The Great TFSA Race Investor Profile – Kagiso Ngwenya

Nonhlanhla Kunene
By Nonhlanhla Kunene April 5, 2016 12:42

The Great TFSA Race is in the home straight: entries close on 29 April and the winners will be announced on 15 May. So if you’ve yet to enter, be sure to do so. The winners will each get R5,000 to add to their savings. Find out more and enter here.

KagisoThis week’s contestant is simply unstoppable!

At just 28, Kagiso Ngwenya’s life journey has taken him from being a self-employed township youth battling to fund his tertiary education to a successful software developer for one of the top international financial institutions. His experiences are evidence that one’s altitude is indeed determined by one’s attitude.

Kagiso has faced many tribulations, most of which were brought about by lack of adequate finances, but his never-say-die attitude saw him come up with innovative ways to overcome them and obtain his BSc in Computer Science and Informatics cum laude.

As with most things in his life, Kagiso has chosen a do-it-yourself approach to his investments and is quite chuffed with the short-term results so far.

Savetaxfree asked Kagiso what kept him going when most would have thrown in the towel.

Tell us a bit about yourself, who is Kagiso and what aspects of your childhood had a profound influence on your views on money and how you manage your finances?

I’m a 28-year-old father and a software developer by profession. Growing up, I think all my childhood challenges had to do with funding, or the lack of it. The barrier to almost everything I wanted to do had a funding aspect related to it.

I always wanted to be a computer programmer. I loved video games and I wanted to invent my own games. Then there was the question of where to start in order to do this. There’s this idea that all you have to do is do well at school and the finances will take care of themselves, so I did that. My grades were very good so I applied at Wits and was accepted. Despite my good grades, Wits wanted an upfront payment of R20,000 tuition fees. So basically, everything was in place, all the paperwork was ready but I needed R20,000, which my mother, as the sole breadwinner, couldn’t afford. Nothing materialised and as a result, I got relegated by the system to settle for a job at Bree Taxi rank as a cleaner and subsequently as a cashier at KFC for a year. So once again, money was a challenge as I needed to survive on a R900 a month, and this is what shaped my attitude towards how I manage my finances.

So even [much later] after I started working for a prominent software company, instead of taking my payslip and heading to my nearest BMW dealership and renting an apartment at Midrand (which I deeply desired), I opted to rent a backroom at R400 a month in Soweto and save R4 000 for 10 months which I used to buy a Toyota Tazz for cash, which I still drive even today.

Fast forward to the present, I’m now a father and have to readjust my saving habits once again.

You mention that you’re very passionate about entrepreneurship and finance, why is this?

Well, I did eventually raise R19,000 and entrepreneurship played a huge role. I started offering delivery services to local tuck shops using my trolley and wheelbarrow. Every weekend I would walk four kilometers to the wholesaler to purchase heavy items such as crates of cool drink for my clients. I liked paraffin because it was the most profitable. Even before I knew about changing oil prices [globally] and their effect on petrol or paraffin prices [here] I quickly realised that even though the price of paraffin was constantly changing, retailers still had to sell at a specific fixed prices, and that I could use this to my advantage when the price went down, or mark up the prices, given my clients had already placed a margin in their selling price as a buffer.

Eventually I was able to do computer science at the University of Johannesburg, which I funded myself. I did very well in my first year and was invited to join the Golden Key Society in my second year. I eventually got my degree cum laude and now I’m currently enrolled with Wits Business School for a PDM (Postgraduate Degree in Management and Business Administration), which is also self-funded.

During my first year at varsity though, there were numerous campus dynamics I had to adapt to and finance was once again a factor. I noticed that bursary students had to meet certain criteria in order to continue receiving funding and most were struggling to grasp some of the concepts whilst battling with academic content offered in the curriculum. The pressure these students were under created an avenue for me, which was tutoring to first years. I realised that these students had the money to pay and needed my services in order to continue studying. However, I was offering my services privately so there were credibility issues. To increase credibility, I simply made sure I passed all my subjects with distinction that year and was officially employed by the university to offer tutoring and academic support in Computer Science, Informatics and Applied Mathematics.

Your tax-free investment portfolio is a pure equities investment. You opened your account in mid-January and when you entered the race on 25 February your investments were up 12%. What influenced your decisions?

I have been following a few analysts and was betting against the analysts, because at times, it’s all really about sentiment and nobody can predict what’s going to happen.

So when I started trading I bought commodities for my son. I know investing in commodities for now seems like murder, but hopefully he will thank me for it years later when he’s older.

For my own investments, I figured banks have always been there and will always continue to be there, so I took most of my funds in the Satrix Fini, which was up 10% in March. However, diversification is important so I also bought Preftrax to track dividends from preference shares, and also got the Satrix Resi to track the capped resources index (it invests in the top 10 resource companies according to market capitalisation). So my overall portfolio is currently standing at 13%.

Has stock market volatility had any influence on your investment strategy?

In a manner the volatility brings an element of opportunity, as the constant corrections often mean that you get to buy stocks that have been oversold. This has worked well so far as the companies are bouncing back.

What, to you, has been the most valuable lesson on finance and investing, and why?

The most difficult lesson has been patience. This is something that goes a long way because there’s always something happening on the markets, so you have to learn to look beyond the short-term profits and losses. Instinct is another one. Trading is not a perfect science, so you have to also rely a lot on instinct.

When it comes to investing, what do you know now that you wish you’d known when you were starting out?

That question is constantly haunting me. If I knew then what I know now – had I understood financial basics such as the concept of compound interest and the difference it can make over the long term – my habits would have been different.

Knowing what you know now, what, if anything, would you have done differently to reach your financial goals?

I would have paid myself first. Initially I was taking care of all my expenses and saving whatever was left; now I put aside a set amount every month and take care of everything else afterwards, regardless of my expenses. If it means forgoing certain luxuries, I’m okay with that. But I must admit that this kind of mindset has, at times, put me at odds with my peers, because people don’t always understand when, for instance, you’d rather eat a home-cooked meal as opposed to splashing out at a restaurant.

Nonhlanhla Kunene
By Nonhlanhla Kunene April 5, 2016 12:42
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