DESTINY
Wealth
REPORT
PERSONAL
2016
IN ASSOCIATION WITH
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2016/03/03 8:53 AM
Wealth REPORT
IT’S GOING TO
BE A SWEET ’16
“Nothing worth
having comes
easily”, so the
saying goes – and
it’s true. If you’re
wanting to create
wealth, grow your
income or protect
your assets, it will
take sacrifice and
commitment.
Whether you’re aiming to build a legacy
or to simply be financially secure in your
retirement, you need to understand
your relationship with money so that
you can manage it better and achieve
your objectives.
If you’re not investing and actively
planning for your goals, chances are you
won’t attain them and that your dreams
will remain just that: dreams.
The road to wealth, especially during
tough times, may seem long and lonely,
but it will be worth it in the end. It calls for
discipline and refocusing on certain areas
in your financial life.
In a bid to set you on the right path,
this year’s Personal Wealth Report, in
association with Old Mutual, offers you an
array of features to guide and inspire you
on your wealth journey, from an overview
of SA’s wealthscape to how three top
businesswomen made their money.
Old Mutual Wealth’s team of experts
share some valuable information and offer
salient advice on everything from how to
invest your bonus and create a passive
income to investing in yourself.
Enjoy – and be inspired!
SHEENA ADAMS
Project Editor
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We’ve seen a great
deal of change in our economy
over the past year. I believe
change is good –
it invigorates and excites;
it helps us move forward
and keeps us on our toes.
T
he beginning
of 2016
reminded
me of a very
important
lesson: our
perspectives
largely
determine our experiences.
While this year is proving to be a
challenging one for investors, my
personal opinion is that it’s not all
doom and gloom. History suggests
that those who stay focused on
their long-term goals have a
better chance of achieving them
than those who react to shortterm noise by pulling out of the
markets and waiting for things to
“calm down”.
We’ve seen a great deal of
change in our economy over
the past year. I believe change is
good – it invigorates and excites;
it helps us move forward and
keeps us on our toes. However,
let’s face it: change is also painful
and uncomfortable, and requires
courage and an open mind.
I come from a large family and
grew up knowing the importance
of saving for the future and for
future generations. I also learnt
how important it is to plan
properly and surround yourself
with the right support, tools
and discipline to overcome the
challenges that change brings.
This Personal Wealth Report
answers a few of the critical
questions everyone needs to
ask, starting with: “How much
is enough to help me live a
comfortable life now and still
assist future generations to
have the things I was not able
to obtain?” We hope these
pages inspire you on your quest
to achieve lasting financial
wellbeing, whether you’re living it
or making it up.
Enjoy the issue. Then it’s back
to work!
ABEEDA HENDRY
Head of Marketing
& Communications
2016/03/03 8:53 AM
YOUR
ASSET
UNIVERSE
assets
What are the main groups of
you can
invest in? How can these be leveraged for
and protection?
important is passive income? What are the best
ways to spend your bonus? Old Mutual
of experts answer these
and other questions
maximum wealth creation
How
Wealth’s team
Written by Trevor Crighton
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2016/03/03 8:56 AM
An asset has a value
and you expect that value
to grow over time.
AN INVESTMENT IS THE SAME,
but it’s also something you’re able to access when you need it.
People think of their primary home
as an asset, but it isn’t,
BECAUSE IT’S NOT EASY TO
access the money tied into it.
INS AND OUTS OF
INVESTMENTS
“People bandy about terms like ‘equity’, ‘fixed
income’, ‘property’ and ‘hedge funds’, and all
sorts of things that don’t make sense to the
average person when it comes to investments,”
says Monene Watson, Head of SA Equity at
Old Mutual Multi-Managers. “There are about
four basic categories of investment, ranging
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Wealth REPORT
from low-risk to high – with the potential returns
mirrored in the risk appetite.”
The most basic investment is putting your money into
a savings account at the bank. When you want to draw
it, you have access to the capital you deposited, plus the
interest you’ve earned.
“Then you get what people call ‘fixed-income returns’,”
says Watson. “It sounds complicated, but the simplest
analogy is a bond for a home. If you borrow R1 million
from your bank to buy a house, which you’ll pay back
over 20 years, you’re paying back the capital they gave
you, plus the interest they’re charging you on the amount
they lent you. Fixed income works the other way around:
you’re the one who’s lending money to the bank or the
government. You’ve lent them your capital, so your return
will be the interest on the amount you’ve lent them.”
Watson says the highest risk – and in turn, the option
that potentially offers the highest reward – is equities.
“If you invest in equity – which are effectively shares in
a company – you own a percentage of that company. It
sells goods or services for a fee. What’s left after all its
costs have been paid are its profits. Some of these profits
are paid back to its shareholders as dividends; the rest is
used to reinvest in the company’s growth,” she says.
“You earn money from the increase in the share price
and the value of the company.”
This investment class comes with the highest level
of risk, due to various factors, including the value of
the share at the time you purchased it and the way the
company manages its affairs. This has an impact on its
profits, its value as a company – and, as a result, the
value of your stake in it.
Another important factor is deciding on your goal
and whether you’re investing for a short or long term.
“Investing for retirement, for example, is a long-term
horizon,” says Watson. “You can take on a lot more risk
because you can sit out the ups and downs in the equity
market, so the peaks and troughs have a lesser collective
effect. On the other hand, if you’re a young person and
MAXIMISING COMPOUND INTEREST
Andrew Bradley, CEO of Old Mutual Wealth, says
many people don’t understand compound interest
and don’t make the most of it. “The best way to explain
it is to assume you’re investing R100 per month at
1% interest. In month one, you get a bit of interest on
your initial investment. In month two, you’ll make a
contribution and get interest on two contributions,
as well as the interest you’ve already earned. As your
capital base increases, the amount of interest you
get increases. At 1% per month, after 8,5 years, you’ll
earn interest that equals your monthly contribution
– effectively doubling your contribution. That’s when
you start seeing real growth.”
