BNC#8: Magnus Heystek Q&A - The brutal truth about South Africa’s financial future

A sharp, no-holds-barred conversation on South Africa’s financial reality - rising offshore limits, shrinking property values, and the struggle for economic revival. From Johannesburg’s decline to gold’s surge, and investor psychology to policy failures, this discussion cuts through the noise. It’s a candid look at risk, resilience, and the tough choices shaping wealth, opportunity, and the country’s future..Sign up for your early morning brew of the BizNews Insider to keep you up to speed with the content that matters. The newsletter will land in your inbox at 5:30am weekdays. Register here.Support South Africa’s bastion of independent journalism, offering balanced insights on investments, business, and the political economy, by joining BizNews Premium. Register here.If you prefer WhatsApp for updates, sign up to the BizNews channel here..Watch here.Listen here.Edited transcript of the Q&A.Alec Hogg 00:21:18 - 00:46:34Okay. Wasn't that interesting? Always is. Always enlightening. Always from the heart. And thanks, Magnus, for not, not whining about not being able to use slots. You know, there's a, this is not a hole where you can put slides in. Maybe one day they will be a hole that we could work on with their slides, but it's much better to have that connection with the audience.00:46:38 - 01:09:09I want to just ask you, before we go into, into kind of a depth of what you were talking about, the increase in the budget to 2 million rand from 1 million rand. Was that, have you seen people reacting to it now that you can take 2 million rand offshore, no questions asked immediately. Magnus HeystekImmediately people say thank you, and I can take 2 million.01:09:18 - 01:37:39And I'll tell you why that is. Apart from I wrote an article for you a while ago saying this, the numbers need to be increased because the real benefit has been declining over years, quite dramatically. In 2015, with a million rand, I could buy $85,000 beginning of last year, dropped to $54,000. Plus, you had tremendous inflation in dollars in most parts of the world, so the real purchasing value had dropped quite substantially.01:37:43 - 02:01:16I had the experience my wife was studying. Not my wife. My my daughter was studying in London and the university and university fees travel. Accommodation, food, entertainment. It reached the 1 million mark and other nice reserve bank disclosure account. Because I keep watch of these things and that infuriated me. I mean, that's so again we back in the Middle Ages.02:01:16 - 02:25:44You cannot spend your money where you like. So I was very encouraged by that. But our clients immediately reflected and immediately it just makes it so much easier and gives people freedom, personal freedom, financial freedom, which I advocate. And I think it was a it was a very good step. Alec HoggI have a different view to you on the budget because of the detail that was addressed by, Treasury.02:25:46 - 02:48:03It's not give enough Enoch, all the credit, but there were a lot of little things like that which had not been adjusted for years and years and years, and now have been changed, I'm sure, in the financial advice industry there were a few things that came up. Estate planning, just, limits that were pushed up, which has to at least get some credit on your side.Magnus Heystek 02:48:04 - 03:12:18No, no, no, I'm giving them a great deal of credit. I mean, the. All right, contributions have been pushed up. The donations has been pushed up to 150, I think, which is still ridiculous. It's meaningless amounts of money. And then the, it was the tax free saving was pushed up slightly, so there was welcome respite. And of course, the, the first 3 million rand when you purchase a house.03:12:22 - 03:33:24So there's been some very nice, changes in the budget. I mean, that's that's quite surprising, I think. I think government realized that they haven't done this for many years. I can't remember when I said donation of 100,000 rand was adjusted. I think it's 20 years ago. I mean, a hundred thousand today in 20 years is two different things.03:33:28 - 03:54:07So they needed to do that to be fair. And, you have to a program for that. What else was in the budget? It was a boring budget. Where what where is the growth going to come from? I didn't see that inspirational. Alec HoggYeah, yeah, I know we can't Rhyme was not built in a day, as Helen Zille has said.03:54:07 - 04:22:27But it also said something very she said a lot of interesting things. But I think if you look at the people in this audience and I you this question because she said she wants to get Joburg working again. You still live in Joburg? Magnus HeystekYes I do. Alec HoggThere are a lot of people who