2015 has been a tough financial year for many South Africans. We have had repo rate increases, load shedding, a drought, a weakening rand, increased food and electricity prices and a shaky economy. There is still a lot of uncertainty and financial stress as we move towards 2016. Now is a good time to work out how to manage debt problems so that you can welcome the New Year with reduced debt stress.
28 November 2012
April 10, 1996
By Magnus Heystek
Who wants to be a millionaire? asks the song, and the answer “I do” would be echoed by most people. Yet no one needs to be a millionaire to live in luxury and very few people would make becoming a millionaire a serious goal.
However, if inflation continues at 10 percent, within less than 20 years the average suburban home, which now costs R200 000, will be worth more than R1 million. So by the year 2016 almost everyone will be a millionaire.
But whether we are striving to be millionaires now, or even billionaires in 20 years, there is one sad fact. Most people dream of having far more money than they could ever realistically need. Yet in doing so, they settle for far less than they could have had.
Why are most South Africans content to settle for second best when they live in potentially one of the richest countries of the world? The basic cause is lack of knowledge. Let me tell you a little about myself. I grew up and studied in Johannesburg, the commercial and financial capital of South Africa. Even four years at university, studying economics, did not provide me with the necessary financial skills to survive and prosper. It took several years of learning through trial and error to realise just how little I knew about money and investments. As I explained in a recent column, mistakes I made 20 years ago still haunt me today.
I started my working life broke and stayed broke for the next 15 years. During that time I worked at a number of newspapers and magazines. Despite all this experience, I never entertained the possibility that an ordinary person like me could ever reach financial independence.
One day I stumbled across a book called Think and Grow Rich. It was written by Napoleon Hill in 1937 after he spent years studying the success secrets of the wealthiest men in America. I was fascinated by what it contained, and when I put it down I knew that life would never be the same for me again. From that time my life changed totally.
Please don’t imagine that overnight I suddenly started to wallow in wealth and luxury ¬ far from it. But from that moment my life became a long learning experience, as I started studying why only a few people achieve financial success. Think and Grow Rich was not the end of the journey ¬ it was the key that opened the first gate on the road to knowledge. I also realised that most other people knew very little about money and finance. The more I looked into the difference between the “haves” and the “have-nots” the more difficult it became. These are the sort of questions I tried to answer:
Why are so many high-income earners in severe financial difficulties? How could a 13-year-old from a poor family save R2 000? When two people work at the same job for the same salary, how can one acquire so much more money than the other? Why is one 23-year-old R10 000 in debt, while his friend of the same age has R25 000 in the bank? After much research, and the experience gained in counselling people from all walks of life on financial matters, I found some of the answers.
The fascinating thing is that most of them have been known for hundreds, even thousands of years. In this country the average person needs only two things to become wealthy ¬ the knowledge of what to do and the discipline to practise it. Unfortunately for those who are trying to find out what to do, the task can be very difficult. There are hundreds of books available about money but very few that start from basics ¬ and even fewer that show practical ways that work.
This column is intended to be a down-to-earth guide for all. It springs from my own research and from the true stories my clients and readers have shared with me. In the past 10 years there has been an explosion in the number of financial products available, and I will cover those that are of concern to the average investor. However, my aim is to introduce you to the world of prosperity, and you should use this column as an introduction to the whole exciting subject of investment and finance. So get ready for your first few steps along the road to financial independence. As the old Chinese saying goes: “The journey of a thousand miles starts with the first step.” To which I would like to add: “In the right direction.”