99WRAssetUniverseNEW.indd 3
want to save for a deposit on a house, a car or an overseas trip, your
investment horizon is a lot shorter – you’re saving for three to five years,
instead of 20 or 30.”
As a South African investor, you can invest in all these shares not just in
SA, but also offshore. You can invest in global companies that make their
profits from selling products all over the world. So how does one access
this opportunity to invest so broadly and how do you decide what to
invest in? This is tricky, as most people don’t have large amounts of
savings to get access to all these asset classes or decide which one is the
best investment at any point. The best way is to invest in what’s called
a “balanced fund”. A unit trust gives you balanced exposure to all these
asset classes. An accredited financial services provider also makes all
the decisions about what to invest in, allowing the investor to achieve
lasting financial wellbeing.
INVESTMENT FACTORS
Kerrin Smith, Deputy CEO at
Old Mutual Wealth, explains that
the more volatile an asset is, the
longer you want your period of
investment to be. “It can go up
or down by 20% in a year, so you
want a long-term outlook which
allows you to ride out the ups
and downs. Diversification
enables you to look at the mix of
stable cash and volatile equity in
your portfolio to get the benefit
of the average performance.”
Smith makes an important
distinction between assets and
investments, when considering
how best to secure your future. “An asset has a value which you
expect will grow over time. An investment is the same, but it’s also
something you’re able to access when you need it and it grows in
value, so you make a profit,” she says. “People think of their primary
home as an investment, but it isn’t, because it’s not easy to access
the money tied into it. It can take a long time to sell and you may
not make a profit if you’re forced to sell to free up capital.” She adds
that people who buy additional properties to rent out can also run
into problems if they haven’t factored in the expenses involved –
maintenance, rates and taxes, for example, which could mean that
after expenses they’re not making a profit and therefore can’t class
those properties as investments. They also need to consider the
tax implications of owning more than one property and technically
deriving an income from rental.
“Investing for retirement is
a long-term horizon.”
2016/03/08 10:32 AM
INVEST IN YOURSELF
Shabnam Sablay-Parker, Head of
Strategic Development at Old Mutual
Private Wealth Management, says there
are investments individuals can make
in themselves to increase their earning
potential. Instead of trying to change
yourself, rather work on improving how you perform. It’s no
surprise that people who do what they love tend to excel and
often this leads to increased earning potential and an overall
sense of wellbeing. She says that when it comes to personal
development, finding a mentor in your industry can be as
important as having a financial advisor.
“Personally, having a business mentor has been invaluable
to me. You don’t know what you don’t know, so why not benefit
from discussions with a mentor who has more experience? They
may be able to expose you to great networks and opportunities
without even trying. Ensure that you align yourself with a mentor
you respect and admire. Building a trusted relationship with this
person is key. You also need to define exactly what you want from
this relationship.”
If you’re looking to increase your earning potential, the more
knowledge you can acquire in your field, the better your chances
of increasing your personal value. “Organisations value and retain
talented individuals and will put retention strategies in place for
you, if you make an impression.”
In terms of further studies, Sablay-Parker recommends acquiring
industry-specific qualifications as a way of increasing your value.
“Do a short course and become a specialist. Find your niche,
enhance your capabilities and you’ll find your earning potential
increasing.” Look for additional opportunities that excite you and
enhance your current earnings. There’s no harm in reaching for the
stars! Be bold and be you.
You don’t know what you don’t know,
so there are many benefits to
be drawn from discussions with
SOMEONE WHO HAS A WEALTH OF EXPERIENCE.
3 STEPS TO BUILDING A STOCK PORTFOLIO
“When you’re buying shares in any company, regardless of what it
does, you’re investing in its management, business plans, strategy
and skills set. Before you spend a cent on any share, know what
you’re investing in,” advises Bradley. That means researching the
company’s structure, objectives and level of expertise.
Secondly, research the effects which changes in legislation,
interest rates and exchange rates will have on the business – and
therefore on its shareholders.
“Thirdly, understand what you’re investing for,” says Bradley.
“That will give you an indication of the shares you should be
buying. The more certain you are of what the company does and
the risks involved, the more certain you’ll be of your investment in
it. If you’re not certain, then diversification is worth considering to
ensure you generate a net positive effect.”
GROWTH OF
PASSIVE INCOME
Old Mutual Wealth Portfolio Specialist
Pat Magadla believes passive income
will play a big role in securing South
Africans’ financial futures. “From a macroeconomic perspective, 2016 is a challenging
Pat Magadla
year. Interest rates are going up, so many
people’s ability to service their debts will decrease.
It’s therefore smart to consider an alternative
income and ring-fence where your core income’s
coming from, ensure you’re delivering there and
keep up with what’s expected of you,” she advises.
Depending on your circumstances, she
recommends investing wisely. Lesego Monareng,
Lesego
Financial Planner at Old Mutual Private Wealth
Monareng
Management, says patience and consistency
are important to the success of your investments. “The economy is
driven by many elements – some rational and others not. You need
to understand that the best investments take time to yield the
required growth.” She adds that it’s better to have consistent
growth than lose out if you become scared and move
your money in the face of the inevitable year-to-year
fluctuations. “Strive for diversity and ensure you
allow the investments time to give you
returns,” says Monareng.
Sarette
van den
Heever
PLANNING AHEAD FINANCIALLY
Sarette van den Heever, Head of New Business
Development at Old Mutual Wealth, says any
financial planner should start by understanding
the client’s goals and aspirations and facilitating
investments based on those. A good financial
planner then guides a client through their
investment journey, rather than advising or instructing them.
“A quality financial planner really comes into their own during
difficult times. Look at the current market conditions, which are
uncertain and volatile,” she says. “What clients tend to want to do in
uncertain times is sell off their investments and move into cash. That
behaviour has a negative effect on a financial plan. A good financial
planner would help investors stick to their original plan to achieve
lasting financial wellbeing.”
“There’s never a bad time to start investing,” says Sharon Moller,
Financial Planning Coach at Old Mutual Wealth. “Obviously, the
sooner, the better.”