used to live in Germany and loved living in Jo'burg, who don't live there anymore, and it's a little bit to me like how many of our children have left the country.04:22:31 - 04:41:00We've got to fix the country to bring them back home. Joburg is going to get fixed to bring if it's going to bring back the people to job is pretty hard to reverse that. Do you think that's possible in our lifetimes? Magnus HeystekCan I be honest? This debate has been raging for a very long time. When I was still growing.04:41:04 - 05:00:15At show at 702 , the one night was against. And this is 25 years ago, there was a guest about the revival of the Jericho CBD. And we had this exact debate 25 years ago and they were propagating this is not the time to buy. And they were selling flats in the center of town, etc., and this is not a revival coming.05:00:19 - 05:26:44I beg to differ at that point, and I still beg to differ at this today, because I grew up in Johannesburg, I grew up in Hillbrow, in Berea in Yeovil. It was a wonderful cosmopolitan cities, and I saw how through neglect, through through, lack of governance or lack of anything, those suburbs, pristine, beautiful buildings have been gutted in a 10 to 15 year period of time.05:26:48 - 05:45:32I'll tell you a little story. Sorry. My back. Let me set this right. Sorry. This is what two hip operations, two failed hip operations do to you. So, but I'm not on crutches anymore. A couple of years ago, there was a rugby game at Ellis Park. Now, you all know Ellis Park. Not a great area.05:45:36 - 06:02:14And we had I had a couple of clients from that, from the plaza and then the Buddha, and we're all going to go to watch the rugby. So we all got into a come in as we driving on the highway, I continued on the highway going around the city, you know, Johannesburg. And one of the guys said, no, but why don't you go through Berea?06:02:14 - 06:26:41It's just cheaper or Hillbrow. I say to him, but it's dangerous. You see that common man? We we don't care. Is this I said, okay, I took the, the wilds off ramp when I went through Berea, and then we Hillbrow. And very soon we were in the middle of, you know what? And it was just chaos. There were just people, and there were braaing and there was rubbish.06:26:41 - 06:48:26There was just guys knocking on the door to. And I saw these threads getting very, very quiet. And then I said this, get out of here. It's scary. Ladies and gentlemen, is a total breakdown of law and order. And as much as I love Helen and what she stands for, I don't think she will turn Joburg around. I think that the corruption is so endemic in the councils.06:48:30 - 07:16:41There was a piece in an activity for a week ago, written by you know, one of the, I can't remember his first name. It was one of the negotiators, etc.. He wrote a piece about Johannesburg,how it's collapsed that two years ago, the Joburg municipal manager decided that the Jo'burg metro bullying, where everything happened for Joburg is unsafe.07:16:41 - 07:43:13Totally out of the blue, she said, no we must vacate. The people got up and left the building that day, leaving their computers in their files, and they just went and work from home, so to speak. And since then the administration in Joburg has collapsed. Lights, water. I mean, you cannot believe. I mean, I have a little office for us in Bryanston Fourways where we have an office.07:43:17 - 08:03:39It's two sectional title units. I've got electricity, rights. Both the other day for the one portion was 100,000 that had the same size, and the second one was a million rand. I mean, it's then you communicate with them and you say, please fix it. This, you know, our first pay or, you know, that's so I think Helen's up against it.08:03:39 - 08:26:07I really and I hope I'm wrong. I hope I can stand there five years from now, but I've seen just that book just collapse the rows, the robots, the hawkers, the biggest, the crime, the mafia, the taxi mafia. I mean, and not only that, my biggest fear for me and my family is being stopped by the SAPS on the road or the roadblock.08:26:11 - 08:43:43That's my biggest fear in life. I can protect myself in my house or in my building. But when you're driving a car and these buggers jump out of the bushes and you're driving by itself, there's a very good chance that you're going to be going. You're going to have to pay a bribe to get out of whatever, case they have against you.08:43:43 - 09:08:29So that's my biggest fear. And if you want to live there. Well, people in South Africa have made their choice over the last 10 to 15 years. The migration from the north, not only from Johannesburg, the migration from the north as those towns collapsed, the Kimberley, the Bloemfontein.Now, I used to drive around these areas visiting clients.09:08:33 - 09:39:31I saw this with my own eyes. And this is the biggest financial collapse in South Africa that nobody's talking about all those properties, whether it's misadventure or commercial, used to have a value, used to belong to someone was in someone's balance sheet. I have a house or two building a garage that's gone zero. It's worthless. The bank's moved out, the Pam, Golding's moved out, and you have the debt collectors moving.09:39:34 - 10:03:07Those towns have gone and nobody talks about that destruction of middle class wealth. We see it in Jo'burg. I live in Jersey, I love Joburg, but my house in real terms has not gone up 0.01cent in 20 years. Let me repeat in inflation adjusted terms, I will be lucky if I get the same price that I could get 20 years.10:03:07 - 10:21:45And if I talk to my clients in that they're all in the same boat now, all tell you the same thing. My house is worth back row. I cannot say that I cannot give it away as opposed to Hermanus. I mean, this is just a bubble. So fantastic bubble with great restaurants. You know, the someone is despite, I don't know, 5 million rand from Marcus.10:21:45 - 10:27:46Just this us in Johannesburg. You can buy a whole suburb for that price.10:28:00 - 10:54:03It's it's not. So, let's make a note of Helen Zille. I'll support her. I'm registry. I'm voting. But my girl, she's up against it. Alec HoggBut surely. Surely there has to be a line in the sand somewhere. Surely there has to be something motivating. Adrian Gore for instance, in buying and spending billions of shareholders funds in buying the discovery head office.10:54:07 - 11:16:32They were renting it. Now they bought it. Surely there has to be another side to this story that the it might be turned around and in. Helen, you've probably got the right person. If you are going to achieve that, what do you need to see though? What do you need to see for those green shoots we hear so much about?11:16:32 - 11:36:15It's of Africa to occur in Johannesburg. Magnus HeystekIt's not only Adrian Gore and I saw Sandton. The heart of Sandton is still a viable commercial center and he bought it for other reasons. He needs a big office for his business, and he's growing business. And so. And he couldn't afford Cape Town anyway.11:37:10 - 11:42:03And you've got Robbie Brosnan who was with his billions.11:42:07 - 12:01:35He's peri-peri billions. You know, he's trying to revitalize to the center of Johannesburg. I admire those guys, but I've seen so many guys trying to do it. But law and order, number one, you need to be able to do it through law and order. It's a simple fabric of society. If someone doesn't. And I'm reminded of, the lights.12:01:35 - 12:18:15Doctor Simon, Mario Alan Gray many years ago, I asked him a question at a at a conference. I said, when you invest in a country, what do you look for? And number one was law and order and respect for property rights. You see, if you don't have those two, they will collapse. And we don't have it in Johannesburg.12:18:15 - 12:39:40There's no respect for property rights. I don't know if you've been following these discussions in Bryanston, very upmarket suburb, have been invading homes when guys go on holiday and when the guy comes back this city fire, those are huts, in his garden and he's rented it out to 140 people. Now, that's the kind of stuff they've got to step up.12:39:40 - 12:55:38But this they they not act against Hillbrow. When they started taking over buildings of the central CBD. I just don't think it's somebody to act simply to later. Alec HoggSo why do you stay there? Magnus HeystekWhy do I stay there?12:55:42 - 13:16:36Well, first of all, you stay with your kids. Are my kids. Until now, just finished with university, and she's still in Joburg. We still want to be there, but we will probably move down to where we bought involved we many, many years ago. And if you look at the prices of the prices of double and double the gang, Hermanus, same story.13:16:40 - 13:38:41Franshoek, Stellenbosch , Cape Town, this is a consequence of money. People, people with money, whether you're black, whether you're what I seem to be, many black families building homes, it's not only a white thing. I have moved down with a money that they didn't send offshore, and they bought houses in the Cape and then live here.13:38:41 - 14:01:41And I say in the last seminar when I was asked about immigration, is immigration a big factor in your life? And I said, no, our people, our clients are very happy. And I and I go back to that date 1st of April 2015. That's when it gave people optionality. People say to me, I can now send my money offshore and have a nest egg.14:01:45 - 14:22:09I'm comfortable, but I can now comfortably stay in South Africa with my network, my family, my friends, my clubs, my