SA financial institutions not transparent
MAINSTREAM SCHOOLS CAN HELP More debt products are being advertised than investment tools.
Whenever I hear about radical economic transformation, I ask myself after 23 years of freedom: why is the majority – predominantly black South Africans – still the minority of the market participants?
Let’s consider my situation as a “low-income middle-class” – under R30 000 per month – individual. I can, and I am pretty sure everyone in this category can, save some money and invest in the market. The question I ask myself is: why don’t we all?
I’ve noticed on TV, radio and social media that more debt products are being advertised than investment products. When investment products are promoted, it’s usually an expensive unit trust or some dodgy, but well-worded, insurance product as opposed to good investment products such as exchange-traded funds, bonds or savings accounts.
I know about these products after doing my own research online. So, as a believer of economic transformation, I started an investment club with my group of friends. We plan to invest R500 every month and increase that amount by 10% every year.
I could have taken the R500 and popped it into my tax-free savings account, but sharing knowledge of the market is more important to me.
And we’re not investing to buy good whisky or visit the Bahamas – we want to ensure our children’s financial foundation is better than we had growing up.
My dad was a driving school instructor when I was in high school and my late mother a domestic worker when I went to university, so you can imagine how tough my tertiary years were.
When my son was born, I made a vow that he should not go through the same financial hardships as I had. I may not start a business to leave behind one day, but he will have assets and a financial foundation when he’s older.
However, my biggest concern now is the lack of transparency from the financial institutions. When they declare fees, it’s still challenging to understand what you’re getting yourself into.
My second biggest concern is how most of my generation drown themselves in debt. I wish we had better financial management education in the mainstream schools, and especially in the township schools. Fewer people would rely on the government and free education would be a whole lot easier if fewer people needed the government to fund their education.
I want to conclude by going back to the basics: spend less than you earn and invest, or save, the difference.
This opinion piece was first published on Just One Leap’s Cash Club blog and has been edited.