INVESTMENT

/in , /by


Shew, this month has been hectic! Yours as well?

We’re on the last of our three blogs on the “I” of the acronym, LIFE. So far, we have covered Live, Laugh and Love. Then Imagination and Inspiration – that was a tome as I re-read it 😊

Today, we’ll cover Investment and I promise it will be shorter. Nonetheless, I am again ready to “throw my heart into it”.

Albert Einstein dumfounds me when he says, “The most powerful force in the universe is compound interest.” Every time I read it, I think he must have had unaffordable debt and he couldn’t believe the cost of not being able to pay it off on time, but, of course, that’s tripe – if he ever had debt, he knew how much money he repaid. We, at Homeloan Junction know that at 10%, a 25-year bond is 2,5 times more than the original cost. Throw in the transfer, attorneys, etc and buying houses are expensive.

Of course, this type of compounded interest we all know well. Hopefully, we also know enough to never incur credit card, and upwards in the sense of interest rate debt. My rule is simple,what you can’t settle on your card at month end, can’t be bought. With that rule, I buy almost everything on my card and just settle the balance at month end. Negative compound interest kills and especially when no tax deduction lessens the load on our purse. The inverse is Investment. Here, compound interest works splendidly.

The other day I helped an elderly lady consolidate her investments; little bits and pieces in three financial institutions. Wow, what a surprise as I trawled through old records dating back to the late 90’s when she retired. Figures like R43000, R60000, etc, but nothing too rich. Unsophisticated investing – a unit trust, fixed deposits, money market, etc. To our surprise, the total amount was over R600000! The reason is that she has lived off her dwindling pension in real terms and never dived into even the interest of her investments. Then, every 6 months or so, she would be advised to re-invest and she did. The lot just grew and grew and the end result was unexpected. No wonder a friend of mine once asked me, “What’s the best investment?” I waited and he told me, “The one you stick to.” You see, the elderly lady could probably have done better in Naspers, but what she knew all well was that time and interest are directly correlated and maybe she didn’t maximise the opportunity, but she had enough. I am not an investment advisor, but here are some generic rules for Investment from personal experience.

Time is measured two ways, the length of time you save and the length of time you don’t.

You see, R500 per month over 40 years at 8% earns you R1745504. The problem of not starting 40 years ago can be expressed in three ways:

  • 30 years: R745180
  • 20 years: R294510
  • 10 years: R91473

This is the way we normally look at it and, often, we look at it relative to a fixed date, retirement, child’s education, the coffee shop we’ve always wanted to own etc.

There is another way and it’s not insurance broker-speak, just a fact of life – Cost of Delay. You see, the numbers of 40 and 30 years may kinda look alike, but the difference is R1000324. That’s a Million Rand! Compare it to the R91473 which you save in the first 10 years and the number is 11 x [1000324/91473] more than you could save. That’s the awesome power of compounded interest. It builds like a hockey stick at the end if you have not touched it.

You see, when the “fixed date” arrives and its retirement, the third problem is that you just don’t have 40 years of R500 per month to catch-up. Very sobering, I know.

In case you think you’re the only one who missed this, I took out a unit trust in 1976. It was R50 per month. As a guess, the JSE Index would have been about 500 then. Today it is 55000. Doing the sums, that’s 11.22% growth plus dividend yield of, say, 3,5% would total 14.72%. Using that “interest rate”, my little R50 per month investment would be worth about: R1900000. Makes you think, doesn’t it?!

So, the moral of the story is: Take out an investment while you’re young. Don’t delay, and then, stick to it.

You know as well as I do, that the money part of this Investment is the easy part. Life calls for an investment as well. For that thought, I turn once again to my old well-known guy, Dr Dennis Waitley, who said, “It takes as much energy to live a good life as to live a bad one. So live a good one.” There’s a thought, but we also know we don’t always put the “good” together long enough to make the ultimate difference. We sometimes stumble up and then stumble down and then stumble up again.

We all seem to do it; I include myself. On the negative side, it seems we have the ability to:

  1. Try
  2. Fail
  3. Regret we failed
  4. Regret we tried
  5. Then try again
  6. Repeat the cycle.

You there as you read it? The downward spiral of defeat and “if only’s”? You know that the only failure is failure itself. “Don’t judge me by my successes, judge me by the times I failed and then stood up again”, said Nelson Mandela. Read some of his books and this understanding of life permeates them. “I should have…”, “I could have…”, “I shouldn’t have…” are often on his lips but in the end, “I did, and if I failed as I or some may think, I tried again.” [My way of expressing this man’s attitude to Life]. Ultimately, despite the naysayers, Nelson Mandela succeeded beyond our expectations.

