Introduction
[background music] Investing made easy and cool!
Wealth creation is the easiest thing in the world, you take some money every month and you buy yourself an ETF and you do this for 20 or 30 years, you come back and you will be rich. Will you be Warren Buffet rich? No, probably not. But will you be richer that the person who didn’t? Definitely!
Welcome to Easy Does It. A podcast by Easy Equities, where we simplify money and investing. No Jargon. No complications. Your cool guide to investing.
Whether you’re a late investment bloomer looking to start your journey to financial freedom, it’s never too early - nor is it too late - to start learning about the world of investing. My name is Dj @ large (Hmm Hmm Hmm) and I welcome you to the Easy Does It podcast. Your fun guide to investing. Today we are hanging out with an experienced investor, a trader, a speaker, a writer, a photographer, a chocolate eater, wine and coffee drinker – I simply refer to him as the investment OG – his name is Simon Brown. Talking all things investing 101. So this one is dedicated to those who are itching to start investing but don’t know how.
Interview:
Dj @ Large: Simon, thank you so much for joining us on Easy Does It.
Simon Brown: Absolute pleasure, absolute pleasure.
Dj @ Large: Still loving the wine, the coffee and the chocolate?
Simon Brown: Yes and Yes and Yes.
[laughter]
Dj @ Large: I am assuming Lockdown gave you enough time to enjoy some of these things
Simon Brown: There were times when wine was a bit tough but yeah, I have made up for it.
Dj @ Large: [laughter] absolutely amazing. Simon before we get into Investing 101, I wanna quickly rewind to 1987 when you decided to buy your first ever share just before the stock market crashed, do you remember what share you bought?
Simon Brown: Oh yah! It was di data. So I was in matric-- I was fortunate if we go back a quick five year before that, my grandmother had passed away and she left me, I think, 9 De Beer shares and it got me interested in the market.
My grandfather knew a bit to tell me course of course, this was pre-internet and stuff. And I am at school and computers are this big happening thing – there weren’t a part of everyday life. My school didn’t even have a computer at that point.
But I figured that this was the future, not because I was smart, but because it looked like fun. So I wanted the stock that was in the computer sort of business / game, whatever the case may be. There wasn’t very much in the market. It’s not like I went out and did deep research, no no, it was just like, “hey di data cool, I’ll buy that one”.
Dj @Large: [laughter]
Simon: What I didn’t know in the background was that my Grandfather was paying the transaction fees and had got the stock broker to do me a favour, because in those days – 1987 – you needed R20 000 to open an account – that’s big money today – back then it was solid money. I was unaware of all of that and I can still remember the thrill of it all and of course it’s old, so you’ve gotta phone in to get the trade done. That broker that phones Jo’burg who phones the floor and about 10 days later, you get a slip of paper in the mail, in the post, saying that you actually own your shares.
Dj @Large: By that time, you’ve even forgot what you’ve bought [laughter]
Simon Brown: Oh no no, I woke up every morning went to check the post. I think I bought 200 of them or something cause in those days you had to buy lots of a hundred. It was deeply exciting!
Dj @ Large: Ahh man, lovely! Earlier on I have mentioned all these amazing things that you do, you’re an investor, you’re a speaker and I mean, you’ve also got your own podcast. But I’ve always picked up since I’ve had interactions with you that educating people about saving about investing is something very passionate and dear to you. Where does that come from?
Simon Brown: It’s a good question. I was actually thinking about it this morning. I am teacher. When people say to me, “what do you do?” – I teach. I use multiple medium - I don’t do classrooms. I do podcasts. I do columns and TV shows and this. Ultimately, I’m a teacher. My mother sort of instilled it into me in a lot of ways. But what really drove me into this industry in particular, was late 90’s and then trading options and the like. A complete lack of information out there for people and the internet starting to come along. And what struck me about it was that none of this is rocket science. You don’t need to be the smartest kid in the room. You don’t even need to be in the top half of the smartest kids in the room. You didn’t have the information out there and it’s the old thing. Something which I consider old hat. Someone doesn’t know about, not because there are not smart, because there’ve just never engaged, there’ve never been helped, there’ve never been assisted in that process.
My skill set, more than anything, is that it turns out that I actually have a skill in talking to people. This is an industry that likes complexity. We like big words. We like jargon. We like to make it think that we all extra smart and part of that is because in the olden days, if you thought that this was a complex industry, you would give me your money to manage, I could charge a fee and I could make money off it.
