Gordhan gets his personal finances right
It is difficult to get a clear picture of the savings behaviour of others. That is why conspicuous consumption is the financial ruin of many. Driving a flashy car and wearing expensive clothes and jewellery give the outward appearance of financial success, while in the background is a debt burden and no savings.
Unless you are an MP. Then all of your assets must be disclosed. The members’ register provides a sample of the savings behaviour of South Africans, at least that segment of society who earn good salaries.
Scrolling through the members’ interests provides some interesting reading. The good news is that many MPs hold a reasonable portfolio of investments, providing them with financial security.
Many have unit trusts, exchange-traded funds or listed shares. Quite a few hold interests in broad-based black economic empowerment schemes like MultiChoice’s Phuthuma Nathi, Nedbank’s Eyethu and Sasol’s Inzalo. Several have interests in private companies.
The bad news is that many have no investments at all.
Public Enterprises Minister Pravin Gordhan’s disclosures have been made much of by opponents trying to discredit him. According to the 2016 register of interests, Gordhan held a portfolio of listed shares with a total value of R3.2m.
This is easy to determine because Gordhan is meticulous in disclosing the number of shares he held across the 36 JSE-listed companies he was invested in and the value as at the reporting date.
Other members provided only cursory information, such as the number of shares and not the value, or simply disclosed that they have “a portfolio of shares” but no further detail.
There doesn’t seem to be any stringent enforcement of disclosure levels. EFF commander-inchief Julius Malema, for instance, discloses that he has interests in four trusts but provides no information on what assets are held within those trusts nor what they are worth.
Plenty of members are worth more than 69-year-old Gordhan, though the inconsistency in the way MPs complete the register makes it hard to determine just how many.
The DA’s Greg Krumbock, for instance, holds a large portfolio of listed and unlisted shares and property interests worth considerably more than R3.2m. In the 2017 register, Krumbock discloses a “portfolio” of “various” JSE-listed shares with a value “as per the JSE”.
He also discloses a portfolio of shares held in something called “Personal Trust International” worth R17.8m and shares in something called “Schwartz Properties” worth R5.6m.
According to the register, his DA colleague Sej Motau has a portfolio of shares including Old Mutual, MTN and 12,000 Sasol shares. Those Sasol shares are worth R5.9m.
The Freedom Front’s Connie Mulder holds a diverse portfolio of blue-chip shares including Woolworths, Anglo American, MTN, Gold Fields, 10,000 Richemont shares now worth R920,000 and 6,000 Reinet shares now worth R1.4m.
ANC members apart from Gordhan also have some healthy assets. Xoliswa Sandra Tom has a fixed deposit of R1m with First National Bank and a R200,000 investment in Old Mutual.
Joe Maswanganyi had R1.7m invested in an Absa money market fund in the 2016 register, though this disappeared in the 2017 register. In the 2016 register Lindiwe Zulu had R120,000 invested in MTN and Vodacom’s BEE schemes. These interests are all separate from the MPs’ pension arrangements, which are disclosed separately.
The standard view among financial planners is that your first investment should be an emergency fund equivalent to three months of income. This should be in an easily accessible, low-risk investment such as a bank deposit.
Then your portfolio should be diversified across a range of asset classes and assets, depending on risk tolerance (how much risk is wise given your objectives) and appetite (your taste for risk). Generally, the longer your investment time horizon and the more you earn, the more risk you can take. Many of our MPs appear to take too little risk, choosing fixed deposits or retail savings bonds instead of equity investments that should earn higher returns over time.
A diverse portfolio of shares, such as Gordhan’s, represents the best way to maximise returns while minimising risk.
Many MPs hold shares in companies listed on the JSE, but many also hold unlisted shares. Listed shares have the distinct advantage in being easy to sell and easy to value.
A public market finds a price based on the views of all buyers and sellers. Also, publicly listed companies have a high level of disclosure and transparency.
In scrolling over the members’ interests, however, I did not see any international investments — such as in a JSE exchange-traded fund that invests in global portfolios. That is a lost opportunity for further diversification by our MPs.
Many members seem to have no investments whatsoever, according to the declarations. The worst-paid MPs earn just over R1m per year and the best paid R2.7m. A legacy of the fight against apartheid is that many people’s most productive years were squandered.
But the point of savings is to smooth expenditure over one’s lifetime. Not saving now means poverty in future.
Our MPs should aspire to put aside more for rainy days and retirement. A diverse portfolio of shares with monthly contributions should be a minimum.