What is the one investment you wish you had made?
One of the best investments anyone can make is to invest in him or herself. There are the formal qualifications, yes, but in my experience the real important one is the informal personal development throughout one’s life. It takes effort and discipline. There are so many excellent books that I have read, and courses that I have attended later in my life, on strategy, innovation, leadership, selling and persuasion, presenting, time management, and a host of other soft skills that I wish I could have made earlier in my life.
What are your investment tips for 2018?
The biggest tip of all is to first create the capacity to invest. Open a gap between what comes in and what goes out, and the tip here is not to focus on the income side, which is often, over the short term, not so much within your control, but rather on limiting expenses and waste, which is much more controllable. Try to find your happiness outside of consumption, instead of trying to buy bliss. There is no independence quite as important as living within your means. Then, focus on building a fund that will preserve your lifestyle for life. This is a firewall that should ensure that you are not one day old and poor.
What do you invest in and why?
My investments have mostly been in boring, diversified unit trusts in retirement fund vehicles. But over time it starts accumulating when compound growth starts doing its magic. Luckily I am not much of a wheels person, I have only replaced cars twice in my life, although I do have a motorbike and have made some sizeable ‘investments’ into road and mountain bikes. I have never sold a property in which we have lived, so we have three now, renting out two, but from an investment perspective it has performed very poorly. I believe the house in which you live should rather be seen as a lifestyle possession, not an investment. I do ‘invest’ quite a bit in the liquid asset category called wine – but find that it does not last that long in the cellar before it is consumed. Another investment that has eroded quite a bit of our family’s lifestyle preservation fund is travel and experiences. I would like to believe these are investments with internal value – these adventures bond families and shape character.
What investments have worked best for you?
One of the best things one can do is to make full use of retirement funds and other tax free vehicles. The state does not tax you when you make the investment, there is no tax on interest, dividends or capital gains, no estate duty, and some of the withdrawals might even be tax free. It is also difficult to touch it, which is a good thing; it protects you from your short term gratification weaknesses.
What investment strategy do you recommend?
It is often said that the best investment is to pay off debt. I agree, but only after you have first made contributions to hedge against catastrophes and after you have made investments in a diversified portfolio of quality financial assets. I have seen too many people who have paid off debt first, throughout their lives, and ended up with still nothing in an investment portfolio in their fifties. Then make sure that the risk-return trade-off of your portfolio allows you to sleep well.