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RYK VAN NIEKERK: Welcome to this week’s version of the Be a Higher Investor podcast. My title is Ryk van Niekerk and on this podcast sequence I converse to main skilled traders and enterprise leaders about their funding journeys. We additionally take a peek into their private funding portfolios. We attempt to perceive how they analyse funding alternatives, what firms and property they put money into and whether or not they have extra hits than misses. The thought is to determine just a few golden nuggets of knowledge to assist newbie retail traders to turn out to be higher traders.
My visitor at present is Claire Rentzke. She’s the chief funding officer at Sukha & Associates. Earlier than becoming a member of Sukha in 2020, she held the identical place at 27four Funding Managers. Claire, thanks a lot to your time at present.
To start with, inform us about your background. The place did you develop up and what profession did you dream of if you had been younger?
CLAIRE RENTZKE: Hello, good morning. I’m Cape City born and bred. I grew up in Cape City, went to college at UCT. I used to be by no means actually uncovered to investments. I by no means considered it as a profession after I was rising up.
I got here from a family of engineers, so there was extra of an engineering focus at house; I may wire a plug and ‘MacGyver’ [fix] something with some electrical tape. However we didn’t actually discuss cash – and I don’t actually assume there was any to speculate.
Investing and finance by no means actually occurred to me as a profession till I obtained in the direction of the top of education.
And after I determined what to do, it was off to UCT to do Enterprise Science. That was actually the primary time that I used to be uncovered to investments, that I realized concerning the inventory market, that I realized about investing and compound curiosity – which was terribly thrilling – and about finance on the whole.
RYK VAN NIEKERK: So that you had been uncovered to the funding world at college? When did you truly make your very first funding?
CLAIRE RENTZKE: Effectively, I used to be most likely a lot older after I obtained round to investing. After I graduated, I went abroad. I labored abroad for some time.
And so my very first funding was actually taking out the equal of an RA [retirement annuity] offshore with the intention to begin saving for retirement.
It wasn’t into single shares that I began, however extra into retirement financial savings which type of dictated the trail that my profession has adopted.
So after I first purchased my very own shares, versus unit trusts or another fund, I believe the primary one I purchased was truly African Financial institution – as a result of it simply obtained cheaper and cheaper. It was like they had been by no means going to let a financial institution fail.
However sure, I realized my lesson from that.
RYK VAN NIEKERK: Did you maintain it till the implosion occurred?
CLAIRE RENTZKE: I did, I did. I believed the implosion was by no means going to occur – that someone would bail them out. However sure, lesson realized.
RYK VAN NIEKERK: Let’s discuss classes realized as a result of everyone thinks an expert investor doesn’t make errors. How typically do you make a mistake and the way do you react to it?
CLAIRE RENTZKE: All people makes errors. I believe a part of what we do is attempt to sift by means of and decide what’s simply noise, what are the info? Particularly coping with retirement funds you’ve obtained fairly a long-term view that you simply’re making an attempt to take, however there are a variety of transferring components within the quick time period and all of us get issues mistaken.
Who would have ever thought that Trump would turn out to be president within the US, and what that might do to markets?
Whoever would’ve thought we’d see the extent of QE [quantitative easing] after which of QT [quantitative tightening]. So all of us get issues mistaken, however I believe you positively have to study out of your classes.
I believe a giant lesson is to all the time stay humble, all the time to acknowledge that there’s so much that you simply don’t know – however to proceed to have a long-term time horizon. So perceive that what occurs within the quick time period shouldn’t be essentially indicative of the place issues may go sooner or later.
RYK VAN NIEKERK: Sure, completely. I as soon as had a enterprise which failed, and I believe that was the very best factor that ever occurred to me, since you simply change your perspective on success. So long as you study from errors I believe it may be very, very invaluable.
Inform us about your funding strategy. How do you strategy your private financial savings for retirement and different discretionary investments?
CLAIRE RENTZKE: I believe I’m most likely a sucker for a sale and a discount, so most likely have an excessive amount of of a price bias; however it’s one thing I’m conscious of.
As for my very own financial savings and my very own retirement, I believe the best way I strategy it’s to not give it some thought an excessive amount of; take away the month-to-month decision-making on how a lot I ought to put right here, how a lot I ought to put there …
And to simply make it possible for each month you might be placing one thing away, you might be taking advantage of the alternatives you might be offered with, and that you’re prepared and dedicated to creating it a long-term funding horizon – so that you’re not tempted to dip in there within the quick time period.
So I strive to ensure I’m constantly saving for retirement and that I don’t dip into it, and that I’m not tempted to dip into it when instances are powerful.
