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On my 21st birthday, my grandfather gave me 21,000 South African rand (approximately US$1,500).
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However, the gift was conditional on me meeting a financial advisor and investing.
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I am grateful for this gift and what it has taught me.
A month before my 21st birthday, my grandfather told me that he would give me 21,000 South African rand (about $1,500, based on the exchange rate at the time). However, there was a problem: I had to visit a financial advisor with him and invest the money in stocks.
At that time, I valued the freedom that money gave me, but I rarely considered investing. I had been working part-time in bars throughout college, doing sales pitches whenever I could, and I had just started doing freelance writing work.
Most of the money I made went toward subsidizing my lifestyle in college (usually nights out getting drunk or getting greasy takeout from the local pizza place), or I saved it for specific occasions, like a cross-country road trip with my roommates. That said, I’m glad I received this 21st birthday gift, and I know I’ll appreciate it more and more.
In early 2019, six months after my 21st birthday, my grandpa scheduled an appointment for me to meet with my new financial advisor.
We sat in a conference room and my financial advisor explained stocks and the market, throwing out terms that I completely couldn’t understand, like “repo rate,” “capital gains tax,” and “volatility.” I nodded, hoping to look like I understood more than I actually did. My grandfather would occasionally ask my advisor to explain important concepts, such as emphasizing the risks of withdrawing money too early, especially when market conditions were bad.
After we finalized our investment, I received quarterly updates via email. I rarely open them and I almost forget about all my portfolios. However, during a family Easter holiday two years after building the portfolio, the topic of investing came up. My brother asked me how much my portfolio had grown (my grandfather had something similar set up for him). I opened the email and checked: the balance was 28,138 ZAR. That’s a 34% increase in just two years.
By this time, I had graduated from college and was starting to make decent money in the public relations business. I was still not sure how taxes worked, so I overestimated the amount I would set aside each month for taxes. However, in 2022, after hiring a tax advisor and filing my annual tax return, I discovered I had a significant amount of money left in my savings.
I remembered the investments my grandfather had helped me build and I emailed my financial advisor to ask if I could add an extra ZAR 80,000 to my portfolio. We set this up and I also inquired about retirement, arranging monthly debit orders that would be rolled into my tax-free retirement fund.
My grandfather not only gave me capital; He gave me the gift of financial literacy. He knew that the best way for me to understand the value of an investment was to see my money grow. I’m lucky to still have him as a mentor and I often turn to him for financial (and business) advice. His approach was never prescriptive; in fact, even at age 21, he never told me I had to give my money to a financial advisor.
Instead, my grandfather always believed that providing people with choices through knowledge, tools, or resources creates a different sense of security. Learning to invest at age 21 gave me the ability to make thoughtful choices with my money as my life and income changed.
Read the original article on Business Insider