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  • What it’s all about

    Students that invest is an initiative to engage students in the worlds of Economics and Finance.

    At the moment it is Prof Krugell talking about the economy in ECON122 class and Risk Management lecturers Mr Johnny Jansen van Rensburg and Prof Andre Heymans are giving advice.

    We use the blog to share thoughts and links.

    Note: this is not financial advice and we do not pretend to replace your registered financial advisor.

  • The Students That Invest initiative is back in 2023

    I am talking about personal finance, saving and investing in the ECON122 class this year and sharing resources here on the blog.

    The plan is to get a few guest appearances by Risk Management lecturers and real-world financial advisors.

    Most of you come to study for a degree in the hope that it will provide a better job and higher earnings in the future, but in the end that is a small part of your money journey. If you hope to be financially free, you need to be intentional in saving and investing while time and compound interest are still on your side.

  • Catch this podcast

    The guys at My Millennial Money have a new episode out in which they argue that it is possible to have a life while building wealth. They chat with Joel Larsgard from the How to Money podcast about coffee and craft beer and a bunch of other things. They recognise that if you want to build wealth you need to make some sacrifices, but emphasise that you do not need to do it everywhere, all the time. It is worth listening to the whole thing. I am off to have a Toro coffee!

  • What people under 30 are investing in

    This week, stock markets are set to have a volatile week with big interest rate decisions in the U.S. and in South Africa. If policy rates go up, there is a bigger chance of a recession and companies will struggle.

    So maybe you are thinking about other asset classes. I came across this interesting video on TikTok by Gary Vaynerchuk where he talks about what people under 30 are investing in. He talks about these “new” asset classes like NFTs and limited edition sneakers. There are many things to keep in mind about these assets and markets, but I like his point that young people are thinking of themselves as investors – like you guys. Check it out.

    And don’t miss Prof Andre’s talk on asset classes.

    @garyvee

    Some fascinating trends brewing in youth culture and how they see investing ect .. fun to see how this impacts the next 15 years .. add a story or 2 in the comments to expand on this trend ❤️

    ♬ original sound – Gary Vaynerchuk
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  • Finance thinkfluencers vs economists

    Planet Money has an excellent newsletter article this week that tells of research that examined 50 popular books on personal finance and investing and compared it to economic thinking.

    It looks at questions like:

    • How should you save your money.
    • How should you think about your budget.
    • Should you be “house rich, cash poor”.
    • How much of your money should be in stocks.
    • Should you care whether stocks pay dividends
    • Should you invest in actively managed funds, or passive index funds.

      It is excellent to see the views from economic theory and those from the finance/investment world. Read the whole thing here.

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    • You say you have a passion for investment?

      In a recent article in the Financial Mail, Deon Gouws wrote a piece that can serve as the very reason to be part of our investment club. I am posting a few quotes:

      I sometimes get asked by friends and acquaintances to impart career advice to their colleague’s nephew or their neighbour’s daughter. Without exception, these are smart kids, straight As, strong personalities, very ambitious. And with a passion for investment.

      It’s that last point that I always interrogate: if the candidate can show me a portfolio and a track record (real or notional), I might believe them; winning the stock-picking competition at the local mall is even better. But often these individuals cannot offer anything to illustrate their passion.

      This is exactly why you should get started asap. Even if it is only in our virtual trading competition. But what about other skills? Deon also writes about the CFA qualification and data science/coding skills.

      Going back to those smart kids looking to join the wonderful world of investments: my advice used to be that they should give the CFA qualification a go — not so much to “set themselves apart” (as practically everyone seems to be doing it), but as a “ticket to play”. Or, as a mathematician might put it, the CFA has become a necessary qualification for an investment career, but far from a sufficient one.

      If it is not sufficient, what other skills do you need?

      My updated advice is to get acquainted with coding: being able to use a programming language like Python to automate tasks and conduct data analysis has become the new necessary (but not sufficient) skill for a young professional, in my view.

      This means getting serious about the statistics, econometrics, coding and Excel skills that you can pick up as part of your degree. But this is a fast-moving field and the university cannot teach you nearly enough. You will have to learn some of it on your own. Ask your parents for a datacamp subscription for Christmas.

