Below is an email I wrote to The Fat Wallet Show…
You can also listen to the podcast below
Good morning SimonI am a pious listener of the Fat Wallet Show and the proud contributor to Lewis dragging down our Fat Wallet Index. When I heard the topic of this week’s show I knew you guys were still sticking to what it says on the label and giving advice to the little guy on the street.
Thank you for that and it’ll pay dividends in future if not cheap wine.I am a 26 year old full time post graduate student (I’m lucky I know but hear me out) living on R6000 a month.This may sound like a lot for a student but bear in mind I have previously held a full time paying auditing job with plenty of travel perks and whatever bells and whistles that come with the occupation. So I have tasted the fruits of freedom and R6000 in that context is worse than my life before I knew what sushi tasted like.To get back to the topic. I have been studying the topic of investing, business and leadership since I was 15, reading Rich Dad Poor Dad and can say the easiest and biggest investments that one can make on a small paycheck is in their financial literacy.The concept of pay yourself first cannot be overemphasized.In my budget the first R320 goes towards everything finance and investing related. I split it R120 for my active share portfolio, R120 for my Tax free savings portfolio and R80 into a rolling emergency fund which I draw down to R80 after 3 months to invest the excess in my active portfolio and my Tax free savings. I’ve been with EasyEquities from the very beginning .“Lost money” that I find in my jeans, birthday presents etc I take in cash or direct my friends and relatives to make deposits to these accounts.I make sure that at least once a year the R300 buys me a decent book that can help me stay on course. My Best Buy and read so far was Fooled by Randomness by Nicolas Taleb and Security Analysis by Ben Graham (which costs the equivalent of 6 months investing capital).The reason I do this is to entrench the habits of having my money work for me while it’s in triple digits so that when I eventually break my glass ceiling the pressure isn’t there to learn habits that I had the opportunity to learn before lifestyle creep.My biggest belief is that the size of my return will be materially disproportionate to my input not because I’m gambling, but because I take the time to learn as much as I can about the basics of money that you guys mention and always look to put my money hard at work where it’ll earn me the biggest most predictable returns.The law of compounding interest says start early not start big.The rest of the R5700 I survive on with the piece of mind of knowing that I have used the best part well and that there will always be someone who is surviving on waay less and not complaining.But my key take away is that on a small paycheck education is your biggest investment and then pay your future self first. The rest is survival as we know it.