I’ve often thought about what I would say to my younger self if I had a chance to sit down and have a conversation. A favourite author of mine Anton Chekhov once wrote “Anyone who harbours regrets, arrests his own development.” And while I’ve tried to adopt this attitude in life and found it helpful when looking forward there are a few things I’d like to mention to my younger self, specifically where I chose to work and what I did with the money I earned.
I knew from a young age that I liked solving problems. In that sense I’m a born engineer constantly looking to solve, improve and optimise the world around me for the better. Obviously that naturally leans towards starting my own business, but that seems like such an impossible goal when you’re young and don’t know how or where to begin.
Unfortunately, I didn’t know anyone in my immediate or extended family who had done so, so I had no one I could ask for advice. Instead, I found my own circuitous route via a PhD and two post-doc fellowships (not your traditional startup story for sure). As a result, I only founded Franc when I was 36 years old and although I had learned some life lessons about myself and the world around me by then, I was still largely clueless as to how to build and run a business.
The advice I would give to my younger self after I finished my PhD would be to go and work for a young startup that had received decent Series A funding in a sector that I found interesting. Working in a fast growing startup is the best way to learn how to build a business that will scale while not taking on major personal risk in the process and there might even be some upside, in terms of share options.
The second piece of advice I would have given myself is to start investing while I was at University. I didn’t have a lot of money then, working as a part-time waiter and University tutor, but I had enough to start investing, for sure. It was only after my PhD in my late 20’s that I started trying to learn more about investing. Firstly, by doing an internship as a quantitative analyst with a hedge fund. And, secondly, through free seminars that were offered by Standard Bank to attract clients on their online trading platform. The problem is that the seminars were encouraging people to actively trade (likely to drive brokerage commission for Standard Bank).
Again, no member of my family worked in finance or actively invested so I had no one to ask for advice. I now know that I don’t have the patience to continuously track the markets and actively trade. To be honest, I find the world of finance boring and uninteresting.
The advice I would have given myself would be to open an investment account and start investing regularly in low-cost index tracking ETFs for the long term. The power of this approach is that you capitalise on diversification and cost-averaging thereby minimising the impact of volatility (constantly changing price of the underlying assets). So instead of trying to time the market and potentially miss out on the right time, you simply buy the market at regular intervals, be that weekly or monthly.
My advice to my younger self would be invest and forget!
The crazy thing is if I had invested just R 500 every month into Franc’s Equity Fund, when I started University in January 2000, I would now be sitting on an investment portfolio worth over R 710,000 given that the Equity Fund has enjoyed a compound growth rate of 12.13% over the last 22 years. That’s not bad!
The sad reality is that although I dabbled in investing during my 20’s and early 30’s, I never made it a regular habit - to my deep frustration. I now know that the most important thing is to get into the habit of investing something at the beginning every month come rain or shine!
The last piece of financial advice I would like to share with my younger self is to understand the difference between good and bad debt (to learn more about the difference read our academy article on the topic). I learnt the hard way how difficult it can be to rid yourself of bad debt (credit card). And that experience scared me from buying a flat in my late 20’s, which would have already tripled in value judging by the average market prices in the area (arguably good debt).
These are hard life lessons to learn and looking back on them I only wish that I could go back in time and have a fat long chat with my younger self. As the saying goes, the best time to start investing was yesterday but the second best time is today, so if you haven’t started, create a Franc account today and start investing today.