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In a year such as this, I think we may need to lower our expectations. Staying alive in a year as turbulent as this is something to be grateful for. Covid-19 and other effects brought on by the virus have claimed the lives of so many people.
Towards the end of the year, I like to reflect on the past twelve months of my life. What did I achieve? What did I learn? What can I change?
I’ve been incredibly blessed this year. I achieved most of my personal goals, changed jobs and quit smoking. Aside from the Covid-19 pandemic, I have to say that my experience of 2020 has been largely positive.
I realise that I am in an incredibly small minority. This has been a year filled with stress and pain the majority of South Africans – if not people across the world. I had to remind myself of the cards 2020 had dealt me, because it certainly wasn’t a common occurrence.
I got to thinking about this when I received a question this week (see below) about how one would go about financially recovering after the effects of Covid-19. While doing some of that aforementioned reflecting at a red traffic light, I couldn’t help but wonder whether I saved enough money this year? Did I invest wisely? Did I perhaps spend too much?
As the light turned green, I glanced to the side of the road, where a man stood holding a sign. ‘No job, no money, two kids. Please help’. Next to him, clinging for life on a street lamp, was yet another headline about Covid-19. Here I was, worrying about finances, when a picture of the reality of South Africa was displayed right in front of me.
I’m certainly not downplaying the importance of my – or anybody’s – personal finances. But in a year such as this, we’re lucky if we get out with some scratches and light bruising. People have lost loved ones, if not their own lives. Businesses have been destroyed and jobs lost. All these thing certainly put things into perspective for me.
So fixated I was on whether I had done enough, I hadn’t even stopped to smell the proverbial roses. If 2020 has taught me anything, it’s that we need to be incredibly grateful of what we have – not fixate on what we don’t have or didn’t achieve. Things we take for granted can be taken from us in the blink of an eye, another lesson from 2020.
If you’re feeling like you didn’t achieve your personal finance goals this year, no matter. You tried. You did something. This was a rough year, so go easy on yourself. Besides, there’s always 2021.
Last week, I asked you to send me your finance and investment queries. Here, Johan Steyn, CFA* of Stellenbosch University, shares his expert advice by providing answers to your questions.
A. Samuels asked,
How would you go about recovering financially following Covid-19? Is now a good time to invest? What would you recommend doing to weather out the storm?
That is a tough question and one that many people are struggling with these days. The most important thing to do is to go back to your personal budget and evaluate it line by line, to make sure it is sustainable. This will involve making sure there are no unnecessary expenses (or expenses that you can cut). As to whether it is a good time to invest, I like the saying: “The best time to invest was yesterday. The next best time is today.” However, you need to be realistic about it. If there is no room in your budget for discretionary investments, perhaps it’s a good idea to postpone it for a while. But as a start, try to save 5-10% of your income and invest it according to your risk tolerance.
How would one go about investing in a small tech start-up? Do you just email them? Do they reach out to me? How do I find these small companies?
Unfortunately, it is not a straightforward process to invest in an unlisted entity such as a small tech start-up, especially for the small, retail investor. It may not be worth the admin and hassle for the start-up to take on small amounts of capital or individual, minority shareholders. Also, most early stage tech ventures are typically looking for investors who can bring more than just capital to the table. They often need shareholders who can help with strategy, execution and introductions to business networks. That being said, every start-up is different and it would be possible to reach out to start-ups to gauge their interest in taking on a shareholder. One way is to contact an incubator – like the LaunchLab in Stellenbosch – and ask them to put you in touch with suitable ventures.
- Johan Steyn, CFA is a lecturer in investment management, from the department of business management at Stellenbosch University. He holds a Masters in investment management and has a background in fund management.
Have a question about share investing? Write to me at [email protected].
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