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EARLIER in the week I was asked to moderate the annual report from asset manager RE:CM to its clients. I really enjoy this group of people because they are smart, entrepreneurial and perhaps offer something a little different from the more mainstream managers.
After the event I was chatting to chairperson Lonn Potgieter. We got onto the old subject of how to build a decent level of financial education in the country and how to interest young people in investing.
He told a thought-provoking story about how his kids had heard that the Telkom [JSE:TKG] listing might be an opportunity to make some good money. However, they were stymied by the eternal problem of not having any money to participate in the deal.
Lonn agreed to play banker but on the understanding that if the listing flopped, the kids would still be responsible for paying back the capital amount and a bit of interest.
As it was, the listing worked out well, the kids made money which went a long way towards buying a car and the amount was repaid. More importantly, at a young age they had acquired a thirst for knowledge to learn about finances and investing, and an understanding of the basic principles of saving and compounding.
And most significant of all, by not just being given everything risk-free they are learning how the real world works.
Beware the piggy bank syndrome
We battle with the exact same conflict when it comes to some of the young entrepreneurs we invest in.
They have staked so much on their businesses that they have damaged their personal balance sheets. Then we have phone calls saying they can't pay their rent, car instalments, etc in their personal capacity - let alone business expenses.
It would be fantastic to just give them money and hope that their problems would go away, but one of the things we have fast come to realise is that money is often not the problem. Lack of money may be creating the discomfort - but simply extending cash is not changing anything.
As a total aside, I suspect that's exactly what most of the economists are saying about the global economy at the moment.
The message we give to our entrepreneurs is that money doesn't fix the problem and that an understanding of the tools at your disposal is worth significantly more. The business can't be the piggy bank which you live from day to day.
Instead, you have to be focusing on building an asset that has far more reach than a single entrepreneur.
Lonn's example of the Telkom listing highlights what happens when you understand what tools are out there, and how a bit of knowledge and a single spark of interest can materially change your financial wellbeing.
- Fin24
After the event I was chatting to chairperson Lonn Potgieter. We got onto the old subject of how to build a decent level of financial education in the country and how to interest young people in investing.
He told a thought-provoking story about how his kids had heard that the Telkom [JSE:TKG] listing might be an opportunity to make some good money. However, they were stymied by the eternal problem of not having any money to participate in the deal.
Lonn agreed to play banker but on the understanding that if the listing flopped, the kids would still be responsible for paying back the capital amount and a bit of interest.
As it was, the listing worked out well, the kids made money which went a long way towards buying a car and the amount was repaid. More importantly, at a young age they had acquired a thirst for knowledge to learn about finances and investing, and an understanding of the basic principles of saving and compounding.
And most significant of all, by not just being given everything risk-free they are learning how the real world works.
Beware the piggy bank syndrome
We battle with the exact same conflict when it comes to some of the young entrepreneurs we invest in.
They have staked so much on their businesses that they have damaged their personal balance sheets. Then we have phone calls saying they can't pay their rent, car instalments, etc in their personal capacity - let alone business expenses.
It would be fantastic to just give them money and hope that their problems would go away, but one of the things we have fast come to realise is that money is often not the problem. Lack of money may be creating the discomfort - but simply extending cash is not changing anything.
As a total aside, I suspect that's exactly what most of the economists are saying about the global economy at the moment.
The message we give to our entrepreneurs is that money doesn't fix the problem and that an understanding of the tools at your disposal is worth significantly more. The business can't be the piggy bank which you live from day to day.
Instead, you have to be focusing on building an asset that has far more reach than a single entrepreneur.
Lonn's example of the Telkom listing highlights what happens when you understand what tools are out there, and how a bit of knowledge and a single spark of interest can materially change your financial wellbeing.
- Fin24