RYK VAN NIEKERK: I assume you may have an RA otherwise you contribute in the direction of a pension fund. Is it an RA?
CLAIRE RENTZKE: Sure, that’s right. I’ve an RA, so I try to make or benefit from the completely different choices obtainable.
I do have a private inventory portfolio that I tinker with every so often, however most of my financial savings are into an RA.
After which I additionally make use of tax-free financial savings accounts.
RYK VAN NIEKERK: Now the large query is do you handle your individual RA, or the collection of funds to put money into – or do you permit that to a monetary advisor?
CLAIRE RENTZKE: I do handle what I’ve chosen to speculate, however it’s by means of a fund. So I’ve chosen which fund to put money into and I go away it at that.
RYK VAN NIEKERK: Let’s discuss that discretionary portfolio, as a result of I believe many younger folks getting into the job market wish to begin constructing wealth, long-term wealth. It isn’t simple to do, particularly as a result of your greatest asset is time however your greatest enemy is a lack of understanding. So how did you, if you had been younger, strategy financial savings and investments – and what had been your objectives?
CLAIRE RENTZKE: Sure, I believe setting objectives is essential and for me – not coming from a background or belief fund the place we had a lot of cash – it’s all the time been the objective of monetary independence and safety, not having to fret about placing meals on the desk day in and time out, which I do know is a priority for many individuals.
However the greatest factor is to simply get began. And so the one good thing about RAs and pension funds is that you simply get the tax credit score there, so it’s all the time nice to have the ability to maximise that first.
However then, take no matter cash you may have that you would be able to afford to place apart, and don’t be afraid to purchase one thing and to carry on to it. I believe the temptation is all the time that younger folks, once they begin portfolios, need to be merchants, they need to be day merchants – out and in of stuff in a day.
However my private portfolio is constructed up issues that I believed seemed to be good alternatives on the time, and that I’d be pleased to carry.
Typically it’s blue-chip shares which might be good, stable, high quality companies which might be going to proceed to develop and compound. Typically it’s even an ETF [exchange-traded fund] in a selected area or space or sector that’s enticing on the time.
So don’t be afraid to place an entire lot of issues collectively to get broad publicity mixed with some blue-chip long-term positions, and don’t take a look at it each day.
RYK VAN NIEKERK: Sure, I can relate to that, particularly if the markets are down. Don’t open your assertion as a result of it is going to wreck your day. However when you have a long-term technique, clearly inventory markets have over many, many a long time proven that if there’s a dip, there’s all the time a spike on the horizon.
Inform us about your private discretionary portfolio – what’s in there?
CLAIRE RENTZKE: It’s fairly a mixture of issues. I’ve publicity to a number of the banks as a result of I purchased [them] into Covid once they actually seemed enticing and had been prone to be sustainable.
I’ve obtained some Naspers and Prosus in there as a result of that’s nice publicity to the tech sector.
And I’ve just a few ETFs. I’ve a European fairness ETF in there, and I’ve additionally obtained some industrial holdings. I’ve [other] ETFs as nicely, notably I believe European equities and another offshore fairness.
I’ve some retail financial savings bonds as nicely which give an awesome yield.
It truly is a mishmash – some industrial shares, even some retail publicity, I believe the likes of Woolworths.
RYK VAN NIEKERK: It sounds such as you concentrate on blue-chip shares after which additionally some extra defensive investments into ETFs and retail financial savings bonds. Is that your strategy?
CLAIRE RENTZKE: That’s an effective way of placing it.
The long-term blue chips that you simply’re going to simply put below your pillow and neglect about; allow them to compound by means of time, realizing that they’ll be protected.
After which some extra defensive broad-sector exposures, mixed with the yield on the bonds.
So sure, I’m most likely way more conservative than the common individual.
RYK VAN NIEKERK: And any small caps?
CLAIRE RENTZKE: I do have Metrofile in there.
RYK VAN NIEKERK: Metrofile? Effectively, that’s a midcap most likely, isn’t it?
CLAIRE RENTZKE: Oh, most likely. Perhaps it was a small cap when it went in there.
RYK VAN NIEKERK: In case you may return in time and converse to the Claire when she simply began incomes cash, what funding recommendation would you may have for her?
CLAIRE RENTZKE: I’d inform her to maximise her financial savings as younger as attainable, and to maintain going. Once you first begin out working, it all the time looks like there’s one thing else you need to spend your cash on. You need to be impartial; you need to save and purchase a property. Then you may have children and it’s infants and shopping for nappies for them.
And so there are all the time issues competing to your cash.
However for those who can maximise your financial savings, these bills simply develop and develop and develop by means of time as you become older, so it truly by no means feels such as you [get] there to have the ability to maximise.
