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Creating wealth

Written by nice from the blog Life matters with Nice on 21 Feb 2008
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After passing matric, most of us move on to get diplomas/ degrees or go straight to the corporate world with the hope of having a better life in future.

Once we get that dream position we can hopefully afford a house, car and accumulate a bit more of credit cards through some form of debt. But then we get to a stage where we are trying hard to rid ourselves of bonds that we have taken to finance houses and cars. We stick to the tried and tested ways of having a job that helps to pay for these things that we owe and by our employment we are obliged to contribute to some pension and retirement funds.

When we all reach the age of retirement all we have is a lousy lump sum which is really worth nothing and rely on Trevor's grant annually and hope that he will increase it by R70 each year. Or even worse when we die we turn to the public for donations as we did not save enough in our lifetime to even finance our own funerals.

After all that said, I want to ask how do we create wealth that can still be enjoyed by generations that will follow in our footsteps...........how do we ensure that our children and grandchildren have a legacy that they can preserve and continue expanding long after we have left this world?

Would it had not been great if you great grandparents had left an inheritance for you, then you needn't to start afresh when buying that first house?

Why then dont we start a way of creating wealth for ourselves now, invest your bonus in the stock markets instead of buying a pair of shoes or getting a recent model of that BMW that will need to be upgraded again in one year? Start by buying that piece of land to rent out, work on obtaining funding for that dream you have always had on how you could be rich and no ma-bloggers I am not saying that we should just start by opening tuck shops or operating telephone containers is every corner just cause we have seen some people make a success out of it. take a risk and venture on something new, develop a network that will leave you wealthy or is the fear of failing much to great for us that we prefer to only stick to what's been proven to be a success. Like expecting a salary from some boss at the end of each month?

So in summary ( I can see the article is long, you may forget what is this all about) How do we progress from just being self sufficient to wealthy human beings? Do we want to do that or is better to just let the cycle of struggle continue to the next generations?

26 Comments

AQUILOGY
21 Feb 2008 07:19

I think the first thing we need to do is realize that we are worth something, our people don't achieve because they have an inferiority complex, if we stop believing the racial stereotypes we have about ourselves we will go very far. if you look at the townships( i live in one) kids are dropping out of school because they believe that an education won't take them very far not realising that without an education it's impossible to succeed so we need to inspire those kids, they must see that the is an alternative to being "ulova"

i have to say this is one of the best blog post i've read, very nice nice

PhlyLady
21 Feb 2008 07:42

I agree with you AUILOGY this is a very good article, well thought out n well written. The 1 golden rule that my mother taught (n NO she is not rich but very happy) is that I should leave according to my means. If u dont have the cash to buy then dont buy it coz u cant afford it.

I've just enterd the coperate world n i'm in desperate need for advice on how I can invest in my money. I just opened a savings acc n I hope that will teach me something!!!

Grt article Nice!!!

Makhumo
21 Feb 2008 08:07

Yes, indeed i agree with Aquilogy, but we have to be realistic that sometimes the the policies and procedures favour those with money, if you go to the bank with an idea, they want to know what security you have, i mean dog where do i get security when i'm just about to begin.  If you tender most times you don't succeed unless you know someone on the inside and can push you. That is why the rich get richer the poor gets poorer.

So we have to realise that opportunities sometimes depend on being at the right place at the right time.

And I am not in anyway belittleling the value of education, because not all educated people are succesful and not all succesful people are educated.

So the question is how do we create wealth that can be passed on to our generation.   How do you simply create freedom, happiness, abundance, prosperity and fearless living in your life, that your children can enjoy generations to come?

Love you Topic!!!!!

nice
21 Feb 2008 08:07

Thank you aqui and phlylady, it is my very first article.

The sad thing though is that people fail to achieve what they want purely because they feel they haven't had a head start in life, but the very same idea of playing catch up should motivate you more. When you are determined to achieve nothing should be on your way as long as you stay focused and be patient.

Phlylady is a good thing to start early to save, because you will always be careful on what you spend your money on.

nice
21 Feb 2008 08:13

Makhumo true that, but what people can do is to get together and do the stokvel/ umgoliswano and that is how you can start to accumulate capital and the power hungry banks will be more likely to finance an idea that has more than one peson to back it up, the so called strength in numbers.

Best-Achiever
21 Feb 2008 23:34

@PhlyLady .... You must

Best-Achiever
21 Feb 2008 23:34

@PhlyLady .... You must also

Best-Achiever
21 Feb 2008 23:34

@PhlyLady .... You must also consider investing

Best-Achiever
21 Feb 2008 23:34

@PhlyLady .... You must also consider investing in

Best-Achiever
21 Feb 2008 23:40

sorry abou t that,this keyboard is ruining my Friday

@PhyLady .... you must also consider investing in property that is one thing i know that assures profit. you can buy a flat rent it out, maybe in that bond you'll only pay for rates and as time goes by(the rent will be increasing), you'll and up getting money while having somebody paying for your bond. when you decide to sell, you'll be laughing all the way to the bank. that's one thing guaranteed.