Saving, she explains, is a pattern of behaviour, whereas investing
involves more complexity. “When we start working
with a client, we aim to help them change their
behaviour regarding their finances,” she says.
“Understanding what we want from our lives helps
us understand how to put a plan in place for the
money. One of the first questions we ask clients is:
‘What’s your first memory of money?’ The answer
often defines the relationship they have with money
Sharon
throughout their lives.”
Moller
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Wealth REPORT
addictive personality, it’s a threat,”
says Archary. “As in gambling, people
can draw funds and speculate with
that money. If they lose, it can make a
serious dent in their capital, or even
leave them with nothing at all.”
DANGERS OF
SPECULATION
Jean Archary, Strategy Analyst at
Old Mutual Wealth, says saving is
about protecting your capital with a
short-term goal in mind. Investing is
a longer-term strategy to secure your
future, but speculation is a high-risk
gamble involving big short-term
gains that could leave your capital
investment vulnerable. For this reason,
financial advisors generally don’t
encourage it. “If an investor has an
“If an investor has an
addictive personality,
it’s a threat. As
in gambling, people
can draw funds and
speculate with that
money. If they lose,
it can make a serious
dent in their capital, or
even leave them with
nothing at all.”
Gallo Images/Getty Images/Istockphoto
BONUS TIME
Andrew Bradley says a common
misconception about bonuses is that you
simply have to take the tax hit – about 40%
– before being able to do anything with the
additional income. “Because bonuses are
discretionary, people don’t really think about
structuring such payments with their human
resources departments,” he says. “However,
asking for the chance to structure your package can benefit you in the long
term. The first of two smart options is to pay a bonus into your provident
fund if you haven’t used your full tax-deductible limit, which means the
full amount paid in won’t be taxed at all. That also means, though, that you
won’t be able to touch the money until you retire. The second option is to pay
the bonus into a deferred compensation scheme – there are various limits
available to individuals. It can go into the scheme pre-tax, but you’ll only be
able to access it once you’re over the age of 55.”
He adds that the most important thing to do is avoid spending a bonus
as soon as you get it. “A bonus should form part of your overall financial
planning structure and shouldn’t be looked at in isolation. It could be most
efficient to pay off your debt first, or put down a deposit on a house or car,”
he says. “Whether you simply save it or invest in a life experience that will
be beneficial to you, never succumb to the temptation of spending it on
consumables, leaving you with nothing to show for it in a few months’ time.”
99WRAssetUniverseNEW.indd 5
CRAFTING A
SHARE PORTFOLIO
“Investors in
shares want to
invest in the
ultimate thing
that produces a
return. At the end
of the day, that’s a
company or credit
holding,” says
Chris Potgieter,
Head of Private
Client Securities
at Old Mutual Wealth. “The stock market isn’t
one company. Investors in share portfolios
look through the broader market and select
the companies they believe will help them
achieve what they want over time – be it
wealth creation or protection. There’s also
a greater sense of transparency and control
over the investment.
“A nice analogy is that we all wear watches
and they all tell more or less the same time.
Effectively, clients who are predisposed to
using share portfolios don’t just want a watch
that tells the time: they want their name on
the back of the watch and a Swiss movement
inside. They want to see the benefits of
crafting their portfolio – a reflection of
the time and effort they’ve put into it. By
contrast, a unit trust is like an analogue
watch – it will tell the time, but won’t bear
that level of personalisation.”
“A nice analogy is that we all
wear watches and they all tell
more or less the same time.
Effectively, clients who are
predisposed to using share
portfolios don’t just want a watch
that tells the time: they want
their name on the back of the
watch and a Swiss
movement inside.”
2016/03/04 11:59 AM
A
WEALTH
OF DATA
SA boasts some of
the wealthiest people
on the continent. A
of this
exclusive club reveals
some
snapshot
surprising
transformations
Written by Nazley Omar
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Wealth REPORT
R
ecent revelations about
the world’s wealth shocked
many when an Oxfam report
revealed that the 62 richest
individuals own as much
collective wealth as the poorer half of
the world’s population.
In SA, there’s also a vast and growing
gap between rich and poor. At the end of
2015, there were approximately 38 500
high net-worth individuals (those with
net assets of US$1 million/R16 million
or more) living in our country, with a
combined wealth of US$159 billion/
R2,7 trillion. This equates to roughly 31%
of SA’s total individual wealth.
According to New World Wealth’s 2016
Wealth Report, 2015 was a particularly
bad year for high new-worth individuals
(HNWIs). Andrew Amoils, Head of
Research at New World Wealth, says the
number of HNWIs decreased by 18%,
while volumes saw a 10% drop.
“Growth was negatively affected by
the significant depreciation of the rand
against the American dollar, falling
equity markets and the migration of a
significant number of HNWIs out of the
country,” he says.
Over the next two years, the number
of South African HNWIs is forecast to
grow by 10% to reach approximately
42 300 by 2017. But Amoils says 2016
is expected to be an equally difficult
year for SA’s wealthy. “Growth concerns
include increased government
intervention in the business sector
(black economic empowerment (BEE),
exchange controls and high taxes), the
electricity crisis, increased labour action,
crime, government corruption and the
collapse in commodity prices,” he says.
WHO ARE SA’S WEALTHY?
At the end of 2015, there were 17 300
South African HNWIs from previously
disadvantaged groups, which equates
HNW IS’ racial distribution
Group
White
Previously disadvantaged
Total SA
HNWIs in 2007 36 600 6 200
42 800 HNWIs in 2015
21 200 17 300 38 500 to 45% of the country’s total
HNWI population.
“SA’s government is likely to push
BEE policies until previously
disadvantaged groups make
up at least 80% of SA HNWIs.”
The New World Wealth report says
the South African government is likely
to push BEE policies until previously
disadvantaged groups make up at least
80% of SA HNWIs, which is anticipated
to happen by 2030.
The number of wealthy white South
Africans, however, has significantly
decreased, mainly due to emigration.