So let’s rerun a “good life”. One that you invest time, energy, and a focus on priorities into: 

  1. Try
  2. Fail
  3. Forgive yourself or ask forgiveness
  4. Learn
  5. Succeed
  6. Repeat the cycle.

You see, investment in yourself tries, parks the past, learns falling forward, and never gives up. Please hear me!


Taking from the financial lessons above:

  • Start as soon as possible. Lives also endure the cost of delay.
  • Invest regularly and as much as you can. A little study is better than none. An hour a day extra doing what you believe is important, not urgent, is 3650 hours of extra focus on your priority every 10 years, not just your “stuff”.
  • Opportunity cost is real. Redefine your focus by all means, but don’t stop doing what is right for you.
  • If you’ve wasted time, stop regretting it and get on using the time you have left.
  • Forgive yourself, you’re better than you think.
  • Celebrate successes, even if you’re alone.

I don’t want to go on to produce a tome like Inspiration, though I could. Thus, a closing thought from the Good book. Job is a well-known story – a great guy who loses everything and then recovers “twice as much as before.” At the end of chapter 42, the last verse says this: The he [Job] died an old man who had lived a long, full life. That fact stuck with me when I read it about 2 weeks ago. Long is easy – Job died at 140 years of age. Right now, scientists are telling us that the person who will live 200 years has been born. Whilst I’m thrilled that’s not me, the “full” caught my attention and has wandered through my thoughts since. What is a ‘full’ life? What things have I done, seen, been to, given attention to, consistently undertaken, left, adopted, listened to, read, spoken about, focussed on, achieved, believed, debunked, tried, striven for, loved, hated, bought, sold, eaten, experienced, achieved, learned, given birth to…that makes up a life that is “full”? I’m still teasing this out so I don’t intend to answer my question right now. However, I encourage you that if something in the question, or anything else above it, has struck you, read it again, begin to coagulate your thoughts, mind-map them and let them develop into something positive and forward-thinking.

As the business of HLJ, we are all on this journey. We have chosen to associate with each other. We have common ground, knowledge and resilience. Use what we have to make a better place from our inside out. Touch lives and encourage them upwards once again. For those on a high, imagine the possibility of being an inspiration to the rest of us and invest some time in all of us, and all of the others, you meet.

Yours in Property.

BUDGET 2019

/in , /by

A real quickie this blog joining the chorus of feedback and comment on the budget.

NFB Private Wealth Management was succinct in its bulletin of 20 February 2019, commenting:

In less than 60 minutes Minister Mboweni presented his maiden budget in Parliament today. In a national election year, off the back of poor economic growth and dwindling confidence, it had to be a budget targeting renewed optimism for us at home and the broader investment community. As he started talking, the rand weakened but by the end of the day, had strengthened against all major currencies; perhaps a glimmer of hope? – Minister Mboweni

Little changed as regards personal taxes but inflation will mean that the man-in-the-street pays more. From the little bit I’ve experienced recently, Mark Kingon, acting SARS Commissioner, has SARS on its toes looking for unpaid tax. Beware! Fortunately, there were “no changes to retirement funds, trust tax rates, donations tax and estate duty” and CGT. That’s good news. At the corporate level, company tax remains at 28%, says the NFB report. Sin taxes have increased. E-cigarettes have not escaped the attention of the new Finance Minister and one of our colleagues is really irked about that ☹

My most annoying one is fuel levy [29 and 31c on petrol and diesel respectively]. If we understood what it means to use a taxi every day we would realise the 41% we pay in taxes in the price of every litre of fuel, is simply a tax on the poor subsidized, in the total, by the rich. We’re not exceptional but when added to the impending Eskom tariff increase, prepare yourself for a shock to your pocket. We’re staring down the barrel of higher inflation, controlled by increasing interest rates, in a tiny-growth economy, while fighting for job creation.

The introduction of a Chief Reconfiguration Officer [CRO] to oversee SOEs who rely on the government for funding should curb ever-increasing debt. Love it, Minister Mboweni! Government’s wage bill being cut “by R27-billion over the next three years” and a “freeze on performance bonuses and salary increases for certain state employees” is welcomed. The Minister concluded, “There are no quick fixes, but our nation is ready for renewal.”

Sin Tax 2019

Very short and sweet.

