Money has a language of its own, and when you speak it, you can make better informed financial decisions every day. Morocco Modiba explains how to view your bank statements, how to cut costs and save for your children’s future, how to spot scammers and more in this excerpt from his new book A wise investor.
Making informed financial decisions
If you understand the language of money, you will be able to make informed financial decisions every day. This may seem like a simple exercise, but it is a major game changer. If you make smart financial decisions a daily habitthen these decisions will build up over time to the point where they become a force on their own, pushing you toward financial independence.
Let me give you a simple example. If you make the effort to regularly by looking at your monthly bank statements, chances are you’ll have a full understanding of what’s going on with your finances. This knowledge will allow you to reduce costs.
You can start by reducing unnecessary fees and penalties on your bank account. It helps that the banking industry is so competitive these days that every year banks introduce new accounts that are cheaper but offer more benefits. You’ll still find people stuck with old, outdated bank accounts that are expensive but offer limited benefits. but switching from these old ones to the new ones is very cheap and sometimes even free (if done in the same bank).
The money you save from switching to a new and improved bank account can be put towards investments.
Empowering your family and the people around you
Ask any parent what they want for their children and 9 out of 10 will say a better life than what they had. However, it is a known fact that the biggest challenges of parenthood are related to finances. When money gets tight, we as parents are left with limited choices to give our children the life we ​​think they deserve. We end up fighting our children and then watch them fight their own children and so the cycle continues.
It’s a painful experience to say the least.
Now imagine that you can crack the code and turn things around. And all it takes is an understanding of how money works. They say money talks, right? Imagine that you are one of the few people who understand his language.
I once attended a Christmas dinner at a friend’s house in the northern suburbs of Joburg. After eating, we went outside to the lapa, where our host entertained us with music and drinks. I couldn’t help but notice that he was using a wireless portable speaker with colorful lights. The sound quality was amazing. When I complimented him, he said the boombox was a Christmas present for his daughter, who was doing well in school. He did not hesitate to reveal the price tag.
“Can you believe it cost me 6,000 rand?” – he said with a smile.
– Really? said the eavesdropper next to me. “When we were growing up, that kind of money could buy a full music center. Can you buy only one speaker today?” We all laughed at that answer.
At that moment, my mind was transported to an imaginary place. I saw my daughter at school standing in front of the class and telling me how she spent Christmas and what presents she got. But instead of bragging about the boombox, she tells the class that her dad bought her two ETFs worth R3 000 each. One ETF is for the JSE Top 40 and the other for the S&P 500. Even though she is only 10 years old, she can explain to the class what an ETF is and how it will benefit her over time: “My dad said that instead of buying something that looks cool now but gets old and breaks, he bought me something that will be more valuable in the future. And I think that’s really cool.” As she finishes her presentation, I return to the paw, to enjoy clear sound and drinks.
Identifying the right people to help you
Another benefit of understanding the language of money will be your ability to identify the right people to help you grow your money. Nobody knows everything. At some point, early or later in your investment journey, you will need help. Your knowledge of the language of money will help you find like-minded people who speak the same language as you. And the opposite is also true: if you do not understand the language, you risk becoming a victim of fraudsters and scammers.
Just a few years ago, a wave of pyramid schemes swept across the country. People threw their life savings into these scams and lost everything. This is the greed that Mr. Goldstein had in mind. One of my potential clients, a professional doctor, challenged me to come up with an investment idea that could match the returns of a cryptocurrency (like Bitcoin) that he wanted to invest in. I wanted to impress him, so I went and did some thorough research, but I couldn’t find anything that matched that return to his risk profile. I gave him the disappointing news.
He then invited me to a presentation by these scammers who pretended to be investment professionals. They hadn’t even finished introducing their presentation when I got up and left. I realized early on that this was a scam based on the wording they used: “double your money in days”, “no loss”, “no risk”, “guaranteed” and “more investors, more money”.
If you hear such things, beware.
Creating a network of like-minded people
Another important benefit of understanding and speaking the language of money is that in your personal life you will surround yourself with people who speak the same language. As they say: your network is your net worth. One of the reasons why the rich get richer is because they always hang out together. They go to each other’s houses, attend the same events, play golf at the same golf clubs. They run a business together and their children go to the same or similar schools. It’s a hard circle to break into if you don’t speak the language of their money. If you want to grow your capital, you need to surround yourself with a network of people who speak the same language.
Let me illustrate this with the story of someone you may be familiar with. His name is Gianni Moutan and he is the founder of PSG Group and Capitec Bank. In his autobiography, And then I was fired, Gianni describes how he achieved his breakthrough. After being fired from the brokerage firm he helped found – Senekal, Mouton & Kitshoff (SMK) – Gianni found himself out of work at the age of 50, his self-confidence shattered. Then one day a man called Piet de Jong visited him at home.
Who is Pete de Jong? Pete is the son of Teunis de Jong, former governor of the South African Reserve Bank (SARB). Someone who is already an adult remembers his signature on our paper money. Piet de Jong was sent to Gianni by his brother-in-law, Gianni Kitschoff. Who is Jani Kitshoff? Gianni K, as he is known in his inner circle, was one of the three founding partners of the brokerage firm that fired Gianni Mouton. But Janie K had left the firm several years before this incident. Interestingly, both Gianni K and Gianni Mouton were best friends with GT Ferreira, Laura Diepenaar and Paul Harris, the founders of Rand Merchant Bank (RMB) and First National Bank (FNB).
How did this network work for Gianni Mouton? Pete went to him to tell him about an unusual deal: a small listed company, Professional Assignment Group (PAG), was trading at a huge discount and its 60% controlling stake was up for grabs. So this group of friends raised money from their other friends in RMB to finance the deal and let their friends in SMK broker the deal. I like the fact that even though SMK fired him, Gianni pulled them into the deal. Everyone spoke the same language and understood that nothing personal is business.
Eighteen months after they paid 7 million rand for the PAG, another company approached them and offered 107 million rand for it. Approximate Profit 100 million rubles in 18 months! This is what they mean when they say your network is your net worth.
I can go on and on about the benefits of understanding the language of money. How people who understand the language eventually go from investors to philanthropists. A philanthropist is a person engaged in charity and humanitarian activities. Their generous contribution to society and the world at large not only contributes to their finances and image, but also has a spiritual component because their work touches and changes people’s lives. The level of execution here is very high. And this is a universal law: if you give, you will receive. This is why their legacy lives on many years after their death. This is generational wealth. And it all starts with understanding the language of money.
This book is specifically about understanding the language of money in relation to the stock market. Investments are one of the most important pillars of wealth creation.
Morocco Modiba is the Managing Director of Fatima Capital (Pty) Ltd, an authorized financial services provider. He is a qualified stockbroker with almost twenty years of experience in the financial sector. He is a best-selling author Consider yourself rich and is located in Gauteng. Your views.