PhlyLady
22 Feb 2008 00:07

I've heard ppl talking about investing in property!! I havent the slightest idea how the property sector works but ke I want to know if irs advisable to buy a car 1st n then pay for it for a few years n then start investing in property? I am just so scared of having 2 huge installments to pay!!

felfel
22 Feb 2008 00:53

PhlyLady, a car is a necessity but a BMW / Merc is a luxury, buy a necessity, there's a lot of entry-level cars out there that are reliable. Buy something you can pay off in 3years instead of dragging for 5years. That way you'll be able to also take out a bond on a 1-bedroom flat (or 1&1/5 if you live in Pretoria...lol). If you still stay at home you can rent out your flat (not via an agency cos they will charge you administration every month). Once your car is paid up (in 3years), you wud have hopefully found a more paying job, buy another flat and then move out of home.You still have your first flat that you renting out, got ur car paid and have ur own place to stay.....see.(or find someone to marry you, move into his house, rent out the two flats, and who knows he'll probably upgrade your TATA...lol)

PhlyLady
22 Feb 2008 01:07

LOL yo Felfel u are 1 creative(n naughty) Individual!! Ya i want a very cheap car but ke not iskorokoro!!

myname
22 Feb 2008 01:15

Great article Nice. As i was reading this article i thought u were speaking 2 mi. Im one of those ppl who struggled 2 get a job for 3 years bt i wasnt sitting at home waiting for a miracle. I remember one of the girls from ekhaya she tasked mi that "whats the use of studying these diploma/degrees & end up selling the apples lyk us". And I told her "We can sell these apples 2gether on the street, but mna i have a Hope that ONE day i wil get a job & wena u will b selling these apples Forever". And i knew the time was not right for mi, i have 2 believe in myself. Now i got the job bt the problem is i cant save money. Im the bread winner ekhaya so its so hard 4 mi to save & ndiyafuna. So can u plz tell mi how can some1 learn/try 2 say some money & how much they need like the minimum? And which bank is okey to do that & sorry about these questions nhe

Best-Achiever
22 Feb 2008 01:22

@Phlylady .... you can do everything you wanna do without anyproblem, if your buy and rent out your flat, you wont be paying much towards it since the other portion will be payed by the tenant, as for a car there are just so many nice, reliable and reasonable cars in our days so you dont have to worry about it, well i did it and it real works. i bought a flat(1-bed flat last year) and im renting it out (i only pay for rated and my tenant is takig care of my bond through his rent and His rent is going up come April, so i'll be paying even less), and i bought a car, its a very nice car but reasonable. Another thig that i did, since i have decided to upgrade my Kitchen with Tupperware stuff, instead of buying from distributors, i joined Tupperware as a distributor, then i get discount everytime i buy it and get some free bees in the process, take those free bees to my kitchen and whatever i buy to my mum's kitchen, nd still get that 27% commission. you just need to open your mind and this world will be yours.

felfel
22 Feb 2008 01:36

Myname, i feel you on the bread winner aspect, i'm not really a bread winner at home, but it seems that my mother's salary is just never enough for her and my and my nephews. I gladly send money home and then tell them that i'm also broke now there's nothing more for the rest of the month but my or my brother or my nephew will somehow find it in them to pick up their cellfones,send me a pls call (when i don't have airtime also), i'll call back only to get someone asking me for money a few days before month-end...WHERE HELL IS IT SUPPOSSED TO COME FROM HEH??? They don't worry about saving cos they know i'll come thru somehow (eg. a transferring from a credit card, they even ask me to do this).
They best way is to go to the banks and "window shop" for the best savings options. In the meantime start small, see how much you have left after budgeting, take that little you can do without and open a stop-order for a period, it will force to save, then you take the lump sum after some time and stash it somewhere in the bank...

maddie
22 Feb 2008 01:43

Interesting article Nice,

I still don't understand us darkies sometimes.

How do you pay R7000 ror more for a car and stay in a flat where you pay R2000 a month.

it does not make sense, why not pay R7000 for a house and pay R2000 for a car installment.

when i started working, all my friends bought cars(and now they cannot afford houses) and i bought a house in one of these new developments, now my house is worth close to a million, i don't have a driver's licence (which i think was a blessing in disguise) therefore i don't have a car and have been using a taxi and lifts, but i'm fine with it. I am working on getting that licence cos i have a huge car allowance, but even when i get it i'll buy one of these standard Corsa Bakkies for my small business that i'm doing on the side (i'm selling paintings).

i'll use that car allowance money to pay for that bakkie in a year, and then i'll buy another property and rent out the current one.

that's me people, i don't succumb to any pressure, difficult as it might be, i don't.

we can blame the past/apartheid for our lack of financial knowledge, but information is out there and it's up to you if you want to use it or not.

ziggi
22 Feb 2008 01:47

Damn Nice I needed to hear this!Uyazi I'm very very bad in saving money or let me put it this way I can't keep money period.If I have it I just have to vithiza it.I really need help to manage my money S.E.R.I.O.U.S HELP.I cant say no to ppl even my siblings are taking advantage of this.they always ask me for money and it's not as if they need it for something really important but bcos they know Im not gonna say no.Its bad its really bad cos I cant even ask them to give it back.

realist
22 Feb 2008 02:00

This is the best article so far when it come to financial planning.

