Episode 011: Investment Myths, busted!

It’s 2024 and you need to approach investing way more differently than 10-15 years ago. You may have come across some investment myths that got you scared to even start, so let us run through those and see if I am able to convince you to cross to the other side.

You need to be rich first in order to start investing:

A lot of people believe that they need to be rich or earn a lot of income to start investing. I don’t blame them because in the old days, a lot of investment houses always had the “minimum investment” condition. They still do have that condition, but there are a lot more investment managers now, who don’t ask for it. It was a tough hurdle to get over. Index tracking investment managers in particular offer low cost products which also don’t require you to have some kind of minimum investment as a hurdle, so things have become more easier and accessable. Believe me when I say, the R10.37 balance that’s in your Capitec, you can use that as your start. The most important part is to start – open that investment account, move money across to the platform & then start investing. You can keep adding more money into it WHEN YOU CAN.

I need you to try cut something from your budget, an unnecessary cost (like your 10 cappuccinos per month at Starbucks) & see if you can start with pushing that into your investment account. Oh, with R42 per cappuccino, that is R420 per month by the way which can buy you 6 units of the Satrix Top 40 ETF. There’s your start, stop playing.

Investing is the same as Savings:

In simple terms, Saving is for short term and Investing is for the long term. If you have money now but would like to keep for later this year because there is a traditional wedding you want to attend and spend on the couple – then Save. If you have a 5 year old and I would like to keep some money aside for his/her university tution, then Invest. You need to split your money goals by having short & long term ones, which then will allow for you to distinguish between investing and saving your money. Whenever possible, you should try work on having investment accounts which you can push money into for the long term while making sure that there are funds available & saved for short term things like emergencies, clothing for the kids and you know how that December-home-time vibe can be.

You need to be super smart in order to be an investor:

Super-smart, no. Knowledgeable – hell yes. All you need is information and you need to just know the basics. This is why index tracking / passive investing in ETF is the most simplest way to start as they are easier to understand. You are reading this, which means you are taking care of this part. You will be shocked to know how many people that work in the investment industry don’t actually have investment accounts. So, continue reading – check where you can get more info on things that can help you understand more about investments like blogs, podcasts, books etc.

Investing can double your money in 2 days:

In reality it can, but it comes at a risk & you also face something called liquidity constraints. There are JSE listed companies that trade at a very small price (in cents), called penny stocks. You can buy it at 10c and then next thing its 20c tomorrow. You can always try to sell it & cash in, but is there someone out there who wants to take at 20c? Hence the liquidity constraints. I am digressing here & I bet you are already Googling penny stocks, so let me stop! My point is that you can do this if you have the knowledge and tools – but to make things simple, rather forget about get-rich-quick methodologies, there is a lot of fire in there and not enough bandages. Rather stick to long term investing. Your money will double, eventually – you just need to be patient & continue investing.

There is never the right time to invest, just as long as you have the means to start investing – you should start, immediately. I am also not saying you should stop having your favourite Starbucks coffee but I am trying to convince you that with a very small fortune you can buy into Starbucks shares by holding an ETF like the Satrix Nasdaq 100 ETF or any S&P500 tracking ETF. Drops mic.

Signing out!