How to invest Cradle to grave (almost)! A personal perspective!

Your Investment plan?

Investing - my way

This is another topic that I had some difficulty with seeing as I had recently done a hubmob hub on this very topic None the less it struck me that by chronicling my investment history, it may serve as a guide to others on what to do and certainly what not to do in the investment arena.

 

MY parents did not believe in insurance in any form. Come to think of it they did not believe in saving either. So I did not have a policy taken out at birth for future education or simply as a nest egg for a gap year as parents now do.

 

My first Policy

 

My first exposure to investment was when I stated working. I was approached by a smooth insurance salesman – literally the man from Pru. He convinced me that setting aside a small amount monthly (I was only 17 at the time) would provide handsomely for my retirement at age 65. Now putting in perspective I only earned about R90 per month (about $90 then) and hi should provide the princely sum of around R150,000 at retirement (illustrative value only mind). My father found out that I bought this policy and went ape shit. In my lifetime I rarely saw his lose his cool. This was one of those occasions He phoned the agent, cancelled the policy and demanded my R7.00 initial payment back as I was not 21. Two years later I go a letter from the insurance company saying that my initial two year advance payment was about to expire and asking me if I wanted to make another advance payment or pay monthly at R7.50. I was puzzled as I was sure this policy was cancelled. At any rate, I opted to continue paying, puzzled but happy I had insurance and Dad was none the wiser

 

The Scam

 

I later read about my agent in the newspaper and found out he had been imprisoned for defrauding the Pru for a considerable amount of money. What he did was to sell low premium value policies to Students and young school leavers. Most being under age had these policies cancelled or et them lapse. He in the meanwhile would pay two years premium up front which then qualified the policy for commission on the estimated total value of he policy which by far exceeded the value of the premiums he had paid. The scam had come llight because of he inordinate number of policies lapsing after two years had expired.

 

At any rate I had my first investment and I subsequently took out additional endowment policies for low premiums a way of saving for the future.

 

Land investment

 

I also started to put small monthly amounts into savings so that I would have some cash.

 

Once I had around R100 ( bear in mind this was the 60’s) I decided that I should buy a vacant plot of in a residential area. I bought a quarter acre in an outlying area of Johannesburg. The deal was that when the area was developed, the land would serve as a deposit in a development with the capital growth in the land to offset the building costs and serve as a deposit on the mortgage.

 

Marriage and children

 

At around 22 when I got married I had a reasonable bank balance and could afford a wedding with all the trimmings. Like My parents I did not buy policies as the children were born. The only policies at that time were educational policies. Life or endowment policies on children’s lives were illegal at that time. It has all changed now of course.

 

We moved into a one bed roomed apartment in Sandton which was fine until the children arrived. Now we needed something bigger. The nest egg with children and all was down to zero.

 

Scam 2

 

I thought now is the time to leverage my plot of land. But guess what the developers had gone bust. No development, no township, all I had was a piece of un-proclaimed land un-saleable and I could not build on it. It appeared that the ‘developers’ had no intention od of developing but just enjoyed the payments for the land and ultimately declared bankruptcy and enjoyed the fruits of my and others labour.

 

Our home and mortgage

 

In themeantime we were house hunting in earnest. We finally found what we wanted but did not have the deposit. It was a newly built house in a new development (which is what my investment should have been).

 

I pondered how to find the deposit. I offered the developers my undeveloped stand as a trade for the deposit. Surprisingly they accepted and lo and behold we had a new home and a mortgage.

 

The advantages (and disadvantages) of a mortgage.

 

Now having a mortgage meant we received all sorts of solicitations. We were of course now officially “credit worthy” We were flattered at being offered the dreaded “CREDIT CARD”.

 

Our lesson in how not to manage credit had begun. Kids need school shoes – credit card. a night out for dinner – credit card. Pretty soon the cards were maxed out. We had a couple of painful years paying back the credit card company. In future no credit!

 

Once we again qualified for credit cards, we always paid back the full amount every month. Extended purchases were done using the budget plan with a fixed repayment period and an ascertainable interest charge. If we had spare cash we paid up early. This was a tough lesson to be learned.

 

The Stock market

 

I invested small amounts into established companies on the stock market that paid regular dividends. I used the dividends to buy additional shares and built up a portfolio over the years. I only used surplus cash to invest in the market. I also paid amounts extra into credit cards as a means of savings and build up a credit balance which I use for holidays or unexpected expenses.

 

Property

 

I sold off some of the share gains to buy vacant property (I lways ensured that no payments were due and the properties were fully paid up).These properties have appreciated over time. But bear in mind that these gains are only of value once you sell the properties. Likewise the stocks only have a real value when they are sold.

 

The current situation.

 

All my investments over time have diminished by half in the current scenario. The lesson here is not to sell. Hang in until things improve (If I live that long).

