×

We've got news for you.

Register on SowetanLIVE at no cost to receive newsletters, read exclusive articles & more.
Register now

Investment 101 from the expert

Investing always seem impossible and far-fetched but it is really not.

Rich people will always be rich because they invest their money but if we think about it, those people were not always rich. Some of them started off by working normal hours and instead of spending, they saved.

Scott Picken, one of the leaders of Wealth Movement started investing at the age of 13, although his circumstances were a bit different from the rest as his family had money, it was his decision to start investing that led to his success.

Question and Answer with Picken

When did you realise you want to get into investment?

"... I decided in my teens I want to be a businessman and be in control of my own destiny. Second part is I've always loved property, I've always loved building things, so when I was a little boy and there was a river running, I'd always make a little dam and at thirteen I decided to knock through the toilet and ultimately create an extra bedroom/bathroom and drew the plans.

How do I start investing?

"People read a newspaper about the get rich schemes and think they can put in R2000 and get R48 000. What they need to realise is that the first R200 they need to spend is buying a good book, my point is they gotta invest in themselves. They've got to get the understanding and the knowledge. They've gotta get the intrinsic, what is a property, what are transfer fees, what is the stock market, what is the difference between the three"

"Also what they've got to be very careful of is that you never learn to swim by reading a book either, at some point you've got to jump in the pool and you've got to realise that when you're young or whenever you start anything in life you're gonna make mistakes so if you go with the mindset that you're gonna make a mistake anyway you will stop worrying about making a mistake. The whole thing is that you've got to learn from the mistakes.

When do I start?

"I did my first property when I was 13, I did my first development when I was 19. I've never done a investment on my own ever in my life, I've always partnered with people because I can bring something and someone else can bring something and my philosophy is 'it's better to own fifty percent of something than a hundred percent of nothing. So it's a mindset thing, it's about partnering with people, it's about how do you add value.

"As young people there are three things that they need to do, the first one is they need to get the right education and I don't mean getting a university degree or anything, I mean going to read a book, going on a website.

"Secondly is, how can I add value, if I'm partnering with a partner, how can I add value to that partner.

"And the third is, you've got to get started."

Where do I get the money to start?

"It's different for everybody, the first I bought I didn't have the money but I could get a mortgage but then I found someone that had the money that wanted to do a deal. So my point is, it's different for everyone but the most important thing is that you've got to think 'how do I create value?' 'What can I give to the party to make it a valuable transaction?'.

So one thing I would say is be careful of borrowing money unless you know what you doing because then you get yourself into even more trouble. Secondly, do save but be very careful of saving and putting it into a bank because then you do not get a return. No one got wealthy by saving in the bank."

Where can I invest? Who do I invest with?

"In every country you've got to look at different areas, but there are two major things in South Africa that are really important: Housing and hospitals.

"We need medical facilities all through Africa and that's never gonna change, we need them. We also need houses. So it's kind of common sense, you invest where demands are.

"I wouldn't invest in office parks because people are going virtual and they want to work from home so certainly I wouldn't invest in office parks in the CBD, so maybe office parks that are in residential areas close to people's homes."

How do I choose and trust the people I invest with?

"The first thing you've got to look at it's people and the most important is thing is that no matter who you investing with you've got to comeback to the fundamentals of investing and you've got to come back to people. So who are the people that you investing with, how do I trust them, what is their background, what is their experience?

"They tell you they want to go and do a development in the middle of the Kalahari, how many other developments have they done in the Kalahari? Are they making fees off you by helping you or have they done this before? Are they just a salesman that earns a commission and therefore tell you it's good because they earn a commission? Or are they actually investors themselves? If someone is not putting their money in they are not serious - they either don't have the money, which means they lied about their track record, or they don't trust the deal enough and they don't want to put their money in.

How do you ensure success in investment?

"Find something you are passionate about and stick to that. What a lot of young people are doing, which is a problem, is they try and be good at this, be good at that and be good at something else. The thing is, you look at anyone successful in the world, it doesn't matter if they are a good soccer player or if they are good at playing in a band, they've stuck to one thing and they are very good at good at and they do it over and over again for years and years. So the best advise I can give to any young person, find what you love and stick to the plan."

Would you like to comment on this article?
Register (it's quick and free) or sign in now.

Speech Bubbles

Please read our Comment Policy before commenting.