How a 22 year old  accumulated R360 000 through saving and investing.

A wise man once said that thrift is a form of income. What he meant was that it is what you do not spend rather than what you earn that will determine your wealth.

Twenty-two year old Rob, who features in our main article this week, is a living example of what can be achieved if you make a conscious decision to create wealth rather than spend.

By the age of 22, Rob has saved up R360 000, has no debt and bought his car with cash. It was not the result of a rich parents or winning the lotto, but simply because he started saving from the first cent he earned.

“I have made many mistakes and errors but my biggest advantage is that I started early, when I was 16. Since then, I have used funds from tutoring and other side businesses and basically invested everything. I have lived quite a spartan lifestyle, even throughout university,” says Rob.

When Rob was 16 years old he entered the JSE/Liberty Investment challenge which is a game that aims to teach South African learners about investing on the Johannesburg Stock Exchange. Rob’s school won the challenge and he received a R500 investment in Satrix.

“This gave me exposure to the markets, I knew nothing before, my parent’s didn’t invest, they don’t trust the markets’” says Rob.

Rob started reading about investing in companies and he started saving money from his student jobs and his pocket money. Rob worked whilst studying and unlike many of his peers rather than spending the money on entertainment, clothes or cellphones he saved until he had accumulated R10 000. He then contacted a stockbroking firm and asked them to give him advice on how to invest the money.

“I was told that the minimum I should invest in a share was R5000, so I bought two shares – Sasol and BHP Billiton”. Rob kept on saving and once he had accumulated enough money he would buy another share. When he was confident that he had learned enough about the market to start investing without advice, he signed up with an online stockbroker to lower his investment costs.

However in the 2008 market crash Rob learnt the harsh lesson that shares can rise as well as fall. He had bought into a small, unknown company which collapsed and he lost a significant amount of money.

However he understood that the market crash had also created an opportunity –he started to save even more, buying up high quality blue chip shares at low prices. Also understanding that buying single shares increased his risks and that his own investment decisions were not always right, he put half of his savings each month into unit trusts. Apart from the fact that asset managers may be selecting different shares, through a single unit trust you receive exposure to at least 20 to 30 shares which lowers the risk of investing.

At this stage Rob was at university and found another interesting way to make money. Because of his parents meager financial means he qualified for a bursary which covered the majority of his study costs.However he focused hard on his academics and by the end of the first year he qualified for a scholarship as he maintained an 80% average. Focusing on his varsity work and doing tutoring Rob had found another income stream.

“I had seen the benefit of investing, and I lived frugally realizing that I had an opportunity to buy shares cheaply. I enjoyed investing and watching my money grow,” says Rob who attends presentations by listed companies and asset managers to learn more about the market.

But perhaps more than anything, Rob is grateful for what he has. It is perhaps our consumer driven culture of always looking at what we don’t have rather than what we do have that drives us to spend more, take on more debt and ultimately makes us miserable. “I have been blessed, having come this far,” concludes Rob.

This article first appeared in City Press