According to the New World Wealth
2015 migration survey, some 4 800
HNWIs have left the country since 2007.
Of these, 42% went to the UK, 14% to
Australia, 10% to the USA, 8% to Canada,
5% to Mauritius and 4% to Israel. The
remaining emigrants went to other
destinations around the globe.
Growth % 2007- 2015-42%
179%
-10%
Source: New World Wealth
40 and
under
6%
Above 60
35%
AVERAGE AGE OF SA’S
MILLIONAIRES
The average age of
multi-millionaires in SA
is 56, which is in line
with the worldwide
average.
41-50
27%
51-60
31%
Source: New World Wealth
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The distribution of HNW Is by city
HOW DID THEY BECOME RICH?
The fastest-growing sectors for South African multimillionaires in 2015 include telecoms, insurance and
healthcare. The table below shows their distribution
by all industries.
MULTI-MILLIONAIRES’
DISTRIBUTION BY INDUSTRY
Industry and percentage
Real estate and construction 19,6%
Financial services 18,9%
Basic materials 11,4%
Diversified 10,7%
Retail 7,6%
Technology and telecoms 6,9%
Fast-moving consumer goods 6,3%
Healthcare 5,7%
Transport and logistics 3,2%
Manufacturing 2,8%
Media 2,5%
Other 2,5%
Hotels and leisure 1,9%
CITY HNWIs 2007 HNWIs 2015
GROWTH
Johannesburg
20 700
16 800 -19%
Cape Town
8 500
7 000
-18%
Pretoria
2 100
2 600
24%
Durban
2 300
2 600
13%
Garden Route
1 900
2 400
26%
Paarl,
Franschhoek
and
Stellenbosch
1 600
2 200
38%
Other
5 700
4 900
-14%
Total SA
42 800
38 500
-10%
Source: New World Wealth
Source: New World Wealth
WHERE DO THE RICH RESIDE?
Gallo Images/Getty Images/Istockphoto
Gauteng is at the helm of the
country’s wealth, accounting for
34% of the national gross domestic
product. While some 44% of
HNWIs reside in Johannesburg,
the financial hub has seen a 19%
decrease since 2007.
Pretoria and Durban have become
home to more HNWIs, but the area
comprising Paarl, Franschhoek and
Stellenbosch was the fastest-growing
South African region, which is now
up to 6%.
page 80 | APRIL 2016
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2016/03/08 10:32 AM
Wealth REPORT
O
Nicky ppenheim
er
BILLIONAIRES’CLUB
to
W
ies
e
Ch
There are 24 billionaires in Africa, six of whom live in SA:
ris
One-third of Africa’s richest people live in SA, according to the
Forbes 2016 ranking of the continent’s 50 wealthiest people.
Some 16 South African moguls made the list
NICKY OPPENHEIMER
Net worth: $6,6 billion/R101,3 billion
Global ranking: #174
Diamond magnate Oppenheimer is the former Chairman of De Beers and its
subsidiary, the Diamond Trading Company. He also held the position of
Deputy Chairman of Anglo American.
CHRISTO WIESE
Net worth: $5,8 billion/R88,9 billion
Global ranking: #214
Consumer retailing magnate Wiese is the Chairman and the largest individual
shareholder of Pepkor and the Executive Director of Shoprite.
J
oh
an
nR
upert
nG
ra y
Al
la
JOHANN RUPERT
Net worth: $5,3 billion/R81,4 billion
Global ranking: #248
Rupert is at the helm of locally based Swiss luxury goods company
Richemont and Remgro.
ALLAN GRAY
Net worth: $1,67 billion/R25,7 billion
Global ranking: #1 121
Gray is the founder of his eponymous investment management
company and the philanthropic Allan & Gill Gray Foundation.
Ko o s B ekk
er
KOOS BEKKER
Net worth: $1,4 billion/R21,5 billion
Global ranking: #1 275
Media mogul Bekker is the former CEO of Naspers, which operates in 130 countries
and is listed on the London and Johannesburg Stock Exchanges.
PATRICE MOTSEPE
ep
e
99WRwealthscape.indd 5
ot s
Source: Forbes’ Africa’s 50 Richest.
At the time of publication, US$1 was equal to R15,38.
Pa t r i c e M
Net worth: $1,1 billion/R16,9 billion
Global ranking: #1 577
Motsepe is African Rainbow Minerals’ CEO and the owner of football club
Mamelodi Sundowns.
2016/03/08 10:36 AM
investing
INTELLIGENT
A healthcare
tycoon, a prolific
actress and a
money-savvy
entrepreneur
impart their wealth
of financial smarts
Written by Nazley Omar
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2016/03/03 8:58 AM
Wealth REPORT
DR ANNA MOKGOKONG
(59), Group Executive Chairperson: Community
Investment Holdings (CIH)
A
t the helm of a multitude of thriving business
ventures, Mokgokong is one of SA’s wealthiest
women, with an estimated worth of over R100
million. In her plush office park and residence
in Pretoria, where impressive art adorns the
walls and bottles of decadent liquor fill the cabinet,
she insists we try some sugar-free, gluten-free muffins
prepared by her team of private chefs.
“I’ve always loved nice things,” she says, “but you need
a balance. I could splurge all year, but I opt to reinvest in
our various companies instead. I have two cars – a Jaguar
I’ve had for 16 years and a Bentley that I’ve had for seven.
It’s time for a new car, but I’m going to have to wait. We’re
currently expanding our mining business, so 99% of my
wealth is sitting in my companies.”
It’s this approach to money which has allowed this
entrepreneur extraordinaire to build an empire. In 1995,
she co-founded CIH, a black-owned healthcare company
with an annual turnover of R18 billion, of which she
became Chairperson. She’s also the Chairperson of
three JSE companies with interests spanning healthcare
technology, telecommunications, logistics, mining
and energy, and she sits on the board of a string of
companies. She was the first woman to be appointed to
the Shoprite board.
BECOMING AN ENTREPRENEUR
Mokgokong’s innate entrepreneurial spirit became
evident at a young age. Born in Soweto and raised in
Swaziland, she says her family didn’t have much money.