      And then it is up to you and LinkedIn!

      From The Hustle
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    • The money saving challenge

      Last week I made a post about managing your spending and shared some resources on apps that can help to track your spending. But how can you free up a bit of money for saving? Our “prescribed book” has a few ideas in Chapter 5. It recommends picking one or two challenges at a time.

      • Say no when people try to sell you stuff. Whether it is telemarketers or the salesperson in the shop, just say no thank you.
      • Downgrade your cell phone. A cheap phone and pay-as-you-go cell phone will end up saving you a lot of money. The companies no offer the fancy phones on 36 months contracts instead of the old 24 months. That brings down the monthly fee to something that you think you can afford, but R450 x 36 is still R16200. So, don’t upgrade, get a cheapie.
      • Cut your electricity bill. There are other simple steps to take – switch off everything that is still showing a standby light (energy vampires!), do your laundry with cold water, and set the refrigerator temperature to the manufacturer’s recommendation. If you can spend some money: get isolation foam for the geyser, energy-efficient light bulbs, timers etc. and then you are really going to save money.
      • Pack a lunch box. Get a lunch box, make your own sandwiches, couscous salads, or whatever.
      • Spring clean. Go through all your stuff and keep only the things that you need and love. Sell the valuables and give everything else to charity. Now, when you do go shopping, you are focused and not adding to clutter.
      • Try to cut down on trips with your car. Walk, organise lifts, ride your bicycle.
      • The dinner challenge. Find three to four go-to recipes to live off. Make sure that they are delicious and cost-effective. The Association for Dietetics in South Africa has some good ones here. As well as a Nutrient dense lockdown recip-e-book.

      Now, you guys are students, so I am sure you know where all the good specials are. Please share your advice in the comments.

    • Trading platforms

      Prof Andre has some platform suggestions to share with you guys who are ready to jump in:

      If you have any suggestions on a platform that works for you, leave a comment, or share them on the WhatsApp group.

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    • Paying off debt vs investing

      Many of you would say that it is not really a question of one or the other, and you are right. Yet, one frequently gets the advice that you should start with paying off debt first and then get some money together for an investment portfolio. An interesting article in the Financial Mail this week shows that there are a few things to consider.

      The article answers the question: Should you try to settle a home loan in a shorter period?

      The short answer is that paying a few hundred of thousand rands a month extra will save you a lot on the interest that you have to repay. The table shows that on an R1m bond an extra R500 per month will save you 30 months and around R156 000. An extra R1000 a month saves you 53 months and R269 000. And yes, it is a risk-free plan.

      From FM, using the FNB Home Loan calculator

      But the article goes on to make some interesting points. If you pay off faster, you are not getting any help from inflation. Also, you should consider your whole balance sheet:

      Settling a bond too quickly may mean that your balance sheet is dominated by a bulky, illiquid asset that does not generate income — your home.

      FM

      It is worth reading the whole thing.

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    • Manage your spending

      To eventually start investing some of your own money, you need to save up. That means wrangling your spending now.

      We can talk at length about your financial goals and what different funds you want to save up for, but at some stage, you need to start tracking your spending and stick to a budget. Luckily the “prescribed book” comes to the rescue with some excellent online resources.

      Check out the page on the Apps and tools that let you track your spending.

      Tracking spending is not the same as managing it. You also need the money dashboard. There is an online, and excel version and an explainer video.

      Start tracking your spending this week. It is never too early or too late.

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    • Four important principles

      Last week The Hustle shared Morgan Housel’s four principles that govern finance. I think that they are quite sensible for anyone starting an investment journey, so I am reposting them here:

      1. Live below your means: You don’t need to show off your success and how much money you have – your savings rate is the gap between your ego and your income.
      2. Understand what bet you are making (when you are buying): A short-term investment means that you are betting you’ll be able to sell to someone at a higher price. A long-term investment means you’re betting companies will innovate, humans will become more productive, and the rewards will accrue to a growing economy.
      3. Everything has a cost: The cost of good long-run returns is short-run volatility.
      4. There is a lot of money to be made in finance: Some may be your money, so beware of scammers and of high fees.