Very few young kids grow up with their own investment portfolio

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‘It was a lot of fun. There was a lot of talking around in the family, which was exciting. Things are a lot more complex today; being diversified is key so you don't cry too much if something goes wrong’ – Kenny Rabson, Discovery Invest CEO.

RYK VAN NIEKERK: Welcome to this week’s edition of the Be a Better Investor podcast. My name is Ryk van Niekerk and in this podcast series I speak to leading professional investors and business leaders about their investment journeys and their personal investment decisions. We look at their first investments and how their investment strategies have changed over the years, and we also take a look into their personal portfolios to see whether they practice what they preach.

So we kind of heard a lot about it at the time, and as kids we all actually had little share portfolios. In those days we had a family contact as a stockbroker. Frankel Pollak was the company name in those days, a huge stockbroker, and we all had like a little portfolio. I think in those days things were simpler. Shares were very much South African-based, so they didn’t typically have a huge amount of offshore earnings, which complicates a lot of shares. The legislation was a lot simpler capital gains taxes and things like that. So the world was a lot simpler and it was a lot easier, I think, to have fun. A lot of the school kids got involved in the JSE, the Stock Exchange Challenge, which I did at the time.

We used to watch the newspaper every day and see the shares and what was reaching new highs, and kind of invest just I think through discussion and speaking to our stockbroker. I think she was the first lady stockbroker on the JSE, and she used to call us often and say, what about this? What about that idea? And we used to follow it. She was great. So we learned a fortune. We used to have discussions with her. I think that’s really kind of how it just happened over time.

RYK VAN NIEKERK: You were young during the 1990s, one of the roaring periods in South Africa’s history. We saw many, many listings. We saw the dotcom bubble form, and you could invest in virtually anything and you would’ve made money during that period. Were you active during that period, and what lessons did you learn when that bubble burst?

I think it is tricky and I think the opportunities, by the way, for youngsters today are just so much bigger. KENNY RABSON: I think that’s a tricky question. I think the way people would generally look at it is at the track record of a particular asset manager. Companies that are more global have a broader offering globally, certainly all the big names in the unit trust industry – I think one won’t go that wrong with them.

I would say youngsters should not invest in funds that haven’t got a high level of offshore exposure at the same time. But I think if you’re looking to do short-term investing, then you’ve got to really manage your risk to low levels. And there, for the short term, people should consider much lower risk investments and more fixed-interest, income types of investments.

People will buy something when they’ve heard all the news about it, the share’s gone up a huge amount over the last couple of months, and then they want to enter that share without knowing if there is still a lot more upside in it or not. RYK VAN NIEKERK: I think that’s a clear message and excellent advice. Let’s talk about your personal investment portfolio. How do you approach it – and, if you can reveal, what is in it at the moment?

So I think to have a diversified portfolio of whatever you’ve got – property shares, fixed income, hedge funds, whatever – it should be diversified so that you don’t cry too much if something a bit pear-shaped can happen. And so not having all your eggs in one basket is crucial and I think that’s probably been key to what I’ve done over the last decade.

 

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