The press is a powerful means of communication, and columnists can have a major influence on the lives of their readers. Advice is dispensed freely, and readers probably often wonder how much of the advice columnists themselves use. So this is the moment of truth for me and I am about to spill the beans.
Our lives are pretty much what we make of them, but our heritage and formative years have a big role in our decision-making process.
I come from a working-class background heavily influenced by the effects of the depression of the 1930s and the hardship of the two world wars. The British stiff upper lip and a tenacious belief in self-reliance (in the pre-welfare state world) placed a high premium on saving, education and advancement. I saw many people who had worked hard all their lives battling financially in old age, often due to factors beyond their control - inflation being one of the worst culprits - trying to eke out a living from their savings.
The value of saving was drummed into me from a very early age by my devoted grandmother. I can still vividly remember the two of us going to the Johannesburg Building Society (JBS) and depositing the money into my green passbook and having it updated each month to see the tiny addition of the interest.
As it grew to the princely sum of R10 we drew it out and invested in the (now forgotten) fully paid-up shares known as "pups" that paid interest twice a year. I had a file that housed the impressive and colourful certificates. Every now and then it would give gran great joy and me tremendous satisfaction to go through the certificates and calculate my net worth. How pleased I was when I went to university: a student loan paid for the tuition, but the "pups" gave me some spending money and the means to put petrol in my little Austin run-around.
This had an impact on my financial decision-making when I began working almost 20 years ago. I was conservative and in the second month of my career I took out two retirement annuities (RAs), despite the fact that I was a member of a pension fund. Looking back from the vantage point of today I am really pleased that I did this, not because the performance has been spectacular, but because I can now clearly see the benefit that will accrue should I reach the age of 65 and the "horror" of retirement. The RAs will certainly not make me rich, but they will make my life comfortable.
I was also acutely aware of the fact that our spending patterns tend to grow into our salaries, and there is often little of our disposable income left over at the end of the month for saving. This leads one on a path to enforced saving - the first step is usually the purchase of a property. The shock of the mortgage repayment really cramps your style for the first few months, but then you get over it and your head bobs up above the surface again.
Not being a good saver, or perhaps being a compulsive shopper and holidaymaker, I was forced into a more regimented savings regime. I began taking out endowment policies with part of my increase in the years that I was fortunate enough to get one - some for five years, some 10 and some 15. The endowments are not especially fantastic investments, but as they mature one receives capital sums that would not have been available otherwise. This cash often came in very handy for holidays, clearing a credit card debt or investing.
I have been a stockbroker all my working life, but it is only now in my early 40s (it feels like my dotage) that I am earning enough to begin building up a share portfolio. It has got off to a modest start, but, like the RAs and endowments, it will probably surprise on the upside in the fullness of time. I am a firm believer in the stock market as an investment medium and have been so all my life.
This is once again thanks to my grandmother - who happened to be the bookkeeper at a firm of stockbrokers. In the early 1960s her aunt died and left her the then amazing sum of R600. She put R300 into the JBS and bought some Rand Selections with the remaining R300.
When gran died in September 2000 the R300 in the building society was still R300 (although she had got some Allied shares from the demutualisation), but the Rand Selections that, after a few sub divisions, were Anglo American, were worth R200 000. This represents a wonderful return of 19 percent a year over the period. It would have been even better had gran selected Rembrandt or Liberty Life, but nonetheless she did very well indeed.
The funny thing was that only a few months after she bought them the stock market slumped and the shares lost half their value and she was mortified, but stuck it out. Not only did she stick it out, she added to her little portfolio when she could afford to.
When she retired without a pension at the age of 75 in 1990, it was a case of the presentation of an ostrich skin leather handbag, a small gratuity and "God bless you - goodbye" (women were not able to become members of a pension fund until comparatively recently). The dividends from her share portfolio provided her with an adequate income to live comfortably and have a trip abroad every second year.
My little share portfolio consists of BHP Billiton, Old Mutual (from the annuities), Metorex, RMB Holdings, Shoprite, Sasol and Telkom. I am about to use some of a recent windfall to add Tiger Brands, SA Breweries, Anglo American and more Sasol to the mix. As a long-term investor, I believe that now is as good a time to invest as any. The balance has gone into my mortgage bond for the moment, because it is always sensible to reduce debt.
It's not the most exciting investment scenario you have ever read, but one that suits my lifestyle and expectations. Over time my share portfolio is going to become my major asset and it is going to perform well. Spend some time considering your financial situation. It is never too early or too late to begin saving. You can't win the Lotto without a ticket, and you can't retire in comfort without saving - get cracking!
- David Sylvester is the chairman of the Shareholders' Association, telephone (021) 686 7567.