Coveting the most decadent sweets she saw in shop
windows, she sold sandwiches on the school playground
and charged her siblings and friends interest on loans
she granted them.
“I’ve always wanted to be wealthy. When I buy
something, it has to be the best. However, at a young age
I learnt that if I wanted something, I had to plan for it,
work for it, save and – over time – I’d get it,” she says.
After returning to SA to attend medical school,
Mokgokong found herself strapped for cash. Her
business savvy came to the fore when she struck a deal
with a leather handbag producer to provide her with
consignments. She secured a captive market among her
fellow students, doctors and teachers on the medical
campus and she later opened a retail store of her own.
“I learnt a lot during that period. Firstly, you need to
separate your business and personal money. While the
temptation’s always there to spend frivolously, you need
99WRProfiles.indd 3
to pay yourself a salary and practise discipline,” she says.
“I also learnt the importance of protecting my assets.
A hurricane destroyed the building in which I ran the
retail business. If it weren’t for insurance, I would have
lost everything.”
BUILDING AN EMPIRE
Having honed her entrepreneurial skills
set and qualified as a doctor, Mokgokong
used the money she’d saved from her
clothing store to establish a medical
centre near Ga-Rankuwa in North West
province. The venture started off slowly,
but once she’d gained the support of a
few elderly ladies in the community, the
word spread and she eventually secured
some 40 000 patients. She attributes its
success to two factors: “Financial planning
is critical. You have to project your income and
expenses and always have money to fall back on. In
business, there are often financial setbacks.
Secondly, the customer always comes first. I
worked extra-hard to ensure the services
we rendered were of superb quality.”
Mokgokong established solid money
management techniques early in her
career. In her first job as a teacher, she
earned just R55. One-third of her salary
was spent on essentials such as food
and rent, another third went towards her
savings and the rest was spent on treats
like eating out and fashion.
“I set up a retirement annuity in my early
20s and I’ve always saved what I could. But when
you work hard, it’s important to enjoy the fruits
of your labour and indulge yourself from time
to time. This formula’s worked well for me,”
she explains.
However, there were challenges she
had to overcome. After eight years at the
medical centre, she went on to establish
a pharmaceutical wholesale business
called Pharmshare with current
business partner Joe Madungandaba
and other partners. They acquired
R1 billion in funding from the Sanlam
Development Fund and the venture achieved
spectacular success in its early years. Then it was
hit by the global stock market crash of 1999.
“Failure is inevitable,” says Mokgokong. “What it’s
taught me is that you can’t take it personally. Also, if
something isn’t working, let it go. Don’t allow bad money
to bring your good money down. Today, my business
ventures are very diversified and are all stand-alone
Mokgokong is one
of SA’s wealthiest
women, with an
estimated worth of
R107 mill ion.
“I lear nt that if I
wanted somet hing, I
had to plan for it ,
wor k for it , save and
– over time – I’d
get it.”
“W hile the
temptat ion’s al ways
there to spend
fr iv ol ousl y, you need
to pay yourself a
salary and practise
discipline.”
2016/03/03 8:59 AM
entities. If one of them went under, I’d get on with
my life and shift my focus to the successful ones.”
math,” she recalls. “My bank balance
was in the red, I had no car, no
property and no peace of mind. Plus
I was losing out on side-gigs, because
I had to be on set for 15 hours at a
stretch. That’s when I finally began
to practise the maxim that ‘time
is money.’”
WEALTH-WISE
Mokgokong later teamed up with Netcare and
rebranded her company as the Community
Hospital Group, which was later rebranded and
restructured as CIH. A huge part of its financial
success was due to her relationship with banks.
“When I first became a business-owner, I
ensured that I maintained solid relationships with
my bankers. Now they contact me,” she laughs.
“Banks are attracted to people with assets. When
you’ve got something they can leverage, then you’re
in demand.”
When it comes to investing, she avoids putting
all her eggs in one basket. She has four investment
bankers, each with their own approach and
preferred investment vehicles. Property also makes
up a significant part of her investment portfolio.
“I meet with my investment bankers every
quarter and although they have different
portfolios, the results have been mostly the same.
I’m not a fan of unit trusts, as they didn’t pay off for
me. That’s why diversifying is so crucial,” she says.
As for the impact the current economic climate
has had on her businesses, Mokgokong says:
“The economy fluctuates in waves. While
market conditions aren’t favourable, businesses
should hang on and tighten their belts. It’s
possible to mitigate risks by operating in stable
or growing markets.”
Despite plans to retire next year, she says she’ll
always be involved in the businesses, but she’d like
to spend more time having fun. She’d also like to
conquer the small screen with a TV programme
offering entrepreneurial advice to young people.
“I’ve worked hard, so next year it will be time for
the business to take care of me. Maybe then I’ll get
that new car!”
MOKGOKONG’S MANTRAS
“You need to cut your cloth according to
your needs. Years ago I had to downgrade
from a Mercedes to a Honda to get my
business ahead. Sacrifices have to be
made. •Don’t be discouraged by the
mindset of doom and gloom in SA. Rather
work hard and focus on mitigating your
risks and diversifying your
investment portfolio.”
NOMZAMO MBATHA
(25), this month’s cover star
3 HARD WEALTH LESSONS
▶1. Mbatha had a bad experience
after being awarded a bursary and
moving to Cape Town to begin her
studies. With little financial support
from her family, she found a parttime job doing promotions and brand
activations at malls to pay her bills.
Nevertheless, she eventually found
herself blacklisted.
“I made just R80 an hour working
six-hour shifts on weekends. It doesn’t
sound like much, but it allowed me
to feed and clothe myself. Then a
retail account my mother was due
to pay went into arrears and I was
blacklisted at the credit bureau. So I
was unable to buy a car or purchase
property and it took 24 months to be
cleared. That was one of the harshest
lessons I’ve ever learnt.”
▶2. She opted out of her accounting
studies when she was cast in Isibaya.