And now we’re at the stage where—and we’ve seen it – Easy Equities is the classic example - and rocket science require - zero! And this is not a diss to Charles and his team, it’s common sense in many cases but it’s seems so complex and my job is to say, “hang on, it’s not’’, let’s take this wall down, brick by brick and explain every term to itself and at the end of the day you will realize that everyone is perfectly simple and suddenly you think you’re a rocket scientist because you know stuff that, prior to that was jargon and complexity.
Dj @ Large: I love the road that you’re going down, because we need to talk about the misconceptions about investing and you’ve already touched on some of them. When you’re interacting with people, when you’re teaching people about investing, what are some of the things that come up? I know you’ve already mentioned you need to be a rocket scientist to understand investing. What are the other misconceptions we need to debunk?
Simon Brown: That you need a lot of money to start. In the olden days. I mean, if you didn’t have 20 thousand in the 80’s—that got you a car, like a real car, not a skidonk! That you need to have a lots of money. That you need to be connected. And again, back in the olden days, it was who you played golf with, more than what your research was. That you can lose all your money – look you can – you can go and buy a Steinhoff and it can go horribly wrong for you but if you’re a little bit smart about it and you don’t just buy one share, because I mean lots of people own Steinhoff and that’s not a judgement on them, Steinhoff was fraud - out and out crookery – you know.
You don’t buy one share, one of the things you need to know is diversification. Buy an ETF, buy five shares, something like that. One of them goes bust – it’s not lekker – but this is not like those pyramid schemes and other dodgy things where you can actually lose all your money. You can, but is a very simple ways to mitigating against that potential risk of total loss. The last misconception is that you can get rich in a hurry, and that’s not true, either. There’s one way you can get rich in hurry: you marry money go find a rich person and marry them. Otherwise, getting rich is slow and takes time. But, not that hard.
Dj @Large: So, you know, we’ve got a Tshepo, a Melissa, a Steve who’s listening, who’s interested in investing, but they don’t know where to start. They don’t know what a share it, they don’t even know what a stock broker is, then they hear you can only go to the JSE to buy shares and then now they’re hearing about an ETF, let’s break down some of those terms in to their basics so that anybody can understand investing.
Simon Brown: Okay, let’s start with stock broker because if you wanna buy a share, you need a stock broker. This is basically the person or actually organization who facilitates that. It’s like if I wanna buy a car, I got to a car dealership. If I wanna buy groceries, I go to the grocery store. If you wanna go buy share, you go to a shares store and it’s called a [stock bow?] And that stock broker interacts with exchanges and stuff and there’s complexity in the background. But you need that person to facilitate it and make it happen for you.
You buying a share, what is a share? Literally a slice of the business. Let’s take Shoprite, we all know Shoprite-Checkers and their other brands; they sell groceries. We understand that business model. People are always going to eat. And you know Shoprite-Checkers does it really good. We use the product, no rocket science required. What they do is they’ve got shares, you can go and buy a slice of Shoprite. Now, you could buy all of Shoprite and it would cost you, I don’t know, 100 billion rand. I ain’t got a billion rand running around but I can go and buy one share in Shoprite. Hundred and sixty bucks as we record this. With Easy Equities, you can buy a slice of that share or a quarter of it or a tenth or whatever. You go and buy that share, you are literally now an owner of a business.
And let’s take it to a scenario of a coffee shop, what does that mean? Well it means that you get to share in the profits, you get to share in the decision making and maybe even get to work there if you so want. My share of Shoprite, means just that. When Shoprite releases results, and they say hey, we’ve made money, some of that money they keep, some of that money they give back to me and you as shareholders, dividend, I get cash. Now, whether I bought that share a week ago or 20 years ago, I get my share of the profit coming through. I don’t get any special treatment, when I go to Shoprite, there’s not discount, there’s no queue for shareholders, that sort of stuff. But when I go to Shoprite – maybe I am weird like that - let’s be clear, when I look down the floor I own a square centimeter and I make sure it’s clean. It’s a sense of ownership. That’s so important! That ability to say some of this is mine. So I own some of the business. I get some of the profit. There is an Annual General Meeting, which is by law, once a year, where all the shareholders come and they get to vote. They get to vote on stuff.
What I don’t have to do is wake up at 6o’clock and go and pack the shelves or attend a marketing meeting or make a strategy decision. I am a passive owner in that management is running it for me. If I do not like the management, I can go to the AGM and vote against them and I may or may not succeed, depends how everyone else votes because it’s democracy. One share. One vote. Or I can simply sell it. But you buy a share, you are a business owner. You own some of that business. As opposed to the coffee shop where I said maybe you need to wash cups because there’re short staffed today, that can never happen. But you get all the other benefits of it.