The Businesstech report was more detailed but I just draw out of it certain relevant points:

  • The minister painted a bleak picture as the country struggles with rising expenditure, failing SOE’s and declining revenues, but outlined several processes underway to try and rein things in.
  • Economically, real GDP growth for South Africa in 2019 is forecast at 1.5% and is expected to reach 2.1% by 2021.
  • In the medium term, spending reductions are expected at R50.3 billion, while provisional allocations of R75.3 billion have been budgeted, mainly to deal with the Eskom crisis.
  • The country’s budget deficit has widened because of Eskom and because of a revenue shortfall and is now seen at 4.5% of GDP in 2019-20 – up from the 4.2% forecast in the October mid-term statement. [Ed: We have reached the critical 60% Debt-to-GDP level, often referred to a fiscal cliff.]
  • State wages and compensation remains the largest category of spending, accounting for 34.4% of consolidated expenditure – a level which the Finance Minister described as “unsustainable”. Measures are in place to realise a R27 billion reduction in spending here, he said.

Eskom:

  • The big topic on everyone’s mind in the lead up to the budget was bailouts for SOE’s – and especially what was going to be done with Eskom.
  • According to Mboweni government will not take on the power utility’s debt, as has been suggested by Eskom in the past.
  • “I want to make it clear: the national government is not taking on Eskom’s debt. Eskom took on the debt. It must ultimately repay it,” he said.
  • However, he said that the restructuring plan – to split Eskom into three entities – is on track, and Treasury is setting aside R23 billion a year for the next three years to financially support Eskom during its reconfiguration.
  • The total of R69 billion is a “shareholder” move to assist the utility to pay its debt, however, it comes on the condition that Eskom cuts cost to cover debt-service costs and meet redemptions.

Land Reform:

  • While the government pushes ahead with its plans to make land expropriation without compensation more clear in the Constitution, Treasury is also allocating funds to accelerate land reform and acquire state land.
  • R18.4 billion has been allocated to accelerate land reform over the medium term, which will help finalise more than 1,700 restitution claims and acquire more than 325,000 hectares of land for landless South Africans.
  • This budget was presented by the ex-Governor of the SARB. He is highly competent and politically connected, but what I like about him most of all is untainted and honest. Can we do with a bit of those virtues right now!
  • Honestly, our country is in a shocking state after 10 years of Zuma [trust my maths, please, with at least 4 more years to come as “aftermath’]. However, whether Tito stays or goes, another strong Finance Minister will replace him and we will get through this. Again, honestly, the demise of Eskom is too horrific to contemplate so let’s get on the bright side. “Too big to fail”, was the way the World Bank or IMF described Eskom.

All of that said, in the property industry we will enjoy:

  1.  A 1.5% GDP growth this year – hopefully!!
  2. No increase in property-based taxes.
  3. A slight narrowing in affordability though we need to wait for Eskom’s tariff announcement.
  4. Probably, stable to improved job statistics.
  5. Better house sales year-on-year [I believe].

Compared to what we have lived with while we get out of the mess and approach the General Elections, I would take this if I was you.

HLJ does take it and remains positive.

Yours in Property.

INSPIRATION

/in , /by

Continuing with our series using the acronym LIFE and on the “I”, let’s explore Inspiration.

I have had the privilege of meeting many inspirational people in my life. Victor Vermeulen, the Transvaal cricketer who dived into an empty pool, is memorable. Constrained to his wheelchair and cared for by his amazing mom, he had us in tears and stitches as he spoke of his life and times. He paints by mouth and even coaches cricket in his spare time. Think about it… coaches cricket… from his wheelchair.

Similarly, Nick Vujicic, the Australian evangelist, who was born with tetra-amelia syndrome and therefore with no arms or legs, is also one of my most inspirational human beings. He struts up and down the stage and then falls over. Flat on his tummy in the video clip, he then tells the kids who are fixated on him, that you may fall and things look impossible, but you can always find a way to get back up. Slowly, he turns himself around and with his head on a firm cushion, he finds his balance and “stands” again. Love it!

When I watch and listen to these kinds of guys, the question: “So what’s your problem, Jack?”, pulses through my mind. Huh?! Fat flab – then do something about it! Relationships – sort them out! Petty issues like taxi drivers – get over yourself! Nothing that worries me day by day as things currently stand, even matter. Really!

Have a look at YouTube if you don’t believe me…

So why do I focus on disabled people to now? Perhaps mistakenly, in your opinion, they personify the courage of the human spirit. Victor: no legs, where once there was a batsman, no arms where once there was a scholar, no independence where once there was transport and venues, no privacy where once I showered and changed myself and then, in the hidden corners of my soul, all the doubt and hurt and “if only’s” and anger and self-un-forgiveness and all of that put aside in favour of life and love and others’ inspiration. What about Nick? He’s never had anything of Victor’s life before the accident; not one iota, but over the years, he has developed his mind, found a lasting Christian faith and journeyed with probably millions of people in audiences around the world lifting their spirits and sense of wellbeing. Wow! So what’s your problem, [your name]?

