From rock ‘n’ roll roadie to corporate speaker and entrepreneur, Richard Mulholland has run Missing Link, a presentation firm in South Africa, for 21 years. The self-described hobbyist talks finance, investments and expensive tattoos.
How does your company generate profit?
Different entities do it in different ways; Missing Link is a service organization where we basically sell our brain for the pound, whereas TalkDrawer and The Sales Department have a subscription and retainer model respectively. Exploring different business models intrigues me; it’s something I believe all entrepreneurs should embark on. You won’t be killed off by a better business; you’ll be killed off by a better business model.
What is your investment philosophy?
I know my weaknesses and this is one. As such I have a set-it-and-forget-it mentality. I find smart people that I like with diversified philosophies and leave them to it. The obvious exception to that is when we invest in starting new businesses.
What is your most prized investment?
I hate to be a cliché, but I timed crypto pretty well and have been pretty lucky there. My most prized investment would have to be starting a business though, that has certainly reaped the biggest dividend.
What advice would you give someone interested in investing?
In spite of what you’re told, unless you are super rich and have money to blow, investing isn’t a hobby. Find someone smarter than you to do it. Or, if you’re like me, find diverse, smart people and share the investment love.
Legacy or innovation? Which would you invest in and why?
Again, diversity is key. All that is old is not bad, and all that is new isn’t great.
Your biggest investment blunder?
I’ve invested in businesses as a complete outsider, and not given the love and support that they needed at the beginning to get traction. That has never worked… and I never seem to learn.
What do you spend most of your money on?
Of late, board games and electric skateboards.
What is the most expensive item in your wardrobe?
A motorcycle riding jacket.
How much were you earning as a rock n’ roll roadie?
R400 ($27) per week, or R600 ($40) per week while on tour.
What is the most you spent on a tattoo?
About R15,000 ($1,000) for a tattoo on my back.
Would you invest in longevity (prolonging your life) and why/not?
Only in so far as staying healthy.
What is the most interesting thing you have invested in?
Other people’s businesses. Troop Travel is one I’m quite enamoured with at the moment.
8 Ways Coronavirus Will Drastically Alter Boomer Retirements
Eventually, the economy and the stock market will recover and COVID-19, the disease caused by the novel coronavirus, will be contained. Yet the current pandemic and its economic consequences could devastate the retirement prospects of some Baby Boomers, while permanently changing the attitudes of many more.
“This is going to leave a real imprint on the minds of people who are near or in retirement,’’ says Joseph Coughlin, director of the Massachusetts Institute of Technology AgeLab. “It’s a personal health 9/11 for much of the country.”
Consider this: After years of hearing how 60 is the new 40, boomers are now being told that those as “young” as 60 have weaker immune systems and face greater risk from the novel coronavirus, particular if they have certain other health problems that increase with age. In China, those 80 and older with COVID-19 suffered a 14.8% death rate, while those 70 to 79 had an 8% death rate, compared to a 2.3% mortality rate for all age groups.
Of course the Baby Boomers—the 72 million still living Americans born between 1946 and 1964—are a diverse group. The majority are still working and plan to stay in the labor force longer, assuming the tanking economy permits it. About a fifth of boomers provide eldercare, either in person or remotely, to a parent or other family member. That means that even if they themselves are relatively healthy, they’re on the front lines worrying about the high vulnerability of the very old and frail. Some have no choice but to worry helplessly from afar. With the largest cluster of COVID-19 deaths in the U.S. so far occurring at a nursing home in Kirkland, Washington, the Trump Administration has directed nursing homes to keep all non-medical visitors out, except in “end of life” situations, and even in those cases clergy and relatives (after passing a respiratory infection screening) must wear face masks. Some assisted living facilities are barring visitors too. (Read more on how coronavirus is changing care for the frail elderly here.)
Much will depend, of course, on how severe and prolonged the pandemic is; how long the bear market that began March 11th lasts; and how deep a recession is caused by the shutdowns and social isolation steps needed to slow the virus’ spread. Here are eight likely longer term effects on Boomers’ retirements. (For current survival advice, readRational Panic: Coronavirus Plan For Retirees.)