If you want to make money in the long term, say in three to five years time. Try the unit trust investments. If you are working and aged between 23 to 35 years invest in the General equity unit trust portfolio. Put aside about R250 for the next 2 to 3 years and will see you investment will grow much better than putting the money in the bank. Remember equity markets are not for the faint hearted. The higher the risk the higher the return, likewise you can loose all your investment if the stock market crumbles. Remember this will materialize if you invest for the minimum of three years to five years.

If you are not sure on how to go about this, consult your financial advisor or go to EQUINOX web side and read about how to invest in the stock market.

Molilo
22 Feb 2008 02:09

Thanx Realist I will do so I love investing. The problem with property I tried to buy last year they told I do not qualify as I earn less money if I was earning double of what i am earning now then we will be talking. I told them I can afford it coz they said their monthly instalments starts from R2000, but they told me they do not want to risk.

nice
22 Feb 2008 02:29

yes mense, we all know about a blackwomans budget and is a reality we have to face because of what happenned in the past (our parents could not save up for the retirement for many reasons which I wont go into), but I dont want to do the same to my kids. I am trying to make sure that they wont feel the need to support me.

have you noticed that when you go out to parties it is easy to spend about R300 for just one evening, how about you start saving that. Instead of buying lunch everyday at work, prepare something from home those cents you save add up and by the end of the month you will realise how much you have available to save. For the people that have "challenges" in saving have a stop order in place whether for a savings account or the unit trust depending on your appetite for risk and how quickly you want your money to grow. and like realist said, if you are going to invest one needs to have patience, especially if you go for stock markets as they fluctuates a lot.

myname
22 Feb 2008 02:33

This computer was doing its trick again. Anyway thanks guys & Felfel thanks darling i wil definitely try that nomakanjani.

realist
22 Feb 2008 03:09

@Molilo
Property investing is a risky business. Probably the reason you did not qualify at that time was due to the inerest rates going up. At that time when they calculated your affordability, probably they took into consideration interest flctuations. If they were to go up by five percentage points in their calculations maybe you were to find it difficult to repay the bond.

Remember with this new credit act, the risk lies with the banks. When they do the affordibility assessment based on the information you provided and it is found that they did not advice you accordingly, they are liable for the debt. That is why it is not easy these days to get a bond with the banks.

LM
22 Feb 2008 03:32

Informative article, Nice. I don't quiet agree with the advice of buying a car now and property later. The sooner you buy fixed property the better because what costs R400k today might cost you double or three times the initial amount three years from now. Those houses that were 200K in 2004 are worth next to a million now. There will always be a car worth less than R100K.

Savings account is okay for short term but the interests paid are poor. For medium term you can consider Government b\Bonds; they offer the highest interests, your capital is guaranteed and your money does not attract the rediculous fees charged by other institutions. You can access GB by post office or simply go to Treasury website.

Cnglemother
22 Feb 2008 03:47

Empowering topic indeed, i guess we sometimes fall in the debt-trap due to living beyond our means and trying to prove a point. I swallowed my pride the minute i fell pregnant and moved into an affordable area, still not happy with the area but at the moment that's all i can afford, some of my friends think twice when they want to visit me as they are scared that their cars might be stolen.But it feels good to be able to sleep at night without worrying about the debt collectors. I closed all my unnecessary clothing accounts and just kept two credit cards that are quite manageable.

And also being born from families that have not financial stability at all adds more harm to the situation, as soon as you start working you have this huge responsibility on your shoulders to take over and make sure your family is well taken care of. As you some of us from us are not originally from Jozi so it is expected from the community at large once you start working to be changes at your parents house, either you build them a fancy house or doing something major for them. On a funny note, by the way its such a dissapointment for a person who comes from Eastern Cape who has been working in Jozi for two years or more and go back home not driving a fancy car. I think we need to start getting real with our finances.

Thanks for all yr tips peeps, you said a mouthful, I really need advice on investments as i have managed to get out of the debt-trap kancinci.

Molilo
22 Feb 2008 04:42

My problem was not with the bank it was with the property giants. all of them will tell me no i cannot help u wara wara wara. ABSA introduced a bond approval (I do not know the correct term) for ppl earning next to nothing and they say they want ppl to own houses but no this ppl r interested in selling property to ppl who earn a lot of money in order to receive fat incentives at the end. But they r forgetting if they sell to us whatever commision they will receive will also assist them.

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