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Investing is not to be taken lightly or without forethought. For those with short memories, markets don’t always go up, and variable rates vary.

If you have doubt, ask Nicolette Mashile. She has made a career learning about and talking truth on the realities of investing.

Mashile built her reputation as an entrepreneur and founder of Financial Fitness Bunnies, a financial education initiative, and Bunch of Winnaz, a media buying, and brand activation agency. She also hosts the Daily Thetha youth talk TV show.

Before starting investing, be sure to take care of the basics. That includes having an emergency fund with three to six months of take-home pay saved and set aside. That’s not exciting, but it’s a huge peace of mind in case of unforeseen emergencies.

“Starting with understanding or drafting your financial goals is a good place,” Mashile said. “You can’t have a journey without a destination. It’s the same as dating. You know who you want to fulfill certain needs. Investing is the same.

“When it comes to investing, starting early is really important,” she said. “Generally, the rule of investments is compound interest. The earlier you start, the more you benefit from this eighth wonder of the world.”

Don’t expect or listen to sure things.

“Investing is not guaranteed unless you get a capital guarantee on your investment,” Mashile said. “Even that can register as a loss when pitted against inflation. So, it’s important to not invest money you need immediately.

“Financial advisors are great, but they too need guidance,” she said. “That’s why starting at home and mapping out what you want is a good idea. You tell advisors what you want. They can’t impose products on you. Acquiring financial education also is key.”

Protect key workers

Business investment opportunities start with ensuring key workers or partners. The business pays their life insurance premiums as an overhead expense. If they have permanent coverage, cash buildups also are a form of investment.

“The first investment opportunity is your own business,” Mashile said. “Use available funds to scale your company.

“Then I suggest venture capitalism,” she said. “There is no one else who knows the struggle of entrepreneurs than one who is already in the game. Identify smaller companies that do what you do and could become real competition. Then acquire them.”

Successful investors take a broad view of where to place their money.

“Diversify,” Mashile said. “Look at things like real estate. Collect rental money, but remember that is not the only way to invest in property. Look at listed property shares and real estate investment trusts.

“Investing in the stock exchange is still a big win,” she said. “Consider industries like information and communication technology; agriculture; manufacturing; infrastructure; and education. If not through stocks, innovation in these sectors is a great place to let your money work.”

There also are ways to invest as a group.

“I would like to see small businesses come together and create investment clubs that assist each other,” Mashile said. “Businesses must also invest in professional help — not the big rental office in the metro but in a tax consultant, marketing assistant, and processes expert.”

Much like hiring employees, entrepreneurs and their investment advisors must be in sync.

“Hire the best people who understand your vision,” Mashile said. “Paying salaries always feels like a schlep. Get the right resources, and they will go a long way. Remember, you must grow the business as if you will one day sell it.”

Only fixed-return investments are guaranteed. This includes conventional savings accounts and certificates of deposit. If an advisor otherwise utters the word “guaranteed,” run. Not only are market returns not guaranteed, but it’s also illegal to describe them as such.

“The investing space is somewhat of a gamble,” Mashile said. “There are instances where you will be guaranteed a return. But places like the stock exchange can’t always do that.

“Companies can default or go bankrupt,” she said. “Hence, it’s important to read the investment contracts so you know what to expect. Companies like EasyEquities have investment insurance products you can look into.”

Beware of promises no one can back up.

“I’ve seen people take their hard-earned cash and flush it down ’20 percent guaranteed returns’ types of scams,” Mashile said. “Be very cautious when investing. Understand what you are investing in.

“It’s also important to remember that for things like stocks, you only realize losses when you sell,” she said. “That’s why they always talk about buy and hold. If you buy high and the stock price drops, you will only realize the loss if you sell.”

Always taxes

You claim capital gains and losses on taxes. The rate of taxation depends on that set by your individual national and local governments. This is where a certified public accountant can advise you.

“You pay tax on some investments because not all of them are exempt,” Mashile said. “Tax is a tricky one. Always get help from a professional. They can help you get incentives.

“Investments such as tax-free accounts speak for themselves,” she said. “Different tax structures apply to different investments. For instance, capital gains tax can come into play when you dispose of shares in your unit trust. Your personal tax rate also can influence the amount owed.”

If you have money you can’t afford to lose in the near future, place it in safe, short-term investments such as certificates of deposit. When you’re young, you can weather long-term market ups and downs. You can make riskier investments that might ultimately yield high rewards.

Mashile noted these risks associated with short- and long-term investments:

  • Losing your hard-earned money.
  • Losing liquidity. This happens a lot when you invest in things like property. They are harder and take longer to dispose of. Your funds are tied up.
  • Diversification. Many people don’t diversity. They usually stick to that one thing that works. Let’s say it’s property. What happens when the property market busts? It’s important to invest in different asset classes
  • Not investing at all. Investments are a good start to create passive income. They come in handy for retirement and generational wealth or income. Not investing is dangerous.

“There also are risks outside of our control,” Mashile said. “These include market risk, currency rate risk or interest rate risk, which sit in economic developments.”

In Mashile’s Southern Africa, platforms allow non-Southern Africans to trade and invest in stocks and buy of property.

Getting out of debt is an amazing investment opportunity for all of us, especially expensive debt that attracts interest over 15 percent,” Mashile said. “That — along with entrepreneurship — allows you to free some disposable income.”

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Jim Katzaman
Jim Katzaman is a manager at Largo Financial Services. A writer by trade, he graduated from Lebanon Valley College, Pennsylvania, with a Bachelor of Arts in English. He enlisted in the Air Force and served for 25 years in public affairs – better known in the civilian world as public relations. He also earned an Associate’s Degree in Applied Science in Public Affairs. Since retiring, he has been a consultant and in the federal General Service as a public affairs specialist. He also acquired life and health insurance licenses, which resulted in his present affiliation with Largo Financial Services. In addition to expertise in financial affairs, he gathers the majority of his story content from Twitter chats. This has led him to publish about a wide range of topics such as social media, marketing, sexual harassment, workplace trends, productivity and financial management. Medium has named him a top writer in social media.

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