Podcast: How to think about investment returns

Kristia van Heerden Latest, The Fat Wallet

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Investing is daunting because there are no clear answers to basic questions like, “How much money do I need?” or “Am I on track?”

To make matters worse, financial institutions like to exploit our limited knowledge on the subject by making promises that aren’t exactly false, but not exactly true.

If you’ve been investing or listening for a while, you know the market has been struggling for years. As a result, we are getting a growing number of emails from investors who are concerned that their lacklustre portfolio growth is the result of either the products in which they are invested or the institutions managing their money. Two weeks ago we talked about when poor performance is the result of bad management. Find that episode here.

This week we help you think about what your performance actually means. My tax-free account is up by 17%. However, I started investing in my tax-free account in 2015. Inflation for the period is 21%. I am 4% poorer, even though I have more money. My discretionary investment account paints an even bleaker picture. That account is 5.6% in the red. Since I started that investment in 2013, inflation has been 32.8%. My investments need to gain 38% for me to be back where I started. If I didn’t understand the impact of inflation, a 38% growth in my portfolio would seem like payday.

As it happens, our friend Stealthy wrote a blog about the effect of compounding, not only on your investments, but also on your costs. He made a compounding calculator that will bring a tear to your eye, which you can download here.

You might enjoy running your own numbers.

The discussion was inspired by a discussion on The Fat Wallet Community group. Join here.

Clean beeped show is as below.

Win of the week: Carl

Perhaps you’re just Starting Out on your Journey, a 21 Year Old with Too Much Bad Debt & a Small Investment Portfolio, receiving a Few Hundred Rand in Dividends every other Month, Thinking, ‘this is gonna Take Forever & I’m Never gonna make REAL Money so why bother’.

Perhaps you’re a Financial Genius and the rest of us are just a ‘Cautionary Tale’ to you.

Perhaps you’re a Lowly BlueCollar just like I am… and the Only Time you get to See the Inside of the Boardroom is when you’re Cleaning it… and Nobody Ever Asks about your Ideas or Opinions, in Fact, Most don’t even know your Name even though it’s Printed on your Uniform.

LIFT your Vision for your Salvation is at Hand – and who’s Coming to Save you from yourself? YOU! Which is GREAT because that Means Complete Control is in YOUR Hands!

I Feel I have Absolutely NO Reason to Boast, because I only Managed to Start Investing at Age 38… after Making Sure I Squandered every single Opportunity Life threw at me..

For Most of my Life I Thought the Best Plan was to Spend my Last Cash on the Day I Receive my Next PayCheck…

As you Grow Older you’ll Realise that Time isn’t Important, it’s EVERYTHING – because of the Compounding Effect.

So, are you Going Laduuuuma! – or are you Constantly Scoring Own Goals?

How about Setting Small, Incremental, Reasonable, Realistic, Attainable Investment Goals – BabySteps, because your Personal Investment Journey is Probably a Daunting Sight…

When I Started Investing ALL I Dreamed about was Receiving my First Dividend… and the Golden Egg was R130 Laid by Country Bird on 21/11/2011- Because everyone Likes Chicken, Right?

It was the ONLY Dividend I Received in 2011… but I was Ecstatic with Joy because I Reached my Initial Investment Goal – I Felt like a Millionaire, like I wanted to Buy Drinks for Everyone!

Then I Started to Dream about Receiving a Dividend EVERY Month… and 2015 was that Year.

Yet Again I Felt Immortal, because I had Reached my Goal.

Then I Started to Dream about how Cool it would be to Receive R10K in Dividends in a Single Month…Well, End July 2019 WILL be that Month – and yet another of my ‘impossible’ Dreams WILL be Realised! – and this Time I WILL be Buying Drinks for Everyone – because Everyone Loves Bubbles, Right?

Now I’m Starting to Dream about what I Need to DO in Order to Receive R10K in Dividends EVERY Month, of EVERY Year…

I’m Thinking about WHY it Took 9 Years to Reach this Goal.

I’m Thinking about HOW to make it Happen Again.

I’m Thinking about How to SHORTEN the Period – Perhaps Halve it to 4.5 Years…

If you’re NOT Dreaming – START!

If you ARE Dreaming, NEVER Stop!

If you Give Up, the Outcome is Predictable & Guaranteed, so Start Climbing that Mountain Standing between You & F-I-R-E.

Don’t Start Tomorrow, don’t Start Today, START Right NOW – and ADD another Zero to the BottomLine!


I just turned 35 and came to the realisation that I don’t have money to retire on, let alone to leave for my wife and child, in 15 years (as I plan/ planned).

Would it be possible to structure my portfolio as follows:

3 Defenders (those that provide cushion/ prevent loses, giving +/- 15-20 year returns)

4 Midfielders (a champions league great mix of conservatives, and aggressors giving returns in about +/- 10-15 years)

3 Strikers giving returns in 5 – 10 years.

I recently joined the Just One Lap community and before your shows have been tip-toeing around in the dark with no clue whether I am going forward or sideways to a cliff.

S’fundo wants to know what homework he should do before investing. He’s 22.

I recently started my investing journey, and I am looking forward to investing for long term returns (15 – 20 years) so I can take full advantage of compound interest.

Which are the most effective due diligence processes to undergo when valuing a company or ETFs to determine if they are worth buying for the longer term? How can someone with no prior knowledge of the markets or finance world learn going through those processes effectively?

The Fat Wallet Show with Kristia van HeerdenThe Fat Wallet Show is a no-nonsense personal finance and investment podcast hosted by Kristia van Heerden and Simon Brown. Every week we answer questions by a growing audience of finance enthusiasts. Submit your pressing money and investment questions to ask@justonelap.com.

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