It’s the silly season! For many of us this means much more in-person and much less on-line socialising. Along with more real conversations with real people, you might also encounter some good old-fashioned in-person peer pressure. We’re here to help you prepare, with words of wisdom from our much loved Kristia van Heerden.
Behind every wealthy person is an army of influencers, advisors, online resources and smart friends. Creating wealth becomes easier when you have access to people who can point you in the right direction. However, acting on every piece of advice you receive will likely lead to poor choices.
You never know where your next insight might come from, so it’s a good idea to hear everyone out. In this article we offer some ideas on what to do with the information you get based on who gave it to you.
The parents
Your parents have already influenced your financial decisions. They like to think it’s because of pearls of wisdom, but you’ve learned much more from their behaviour than they realise. This will not prevent them from offering more financial advice.
When to listen
Parents are people (gasp!) and people don’t practice what they preach. Your parents might not have a cent saved, but they’re not wrong when they tell you to put money away for the future.
Nod and smile
Be careful of the things your parents taught you by example. Most people aren’t good with money. Copying someone else’s financial management style is not likely to get you ahead.
The braai-and-money-master
This friend has a new idea about wealth creation at every social gathering. They either have a stake in every new venture they discover or they never actually invest their own money. Questions about previous ventures are best ignored.
When to listen
You’ll leave each social gathering with a lot of research to do (and probably a little tipsy). If something sounds good, look into it. You never know.
Nod and smile
When it comes time to invest, politely decline. “This sounds wonderful, but it doesn’t fit with my current investment strategy,” should suffice. If it still seems appealing after the hangover passes, you can do more research.
The company man
This person might find you by accident or be part of your existing social circle. They work for a company that sells financial products. They really believe the products their company offers are the only true way to wealth.
When to listen
It’s great to know what’s available. If someone’s company has a product that seems appealing, you have a place to start your research. When comparing products, remember to read the fine print and look out for fees and commissions.
Nod and smile
When this person tries to set up a sales meeting, politely decline. “Thank you, but I’d like to do some research first,” should do it. Take a card in case your own research backs up their fervent claims. If not, be grateful that you found another product to avoid.
The DBA advisor
The death-by-abbreviations (DBA) advisor is smart and they won’t ever let you forget it. They’ll never use one word when two will do. They believe your money will never do anything without their qualification.
When to listen
Most of the time these advisors really are very smart. If you can keep up with the jargon, you’ll probably learn something you’ve never heard before. Keep your phone handy to jot down terms you don’t understand.
Nod and smile
When they start talking about how only people with certain qualifications can make good choices about money, start reciting the words to Beyoncé’s Single Ladies in your head. When they’re done, ask something you’ve always wondered about.
The industry man
Not a financial advisor per se, the industry man works “in finance”. They never drive an old car and they seem to be dressed by personal stylists. They always have something to say about company results and “the economy”, but they never talk about their own investments.
When to listen
Many people in the financial world make a living by understanding company results and economic trends. It’s a wonderful, useful skill. However, it’s not the same as being good with money. Their knowledge can certainly help you make a decision about an investment, but it should only be one part of many in your decision-making process.
Nod and smile
Sometimes it’s easy to spot a really good company based on their financial results. Other times it’s not. Your friend might be very excited about a company’s prospects, but unless that company or industry was on your radar already, stick to your strategy.
Beware the scams
When you’re promised high returns in a short period, asked to make quick decisions or feel it would be rude to refuse an opportunity, walk away. It will be less painful to apologise for offending someone than it will to lose trust in the good will of others.
OUTstanding Money
Being outstanding with your money doesn’t have to be hard. This series of articles will give you all the tools you need to get your house in order to start investing.
This series of articles was sponsored by OUTvest, and written by Just One Lap in 2018. It’s timeless wisdom that needs to be out there – in public spaces where it can feed into ongoing discussions about long term financial wellness. So we’re regularly updating and republishing this series. In 2024 Alexander Forbes acquired the OUTVest investment platform.