network, my golf. And that's what happened. People have moved to the Cape, the number of people who have left South Africa. And our experience is very small. I don't know about you and others, but the kids are leaving.14:22:13 - 14:43:15That is a big number. The kids are gone 30 to 40% of the young children. They educate themselves and off they go. So there's this gap developing. So Cape Town is you should have the next meeting in a town like Bretz or something like, then you'll see what the ANC has done to a town. You cannot believe how they've got it.14:43:16 - 15:01:44Or Lichtenberg. I drove through Lichtenberg a while ago. You know, the the main road is there, the tar road and you on to a dirt track. But that's the main road I've left. But I mean clover as if the city, the biggest butchery is left. It's gutted beyond belief. Why most of the right buyers money has been stolen over a long period of time.15:01:45 - 15:27:24It's not being reinvested and it's just gone. Alec HoggWe know all about it. And Piet Le Roux . Good for Piet. LaRue for getting correct. Yeah. Getting Ramaphosa involved in that one. I'm interested, in a little bit of elaborating on gold. I know Peter Major said, by all historical standards, gold's ridiculously high.15:27:28 - 16:09:37I'm sure you you've read his book Breakout Nations. A great, book, which if only they made it work in Pretoria. He says that in his opinion, gold's in a different ballgame now. It things have things have changed dramatically because the world has changed. And it was interesting on BizNews daybreak this morning. Or maybe last night's briefing, the team put together an interview with, Ed Yardeni, a name that we used to talk to, you know, for many years who's not based in New York, who's saying six, $6,000 by the end of the year and $10,000 a few years hence?16:09:41 - 16:36:02These seem crazy numbers. What's your assessment of that? Having watched gold right back in the days when it was 250. Magnus HeystekYeah, that's a that's a good question. I need to elaborate is, you know, gold itself has been in a bull market since the bottom of Gordon Brown. Well, I should put it differently. When he saw all Britons go $295 an ounce, he sold off of the.16:36:06 - 16:57:20And since then there's been a steady, steady, steady upward climb. And, it's been a phenomenal asset to have money in. And David Mallory nice to you. Gold has done even better in our days when when Alec and I were in Johannesburg, we had something like 30 gold mining companies and the mining holding companies listed on the stock exchange.16:57:24 - 17:19:15You were in the big league. If you were a gold mining analyst, every quarterly numbers was highly anticipated, and we were waiting for the reserves and the quality and the gold price would run. And since then, of course, our gold mining industries shrunk from the best performing yet gold shares. Where do you buy them now or offshore has been a phenomenal asset class.17:19:19 - 17:41:45I'm just thankful and I think I saw Merrill pick. I don't know how, but I recognize it from the photographs that they did not close the Old Mutual Gold Fund, which Old Mutual wanted to do in 2017. Alec HoggThe managers here..Magnus Heystekwell well done, well done. If you look at the kind of trying...Alec HoggDo take a bow at the manager is she's sitting in the audience.17:41:49 - 18:01:26Yeah, I saw you this morning walking in it anyway, so we nearly did not have a gold mining fund to invest in. That was the, kind of approach that our large asset managers I wanted to closer to David Melville, Neville Stevens, but and I made a couple of comments and I said, no, we need a gold mine.18:01:30 - 18:35:12At that time, it was a 400 million rand gold fund. It is now a 3 billion rand or 5 billion rand gold fund. So sometimes big asset managers can also get it wrong. So the the people have spoken, they said they wanted gold shares. Not to answer your question. I suspect if you just from a purely technical and a frontal fundamental perspective, these are very powerful charts, these fundamental buying by the Chinese government and governments all around the world, maybe, what with what Trump did when he confiscated, Venezuela's gold.18:35:16 - 18:54:11Everybody going to screw. So gold is plays a nice role in our portfolios. If you can live with the volatility of gold shares. You know the final night in our company, we had a ceremony beginning of last year where I needed to buy ten krugerrands and I bought it from David, and we were handing them out to some of our top guys.18:54:11 - 19:23:12And I paid 49,000 rand for a, a krugerrand. And how much are they today, David? 