South Africans should learn how to invest

The average South African is well-renowned for their extravagant spending. Be it middle class or wealthy, many South Africans fall into the trap of living expensive lives – most of the time it is just a matter of falling victim to “abantu bazothini” syndrome. The sad reality is succinctly stated by Dave Ramsey in The Total Money Makeover: A Proven Plan for Financial Fitness: We buy things we don’t need, with money we don’t have, to impress people we don’t like.

This culture of spending in South Africa, particularly in African communities, should not come as a surprise though. Looking back, blacks in general were not afforded the opportunity to participate meaningfully in the economy. Their education was intentionally made sub-par and was designed to produce blacks who were more manual labourers than anything else. Not to mention, the remuneration for work, if there was any, was only enough for survival and nothing more.

But this narrative has been told and retold a multitude of times and reiterating what is widely known serves no function. The intention of this article is to highlight a short-sightedness in black thinking and to provide a possible solution to the aforementioned narrative.

It is important for South Africans in general to reflect on the future of our country, and our futures as individuals. In doing so, one may realize that a culture of consumerism is due to burn out, and if this realization is not apparent early on, then by the time it comes, it might be too late. By the time we try to lean more on ownership rather than consumerism, there will probably be nothing left to own because everything would have either been consumed or sold to feed more consumption.

One of the alternatives to consumerism is ownership. If all South Africans could adjust their spending habits, by making provision for conscious participation in the JSE, then generational wealth will soon become a reality. The JSE is a stock exchange, it allows the public to have ownership in certain companies via shares. It also gives the public an opportunity to create wealth by providing the public with other financial products. Shares and other financial products are assets, this is because they make you money. Buying assets, rather than going to a restaurant every day, for example, is where the generational wealth may come from.

With the introduction of a simple and accessible platform such as Easy Equities, which allows South African individuals to seamlessly access the assets listed on the JSE online, it is a surprise that African participation in ownership of assets has not increased. It is the responsibility of those who know more, to educate those who know less. This should be especially done in the finance department, and so those who are aware of the JSE and investing should educate those who are not.

The benefit of investing is that it exposes your wealth to compound growth, and feeding a consumerist lifestyle may land you in debt, which exposes your wealth to compound decay. Carry these final words with you, wherever you go:

‘Compound interest is the eighth wonder of the world. He who understands it, earns it; he who doesn’t, pays it.’

Albert Einstein

  • Albert Einstein quote about compound interest being the eigth wonder of the world.

 

This article was written by Tumelo Koko

You can contact Tumelo Koko by clicking on the social media buttons below, or by emailing him on: tumelo@afrikakesho.co.za

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