1. Younger Boomers Will Fall Farther Behind
A new study from the Center for Retirement Research (CRR) at Boston College shows that as of 2016, even after seven years of a bull market, late boomers (those born in 1960 or later) had accumulated a lot less in 401(k) and IRA wealth than older boomers had at the same age. That’s despite the fact that fewer late boomers are covered by traditional defined benefit pensions, meaning they need to accumulate more, not less, to achieve the same level of retirement security. Late Boomers were on track to save more, the study found, but got slammed by the Great Recession and layoffs in their 40s. Some dropped out of the labor force. Others settled for lower paying jobs without 401(k)s. Alarmingly, for late Boomers in the middle wealth quartile, 401(k) participation was actually lower in 2016 than before the Great Recession.
The CRR researchers noted they were waiting for results from the Federal Reserve’s 2019 Survey of Consumer Finances to see how lasting the damage to late Boomers, and members of Gen X behind them, had been. Now, even if the news from that triennial survey is good, it might be just a bittersweet historical footnote—-particularly for any late Boomers who lose their jobs in a coronavirus recession.
2. Working Longer Will Get Harder
You’ve probably heard this factoid: an average of 10,000 boomers turn 65—the traditional retirement age—each day. But the Pew Research Center calculated last July that the Baby Boomer labor force has been shrinking by an average of only 5,900 per day since 2010. That’s because while some chose to retire early or were forced out of the labor force early, on average, the Boomers are working longer than the previous two generations did. In 2018, 29% of folks aged 65 to 72 (that is, the oldest Boomers) were working or looking for work. When the Silent Generation and the Greatest Generation were that age, Pew figures, only 21% and 19%, respectively, were in the labor force.
Even more dramatic has been the growth in older workers who say they expect to work past 65—even though they don’t all end up doing so. In a 2016 Employee Benefit Research Institute survey, 54% of workers aged 55 and older said they expected to retire at 66 or older or never. Twenty years earlier, only 19% of older workers answered that way.
Yet while lots of Boomers want (or need) to keep working, this harsh fact hasn’t changed in recent decades: when those 50 and older do lose their jobs (say, in the Great Recession or the coronavirus recession), it takes them longer to find new jobs than it does younger workers. Moreover, just one in 10 match their old pay. Some give up and retire earlier than they planned. Those who claim Social Security early to make ends meet end up with lower monthly benefits and less overall from Social Security than those who claim later.
3. Panic Will Doom Some Boomers’ Wealth
The current market dive is scary, for sure. The stomach churning volatility that’s typical of a bear market has been so severe this time that the drops have triggered multiple automatic trading halts. Eventually, the bear market will end, but not all Boomers will be there to ride the recovery. During the 2008 market crash, about 5% of those 55 or older dumped all the stock in their 401(k)s and then missed the 2009 rebound, a 2011 study of 425,000 workers’ 401(ks) showed.
The problem with “going to cash” in a crash is that you lock in your losses. Maybe your plan is to jump right back in after the market bottoms? Good luck with that. When markets do turn back up, they do so quickly. As financial planner Kristin McKenna explains here, six of the 10 best daily gains in the S&P 500 between January 2000 and December 2019 occurred within two weeks of the worst 10 days. Had you missed all of those 10 best days, your average annualized total return on the S&P 500 for those two decades would have been 2.44% compared to 6.06% had you stayed fully invested and ridden the roller coaster down and back up.
4. The Cash Bucket Strategy Will Gain New Fans
The current bear market should give a permanent boost to a strategy that was already gaining favor—one designed to allow retirees to live well while the market tanks and to conquer the “sequence of return” risk in retirement. The problem is this: even if the stock market averages a healthy return over the 30 or so years you spend in retirement, you’re more likely to run out of money if it has its bad years early in your retirement. (That’s assuming you’re planning to draw 4% out of your portfolio each year, a common rule of thumb.)
There are multiple ways to deal with sequence of return risk, but arguably the simplest way is with a cash bucket. For example, someone nearing or in retirement could keep three to five years’ worth of money for necessary expenses (over and above what Social Security and any pensions provide) in cash or cash equivalents—say, laddered CDs, or Treasury Bonds. The idea is to have enough cash that you won’t panic and can wait for the market to recover before you sell stocks to refill you cash bucket.