However, she was so thrilled to have
landed the part of Thandeka that she
failed to peruse the contract properly,
particularly in terms of her pay and
working hours.
“It wasn’t until halfway through
the year that I realised how hard I
was working and sat down to do the
“Having experienced
so many ups and
downs, I never
again want to be in
a situation where
I’m unprepared for
a misfortune and I
have to cough up
bucketloads
of money.”
▶3. Another tough lesson was
learnt when she invested in a
small start-up business. Within two
months, the venture tanked. With
no insurance or contracts in place,
Mbatha’s money was lost. What
did she learn from the experience?
“Always ensure you do your research
and cover your tracks by putting
everything in writing.”
It wasn’t until 2014 that she finally
took steps to secure her finances
by consulting a financial advisor
and setting up a retirement fund,
a 12-month savings account and a
32-day notice plan. She’s also buying
shares in pharmaceuticals and
dabbling in forex trading.
BUDGET WISELY
Mbatha stresses the importance of
practising sound budgeting principles
as early as possible.
“If you haven’t worked hard for your
money, you’ll never understand its
true value. When you’ve had sleepless
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Wealth REPORT
nights and early-morning starts to
accumulate it, you become intensely
aware of how and when you spend it.
Nowadays, if I absolutely adore a pair
of shoes that cost R30 000, the
realist in me understands that
money has far more value
than that,” she says.
INSURE SMARTLY
“Start invest ing as
so on as you can, but
don’t expect any gr owth
immedi atel y. Patience
and netw or ki ng
are key.”
Another key
priority for her
this year is
insurance. “Having
experienced so
many ups and
downs, I never
again want to be in
a situation where I’m
unprepared for a misfortune
and I have to cough up
bucketloads of money.
I’ve invested in a very
good hospital plan,
as well as life and
car insurance. One
day I plan to have
a collection of
expensive jewellery
and artworks – and
I’ll insure them too.”
“ Time is money!
Every second spent
on things that don’t
br ing you an income or
gr owth is time
wasted.”
Concerned about the
current economic climate,
she believes 2016 should be
a year of cutting back on
spending and our use
of water and energy.
“We’re headed for
even tougher times,
but it’s unbelievable
how many people
haven’t woken up
to that reality yet.”
While she’s
committed to living
frugally, Mbatha does
admit occasionally
splurging at online clothing
boutiques and holidaying in exotic
locations. “My taste in handbags is
quite pricey, but we all deserve a bit
of pleasure for working so hard!”
she says. “Kno w t he
language of
busi ness and
al ways be wil li ng
t o lear n.”
99WRProfiles.indd 5
NONKU NTSHONA
(39), MD: Nonku Ntshona &
Associates Quantity Surveyors
T
his formidable entrepreneur
is at the helm of a quantity
surveying company that boasts
major projects, including
refurbishments at Nelson Mandela
Square in Johannesburg’s Sandton
City (which was a joint venture with
MLC Quantity Surveyors) and the
revamp of the international terminal
at OR Tambo Airport. In 2015, she
broadened her business interests and
bought the franchising rights to a
Camelot Spa in Sandton.
LEARNING TO
MANAGE MONEY
Ntshona was raised in a four-
2016/03/03 8:59 AM
bedroomed home in Umlazi,
KwaZulu-Natal. Her parents
weren’t wealthy, but made
significant sacrifices to send their
children to private schools. She
came to appreciate the value of
money at a young age, when
her mother opened a
savings account for her
and encouraged her to
spend sparingly.
She later moved to
Port Elizabeth to study
quantity surveying
at Nelson Mandela
Metropolitan University,
where she got by on just R1
000 a month.
“Student life was tough,” recalls
Ntshona. “I had to make sure that
the little money I had was
enough to buy food and
other necessities, as well
as pay for transport. It
taught me to be very
conscious of spending.
I became paranoid
about how much
money I had in my
bank account – and I’m
still that way today.”
After a short stint as
a Junior Quantity Surveyor
in Port Elizabeth, she moved
to Johannesburg and worked at
Turner & Townsend Quantity
Surveyors, where she was
later made an Associate
Partner.
“During that time
I began earning
decent money, but
I didn’t change my
lifestyle. I continued
living frugally,” she says.
“In 2002 I got married.
The wedding was a huge
expense, but we ensured we
paid for everything in cash. I’ve
never believed in buying things
you can’t afford there
and then.”
“After I began earning
decent money, I
didn’t change my
lifestyle. I cont inued
living frugal ly.”
“I felt I’d reached a glass
ceiling and I knew it was
time to do my own thing.
However, I lacked business
conf idence.”
“My biggest regret is
not investing in pr operty
sooner. We struggled wit h
of fice purchases later on and
we should have paid of f a bond,
instead of paying rent for
our premises.”
BUSINESS STARTS BOOMING
Ntshona’s entrepreneurial journey
began in 2007, when she bought a
Wendy house for her backyard and
started her company from there.
She landed her first client eight
weeks later and moved to
an office park in Rivonia after just
six months.
“I’ve always known that I wanted
to be an entrepreneur. In this
industry, you climb the corporate
ladder and either become a
partner or start your own firm. I
felt I’d reached a glass ceiling and
I knew it was time to do my own
thing. However, I lacked business
confidence, so it took me a while
to take the plunge,” she says.
Making the transition from
employee to employer proved
tough at first. Ntshona says
she often believed the business
wouldn’t last and felt burdened by
the responsibility of paying salaries
and rent. A year later, however,
she secured a R1 billion project
working as the leading quantity
surveyor on the Levi Business
Park, a mixed-use development
in Zambia. Her business, which is
growing in strength through her
leadership, has since completed
projects for Anglo Platinum, the
National Department of Public
Works and the Eastgate and
Southgate shopping malls in
Johannesburg.
However, she stresses the
importance of maintaining firm
control over the company’s
gearing, liquidity and cash flow,
and setting aside sufficient capital
to allow the business to grow.