 

So this is a my particular scenario of how to build wealth over time (or not). Incidentally my biggest windfall was a credit insurance policy the ensured against death and dread disease, so the upside of getting cancer was a cash payout which paid for my car. So although I would hope you don’t get seriously ill or die, I would seriously recommend that you take credit insurance that covers these events when you buy a high priced item such as car on terms.

 

 

Another great hubmob from Sixtyorso

Comments 14 comments

agvulpes profile image

agvulpes 7 years ago from Australia

G'day sixty, The video has not been embedded? How are you going?


sixtyorso profile image

sixtyorso 7 years ago from South Africa Author

Thanks Ag Try gain now!


sixtyorso profile image

sixtyorso 7 years ago from South Africa Author

Hi Ag I am doing fine thanks. How goes it in Oz. after our cricketers sorted you lot out, I thoght you may not be too kind to correspond (LOL).


ilovehubbing profile image

ilovehubbing 7 years ago

interesting hub


sixtyorso profile image

sixtyorso 7 years ago from South Africa Author

ilovehubbing Thanks for stopping by and commenting. much appreciated


agvulpes profile image

agvulpes 7 years ago from Australia

G'day sixty, it wasn't the losing to SA ( they were the better side in Test and One Day) . Hey IT is only a game!. You can say that when you lose.

Winners a grinners, losers just cry in their beer. LOL

We don't have time to cry, we have to play NZ today and not be humiliated.

Great Hub on investing. This is definitely not the time to be selling if anything you should be buying. (only with your own money though) There are some bargains around. I would only be buying bricks and mortar.

My advise to anyone who asked ( and I am no expert , only from the hard school of knocks, something like yourself I'm guessing) is to put any SPARE cash into your house mortgage.

Sixty, good advise for the inexperienced. There always has been and always will be scammers out there trying to separate trusting people from their money.

 


G-Ma Johnson profile image

G-Ma Johnson 7 years ago from NW in the land of the Free

Boy I know it can take nearly a lifetime to learn...I do have some insurance coverage that is truly worth the money...but unlike my mom I don't have Longterm care Insurance and to me now that is way important...Glad the one was big help for you though...and hope the rest gain...G-Ma :o) Hugs & Peace


mistyhorizon2003 profile image

mistyhorizon2003 7 years ago from Guernsey (Channel Islands)

Fab advice and a fascinating story Sixty. My first Husband was diagnosed, and died two weeks later, from Bowel Cancer, just 4 months after he cancelled all his life insurance policies and declared himself bankrupt. It left me not only penniless in a rented home and with no job, but of course I also barely got a chance to grieve. In two weeks my life was turned upside down. If he had kept those policies going I would have been secure, as the total return would have been over £300,000 UK pounds, and I could have grieved without the added worry of keeping a roof over my own and my pets head. Needless to say this worry added hugely to my stress levels and many times I felt like simply 'topping myself' rather than keep battling on.


sixtyorso profile image

sixtyorso 7 years ago from South Africa Author

Ag Thanksfor your great comments and added advice which add immeasurably to the hub. I hope you guys give NZ a hiding!

G-ma yes certain types of insurance are vital and I hope the younger people reading this hub take heed. Hugs and kisses back.

Yes Misty There but for fortune... In the days before my divorce and while trying to keep the farm going, I could easily have cancelled my poilicies to improve my cash flow. I opted to sell shares instead, Thanks so much for stopping by and sharing and I am so happy you survived and your life has taken a turn for the best. LOL

Thanks allfor stopping by and commenting


Constant Walker profile image

Constant Walker 7 years ago from Springfield, Oregon

Sixty, what do you think of Mutual Funds in the current, and near future, market?


sixtyorso profile image

sixtyorso 7 years ago from South Africa Author

Hi CW in view of the fact that markets are considerably down, a mutual fund is a great long term strategy. Of course ypu cannot guess when markets are at bottom, but if you have spare cash this investment will over time beat the banks. Banks are at best dodgy at present anyway.

CW thanks for stopping by.


Constant Walker profile image

Constant Walker 7 years ago from Springfield, Oregon

Thanks.  And I agree, I have little - or no - faith in banks.

Also, I'd like to ask you something more in depth, pertaining to investing, but am not comfortable doing it in a public forum. Can I email you via your profile contact?


Just_Rodney profile image

Just_Rodney 7 years ago from Johannesberg South Africa, The Gold Mine City

Hi Sixty, Yes that is very sound advise, especially in watching ones back with unscrupulous insurance and also housing developers. Great hub once again.


sixtyorso profile image

sixtyorso 7 years ago from South Africa Author

CW By all means send a mail. You have my details.

Hi Rodney Once again thanks for your support. your oments are much apreciated

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