Investing: When, how to get started?

It is over a decade ago when I first read the personal finance management best-seller, Rich Dad Poor Dad, co-authored by Robert Kiyosaki and Sharon Lechter. Many who have read this book will agree that it is a simple, but inspiring read on how one can attain financial independence.

The book is widely touted to have challenged and changed people’s perception of money and how to spend the finances.

Talk about investment and retirement planning has dominated public discussions from time immemorial, especially among people in formal employment.

In Malawi, for a long time, many in formal employment as well as those in business depended on life insurance policies and savings accounts as avenues of saving.

Economic liberalisation in the mid-1990s opened up alternative investment platforms such as shares on the stock exchange and related products.

Earlier this week, Airtel Malawi listed as the 15th counter on the Malawi Stock Exchange (MSE) after giving a chance to about 8 000 individual Malawians to own a stake. The Airtel Malawi initial public offer at K12.69 per share faced negative publicity, but still it ended up being oversubscribed by 34 percent. On listing day, Airtel gained K5.30 to trade at K17.99, a whopping 41.7 percent gain by investors. Briefly, those who ignored the negative talk and took the risk to invest in Airtel Malawi now own a part of the telecommunications giant.

When I went through a presentation made at a Financial Planning and Wealth Management Seminar in Blantyre by business executive Simon Itaye under the topic Creating and Managing Successful Investment Groups: The Case of Investments Alliance Limited, I picked out what I feel are some practical homegrown tips that have worked.

In the presentation made courtesy of Nico Asset Managers in Blantyre on March 1 last year, Itaye highlighted the use of investment groups as a key to creating wealth.

Do not be scared with the terminology. Investment groups, simply put, are platforms for making money make money by like-minded people who pool their resources together for a common goal. Such groups or consortium, as Itaye put it, act as insurance and provide some security to lenders.

But, he stressed on some virtues not common among many us: professional approach, patience, discipline, transparency and accountability.

From the presentation, Investments Alliance Limited (IAL) started in 1998 initially by 18 Malawian professionals but now has 12 members or shareholders, as an economic investment portfolio empowerment company. It has stakes in companies such as Marsh Malawi, TNM plc, Icon Properties plc, Malawi Telecommunications Limited (MTL) and CDH Investment Bank Limited.

But, as they say, talk is cheap. What does it take to set up an investment outfit that grows?

I have drawn several lessons from the IAL chairperson Itaye’s presentation. These include preparation for investment and financial independence and taking charge of your financial future plan ahead. Further, start a savings/investment plan while you earn an income whether from your business or employment, keep savings and stick to your goals, plan your lifestyle and budget for it and, above all, save first and spend later—put a little more each month.

That done, never depend on a single income. Work to create a second income, start your own business.

Warren Buffet: “The first rule is never to lose money and the second rule is not to forget the first rule.”

When all is said and done, what is the best time to start or plan your investment and how?

Based on his experience alongside his colleagues, Itaye advises: “Start plans as early as possible, preferably while in the 20s and 30s. Save about 10 to 15 percent of your gross income every month, including, if possible topping up pension contributions to boost savings.”

But if you are in your 40s or 50s, do not despair. It is not too late. What you need to do, though, is to save a larger proportion of your income.

To move forward with your plans, according to Itaye, you will need to get rid of high- rate consumer debts.

Food for thought from Itaye: “Lack of savings leads to longer working years or falsification of age to make up for lost savings… Do not remain in employment for too long…”

Good financial advice is priceless and can be the key to success.

We plan, but God fulfills. Things may not always work out according to our plans. In such situations, when bad things happen in your life, you have three choices. You can either let it define you, let it destroy you or you can let it strengthen you.

It is time to explore more avenues of investment. In June this year, FDH Bank is set to list on the MSE, save now to buy shares.

Remember: Do not put all your eggs in one basket. Spread the risk, as insurers like to put it.