“When it comes to applying
for funding, it’s crucial that your
banker understands exactly how
your company works, as they
become an extension of it. I had to
share my insights on the property
development and construction
industry and show how I planned
to mitigate risks.
“Managing our cash flow has
also been tricky, as we often work
on projects that don’t pay out
for six to 12 months. To cope, we
have cash flow meetings every two
NTSHONA’S
BUSINESS AND
MONEY TIPS
“Before you become
an entrepreneur, decide
whether you’re in it to
make a quick buck or to
build up a sustainable
business.
• If you have passion
and put in the work, the
money will come later.
• Ensure that you have
a good accountant and
that you understand your
finances and risks. You’re
ultimately accountable
for this aspect of
your business.
• Look after employees,
as they’re the ones who’ll
make you money at the end
of the day. If you’re good
to them, they’ll be good
to you.
• Never take short cuts
and always be hands-on.”
weeks and we always project our
income six months in advance,”
says Ntshona.
The market has become
somewhat volatile for her
industry, since the plummeting
rand is causing project values to
change, sometimes making them
unfeasible. As a result, clients
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Wealth REPORT
are more susceptible to pulling
out of ventures. To counter these
challenges, she’s always on the
hunt for new clients by attending
conferences, scouring databases
and applying for tenders.
And despite her company’s
development into a significant
player in the built environment
sphere, she says there’s a lot she
wishes she’d done differently.
“My biggest regret is not
investing in property sooner. We
struggled with office purchases
later on and we should have paid
off a bond, instead of paying rent
for our premises.
“I’ve also learnt how important
it is to do things the right way. We
tried to cut expenses by employing
people who wouldn’t cost us much
– and it backfired. You get what
you pay for and in future I won’t
compromise on quality,” she says.
The rest of my money’s in a savings
account or invested in property.
My philosophy’s always been to
pay off a bond as soon as possible
to minimise interest and monthly
expenses,” says Ntshona.
She adds that it’s crucial to
obtain solid financial advice
and accumulate a nest egg.
“Life throws you curveballs, so
I’ve ensured that if something
happens to me, my family will be
well provided for. I take savings
and insurance – in my business,
my home and my health – really
seriously.”
This year she’s planning to run
more quantity surveying projects
on her own, particularly in the
airport space, and she’s in the
process of establishing a black
women-owned property fund.
She’ll also be doing a four-month
business leadership course in
Spain.
DIVERSIFYING
In 2015, after battling breast
cancer, Ntshona learnt the
importance of achieving a balance
between working
hard and taking care of her
health. Her 50/50 partnership
running a Camelot Spa outlet in
Johannesburg was a result of that
realisation.
“Running a franchise has been
a completely different experience,
as there are rules and regulations
I have to adhere to, but the spa
resonates with my values, so it’s
working well. We have monthly
meetings to establish our 90-day
objectives and then we determine
what we need to do to achieve
them,” she says.
When it comes to personal
finances, her preferred investment
vehicle is property. She owns
a holiday home in Knysna, a
property in Sunninghill, office
space in Rivonia and timesharing
at Zimbali.
“Buying property always pays
off. I have a good retirement fund,
a medical aid and life insurance.
99WRProfiles.indd 7
“Running a franchise
has been a
completely different
experience, as
there are rules and
regulations I have
to adhere to, but
the spa resonates
with my values, so
it’s working well.
We have monthly
meetings to
establish our 90-day
objectives and then
we determine what
we need to do to
achieve them”
2016/03/03 12:29 PM
“The minute you realise or accept
the concept that you’re a powerful person,
the people who need you to get things
done – business guys and financial
people – fall in line.”
– Shonda Rhimes, TV producer and writer
“Young people need to be taught
financial management. My mother
taught me to live within my means
and never depend on debt.”
– Wendy Luhabe, businesswoman, social entrepreneur and author
A WEALTH
OF WISDOM
Everyone dreams of achieving success and all that goes with it.
These sage words from women who did just that are sure to get you thinking
“If you want
to breakthe
cycle of poverty,
educate a girl.”
– Graça Machel, humanitarian,
politician and widow of former
Presidents Samora Machel
and Nelson Mandela
“I’ve always
tried to be
clever about
money.
I never
wanted to
find myself in
a desperate
situation
as an artist
because
that’s when
you agree to
things you
otherwise
wouldn’t.”
– singer Zonke Dikana
Compiled by Claudia Padayachy
99WRQuotes.indd 2
“I had no idea that being my
authentic self could make me as
rich as I’ve become. If I had, I’d
have done it a lot earlier.”
– Oprah Winfrey, talk show queen, businesswoman,
actress and philanthropist
2016/03/03 9:00 AM
Wealth REPORT
“There are people who
have money and people
who are rich.”
– Coco Chanel, fashion designer and founder
of the Chanel brand
“Don’t waste your money – you only have
one pair of feet, so there’s a limit to how
many shoes you can wear.”
– businesswoman Johanna Mukoki
“If there’s one thing
in my life I’m proud
of, it’s that I’ve never
been a kept woman.”
“I used to sell ice
blocks and sweets
from home with
my siblings. That
taught me how to
sell, work out profits
and keep tabs
on money.”
– businesswoman and actress
Gail Mabalane
– Marilyn Monroe, actress
“No-one’s ever
achieved financial
fitness with a
January resolution
that’s abandoned
by February.”
– Suze Orman, author, financial advisor and TV host
“At some point, you’ll get ripped off; someone will steal your idea,
pull the rug out from under your feet or stab you in the back. That’s
life. Learn the lesson – and move on.”
– Thami Ngubeni, media personality, spiritual mentor and former DESTINY columnist
“ To attract money, you must focus on wealth. It’s
impossible to bring more money into your life when you’re
noticing that you don’t have enough, because that
means you’re thinking that you don’t have enough.”
