something like R400 at the end of each month saved away – certainly not the R2000 you were hoping to save, but better than the zero you were headed for.

From microsaving to microinvesting

Of course, it’s not just saving that this approach is good for. Instead of sending your loose change into a savings pocket, what about into an investment vehicle? Or your retirement fund? Or the trust you as a couple set up for the kids’ university fund? The possibilities are endless and, especially when coupled with intentional saving and investment of larger sums, microinvesting can be powerful.

Sometimes it pays big to go small…

Five awesome things about women investors

It’s Women’s Month, and we’ve been thinking lately about all the ways in which women are wonderful in matters of money.

Women as investors don’t get praised often enough – there’s been an unfortunate stereotype in the past that keeps finances in ‘man territory’. Today, we’d like to honour the ladies in our stock markets and on our shareholders’ boards and count the ways in which they rock and the things male investors can learn from them.

They consistently outperform on returns by being faithful

A Financial Times article cited two studies a couple of months ago. It had this to say:
“Warwick Business School conducted a study of 2,800 UK men and women investing with Barclays’ Smart Investor, tracking their performance over three years. Not only did the women that were examined outperform the FTSE 100 over the time period, they also achieved better returns. The men in Warwick’s study managed an average annual return 0.14 per cent higher than the FTSE 100, but women outperformed the benchmark by 1.94 per cent, beating men by 1.8 percentage points. A separate study by Hargreaves Lansdown also found women investors returning on average 0.81 per cent more than men over a three-year period.”

The reason for this, according to spokesperson for insurer Liberty Daphne Rampersad in an article this month, is that women tend to stick with investments, “getting higher returns over the long term, while many male clients choose to switch when markets go south”.

Those that do go against the grain

Despite these impressive results, the woman investor is certainly the minority. The same FT article cited earlier stated that “55 percent of women said they had never held an investment, compared to 37 percent of men. Just 21 per cent of women said they held a current investment, compared to 35 percent of men” in the UK, famously less sexist than South Africa.

Many reasons have been attributed to this, from a dearth in financial advisers to older generation South African men teaching their sons about investing but not their daughters.

Also, where are the women’s role models? Despite giants of the industry being female – JSE CEO Nicky Newton-King comes to mind – there are no articles on Warren Buffett-type female investors, here or abroad. That makes the women who do invest that much more impressive.

They stick with what they know – and that’s a good thing

“Men tend to favour new, untested shares, whereas women will stick with tried-and-trusted, recognisable names”, says HSBC private bank in an article on its website. Unsurprisingly, this also often results in women getting more tried-and-trusted, recognisable results than male investors, thanks to their tendency to stick with a ‘sure thing’.

… Despite ‘bucketing prejudice’

That being said, women are often stereotyped unfavourably by asset managers and their portfolio managers in general. This is thanks to the notion of ‘risk profiles’ – somewhat outdated now in developed markets yet still used widely in South Africa. Due to women being seen as more ‘risk averse’ than men, they will be given investment options with lower returns because, well, higher risk means higher potential returns.

This is how it often goes. A woman will go in/phone in to set up a new investment. The manager, often male, will give her a risk profile assessment rather than ask her what her goals are and what assets she would prefer. Instead of saying ‘if you want X returns, you can only get that with equities, although you stand to lose more there too’, he will more often ask ‘how much are you comfortable with losing per annum?’ This is called shortfall-based rather than goals-based. Most women, baffled, will reply that obviously they would like to lose as little as possible. Thus, women are consistently given scores of less risk appetite than men, due to both the phrasing of the questions and the way they are automatically bucketed for being female. Research has shown that less women invest in equities is the reason given – but it has been socially acceptable for women to invest for less time than men, and women are given equities by default less often.

It is a tiring, unknown prejudice which shows women’s greater returns and their involvement in equities at all as even more impressive.

And they get impressive financial gains despite more obstacles than men

Apart from all their obstacles from within the financial landscape, there are numerous other things standing in the way of financial success for women. Women are given higher insurance premiums and less life cover than men consistently, despite being labelled ‘more risk averse’ than men, and receive on average 28 percent less for salaries than men doing the same job in South Africa.

More than 60 percent of South Africa’s households are run by single mothers paying for everything, according to Statistics South Africa, while less than four percent are run similarly by single men.

Higher returns and better staying power despite more obstacles and often less money to work with? To paraphrase the 1955 Women’s March anthem, a woman investor is solid as a rock. You go, girls.

Don’t let market cycles catch you out

Source: Investopedia

If there were a set of commandments for investing, the first commandment may well be this: know your seasons.

Just like a surfer or fisherman know the tides of their favourite spots, prudent investors know the market cycles.

“The problem is that most investors and traders either fail to recognize that markets are cyclical or forget to expect the end of the current market phase,” says Investopedia. Many investors will come up with a strategy, and it may be a very good one, then with enthusiasm rush out into the marketplace and expect to impose their vision on the market or, in their excitement, misinterpret the signs.

This is like rushing out into a thunderstorm without an umbrella in a T-shirt, because you feel like sunshine. We all need to obey what the climate and environment is doing. A good investor is very much like a farmer, knowing that there is a time to sow and to reap, to keep store for lean months and times to feast as well.

The four seasons

Just like any other rhythm or cadence, markets tend to begin low, climb, reach a certain high point and then fall until a certain low point. Then the cycle begins again.

The four phases are generally referred to as accumulation, mark-up, distribution and mark-down in the financial industry. Allocation is the beginning of a new cycle, when prices are low and savvy buyers are buying. As things in the market settle and rally, the prices rise and this is mark-up. At the investment’s peak, when it has become the most valued and expensive it’s going to get, that’s called distribution because the savvy sell now. Those who don’t sell have to deal with mark-down, the fall from grace, when the investment loses its value as the cycle descends to begin anew and ride the next mark-up wave.


Source: Investopedia

If they sound a bit like shopping around Christmas in fancy department stores, you’re right – stocks are a product and, just like any other product, have a marked-up price and a discount price. It’s wisdom to buy it ‘on sale’, wait until it’s in demand and then sell it for a higher price than you bought it for before it devalues as the next new thing comes in.

Know your animals, too

Then there’s also the global sentiment of the market: bullish or bearish, hawkish or dovish and for what reason. These are directly linked to the four phases. Currently, America is in a fragile, yet still-running, bull market – the longest bull market in history. Many a betting man would’ve lost his shirt by predicting, reasonably, that it would have ended a long time ago. But that’s how markets are – and we must be cognisant of them. It would be just as foolish to not take these into account as it would be to build your entire investment strategy around them.

A man for all seasons

There is a reason for the phrase ‘unpredictable as weather’, which should also be ‘unpredictable as markets’ – it can be famously hard to predict the exact right moment when an investment will reach its peak value, will start to decline or appreciate. The cycle is a law unto itself at times, just like climate patterns and weather – there are rules, but no one knows when there’ll be an exception.

If anything, the cyclical nature of all markets shows the need for good advice. Lean and fat times come and go, but your future security should not depend on it but rather get richer and mature with the seasons, just like you.