So we’ve got the broker, we’ve got the shares – and I said a moment ago the risk if you bought Steinhoff and then there’s crookery and the stock goes from 90 bucks to 90 cents and you lose 99% of your money. One of the way that we mitigate that is, we get something called an ETF. They came along 20 years ago. Exchange traded fund. What that is, is a basket of shares. So instead of buying Shoprite, you buy this basket and you get 40 stocks and they will be, for example, Satrix 40 – that will the 40 largest companies in the exchange in South Africa. So you’ve not only got Shoprite, you got Pick n Pay. You got the big banks, including Capitec and Investec. You’ve got some mining companies in there. You’ve got some Medical companies in there. You’ve got all of the sort of different industries, different companies. So if one of them happens to be Steinhoff which was in the top 40 and the day it fell 70%, my ETF lost about, meh, 0.8% because it was just a small slice.
So I say to folks, to the question of “where do you start?” I say, buy an ETF, “which one?”, you can buy the South African one, you can go and the 500 biggest companies in America, which is, you know, IBM and Apple and Tesla is in there these days and stuff. And you can go and buy yourself a basket and you start like that because, A, It’s safer, in case some of them goes bust or do some crookery but also it gets you in the game and now you’ve got skin in the game. You watch the price going up and down. Now you the shareholder of 500 or 40 different companies. You can go and buy a tech one, NASDAQ, which is all the tech stock. And now you in. And that’s the scariest part – is that first purchase – cause you don’t know what’s going to happen and then you’re worried you gonna lose your money, so you buy the ETF and then you can start and watch it. You know what, it goes up, it goes down, it goes sideways, one day it pays you a dividend and its like “Yoh! There is money just for mahala. So you start with an ETF, an Exchange Traded Fund. We’ve got about 70-80 locally. It’s everything, from your big 40 companies in South Africa. You can buy a world-wide one which is 1600 companies around the world. America, Tech, Property. China. You wanna be invested in China, you can buy a China one and suddenly you now are a Warren Buffet. You’re in the game, you’re investing!
Dj @Large: I love that! I wanna put this visually in terms of Exchange Traded Funds. Because people usually get very confused with it. So the idea is an actual basket – we’re are talking about Shoprite - and inside this basket there are a whole lot of different things but you’re paying one amount for what’s in your basket.
Simon Brown: Yes!
Dj @Large: That makes complete sense to me.
Simon Brown: Yeah. And the beauty of it is, you could go and buy those 40 shares yourself. But now you’re gonna pay 40 times to buy it. You buy the basket, there’s a company out there; Satrix, Coshares, Sygnia ITRIX, they go and manufacture this basket for you. And I suppose, in a sense, it’s like going on a picnic, you’ve got a picnic basket and when you get there, well, what’s in there, you’ve got some cheese, some cold meat, some bread, some wine, maybe water, all the cutleries and it’s all kind of needed. That is exactly what an ETF is. It’s kind of like a picnic basket in many sense.
Dj @Large: Love that! Now here is a difficult one for me, I remember when I started investing, I’d gone to the one lap and I started learning about investing. The thing that made me scared to take the first leap was, what do I buy and how do I decide what to buy. So there are all these baskets, how do I know which is the best basket to buy?
Simon Brown: Well, here is the bad news, you don’t know which is the best basket to buy. I get the question all the time and it used to-- for decades it bothered me that I wasn’t buying the best. The truth is, sometimes you do buy the best, and that was just luck. What you want though is one that’s not horrid! We don’t know what the future is, no one can see into the future. If we got a time machine, I can tell you what the best one was one a decade ago, of course, absence of a time machine - that is completely useless information. But what you’re doing is, you’re buying the market. Now quickly go on slight detour.
The market in itself, collectively, that basket we talk about, that ETF, we talk about. That is typically the best performing asset class, over the long term. And what I mean by that, it does better than property. It does better that money in the bank. It does better than a commodity such as a gold. In the short term, maybe gold wins, maybe this one wins, but over the long term businesses win – that’s where the wealth is created. The rich people out there, that weren’t inheriting, are rich because they have started businesses. If we go look at the Forbes list, the Elon Musk’s, the Bill Gates, the Jeff Bezos and Patrice Motsepe, they start businesses. That’s how they get to that place. We can hook along for that ride. Then the question is—typically what we do is—we go see which one has done the best in the last three or five years and we’ll buy that one cause we think it will continue. Well, it might, it might not. But, you know what, buying an ETF, even the second or the third, even the fifth best, it’s still gonna make you money. It’s still going to do better than inflation, because if you’re not beating inflation, you’re going backwards. Overtime, it’s going to create wealth.