– Rhonda Byrne, author and TV producer
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2016/03/03 9:00 AM
SPENT
OUT
The economic downturn may have taken the edge
off spending by wealthy South Africans, but they’re
still splashing out on expensive accessories, flashy
cars and second homes in elite areas
Written by Mariam Isa
99WRSpendit.indd 2
2016/03/03 9:01 AM
Wealth REPORT
F
rench champagne is a
must at dinner parties,
holidays in Europe
are still favoured and
pricey watches for
men are more popular
than ever before. And
this in the midst of
what some economists
say is another recession.
Spending by high-net-worth individuals
(HNWIs) in SA slowed to about $2,4
billion last year from $2,8 billion in 2014,
according to the latest report by New
World Wealth, a company which
provides information about the global
wealth sector.
But South Africans still hold a combined
wealth of $159 billion – roughly one-third
South Africans still
hold a combined
wealth of $159 billion –
roughly one-third of the
country’s total individual
wealth, according
to the report.
of the country’s total individual wealth,
according to the report. The rand’s
precipitous slide at the end of last year
has made a serious dent in their fortunes,
but the number of dollar-denominated
millionaires has climbed steadily in the
past decade, reflecting the country’s
demographics more accurately. And
they’re keen to show they’ve “arrived”.
“There’s a movement from discreet to
more ostentatious consumption,” says
Silvana Bottego, CEO of the Southern
African Luxury Association. “It’s more
about the brand: there’s ever more pride
in status symbols.” Luxury brands spotted
the trend years ago and have flooded into
the country, clustering mainly in Sandton
City’s “Diamond Walk” in Johannesburg.
Dolce & Gabbana, Prada and Jimmy Choo
made their entrance last year.
99WRSpendit.indd 3
LASHINGS OF LEATHER
Luxury leather goods have entrenched
themselves among the wealthy, with many
women prepared to fork out R50 000 for a
Louis Vuitton handbag or R35 000 for one
by Gucci. For those who can afford it, a
Dolce & Gabbana dress costing about
R32 000 and Jimmy Choo shoes with a
price tag of R11 000 are worth the money.
Men with expensive tastes are fond of
suits from Ermenegildo Zegna, Paul Smith
or Hugo Boss, ranging from R13 000R21 000. But they’ve also latched onto
the trend of buying expensive watches: a
Patek Philippe timepiece worth more than
R400 000 is the ultimate status symbol,
with Breguet, Vacheron Constantin and
Ulsse Nardin not far behind.
ranging from a mere R342 000 for a basic
Beemer 1-Series model to a 7-Series sedan
worth about R1,8 million. Porsches carry
price tags of R711 000-R3 million and if
you’re seriously wealthy, an even pricier
Ferrari or McLaren is sure to turn heads.
But new cars depreciate in value from
the moment they’re driven out of the
showroom. Those wanting to make a real
investment are jumping on the global
bandwagon of “classic” cars, manufactured
more than 50-60 years ago. A classic car
global price index compiled by Liv-ex
rocketed from 100 in the 2007 base year
to 263 at the end of 2015, with eyewatering models like a Ferrari 250 GTO
and a McLaren F1 (not available in SA)
worth more than R400 and R160 million
respectively. A 1960s Morgan Roadster is
worth about R1,6 million, while a Jaguar
E-type will set you back R4,8 million.
Porsches carry
PRICE TAGS OF
R711 000-R3 million
and
if you’re seriously
WEALTHY, AN EVEN PRICIER
Ferrari or McLaren
is sure to turn heads.
HOT WHEELS
Luxury cars will always be in vogue for the
wealthy and BMW is still one of the most
popular brands in the country, at prices
2016/03/03 9:01 AM
Wealth REPORT
Fine wines are languishing, but
champagne’s still bubbling strongly, with
the best-known brands in SA – Moët &
Chandon and Veuve Clicquot – relatively
affordable, at well under R1 000 a bottle.
But many South Africans are developing a
taste for whisky, with Johnnie Walker Blue
the most coveted, at R2 500 a bottle.
PAINT BY NUMBERS
Fine art is a “collectable” investment
and dealers say that South Africans hold
literally hundreds of millions of dollars
worth of stored wealth in this category.
In an economic downturn, people more
“rigorously interrogate” what they buy
and collect front-rank artists because
these are less risky financially, says Mark
Read, owner of the Everton Read Gallery
in Johannesburg. In SA this would include
artists like Nelson Makamo, Phillemon
Hlungwani and Colbert Mashile, whose
works sell for anything from R50 000R500 000. Global recognition of African
art is on the rise and Read will be opening
a gallery in London this year to showcase
local talents.
and minimal regulations make it a very
appealing option.
PUTTING DOWN ROOTS
Property is a key component of any
wealthy individual’s portfolio and despite
a lacklustre overall market in SA this year,
demand for properties worth over
R10 million is flourishing, says Pam
Golding CEO Andrew Golding. Demand
for high-end properties worth over R20
million has surged along the Cape Atlantic
seaboard, particularly in Cape Town,
Knysna and Plettenberg Bay – and this
comes mainly from Gauteng buyers.
Other hot spots include the KwaZuluNatal North Coast, particularly Zimbali,
Umhlanga and Ballito.
Offshore, London has traditionally
been the most desirable place to invest in
property, but is now unaffordable for all
but the very wealthiest South Africans.
However, Portugal offers value in terms of
both price and location, as does Mauritius,
where the added inducements of low taxes
Gallo Images/Getty Images/Istockphoto
TOP TIPPLES
page 92 | APRIL 2016
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2016/03/03 9:01 AM
HOW MUCH IS ENOUGH TO LIVE THE LIFE
YOU WANT NOW AND IN THE FUTURE?
With Integrated Wealth Planning, we will help you achieve it.
At Old Mutual Wealth, we’ll help you map out the life you want and inspire you as you build toward it.
Together, we’ll create an Integrated Wealth Plan to show you exactly how much is enough to achieve it
today and in the future.
Let’s have the conversation of your life. Call 0860 WEALTH or speak to
an accredited Old Mutual Wealth Financial Planner today.
ADVICE I INVESTMENTS I WEALTH
Old Mutual Wealth is brought to you through several Licensed Financial Services Providers in the Old Mutual Group who make up the elite service offering.
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