Wake up and diversify
Business people can’t help but be concerned about the State of the South African nation – and when former government loyalists start sounding the warning bells it’s time to protect your assets (R.W. Johnson’s “How long can South Africa Survive”, LINK HERE – RHS of the Blog). There are a lot of things to be alarmed about. Exchange rates weakening daily (who remembers R/$ parity?), a president that is a laughing stock but thinks it is all a joke, a public service that has grown 25% in the last decade while the public sector has only grown 2%, international investment rating one above junk, inflation headed north thanks to above average salary increases, rolling blackouts thanks to incompetence and squandering of public funds over two decades, little or no Direct Foreign Investment – especially in our resources – thanks to new confiscatory laws… The list goes on.
You have two choices – You could cry into your beer, rant on twitter or emigrate – OR structure your life to make the most of it and increase your wealth, make money. These cross-roads have been navigated before and we have survived (Rubicon anyone?) The biggest problem comes when those changes or threats seriously affect your ability to earn and you haven’t anticipate it.
Focus on the things you have control over.
- Industries grow and wane, that is the order of things. If you’re an employee you need to keep learning and be flexible so that you can’t be retrenched or sent out to pasture early. As you get older, this often is more difficult, and we will resist the change until it is forced upon us. It is not cool to be clueless. Be curious not dismissive, and never abdicate the responsibility of your wealth to someone else – not an advisor, bank nor spouse.
- Diversify your investment. Your retirement pot shouldn’t just be in one place. Yes, investments are important but the growth of these is going to be linked to the economy. If you don’t think a 10 year recession is possible, ask Japan (let alone Zimbabwe). If you’re an entrepreneur how much of your future wealth is tied up in the company – 100%? That’s normal but not necessarily prudent. There comes a time where you need to realise that value and diversify.
- Start a rental property portfolio. In order to maximise the tax benefits while you are building your portfolio, speak to your accountant about financing and company structures. Because you don’t get much of a Capital Gains tax break for second homes, a ‘property company’, perhaps also inside a Trust is a good idea right from the start.
- Become an entrepreneur, even if you’re an employee. Many companies try and get you to sign away your rights to ‘moonlight’ because they want their pound of flesh. Let’s face it, they’re worried you’re going to spend time on your business and not on your job. Starting a new business takes time and often new skills. Don’t think you can be an entrepreneur, even on a small scale? The massive success of the craft site Etsy in the US proves that this isn’t so. Thousands of people have taken their hobbies and turned them into thriving side businesses. Take an audit of your skills, if you don’t have general business skills like marketing and accounting, take the time to build those skills – push yourself. Those skills are for you not your CV.
- Start going ‘off-grid’. Instead of spending tens or hundreds of thousands to move house because you’re bored, spend that money on going solar. This is also going to be a great investment in the property, and your sanity. It doesn’t have to be done all at once, build it up slowly. Solar energy is obvious – modifying energy-gobbling geysers, lighting, charging batteries, charging cell phones, energy banks and laptops – with more being introduced all the time. In time there is no doubt that you will be able to ‘sell’ excess back onto the energy grid.
- Collect rainwater. The days of cheap water are over, the annual increase this year was around 14%. Overflow from the tank could go straight into the pool. Use your ‘grey’ water in the garden – you can convert a bath outlet and divert the water for peanuts. If, like me, you love those water-greedy plants and bog gardens – backwash your pond and pool into those areas not the storm water drain.
Action: Get your affairs in order, then buckle down to creating wealth. It is simple. Insure breadwinners, invest for retirement and have a will. Get organised, get help. Worrying is like paying a debt twice – upfront when you worry, and again if it becomes due.
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Author Dawn Ridler