I bought the Finweek 28 February 2013 edition to eagerly read the article Top Secret – the most important f inancial article you will ever read! No modesty here...
In the article you write about compounding “when we at Finweek…” and show a graph of how R10 000 invested at Allan Gray on 15 June 1974 would today be worth R114.9m. Interesting you add “before fees”, how can you not deduct fees if you are giving a meaningful picture? Or is it possible for me to invest there without having fees charged? If the fees accounted for, say, R900 000 then the growth would still be astounding.
So much so that I believe it is not true, I have not done the maths, I failed stats twice. However, I believe that you have got a misprint. If I am correct, then Finweek can give me two years’ free subscriptions, and if I am wrong, I will donate R1 500 to a charity of your choice.
I was most surprised not to see an erratum in the current week’s publication.
Thank you for the mail and the feedback on the article. It is always nice to interact with readers and to be kept on our toes.
With regards to the query concerning the fees, I agree 100% that one would need to take fees into consideration to get a real picture of investment returns. However, the point that the article was making was around the power of compound investment returns. Playing the devil ’s advocate here, it could be argued that irrespective of whether your investment was worth R114.9m or if we – unscientifically – deducted 38% (1% for every year between 1974 and 2012) a total investment value of R71m still remains a significant nest egg.
With regards to the actual value, it is not a misprint – the number is published on the Allan Gray website (www.allangray.co.za) and the company confirmed to us that the number is audited and correct. Instead of putting money into a specif ic charity, my suggestion would be that you visit www.sasix.co.za and open a “giving account” there where you can identify projects that you are passionate about. more information about the programme and what it is trying to achieve. In 2012, Finweek partnered with the team from business acceleration f irm Aurik to identify 10 high-impact entrepreneurs in Gauteng to receive R2.5m in business development support. In a nutshell, we were looking for 10 entrepreneurs who needed guidance and internal system development and tracked their development over a year. These entrepreneurs have developed their businesses significantly over the last few months and many of them have been able to increase sales and revenue by more than 100% and are busy expanding into new markets. One of the key factors about the BizAccelerators initiative was that we have been able to go beyond simply profiling entrepreneurs and have been able to track them, tell their war stories as well as their success stories. Based on the success of the programme in 2012/2013, we are exploring opportunities to take the programme beyond Gauteng. With entrepreneurship being such a critical part of the development of the South African economy, this kind of programme is important to encourage people to consider starting to their own businesses.