Steven Amey, head of intermediated distribution at Ashburton Investments, says he wishes his financial literacy was better when he was younger.
The saying goes that hindsight is 20/20 vision, meaning that you will always think you could have done better later. This is even more valid when it comes to financial literacy.
Do you ever wish that you knew what you know at the age of 50 about investments when you were 20?
If you were 20 today and could learn about investing from scratch, you might be surprised to learn that it is not just a privilege reserved for people with a lot of wealth.
It is, in fact, much more accessible than you might imagine, because it is all about three small things.
“Did you know that all people are genetically 99.9% similar, yet the 0.1% difference makes us all so unique? And did you know that if a plane incorrectly sets its course with a 1% error rate, it can have a dramatic impact on where it lands?
“A flight from Los Angeles to New York, with a 1% flight path deviation, would result in the plane landing 239 km off course.
“Lastly, and this one is close to home, did you know that in the 2024 Olympics, our very own super athlete, Akani Simbine, missed winning a medal by one hundredth of a second? Only 0.01 seconds was the difference between receiving an Olympic medal and not.”
Amey says this makes it clear that the small things can have a profound impact on outcomes and shares these three lessons you can use to help your future self financially.
ALSO READ: What to consider when deciding to invest locally or offshore
Financial literacy lesson 1: Look at the small picture
Sometimes you need to look at the small details to get ahead in life, he says.
“Many people complain about not having enough monthly income. To resolve this issue, you could search for a higher paying job, work a second job or play the Lotto, but these take time or may never materialise.
“Budgeting, on the other hand, is a much surer bet. Over two decades of experience have taught me that you can always find a place where you can cut back, be more financially free and start investing, even if just a little, for your future self.”
Amey says the sooner you start to invest, the better.
“I love the old Chinese proverb, ‘the best time to plant a tree was 20 years ago. The second-best time is now.’
“Do not wait for the right time, because time is not waiting for you. If you feel overwhelmed, contact a registered financial adviser or visit an asset management website where you will find different funds to suit your needs.”
His advice is to start by moving from a motivational to a disciplined mindset.
“Someone who is emotionally stunted uses motivation to do something difficult once, while an emotionally mature person uses discipline to do something difficult a thousand times.
“It may be difficult to start saving, but look at what the disciplined investor achieves over time.
“If you start at 25 and invest just R1 000 per month until you are 55, you will end up with an impressive R1.5 million if market growth over the period is 8%.”
ALSO READ: Investing in JSE shares: What you need to know
Financial literacy lesson 2: Go small or go home
People usually start by adding bigger pebbles to fill a glass jar, but adding thousands of tiny granules of sand will ensure the jar reaches its true capacity. Amey says you should not wait until you have bigger chunks of money before you start investing.
“True success is not about chasing big wins, it is about getting the small things right so that the big things can follow. Some of the biggest success stories in the world started small.”
He uses these examples from well-known people on starting small and growing from there:
- Madiba tended herds of cattle in Qunu but went on to go to university and become the leader of the ANC and South Africa’s first democratically elected president, a true world icon.
- Legendary businessman Raymond Ackerman was fired from his retail job in the late 1960s when he bought four Pick n Pay stores and grew them over the years into what is today one of South Africa’s premier retail chains.
“These stories all teach us that even from humble beginnings, greatness can follow if you just persevere. Ultimately, it is all about putting one small foot in front of the other.”
ALSO READ: South Africans optimistic about investing in residential property — survey
Financial literacy lesson 3: Be a small deal
In our consumer culture, we often feel the pressure to stand out and flaunt status, Amey says. “But what if there was more value in rejecting status anxiety to pursue our best life? What if real success was more about quiet self-reflection to see where our innate vulnerabilities and biases may be tripping us up?”
He points out that success is not about big gestures but about the consistent care and attention to every small detail.
“It is not about how much wealth you can display but about how financially literate you can become. Do not let your anxiety about current success stop you from putting the small things in place to achieve bigger success one day.
“One of the best small things you can do is to become aware of inherent behaviour biases that affect your decision-making. The three most common mind traps are the herding, anchoring and recency biases.
“Herding refers to doing what the herd is doing out of fear of missing out. If all your friends are spending freely and not saving, is it wise to simply follow? Anchoring means relying too heavily on the first piece of information you stumble across.
“Take a more holistic approach, do your research on reputable investment sites and if you can, engage with a qualified financial advisor and increase your financial literacy.
“Thirdly, do not get trapped by the recency bias. This is when we tend to focus more on recent events than long-term trends.”
He emphasises that markets are currently volatile, and while some of your family and friends may have lost money over recent months, longer-term investing, with exposure to equities, creates long-term wealth despite short-term market downturns.
Amey points out that instant gratification is celebrated in our culture.
“We have information at our fingertips through Google, social media and AI, and we can instantly order transport or food on our mobile devices.
“Investing, on the other hand, is counterintuitive to this programming, because it requires patience.
“Materialism and compulsivity erode our monthly income and trap us in debt cycles, leading to short-term gain and long-term pain.
“I have learnt that it is better to start off small, even if that means your house or car is not as smart as that of your friends.
“Be wise and use some of your income to provide for future capital growth over time. Your future-wise self will thank you in years to come for focusing on the small things that reap meaningful long-term rewards.”