5. Cruises Will Fall Off Boomers’ Bucket Lists
In January, AARP released a survey of Boomers’ 2020 travel plans showing they expected to spend an average of $7,800 on four to five trips this year, with 51% planning at least one international adventure, and 23% calling their planned foreign travel a “bucket list” trip. Moreover, a full third of Boomers’ planned international trips involved staying on a cruise ship; 61% of those who chose a cruise said they did so because it was “hassle-free”.
Assuming their portfolios recover while they’re still in the travelling mood (travel declines past 75 or 80) it’s hard to believe that retirees will permanently forsake bucket list trips. But it’s easy to imagine that the image of passengers trapped on a ship for weeks as the coronavirus spreads among them, might permanently reduce the number planning to hit the high seas. Yes, the cruise industry, which has suspended operation from U.S. ports until at least mid-April— has recovered from previous health scares. (The World Health Organization notes there have been more than 100 reported disease outbreaks on cruises over the past 30 years, including recent norovirus and influenza outbreaks.) This time could be different.
6. Time With Family Will Be Even More Important
One item that pops up at the top of many retirement wish lists is spending more time with family and friends; it’s the leading reason people say they were “pulled” into retirement rather than being pushed there by ill health, layoffs or age discrimination. In the AARP travel survey, multi-generational family trips and family reunions, combined, were the top reason Boomers were planning either domestic or international travel.
Being closer to family also turns up in surveys as the leading reason people move in retirement. It’s not hard to imagine the pandemic and related air travel fears will motivate even more Boomers to move nearer to adult children.
7. Aging At Home Will Be Even More Compelling
Even more than cruise ship horrors, the spread of coronavirus through that Washington nursing home and the nursing home visitor ban is likely to be imprinted on Boomers’ minds—and the minds’ of their own now adult children. The vast majority of Boomers already say they want to age in place “where their marriage and mortgage and memories are,’’ notes the AgeLab’s Coughlin. But, he observes, that determination hasn’t been tested yet, since the oldest of them turn 74 this year, while the average age for entering assisted living facilities is 83 or 84.
The desire to age in place—and the reality that not everyone can—predates the Boomers. A new CRR study, using data from the University of Michigan Health & Retirement Study which has tracked about 20,000 Americans 50 and older since 1992, finds 53% of homeowners stay in the house they owned at 50 for the rest of their lives. Another 17% move once, around the time of their retirement, and then stay put. The other 30%? According to the CCR analysis, 14% move frequently after 50 because of job problems and 16% move in their 80s when health problems force them into a rental, assisted living or a nursing home.
A new generation of connected health technology could help even more people stay in their own homes—or at least delay the age at which they move, Coughlin figures. He sees everything from internet-linked pill reminder systems that dispense medication to sensors that allow remote caregivers to check whether an elder is up and moving about. As Coughlin, a Forbes contributor, writes, the internet-of-things will be not only around us, but in us, as Mom has a smart glucose sensor under her skin transmitting and adjusting her insulin levels.
8. Care Facilities And Senior Housing Will Change
Over the past four years more than 550 nursing homes have closed, bowing to rising costs, reimbursement pressures—and crucially, shrinking demand from older folks, who as noted above, want to age at home. Nursing homes aren’t likely to disappear as a last resort. But they will need to change, Coughlin predicts—for example, employing contagious disease experts and using antimicrobial surfaces.
Meanwhile, senior housing and assisted living developments, now designed to encourage congregation and socialization, might be built in the future with more spread out units and an eye towards limiting contagions.
“Until two weeks ago, every article was about the perils of social isolation (for the elderly). Now we’re changing it to (promoting) self-isolation,’’ Coughlin observes. “This is an inflection point in our medical model of how to age well.”
‘I Can’t Really Spend Much On Cars’
Thomas Schaefer, the 49-year-old CEO of Volkswagen Group South Africa, loves golf, running and wine, and says he would put his money into waste-to-energy projects, and horses.
What has your focus been for business recently?
Volkswagen in South Africa started over 65 years ago and has been a part of South African history with iconic models like the Beetle, Citi Golf and Kombi. Volkswagen has been the passenger car market leader for the past eight years and had 23% market share in 2019. The factory in Uitenhage will produce 162,000 Polos and Polo Vivos as well as 97,000 engines.
