Home ECONOMY Save and invest 30% of your income to get wealthy

Save and invest 30% of your income to get wealthy

by biasharadigest

George Mangs is the co-director at Market Cap Trainers, an investment firm that trains individuals, chamas, corporate staff on where to invest their savings for better and higher returns.

Greatest milestone: As at now, the greatest achievement has been helping over 300 people open CDS Accounts and start investing in the stock market (NSE) and Money Markets in less than two months. We always hold training forums on Personal Finance and Investment here in Nairobi over the weekends and this has helped a lot in sensitizing people about the significance of long term strategic investing in the capital markets.

Biggest money mistake: When I was starting off at the stock market, I bought several penny stocks that I believed were going to take off and make me super rich because they could easily double and triple in price, or so I believed. How wrong I was! Just when I was about to offload them and stop seeing them paint my portfolio red, the Capital Gains Tax was introduced and that made it even worse because I would be taxed for selling them even though they were loss-makers. By the time I finally got rid of them, they had already done a horrendous dent on my portfolio.

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Biggest career loss: A few years ago I invested in a startup after meeting a bunch of really enthusiastic young guys who had this amazing idea of how they were going to revolutionize learning in colleges and universities. It was a really ambitious project that could have succeeded well but these young guys saw the money and sort of drifted into other things and turned their backs on the project. The revolutionary dream died away with their drift…and so did my money. Today I am more comfortable dealing with older folks when it comes to investing in projects or startups; either that or I personally manage the project end to end.

Saving method: I save at least 40 per cent of my income. On a good month if I can save more, the better.  I only spend what’s left after saving (and investing). Before, I used to do it the other way round; spend first then save whatever I had left. Once I started reading up on Warren Buffett’s investment strategies, Peter Lynch, Charlie Munger, Chris Kirubi and others, everything about long term wealth creation started to make sense. I decided to stick to adopt their long term approach.

Secret to wealth creation: When it comes to wealth creation and management, the secret is always to start saving and investing early, be consistent, let time do its compounding magic on your portfolio and with the passage of time, you will be much better off in the end on the wealth ladder. The biggest problem we currently have is that we are an extremely impatient generation; we want to invest a few thousands in the morning and reap millions in the evening. If the millions don’t show up soon enough we ditch the strategy and start something else that promises faster returns. In the end we lose out on the compounding effect of time because we are busy chasing quick riches. If there is anything worthy insisting, it’s that let’s save at least 30 per cent of our income, invest it in a well selected group of assets and let time do its compounding magic.

If could turn back the clock: I would educate myself first about the basics of investment, including the constant trade-offs between risk and reward and the benefits of asset allocation. My biggest flaw was always the lack of a solid investment strategy that I would stick with through the ups and downs of the market. As a result, I seemed to zigzag through various market climates with a blindfold which could easily get my young portfolio wiped out.

My parting shot: Start learning as early as now to get the discipline to spend less than you make. Save the difference and invest in a diversified portfolio of assets, then let time do its compounding magic. Don’t be in a hurry to get rich… everything takes time.

This story was first published in the Saturday Magazine. Saturday Magazine is a product of Nation Media Group. More info email: [email protected]

Copyright @Nationmediagroup

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