Azola Zuma: To attain financial independence start investing in the stock exchange

Azola Zuma is the CEO Sanlam Investment Management. She started her career at Alexander Forbes as an asset consultant and later joined Vunani Fund Managers as executive director and head of business development. She is also the executive for Women In Focus at ABSIP. She holds a Bachelor of Business Science (Finance Honours), an MA (International Business) and an MBA (International Business & Management). She is an International Women’s Forum Fellow, based in Washington. In this interview she talks about her money habits and shares advice on what women can do to grow their wealth.

In this economic climate, have you downsized your lifestyle at all?

I absolutely had to. My husband and I have just committed to a new bond post getting married in 2016. There is definitively more eating at home rather than out. And more emphasis on keeping fit so as to be able to handle the hard work we have to put in to generate more money so we can invest.

How did your childhood influence your attitude towards money? 

I was partially raised by my grandmother and she taught me a principle of self-sustenance from a very young age. She would receive money from my mom for us but because she had so many grand kids under her roof she needed to ensure she got the best out of every rand at her disposal. So we had a full on garden with all kinds of vegetables and fruit trees. She also bred chickens and pigs. So money was spent on seeds and feed for the animals and we went to the shops to get the groceries she couldn’t provide herself. This taught me a lifelong lesson to be able to budget and see how best to stretch every rand I’ve got. At the age of eight I won a packet of Cadbury Chocolate Eclairs from a competition I had entered. Instead of eating the sweets and sharing them with my siblings and cousins, I started a business where I sold my sweets at school. This made a handsome profit. My grandmother also sold fatkoeks through her young band of entrepreneurs, her grand kids. We sold them at school and that’s where the entrepreneurial spirit in me was cultivated.

What are you doing to remain positive about your financial well-being during these tough times?

To remain positive,  I have invested in a long-term asset property (whose growth over the long term is in the double digits) and I am also invested in the stock market so even though the real economy is struggling, my investments are working for me. So the moral of the story is diversify, diversify, diversify when it comes to financial well-being. 

Out of all your responsibilities (bills, groceries, etc) , what do you find to be the most expensive nowadays?

Electricity! And obviously rates and taxes for the property. Food inflation on the back of the 2016 drought shot through the roof but food prices have since stabilised but still quite expensive. I am actually contemplating starting a garden patch in my yard but with my schedule that is going to remain a pipedream for the time being.

Do you and your husband share equal responsibility when it comes to your household finances? 

Yes indeed. Ours is a marriage of equals and so everything is done on a 50/50 basis although my husband has an added responsibility of ensuring that I have petrol in my car and that it is clean. I also do not take out the garbage.

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How do you define financial independence?

My primary definition of financial independence is being debt free. Debt to me is like a swearword. I avoid debt like a plague and only get myself into unavoidable debt like a mortgage or loans for education and car loans. Everything else, if I cannot afford it then I save up for it until I can afford to buy it cash. My secondary definition of financial independence is having enough savings such that if I do not work for the next 20 years I wouldn’t suffer financially. So having an investment portfolio with balances in the multiples of millions would qualify.

What is your number one financial priority right now?

Getting rid of the mortgage asap and putting more money in the stock market.

In the event of an emergency, are you prepared financially?

I would say yes but it would mean liquidating some of my investments.

Have you ever been broke and how did you did deal with that period of your life?

I grew up poor. I went through my entire junior degree years at university broke. I had to cope by working whilst I studied just to get through each month. I was funded by what used to be called TEFSA, now known as NSFAS and they paid for my tuition. I had to photostat some parts of my study books and I had to rely on borrowing books from friends for the rest of it. My mom could only send me the little money she had to borrow from loan sharks in order to assist me. Those were really tough times. But alas I had to do what I had to do to get through it and I haven’t been broke since my first job. Why? Because I live within my means – always have, always will.

Why do you think we so easily fall into debt these days?

People fall into the debt trap automatically because of the structural issues that have to do with exploitation of workers in this country. People earn a pittance for their labour. They also have to travel long distances to get to work which means quite a significant portion of their money goes towards transportation costs. Over and above that they have a responsibility of sending their children to school while maintaining a roof over their heads and putting food on the table. All these things demand money people do not have. This is why early in 2017 a national minimum wage was set at R 3500 per month. The deputy president admitted this wasn't even a living wage. So I guess the picture I paint above is for those members of our society who are in the lower LSMs. I believe the reason the middle class easily falls into debt it is because people are competing with the Jones. They are not to be outdone by their neighbours and so will rather go into debt so they are seen to be doing better than their neighbours or friends. It’s the crass materialism that has gripped our society and it’s obviously influenced by pop culture and TV shows like Keeping up with the Kardashians.

If you have the choice between buying a home or investing in shares, which would you choose and why?

Both for reasons mapped out above. Both are a way to wealth creation. A home can be leveraged if you want to raise finance for a specific project because it has value and its value tends to go up over time depending on where it’s located and developments around it. Investing in shares is one sure way of amassing fantastic wealth and anyone who forgoes investing in the stock market is doing themselves a massive disservice.

When you think of a comfortable retirement, what does that mean to you?

Travel around the world endlessly without worrying about any of the costs associated with it. Having assets that have no debt associated with them. Having my kids financially independent not requiring any support from me.

What’s the worst money mistake you’ve ever made, if you’ve made any? What did you learn from it?

Taking R 250 000 and buying a second hand car in cash for my mother, only for the car to have persistent mechanical problems. It remains a headache to date and has been the worst financial mistake I ever made. I am engaging with McCarthy the people I purchased the car from but if I do not get any joy I will approach the Consumer ombudsman with the complaint.

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What was the last item you regretted purchasing?

A small quirky handbag in Cape Town. This was a complete impulse purchase and when I look at the bag now I ask myself how I will actually enjoy it.

Do you have a budget? Why? Why not?

Yes, it is crucially important to ensure that I do not live beyond my means and keep a check of how much money I can afford to invest every month.

What tools or resources do you rely on to keep your own personal finances in order?

I grew up in an era where we used to write essays at school by hand, on paper. With all the technological advances and apps for everything I still very much prefer writing my budget on paper and doing a recon with my bank statement, which I check online!

Do you have rules for lending money to friends or family?

The only rule is once you have lent the money to family and friends then write it off immediately. So if I can afford to give money away then I do ‘lend’ it otherwise I generally don’t.

What are your money tips for our readers?

Live within your means, if you can’t afford it and you really must have it, then save up for it. Maintain a budget and stick to it – also budget for saving money then invest it with Satrix for first time investors . They have a product for investors even with very small amounts to invest. Many people have fallen for get rich quick tricks, there is no such thing as being rich overnight! Financial independence is a long term game and is very much shaped by your daily behaviour towards money. To attain financial independence start investing in the stock exchange, start yesterday! Convince your stokvel members to invest in the stock exchange. Thank me later!

Pic Credit: ABSIP

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