Great TFSA Race Investor Profile – Ryno Van der Walt

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With just three more weeks to go, the Great TFSA Race is nearing the finish line! Until then, we will  continue sharing investment ideas and insights from our entrants every week, culminating next month in an announcement of three winners who will each get R5 000 to add to their savings. Find out more and enter here.

Our contestant this week is accountant and family man, Ryno Van der Walt. Until recently, Ryno had entrusted his broker with the task of taking care of his finances. After his recent passing, however, Ryno stepped up and took charge.

Having already invested in a self-managed tax-free savings account, Ryno says the realisation that his own investments were performing just as well as his late broker’s not only gave him the confidence to go at it alone, but has also led to a shift in focus from his more traditional retirement investments to his tax-free savings account.

We had a chat with Ryno to find out how it was going.

Can you tell me a bit more about yourself and how you started out investing?

I’m a professional accountant, and married with two kids. I’ve been putting money away for retirement from an early age. Over the years I’ve put money away through conventional investment vehicles such as my retirement annuity (RA) and unit trusts, but since last year my focus has shifted. I have always put more into my RA, but I now feel I should be putting more into my tax-free investment because in the long term it seems that it will yield higher returns.

Previously my investments had always been taken care of by my broker, but he passed away earlier and his passing forced me to be actively involved, and that is when I chose to open a tax-free account.

You’re saving for retirement, what are your concerns for the future and do you think your current investments will address these concerns adequately?

I think I’m probably in the same boat as many other South Africans – we don’t put away enough for retirement. With the current economy I feel I’m not putting away nearly enough, which is why I feel I need to shift focus more on my tax-free investment as I do feel that it will outperform my RA and may end up being more than just a supplement to my retirement savings. I may in fact, probably end up using my RA as a supplement to my tax-free investment.

Some investors have clear-cut strategies to help them meet their objectives, what are yours?

As I said previously, I’m very young in the investing world, so I don’t have a defined strategy just yet. Based on my own fundamental and technical analysis of investments, I place investments on value products and so far I’m happy with how they have performed, although one shouldn’t really place too much importance on short-term gains as markets fluctuate, it’s still nice to check once in a while.

For your tax-free investment, you’ve chosen the BBET40 for its equal weighting and the DBXWD for some offshore exposure. What about these two aspects (the equal weighting and offshore exposure) was of great importance to you?

Equal weighting basically gives equal weight to stocks in a portfolio regardless of market capitalisation. When stocks are weighted based on market capitalisation, your big companies can take up about 80% of portfolio. For me, capitalising on the smaller companies is just as important, which is why equal weighting was important to me. For offshore diversification I chose the DBX World.  What appealed to me about it was that it gives me exposure to numerous foreign economies of which the US has the biggest exposure. (The BBET40 invests in the top 40 stocks on the JSE; the DBXWD invests developed market indices.)

Wouldn’t you say that holding your retirement in pure equities is rather risky?

I think those [ETFs] are actually safer compared to single equity shares. Every investor should ensure that his or her portfolio is adequately diversified based on his or her appetite for risk.

What important lesson do you hope your children or other people can learn from you about financial management?

Basically what I’d like to say to everybody is that you should start saving as early as possible, because the compounding effect, over the long term, can add significant value to your investments. The longer you delay it, the more difficult it becomes to catch up and save adequately for retirement.