Cash Club: Start where you are

I am a big fan of Simon’s JSE Direct podcast. In this podcast he reminds us to focus on getting into the habit of investing rather than on the goal. As a newbie investor and someone who is quite passionate about financial education, especially as a member of the middle class, this got me thinking.

I calculated how much I need and how much I would like to retire with, and the number was in the millions. To be honest – it was very overwhelming. I looked at the value of my portfolio, excluding the value of my investment club assets, and I haven’t even reached 1% of what I need to retire. I used the Stealthy Wealth ‘How long till you can be financially free?’ spreadsheet, and didn’t like the results of that calculation. This exercise can be very discouraging, and those who are yet to invest may even think: “What’s the point, because I will never get there.”

When I shared the idea of the R50 data challenge—where you’re challenged to spend R50 less on airtime/data and put that money into an ETF, savings or investment vehicle of your choice or adding it to your debt repayments—most people reacted with: “What’s the point of saving R50, it wouldn’t really get you anywhere.” That’s not the point. The idea is to focus on the habit of getting into a savings habit and paying off debt.

With compounding, size plays less of a role than time does. When you have time on your side, your growth potential is exponentially better. When I started investing, I started with the minimum required amount — at that time it was a R300 debit order. I bought the Satrix 40 ETF on etfSA. The ETF I chose doesn’t matter, but this got me into the habit of investing.

The amount I’ve been investing has since grown and has been divided into various accounts (an emergency account, my TFSA, my son’s TFSA, individual stocks and my investment club) thanks to the teachings I received from Just One Lap and the Fat Wallet Show. I’ve added more and more variety to my finances and my newfound knowledge helped me to make informed decisions regarding financial products – all of which wouldn’t have been possible had I not gotten into this habit.

Starting small doesn’t result in finishing small. As the years go by, your income will probably grow and so will the amount you invest, because you’ve already cultivated the habit.

Start where you are, with what you have. But most importantly: start.

Njabulo Nsibande is a Just One Lap user-turned-contributor and a founding member of an investment club. His “Cash Club” blog details his experiences balancing the financial obligations of a young parent with his investment aspirations.