92. There you go. I would still buy gold. Alec HoggBefore we go to the questions, you mentioned that you've got gold is a good chunk of your portfolio for the Pete versus Magnus challenge, where you were left in the starting stalls at the jump, but you've been progressively catching up.19:23:13 - 19:49:04Can you give us an update from your side? Because in the most recent times, if you got 15% in gold, you must be looking quite sweet. Magnus HeystekWell, I could I don't follow it five times a day like I used to. I only check the value of three times a day now, yeah. The the portfolio is currently at $41,000 run about the.19:49:04 - 20:10:42I checked about a week ago, and so four years ago I was at 20 at the bottom as a as this competition started. And timing is so important in life as this competition started, the global markets thanks. And the rand strengthened. I was I was within six weeks I was like 40% behind Pete. It's like left in the stalls.20:10:42 - 20:33:37You know, my saddle fell off for and I to put it back on and then, just like this to stick to this has been fun and games, and Peter is having a really good run this year. He's actually chosen some good winners. So it's fun and games is, you know, and people are learning about the risks and rewards and the diversification.20:33:41 - 20:54:04And the only person who's going to be the winner is people who learn from this. There's no long term, very long term depending on what you define as long term. There's no question that, you know, offshore has been fantastic since 2010, but over a longer term, South Africa's been a good place, driven by its gold mining industry.20:54:08 - 21:21:11If we can resuscitate our gold mining industry, South Africa's a winner. Alec Hogg$41,000 is worth 680,000 rand. You might have just timed you run perfectly. It'll be interesting to see because the competition ends in November I think.Magnus HeystekThat's correct. 11th of November, 12:00.21:21:15 - 21:42:32Maybe it's like the Boston Marathon. I don't know if you've seen that trip of the Boston Marathon. I mean, this guy was leading for a long time, and he was coming to the end of the line and he didn't realise, is this guy coming up behind him and on the finishing line the second the guy from by this 15 by point one second, the narrows marathon, ever.21:42:36 - 22:16:00So maybe it could be one of those things. We'll see. Alec HoggWe'll be watching. Okay. There's a lot of questions Michael starts off, South Africans increasingly move capital offshore for security and diversification. What key policy changes would restore investor confidence and attract significant inward investment to South Africa? The perennial question, Magnus. Magnus HeystekWell, the government has done a lot to make it easier to move money in and out, but there is still major hurdles if you want to take larger amounts of money offshore and bring money back.22:16:00 - 22:36:22So it still is a mountain of paperwork just simply to move your own money or your company. So the paperwork that the foreign exchange rules are so far too onerous in Mauritius, if I want to move on $1,000 doesn't matter where I instruct my bank and offer goes. They do ask where is it going? Where's that coming from?22:36:26 - 22:57:42But it's a simple instruction. So the issue of exchange controls or the intrusive exchange controls is still an issue for a lot of investors. And of course the other one is BEE is an issue for them and they are simply not investing. They said it doesn't bother as that article about mining say. They say that global mining is a comparative business, a very important look at the world.22:57:42 - 23:35:31And I thought, that's smart, a comparative business. These guys come and compare South Africa with Canada, with Australia or Chile or the other mining countries, even China. And they do their numbers and they walk away from South Africa because we don't stack up well in terms of mining rights, predictability of taxes, etc.. Alec HoggYeah. The Fraser Institute tells us every year, I wonder one day when the legacy of people like Gwede Mantashe is written, what historians are going to be saying.23:35:35 - 23:58:16David Turnbull's question movements on the JSE suggest that foreign capital is buying local stocks. If foreigners are comfortable investing in South Africa, shouldn't we be? Magnus HeystekWell, I'm not saying done by the JSE. I'm just saying to answer your question, if you can look at the flows of money, foreign money into the JSE for 11, 12 months last year, it was negative.23:58:16 - 24:18:03It was only in December that money positively came into the country. The foreigners have been invested in a bond markets primarily, and it's been a phenomenal hunting ground for foreign investors, even for South Africans. I mean, our bond funds that we offered our clients almost on a straight line return has given 15% year after year for five years now.24:18:05 - 24:45:03That's phenomenal. No risk or little risk. So the foreigners, if only started nibbling on our gold shares and other companies and the last months of last year, beginning of this year. So there is a recurrence. And I'm not saying now I need to lay a statement on someone said, it's everything is offshore. In fact, the a lot of our clients that I advise not to go offshore because their needs are different, they don't like volatility.24:45:03 - 25:17:13And it's not long term. Our income and bond space has been a phenomenal space for an advisor. You've been giving people predictability and inflation. Plus 5 to 7 to 8% returns year after year, which is retirement nirvana. You're in heaven. Nothing is better for a retiree where your income rises by inflation and 5%, and that's been phenomenal. But to the offshore, onshore debate is far more nuanced than that.25:17:17 - 25:44:17A lot of our clients, say I want my money offshore because I'm not going to need it. But my children who are in the UK or Australia will one day need it. And if that is the case, then you send everything offshore. You cannot take the currency risk for something in the future. I would rather take the currency risk out of the picture and say, Mr. Smith, we'll create a portfolio for you, put it in your trust and that's offshore.25:44:17 - 26:13:19And forget about the rand returns. You look at the dollar returns. So it's a far more specialized analysis of a person's, financial needs, risk tolerance. I mean, some of you might not even know in our company we apply a psychometric test for new clients. We actually test separates analogy to give us a better handle on how they will react to market downturns or what kind of a lot of people are coming being very aggressive.26:13:19 - 26:38:36But when they do this test, which was devised by an Australian professor, it comes out saying, meneer you're a very conservative investor. That's what you're you think you're aggressive, but you're not. And that's part of our function to try and match a person's risk tolerance or tolerance to risk to the investments that we can create. And as we said, I mean, investment world is open up somewhere.26:38:37 - 27:02:24You can create anything for anybody. But you have to know who's the person. That's why I'm not afraid of AI. I can come with the best cash flows and forecasts. And this AI doesn't have emotion. AI doesn't understand the family dynamics, and we use it as a tool to be better advisors. But am I scared about AI taking over the role?27:02:28 - 27:22:30No chance. It was a there was a certain young lady about ten, 15 years ago who writes an article in one of the papers and she said, that's the first time I came across her name. She said, if you're an investment advisor, you must be you must look for another job, because robot advice is going to take your job.27:22:34 - 27:42:45Now, I made a note of that lady's name and I did contact her later and today. She's a great, great friend of mine. Her name is Marta. But she said robo advisor is going to take your life away. And I said, no, that's not, it's not. And then what has happened? Who's who? Who uses robot advice in this room?27:43:01 - 28:16:35Yeah. Nobody was the rage five years ago. Everybody. Robo advisor and this and that. This is the pet. Anyway. That's it. Alec HoggIt's a very it's a it's it's a very good point. A little bit of a, technical question, but you can just explain why this is important for the broader people from Gary Johnson. Rick, 28, is a major impediment to pension fund performance, is why a fund manager is not lobbying the reserve Bank to remove or increase this 45% threshold.Magnus Heystek 28:16:39 - 28:40:07I've been raging against this limitation for many years. I've written many articles on Moneyweb when I was writing for them, and even for, for for Alec. I've the rate 20 eights up until about 2013, 2014, only about 20% offshore. And I personally felt that was too that was way too low and affect the whole retirement industry. It's got an upside down.28:40:09 - 29:01:04I think when you putting money into a fund, you should realize choices to grow your capital as much as you can using. That's what the classical theory tells you. When you're young, you should take more risk. So the industry as a whole is the better way. Rate 28 prevented you. It's prescriptive. It tells you you can invest 20% offshore.29:01:04 - 29:27:24You can have 45% in equities and 20% in it is very, very prescriptive. Now, the industry might have its own reasons why they're not making a big song and dance of this. I wrote many articles. 