The other day, the Stormers came to train in our gym. Eben Etsebeth is larger than huge, larger than life and his bicep is bigger than my thigh. Flippen’ huge! If he’s not your hero, tough; when you see him you will be in awe and if you don’t know who I’m talking about, shame on you!! Jy watch seker nie rugby nie – Skandaal… He’s an inspiration and like Kolisi and others, we scream them over the goal line every Saturday in season. Just by playing the game, he’s an inspiration; in my gym, well, he changes the ambience of that sweaty place, but everything is in the right place and he had everything, and then honed it, to make him the great rugby player he is.

What about Nelson Mandela and so many other great leaders? You want to know them. You long to be known by them. You hang onto their words – you YouTube, TED and Wikipedia them. They inspire you and lift you up when you’re down and raise your sights when you’re up. That’s what inspiration does, but then, the other day I get this clip of an ant pulling a spider up a wall. I have no idea of the weight variance and, in case you wondered, the spider was dead, but, my goodness, was that little ant strong and determined. No wonder the Good Book says: “Take a lesson from the ants, you lazybones.” – [Proverbs 6:6].

Big and small, human or otherwise, they inspire us. You could say, we are surrounded by inspiration. So what’s wrong when you and I cannot lift ourselves out of sadness, worry and agitation so many times? When finding things to be grateful for seems to be a trick of the motivationalists to detract us from our own weariness and problems. Ellende!

So what about you and I? Can we be an inspiration? We have all our arms and legs so there’s nothing to overcome. We have all of our faculties so we cannot be modern-day Helen Kellers who said: “Life is either a daring adventure, or nothing, and, blind, she lived it; way before Facebook and YouTube and TED and TV – just newspapers, radio and a world stage with enthralled audiences whose hearts were quickened. So what about us? Educated and able to be, relatively wealthy, well-travelled with more holidays planned. Married with children and able to make them. Employed, some self-employed and connected to do our work better. So what about us? What about me?

One of my favourite quotes is that by Martin Luther King,

Not everyone can be famous, but everyone can be great. And then there is another that I have come to love sharing repeatedly [Longfellow: Psalms of Life]:
The lives of great men all remind us
That we can make our lives sublime
And departing, leave behind us
Footprints in the sands of time.

 

Rather than set the bar high focussing on what everybody else does and says, “Let’s get a little practical with our own lives…”

1. You have Influence

Whether you’re up or down, we know it. So, be up. My misery, problems and hassles worn on my sleeve may be real to me and based on Agrizzi’s evidence; my posture may be because I have synthesized the facts and I’m going to do something about it, but darn it, making my problems your problems always, in-depth and continually, affects you. I can have whatever, I can confide my deepest thoughts which hurt with a confidante but when I step out of the room, my influence makes or breaks your day. Make my day, please. I want motivated, I want enthusiastic, I want whatever hope is left in you and I want my kids to believe the world can be a better place because they’re in it. Leaders, your people don’t need sweat on your brow. Be scared, be real scared, but then get out and display confidence.

I must tell you this notion feels fake for me. For many years I never let on I was in pain – that my ear hurt after successive tumour operations. Nobody knew it and I’m fine was my pat answer. Then one day I shared that stance, in a spirit of what we like to call authenticity, with my Coach Supervisor who is also a psychologist, and she said to me, “You need to let go a little, give yourself some slack and share your true feelings.” I started to do that and felt really authentic. You ask me, “How are you feeling?” and unlike my usual, “I’m fine!”, I said, “My ear is hurting me and I’m taking quite a few pills a day for the pain.”

What then followed was hock and horror firstly but then a kind of distancing that was tangible in my relationships. You see, on the one hand, people could not think of Jack appearing miserable [he’s always so positive], and, on the other hand, they just couldn’t face my pain on top of their own issues. So I hear the word authentic and I understand it well, trying always to be as open and honest as possible., but I have learned to limit, once again, my complete honesty around any negative things or physical pain, preferring only to share my deepest opinions with confidantes. Honesty or hypocrisy, you decide! I want to be inspirational certainly without being perceived as fake and those who know me, know that.

