Over the years, people have asked my opinion about many strange and "100% fool-proof" investment ideas, including, but very much not limited to:
- Solar panels
- Cows (which you can literally buy through an app now by the way)
- Buy-to-let properties
- Marijuana (companies? fields? bankies? I never get deep enough into the conversation to ask)
- Multi-level-marketing schemes (AKA the devil)
- Uber cars
- Bottles of wine (but, like, how do you not drink it?)
- Bars of gold
- Digital representations of bars of gold
- Gold coins
- Gold that's been pressed into shapes and sometimes worn on your body (guys, people really like gold)
Now, I think the instinct behind considering investments like these is a good one: fundamentally, people want to invest in stuff they understand. And more than that, people want to invest in stuff that feels real and tangible.
And this is why I get so irritated that finance bros make the stock market look so difficult to understand. Stocks are wonderful. Historically, they've been the asset class most likely to outperform absolutely anything else (yes, including all the stuff on that list) and they've got a long track record of doing this. Investing in the stock market doesn't have to be a second job (unlike buy-to-let property, which usually takes much more time and labour than you think it will), you can do it even if you only have a tiny bit of cash to spare, and there's a way to do it that keeps your money much safer through diversification (buying ETFs).
But to most people, buying shares feels weird and abstract and complicated. To be completely honest with you, I actually had no idea what the stock market actually was until like five years ago. So most people are missing out on what can be one of the simplest and most satisfying things to do with your money: buying pieces of succesful businesses.
So that's what we've tried to do with the second episode of our podcast: create a quick, 14 minute introduction to what shares actually are and show you how easy it is to buy them. It's designed for total investing n00bs, and I hope that you'll share it with anyone you know who might find it useful :)
A SIDE-NOTE ABOUT SHARES AND DEMOCRACY
I believe that teaching more people how to buy shares is good for our democracy, too. In our weird, capitalist world, big companies have more power over many issues than governments do. The climate emergency, rich CEOs getting paid so much more than their employees, insecure jobs... all of these are issues that big companies need to help solve. And one of the rad things about owning shares is that you actually have the power to vote on what happens in those companies.
Now, this is one way that investing in ETFs is kinda weird (if you're not sure what an ETF is, go listen to the episode quickly), because normally, it's the ETF company that gets your voting rights instead of you. They're called proxy rights.
Let's say I invest in the Vanguard Total World Fund. Vanguard will get to send representatives to all of the annual meetings of the companies it invests in (like Apple and Google and Amazon) and vote on issues that come up, on my behalf, and on behalf of all the other people who invest in that fund. I can see how Vanguard voted on my behalf on their website.
Which means that if you care about issues like climate change, or economic inequality, or if you just want someone to tell Elon Musk to stop using the word "pedo" in polite conversation, you need to put pressure on the companies who are representing you. Just like you'd put pressure on your political representatives. And if they won't listen, move your money to someone who will.
UPDATES FROM SAM-LAND
- Are you enjoying the podcast? Do you have any tips about how we can do better? Please respond to this email and let me know! We'll be dropping episodes fortnightly between now and the end of the year.
- There's a page on my website where I maintain a list of good low-fee investment and savings options for South Africa. I've just done an update, please let me know if I've missed anything you think should be included.
- Catch me on 702 on Thursday the 17th on the Money Show with Bruce Whitfield, talking about... uh... actually I'm not sure yet, but talking to Bruce is always a hoot.
- Thank you so much to all of you who sent me insights about what money questions kids have! We're putting that book together now - it will hopefully be out in the first half of next year.
- We've just released a re-design for Lettuce, our brand-new portfolio management app. The next release will have graphs and some other nifty stuff.
- I just finished a first draft of the SUPER SECRET PROJECT I can't tell you about and I AM SO EXCITED ABOUT IT. Sorry to be all mysterious and stuff, but I just wanted to share :P Apart from that, my whole life life is moving admin right now. PRETTY BORING, yo.