So maximise what you may put away from day one, and simply go away it and let it work.
RYK VAN NIEKERK: Sure, I believe that may be a sound technique, which not many younger folks absolutely perceive once they set out on their funding journeys.
CLAIRE RENTZKE: It’s very arduous. There’s a lot that’s competing for each single rand that you simply earn, and to place it away is a troublesome resolution.
But when typically for those who can automate it so that you simply don’t need to assume each month – what am I going to place right here, what am I going to place there? – it does make it simpler. Take the choice out of your palms in order that you understand all these different competing bills don’t stand an opportunity.
RYK VAN NIEKERK: How lengthy do you usually maintain on to a share?
CLAIRE RENTZKE: Given the construction of my portfolio, it truly is buy-and-hold.
There have been only a few issues that I’ve offered. Usually it’s been for different causes.
I keep in mind proudly owning Sasol and simply obtained to the purpose the place they weren’t enhancing, they weren’t cleansing up their act, and I felt it was one thing that I couldn’t maintain anymore.
And so I offered that out.
Equally, with one thing like BTI [British American Tobacco] – I believe I offered that, however I offered that extra from a perspective of not eager to help a tobacco firm.
In any other case a variety of what’s in my portfolio has been there since I purchased it.
I suppose it actually can be a case of every factor, figuring out that the funding case wasn’t there [anymore]; that it was below an excessive amount of threat, [and] to promote it off. However that’s not actually one thing I’ve been very energetic in – buying and selling. It truly is extra buy-and-hold.
RYK VAN NIEKERK: The most important problem for younger traders is to be affected person, but it surely’s not all the time that simple if a share loses worth. So what do you do after you’ve made an funding and it seems to be an absolute canine?
CLAIRE RENTZKE: Typically it’s within the eye of the beholder.
Consider the funding case. Is the funding the thesis nonetheless sound? Is the enterprise going bankrupt at present – like African Financial institution, – or will it proceed to earn money into the long run? Is it an organization that has a sound funding proposition?
The share worth is simply reflective of sentiment – it’s not all the time reflective of the worth of the underlying enterprise.
So, even for an investor who possibly can’t put collectively a mannequin and perceive the worth of the underlying firm, look as a shopper: is that this one thing that you simply’re going to proceed to purchase into the long run and, if you’re, does the enterprise case for this firm nonetheless stand?
RYK VAN NIEKERK: However it’s troublesome, even for skilled traders, to take the loss and to not hope that it’ll enhance in worth sooner or later. I believe if you will get your mindset and your technique to accommodate these poor investments, that may stand you in good stead.
CLAIRE RENTZKE: Completely.
And I believe there are sometimes two ways in which folks react to falling share costs.
The one is to simply promote and react to what’s taking place within the share worth, and the opposite is to simply maintain on to your funding thesis and actually consider that you’re proper – since you’ve carried out the work, you acquire the share, you’re in love with it, you need to maintain on to it. And so, taking a step again and it objectively may be very arduous.
But in addition, what’s your funding horizon? Are you cheerful to carry on for the subsequent 5 years, or do you need to take your losses and go?
RYK VAN NIEKERK: Now for the large query, what do you regard as your finest funding ever?
CLAIRE RENTZKE: It must be placing cash away into my RA, as a result of I haven’t tinkered with it.
I haven’t checked out it besides to see my assertion on a quarterly foundation.
It has compounded and compounded and compounded. I couldn’t have carried out that myself with out the self-discipline of placing away that cash, having that debit order come – and never dipping into it after I change jobs – and simply actually having the ability to let it compound.
RYK VAN NIEKERK: Compounding, I believe, when you have time in your aspect, it may be your very best buddy and asset.
And what was your worst funding ever, one you don’t actually need to discuss?
CLAIRE RENTZKE: African Financial institution [chuckling].
RYK VAN NIEKERK: So your first funding was your worst one, and the trajectory was up from there?
CLAIRE RENTZKE: Sure. Make errors early in life.
RYK VAN NIEKERK: And don’t make life-changing errors. Don’t put all of your cash into one basket. Was it a considerable funding into African Financial institution in your monetary place on the time?
CLAIRE RENTZKE: No, it wasn’t. It’s a discretionary portfolio.
It’s very a lot cash that if it went to zero tomorrow I’d be upset, but it surely wouldn’t impression my monetary safety.
RYK VAN NIEKERK: Claire, thanks a lot to your time at present and for sharing your insights and telling us your story.
CLAIRE RENTZKE: You’re most welcome.
RYK VAN NIEKERK: That was Claire Rentzke. She’s the chief funding officer of Sukha & Associates.