2. Mix with Positive People

Allied to what I’ve opened up on above, mixing with positive people rubs off. Don’t be fooled, you are not bullet-proof and inoculated against bad news and often when you’re down, I’m up. It works like that in our relationships and we find ourselves able to comfort each other at different times. Enthusiasm is contagious and being enthusiastic is what people want you to be. They will pick up flakiness by their 6th sense, but they will also rise to genuine happiness and hope spoken out. I have lived with positive people in the business. They exude confidence, they always have a plan or consult to get the plan, they empower you by trusting you with information so that you can feel and be part of the solution, they form bonds with others and “get real” if and when it’s appropriate. Gail Kelly always goes through my mind when I write like this [if you don’t know her, you can Google what an inspiration she is].

3. Get involved

Not sure of that, I hear many of you say. I’ve got enough troubles of my own. Really, if that’s your opinion, go back and read my opening paragraphs. Involvement asks questions and listens to answers, it takes time to reply and not rush out your experience and your solutions, it respects the other person and does not pry. Let me get real about someone I know… He has bone cancer and a friend of his told my wife in confidence knowing that I would get the message. I do not want to breach confidence as I respect the privacy of people, but I’ve just received a call and been asked to go for coffee on Friday and was told that on Thursday he’s going to the doctor. Will he finally tell me about his illness? I don’t know, but I can tell you, I’m involved and waiting to become more so as matters transpire.

People need you at times in their lives; you don’t need to barge in larger-than-life with all the answers. Just stand by, be available and be prepared. To this latter comment, I was intrigued to hear during George Bush senior’s funeral a meeting in which his Deputy President, Dan Quayle, asked him what he expected of him. His answer was: “Be faithful and be prepared.” That’s involvement. In leadership positions, you will often hear me refer to FAT people – Faithful, Available, and Teachable and goodness me, have I been blessed to work with tens of such people in my career. They’re not puppy dogs that roll over when you speak, they’re competent, opinionated, hard-working and committed, but when the chips have been down and a single outcome required, they have been FAT. How grateful I am that I have been able to be involved in many lives of family, friends and associates and then felt their involvement in mine at crucial times – I am indeed, a man most blessed – thank you all who may be reading for being my inspiration so often.

4. Believe in Something Bigger than You

Crimped in the space of your mind, imprisoned but your little woes, even engrossed in your big ones, you can never inspire. In my humble opinion, it is the belief that there is a higher cause for our lives that takes us through and makes our “overcoming ability” an inspiration to others. Myopic behaviour is selfish and self-centred – me, me, me. Expansive, abundant behaviour enthuses others, brings out the best in them and makes them above average and even brilliant. You see, the Pygmalion Effect, having a genuine sense that others are better than where they’re at [of My Fair Lady movie fame], lift them to greater heights. Many classroom experiments have been done when I teacher was told the opposite of the true IQ of pupils. So the teacher gets to the class believing the bright kids are not-so-bright and the not-so-bright kids are really clever. Lo and behold, the grades of the bright kids’ decline and the not-so-bright kids’ grades improve, even dramatically. What causes that? – well, I posit that the way the teacher talks to the kids founded in what she thinks about them raises the capacity of the children to believe in themselves. They rise to her expectation of them.

So, taking that to our own situation, if you believe that there is something big, bigger than you, towards which to strive, upon which to trust, for which you serve and get involved, then just the way you get out of bed in the morning changes and changes dramatically. The Purpose is Power. A Sense of Belonging is Presence and Positivity about someone or something beats misery hands down. Some say that the two most important days of your life are the day you were born and the day you discover Why. Sitting in limbo wondering and wandering meaninglessly? Find that higher cause and let It, or them, ignite you. You’re better than lounging around mentally and spiritually going to seed. Wake up! Stand up! And Get out! – be the difference you want to see.

As I close, I want to leave you with this quote by George Bernard Shaw that I know you have seen before, but bears repeating:

This is the true joy in life, being used for a purpose recognized by yourself as a mighty one, being a force of nature, instead of a feverish little clod of ailments and grievances that the world will not devote itself to making you happy. I am of the opinion that my life belongs to the whole community and as long as I live it is my privilege to do for it whatever I can. I want to be thoroughly used up when I die. For the harder I work, the more I live. I rejoice in life for its own sake. Life is no brief candle to me. It’s a sort of splendid torch which I hold up for the moment and I want to make it burn as brightly as possible before handing it on to future generations.

We are all on a journey. You and I coupled only by our humanity, but for those who are rich and famous, well done and for those of us who are not, we can at least be great. Be influential, mix with the positive and rub off on the negative, be involved, and live for a cause higher than you and for which you leave a legacy albeit just in the memories of your children. You have what it takes…

Yours in Property.