20% is not not enough. In fact, I call a debate on rather a scam 10/15 years ago with the head of ten. At that point he was actually screaming at me the saying 20% is enough.29:27:24 - 29:50:26South Africans don't need more than 20%. That was the mindset and I suppose it still is. So now you have a situation and I agree with Gary. It does. That does inhibit your growth by a percent or two. And as a, as a rate of interest, this little interest, everybody in this audience, we had a presentation last week.29:50:26 - 30:29:17There's a company by an AI specialist from 91 and she said they were using AI tools of very, very sophisticated AI tools. They did a 30 year comparison of rate 28 funds with discretionary funds, taking into consideration all the tax breaks, etc., etc.. What was the best outcome? And they've done the study and it showed that the discretionary tools are better than than in the rate 28 so it protects people why they should not be protected and when you take your money as at retirement, move it into a living annuity.30:29:17 - 30:52:25You got full discretion, which I think is wrong. And it's something that you could perhaps stir a little bit. They can explain why am I here prevented if I want to be 100% offshore, I take the risks as my pension money. But when I retire at 85 or something, I can go 100% offshore if I choose to do so, which is the wrong time?Alec Hogg 30:52:29 - 31:23:37Monica Maynard's question is one more broad. It's most middle class people's wealth is or was situated in their houses and primary properties they can't afford to sell. You mentioned Joburg valueless properties and move to better governed areas. What is your advice to these people? Magnus HeystekYou know, it's very, very difficult to tell people, get out of a non-performing house because there's always a hope that somewhere it will return and do better.31:23:41 - 31:48:32You know, a house is also apart from being a financial products or selling an emotional product. And I'll give you an example, my dear wife who's in the audience when we got married 22 years ago, I gave her a house in the infant as a wedding gift. There they, my darling. Ever last 15 years I've been telling her sell.31:48:36 - 32:15:15And year after year after year, I say, hey, sell it? To her that's safety. It gives a good income. She's not really taken up on this phenomenal returns we can get elsewhere. And I think there's a big element of that. People love their homes. They dont want to sell. They actually write it off with a financial instrument that they make the investment somewhere else.32:15:19 - 32:42:35But if you are in a town where it really is falling apart, my advice to people to stay take whatever money you can get and run, because the value of five years now is probably going to be zero. So but it's a very difficult decision to tell people to buy sell the house based purely on financial grounds. Alec HoggAnd I suppose the question is more about that, your major asset in your mind, it's where most of your savings reside.32:42:39 - 33:13:10But actually it's not what you think. So perhaps it is no better to face reality. Magnus HeystekI would say middle class values today are in their in their, in their RA's tax free investments and the discretionary portfolio. But it might be because the listed portfolios have grown so much and the properties have just not grown. So most people, middle class, rich people is the biggest asset is in the stock market or stock market related investments, not the house anymore.33:13:14 - 33:19:45Unless of course you have bought somewhere in Hermanus, but you can't. You still need a big chunk in discretionary money.33:19:48 - 33:34:31Final questions from your hand window. Which is the kind of thing I hate addressing. And maybe you do too. Has Brenthurst put a succession plan in place when Magnus retires at 85? That's only about 20 years time.33:34:31 - 33:35:14I think.Magnus Heystek 33:35:18 - 33:52:43You know, I get asked that question a lot. And I am extremely fortunate to say that the average age of the people in our business is about 40, 45. You if you take me out of the equation, you put me into the equation. It's 46, but...33:52:47 - 34:14:30I have three children. One of them, the Michelle Heystek. She's our, CFP. She's been in our industry for a long time. She's the head of our George office. My is my son runs the Durbanville Office and my other daughter is involved. The way that all CFP is all got B.com degrees by estate planning tax. So there's a succession plan and my partner is not you.34:14:30 - 34:35:06Unfortunately, due to, personal reasons, he's been with me for 25 years. We have a very, very powerful bunch of young guys who can take over. And, I will leave them with very strict instructions how to invest the money, and I, thank you so much, Alec. It's always a pleasure.

BNC#8: Magnus Heystek Q&A - The brutal truth about South Africa’s financial future

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