In the rest of sub-Saharan Africa, we have unfortunately not been as successful. But then again, no other manufacturer was really successful, as 95% of all vehicles sold are used vehicles and not new.
In 2016, Volkswagen decided to change that by reaching out to those African countries that have the political will to make the required changes that will bring industrialization and jobs. We have started assembly operations in Rwanda, Kenya and Nigeria. Ghana is next and then hopefully, Ethiopia.
Those are small beginnings, but when Volkswagen started in China in 1984, nobody expected it would be producing more than four million vehicles per year in 22 factories today.
If you had to invest capital into any venture, what would it be and why?
I would invest in waste-to-energy projects. Apart from being feasible, they tick some more boxes like job creation, conserving the environment, reducing the need to dump waste in landfills and providing a source of carbon neutral energy.
Your biggest investment blunder yet?
It My biggest was buying German Telekom shares after privatization.
What is your most prized investment, and why?
My house in Stuttgart [Germany]. It is rented out to an American couple.
When we were about to move to Hannover with my change over to Volkswagen, the American Army decided to increase its presence in the Stuttgart region and build up the Africa Corps. Since then, rental has gone through the roof.
What do you spend your money on mostly?
My wife’s passion is horses. We own a smallholding and I can say without a doubt that this has taken number one spending position. Other than that, mainly food and wine. I can’t really spend much on cars.
Your most recent expensive acquisition?
Our smallholding for the horses, plus all the equipment that one needs such as quad bikes for the riding arena.
What is your dream car?
A Porsche 356.
Which is your favorite Volkswagen vehicle, and why?
The Polo GTI. It is an unbelievable car that ticks all the boxes – looks, feel, finish, power, handling and of course, value for money.
You cannot travel without your…?
German wax earplugs. I need them to sleep on the plane. The normal earplugs you get are all useless and hurt your ears.
– Interviewed by Gypseenia Lion
‘The One Thing I Want To Do Before I Die’
Thembani Biyam was appointed Head of Strategy & Monetisation for OLX South Africa when he was only 28. Now, as the Head of Growth at Orderin, one of the top three online food delivery companies in South Africa, he is responsible for strategic projects, product, design and growth marketing. He speaks about his best and worst investment experience.
What do you splurge on?
Definitely food; it’s the way to my heart. Then travel. Then tech toys, mostly photography and videography stuff like drones and stabilizer sticks for shooting vlogs. I love vlogging and editing for fun.
What has your worst investment blunder been?
My best and worst experience was investing in cryptocurrency. I got in late but bought some Bitcoin and Ethereum, and my investment grew about 350% in six months. Problem is, it crashed real quickly too. I got a lot of it out in time but lost a lot of it as well.
If you had to work but didn’t need the money, what would you choose to do?
Develop high school, university and professional basketball in South Africa to, at least, the European level. It’s the one thing I want to do before I die. I was an aspiring basketball player in high school but there were no proper structures in place to fully develop and the options for me to play professionally didn’t exist. I want that for my kids.
Where do you not mind waiting?
At home. If I am out in the world, I hate waiting for anything.
Fast food or home cooking?
Home cooking anytime. But fast food delivery every now and then doesn’t hurt (especially if it’s from Orderin).
Do you own anything you consider priceless?
Nothing material. More memories and perspectives.
Should people work for money or fulfilment?
Both. We all have to eat and do nice things, right? Those things cost hard-earned [money]. I would say, if you can continually optimize your career towards work that provides a combination of both, but increasingly nearing fulfilment versus money, that would be a win.
READ MORE | ‘Worth Billions and Millions‘
What kind of debt is okay?
The type that is income generating is the ‘most’ okay. Robert Kiyosaki talks about debt that generates income like property loans, business loans, and even credit card used for positive income-generating activities. Then, there are scenarios where you may really need debt to bail you out, but hopefully, you have savings and liquid investments for that. Then, there is a grey area around things like cars, phones etc. For this category, I would say, just make sure you can afford it from your income.
Do you follow a strict budget?
I do my absolute best to. There are some ‘treat yourself’ months sprinkled in there.
Would you rather never be able to express yourself accurately or always have to say the exact truth?
I always have to say the exact truth. A world of never being able to be a little colorful and fun in expressing myself would be a dark world.
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