It's been 7 years now since I bought my first stock. I still remember that day. It was a simple and boring day. Yet I can say it was a day that changed my life. And I needed the change.
People always ask me How Did I start Investing, so today I am going to briefly share my story and give you three lessons from it. Lessons that I believe everybody needs to know.
My Story...
After high school I had planned to be a lawyer, a prosecutor to be more precise. I had grew up watching Law & Order and I wanted to be Jack McCoy. I had planned to go to Wits. I was accepted to go to Wits and had a bursary that covered tuition but I couldn't afford Residence. So I went to UKZN and studied psychology and behavioral science. It was at UKZN I started my first business after struggling to register for not paying the previous year's school fees. I had a small music studio and charged R300 to record a song. I loved it. I then did some odd jobs as well. After UKZN I did Business Administration at UNISA with a focus in economics and finance management. I then followed this up by learning computer programming and becoming a data analyst.
After that I got a job in Sandton at a CFD Brokerage firm. This gave me a good income and I put investing in stocks of for later. I was working in admin for the trading desk and then moved to being an analyst and climbed to the executive level and helped the firm reach an AUM of R100 Million, pretty cool. I even gave a speech at the Johannesburg Stock Exchange. (Good times).
Sadly I didn't care much about saving and investing in my personal capacity. I had just always had money and thought . Then I lost my job when the company laid off employees after our CEO had embezzled large sums of money. I had just gotten a new apartment and trouble came quick. Naturally to solve my problems I started Day Trading CFDs and Binary Options. The problem however became when you work at a brokerage firm you get paid a fixed salary to trade that does not come from your portfolio. Suddenly my portfolio now had to feed me. This added stress and pressure. It also meant that I couldn't have medium to long term trades as I would have to quickly liquidate any profits to pay my bills. A recipe for disaster. Slowly and slowly my bills ate away at my CFD trading portfolio. I went through my own personal "Great Depression". Eventually I moved out of my own apartment to rent it out so I could save it. Imagine being evicted from your own place, yeah that's me.
I wanted to start a business but still wanted to trade. I then realized that it's best I moved to a cash account and leave my CFD margin account. A small start-up called Easy Equities had been running for 2 years by that point. After researching various stock brokers I decided to open an account with Easy Equities . It took me a while to fund my account, always waiting for some big payment to then start. But eventually I did fund my account with R300 and bought my first stock.. First Rand. The rest is history.
There are 3 lessons that I wish to high light from the story above and I hope they inspire you to get you started..
Lesson #1: You don't need much to start
One misconception that a lot of people have is that investing requires a lot of money. I don't blame people for thinking this. There was a time that investing for the private individual did require a lot of money. Most brokers and banks used to charge (and some still do) exorbitant fees. There would be commissions, monthly service fees, deposit fees, withdrawal fees, forex fees, consulting fees etc. To top it of there would an order minimum requirement and a minimum account balance. Account balances would range from R50 000 upwards and in most cases R100 000 upwards. Most South Africans cannot afford such fees yet that was the expectation.
Fortunately modern day online brokerages have changed that. In South Africa we have Easy Equities which requires as little as R10 to open an account, charges 0.25% commission and has a minimum order amount of R1. This means that You no longer need a lot of money to start investing. In fact you can start with just R10. After I deposited my first R300 I figured that I could randomly deposit small amounts whenever I could. I eventually got hooked on depositing. Whenever I had the option to buy something or deposit, I chose to deposit. It helped grow my account to what it is today. Open an account and start with what you have and build from there. You have no excuse at all.
Learning this also shifted my thinking. I realized that you never need a lot of money to start something important to you. For a long time I thought I did hence always waiting for a "big pay day" that never came (lol it did come in 2020 though). Instead it was small steps that helped me grow.
Lesson #2: Don't wait too long to start
From my perspective I waited too long to start investing. I should have started from the day I got my first proper paycheck. But because I felt like I would earn that money forever I put investing of for later. BIG MISTAKE. The best time to start is today with whatever you have.
Waiting and making excuses will cost you in missed opportunities and missing out on the power of compounding. If I had started three years earlier my portfolio would be 40% above the value it is today. There is no "right income", "right job" or "perfect day" to start. Waiting until you reach a certain income is pointless. Waiting until you get a particular job is pointless. Waiting until you have a better computer is pointless. Just start or as the Nike slogan goes JUST DO IT.
As humans we procrastinate because we would prefer to be doing something else than the activity we are procrastinating on. Waiting to invest just means you would prefer to spend the money instead of saving & investing it. And Is that who you want to be? If that's currently you then you have to work on shifting your financial habits. Transform yourself to an Investor first and Spender second.
Once you start it becomes easier to continue. The biggest hurdle for most of us is starting. We dread opening up an account, submitting documents and transferring money. Urge yourself to do this. Luckily most online brokers no longer need you to submit extensive documents to verify your identity. So it is as easy as opening up an Instagram account.
Just don't wait.
Lesson #3: Build your own personal financial infrastructure.
This lesson is not so obvious from the story but it's important to point out. You must build your personal financial infrastructure to serve you.
But What is Personal Financial Infrastructure?
It is simply the tools you use to manage your money and wealth. So think bank accounts, credit accounts, accounting software, insurances, stock brokerage account etc.
Most people, myself included, become slaves to the services they use. The banks and most other financial institutions are very good at extracting money from us. They use various tricks and methods to do so. It is important to build awareness in yourself and stay in control of your financial infrastructure. You do this by being mindful of your real needs, being honest about your financial situation, making sure things stay simple. Thus you only use services you truly need that won't extract money from you.
The expensive Gold, Premium or Black bank account, throw it away, you don't need it. Get your banking to be as cheap as possible. When it comes to your stock broker account, think affordability and reliability first. So don't get any fancy account that makes you look special, it does not make you a better investor to have an expensive brokerage account from a "BIG" Institution. Get rid of unnecessary credit and insurance products in your life as well. That store account card? Cut it up and pay it off.
Why do all of this?
So you can keep as much of your money as possible and direct it towards investing.
This is one thing I learned during those beginner days. I ditched everything that was fancy and decided to keep things as simple as possible.
Final thoughts..
I really hope these simple lessons inspire you to get started. There has never been a better time to be a private investor. The technology, the costs and the universe of things to invest in is just insane. Remember to manage risk and always protect your money first.
-Happy Investing
Omega
PS: If you are interested in learning how to invest in Stocks, Bonds, ETFs from the JSE or other international markets then click here and learn more about My Mentorship program. Click here to learn more.
Remember: Opinions expressed in this article do not and never will constitute financial advice. Every persons financial situation is different, I recommend you speak to a financial adviser about yours
Great post! Love the lessons! Personally what did your CEO embezzling money teach you about people, money and integrity