Wealth creation is the easiest thing in the world. You take some money every month and you buy yourself an ETF, and you do this for 20 or 30 years, you come back and you will be rich. Will you be Warren Buffet rich? No, probably not. But will you be richer that the person who didn’t? Absolutely!
Dj @Large: Definitely!
Simon Brown: The secret there of course, was the 20 or 30 years. Now, everyone is like, ‘’dude, in 30 years? I could rob a bank and do 10 inside. It’s that. Wealth creation is a process, it takes some time.
Dj @Large: I love that! And I guess when we start to talk about generational wealth and sharing of information, somebody has to start it in the line of the Browns, somebody has to start it, that person could be you.
Simon Brown: Why don’t we start? So, don’t get to start because we haven’t have enough money? 100 bucks all you need. We live in a country where a 100 bucks is a lot money for a lot of people. Yeah, you got a job, you can find a 100 bucks a month. So you can start this month with a hundred bucks. What do you buy, an ETF, go buy the S&P500 or the Satrix top 40. Simple, easy, done, your hundred bucks in now invested. And just rinse and repeat. You get a little bit of extra money, I always say to folks, when you get extra money, a bonus or whatever it might be, you a little bit lucky in the lotto one Saturday. Everyone say, take it to pay off debt, nah man that’s boring. Take a third, pay off debt; take a third, go on a holiday; take your partner on a dinner or your kids to the circus or something. Take a third and save it!
Dj @Large: Absolutely, love that, love that! Simon, what are your final words of encouragement for those are like, ‘’You know what, the OG of investing has given me so much knowledge, I just need that final push just to get me started’’, what are your final words of encouragement?
Simon Brown: To be a cliché, just do it! Start today! The point is, it’s the decision you need to make. And what’s that decision, the decision is not what should I buy or what’s the best one or what happens if it goes down. The decision you gotta make is, do you, in your future want to be richer? Do you in the future want your children to be richer? Do you in your future want to be able to help your parents in their old age, and if the answer to any of those is yes, and surely, surely, they are. You need to make that decision to start today. And once you’ve made that decision, then it’s easy, you can open yourself an Easy Equities account, boom boom, click click! All online! You find yourself a hundred bucks somewhere, you drop the hundred bucks in the account, go buy yourself a Satrix 40 and start to check out how it’s doing. What should go up, what should go down. Month later, rinse and repeat. But make that decision to make you and your family’s life, better into the future.
Dj @Large: Ooh weee!! That’s it right there! Simon, before I let you go. There’s one question that I need to ask you, otherwise people will kill me. What is Simon investing in right now? I know on your website there is a little bit of a cheat sheet there [laughter] with a preview into your portfolio but what are you generally buying at the moment?
Simon Brown: So, what have I been buying lately…? So every month, I go and buy some ETF’s. I happen to buy the Ashburton 1200 - it’s a global ETF - I like it. It includes some emerging market. It doesn’t include Africa, it’s a bit of a blind spot there, but you know what, I’ve got that in my local stuff. So every month, I go and buy the Ashburton 1200, debit order, bang, it happened, don’t even know about it. There’s stuff happening in the small cups, there’s stuff happening in the mining space. [Binew?], Renergen, Trellidor, Purple. I’ve actually exited my Trellidor recently. These are all the sort of stocks that I’ve been picking up. Shoprite - we talked about it – giant company! Man those results they had were knock out. Folks will say to me Shoprite is not cheap. Yeah, never been cheap! Like, it’s never cheap, so just buy it. The resources, I think there’s still a way to go in the resource space and we have got a market that is full of excellent, small companies that have done nothing for maybe 5 or 10 years and they’re brilliant companies. And don’t look at it and say, it’s already up 50% or 100%. You wanna buy a share that goes up 10x, to go up 10x, it first has to go up 1x, if you miss the 1st x, there’s 9 more x’s for you. 11
Dj @Large: Ahh man, 100%. That’s why I call him the investing OG, Simon Brown, thank you so much for giving us your time on Easy does it. How do we connect with you, Apart from seeing you on TV, [laughter] hearing your voice on the podcast, how do we connect with you?
Simon Brown: Just got to my vanity site: Simonbrown.co.za. All my contacts are there, published my portfolio up there, etc. I’m on all the Twitters, Facebooks. I am everywhere. Drop me a DM, drop me an email, always happy to chat.
Dj @Large: And that’s how we do on Easy Does it! Your fun guide to investing.
Easy does it, that how we do. A big shout out to you for hanging out with us. Don’t forget to subscribe. We are on Spotify and Apple podcast. Let us know what you think of this episode on twitter and Insta. Our handle is: @EasyEquities