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You can also listen to this podcast on iono.fm . Download the free LiSTN audio app on , or . For previous Be a Better Investor episodes, click . Welcome to this week’s Be a Better Investor podcast. It’s a podcast where I speak to finance and investment professionals about their investment journeys and why they chose a career in managing other people’s money. The idea is to find those golden nuggets of wisdom to assist amateur retail investors to become better investors. My guest today is Isabella Mnisi. She’s the sector head for asset management and funds at Rand Merchant Bank [RMB]. She has been in the investment world for 20 years. Before joining RMB, she was at Ashburton Investments, where she held several executive positions. She also made her mark at Absa Capital and the Development Bank of Southern Africa. She’s a CFA [Chartered Financial Analyst] Charterholder and has a Bachelor of Science degree in computer science and computational mathematics. She has a postgraduate degree in advanced mathematics and finance from Wits and a Master’s degree in commerce from the University of Johannesburg. Isabella, thank you so much for coming into the studio today. That was quite a mouthful. Do you perhaps still study? Thank you very much, Ryk, for having me. I don’t do much studying anymore. I find myself busy with Grade 6 mathematics, and Grade 1 and other stuff. So I’m quite challenged. I think after the academic world the university of life is also very educational. But give us a bit of background. Where did you grow up and when were you first exposed to investments? I grew up in a small village called Mansehra Village. The nearest small town is called Northam on the platinum belt of South Africa. I grew up there, raised by my grandmother. I went to school there and only spoke Setswana. I never spoke English until I was about eight years old. We moved to Pretoria and I went to school there. And I remember getting feedback from Old Mutual and Momentum and others saying ‘study actuarial science’. I didn’t bother to read those things; I wanted money to study computer science. The first time I was introduced to investments was when I was doing my honours in the maths of finance at Wits University. Let’s talk about mathematics. Obviously you are an absolute boffin in mathematics, and in computer science you need a strong maths base to be really good at programming. Why didn’t you go the programming or the IT route after you studied? Why then switch to financial services and investments? Yes, I must say spending hours and hours in a computer lab trying to debug a programme that I’d written just killed my soul. But at least I can still do basic coding. So that’s what happened. I just couldn’t see myself behind a desk debugging or writing programmes. So when I did advanced mathematics of finance, then the finance bug bit and I’ve never looked back. Tell us about the finance bug. What attracted you to it, and why did you pursue a career later in the investment side of it? I must be honest, I was recruited to the Advanced Mathematics of Finance course by a Professor David Taylor, who was running it at Wits at the time. He is now at UCT [University of Cape Town]. I’d never heard of them, but these people were willing to give me a job and buy me out of my bursary that I had before. I was just grateful. And then I got there and I found a whole other world that I hadn’t known existed. I had studied derivatives and other stuff, so I got introduced to that world and worked at Deutsche Bank for a little bit. But I’m not a trader. What did you do there? I started off on the money market desk, because I was a ‘little grad’. So I went for the grad training programme. I started on the money market desk. I went on to the FX desk and went on to the bond sales desk. That’s when I thought, no, this is not me. Then I moved into the world of structuring because there you have a bit of time to think about things and put them down on paper and discuss your thoughts. But because Deutsche was an international bank they didn’t really have the muscle to do that in South Africa. That’s when I moved to Rand Merchant Bank. And your first personal engagement with the investment world or, put differently, when did you actually buy your first asset with money you’d earned? Actually not until I was given shares by my employer – at the time FirstRand. I didn’t have enough money to buy shares. But also, quite honestly, I didn’t have enough people around me who were buying shares or where shares were even a conversation. I was just surviving, trying to plug here and there, helping out at home. I just didn’t have enough exposure and enough money. Then the first set of shares I got was the ones I was allocated by my employer. Do you still have them? I still have them. I used some but I kept some. I don’t consider myself an active trader of shares. So I’ve gone on to buy more shares and also shares for my children. And when there were B-BBEE share schemes – I didn’t have children then – I could afford to buy for nieces and nephews, which I did. It was really just buy-and-hold; this is a long-term investment. I’ve got some exposure in Transaction Capital, so I don’t know how I’m feeling right now. [Laughing] But I have gone on to acquire shares outside of my employer. That was obviously when you were still very young. You are still young. How did you choose the shares you bought? I guess I have the benefit of also having worked in the investment-management space, and of having [become] a CFA and just having exposure to a lot of research and reading material. Who is in management, what is their experience, who is on their board, what is their experience, how diversified is the board – just in terms of race, in terms of gender, in terms of, social background, in terms of education; that whole thing. So I tend to look at all those things. And when I think, okay, I think this board is solid, it has solid people and it’s in a sector that I like, then I consider that kind of share. I don’t own Bitcoin. But [with] that kind of vibe sometimes I take a punt, just a little bit, and then see where it takes me. But ordinarily I just choose a sector and then follow top down. Do you invest in individual shares or do you also invest through collective investment schemes [CISs], like unit trusts and ETFs [exchange-traded funds]? Yes, I have some investments in unit trusts. But where I’ve gone into unit trusts – because my training also comes from the unlisted [space], your non-traditional stuff – is actually [through] my previous employer, Ashburton, because they’re quite big in the unlisted credit space. So I’ve gone via them because I can’t really access that on a listed market. So I tend to go on the alternative side, go on unit trusts or CISs, and I tend to do more direct investments for listed companies. And maybe if I want precious metals there will be futures traded, things that have maybe platinum or gold, and I’ll go for that. So it’s very, very diversified. Is it a big portfolio, and how much time do you spend managing it? Not a big portfolio at all. Honestly, I don’t spend a lot of time managing. I’m a passive investor, so to speak. I don’t spend a lot of time managing that. I do look at my statements once a month to see whether I think I’m overexposed here, [or] can I add something more here? To actually buy shares is very difficult, because I cannot sit in a meeting where we are discussing something sensitive that is not public – at Sasol, an example, and then go and buy Sasol shares. No. That used to happen in the past a lot. I know. So you can’t be an active trader when you work in the space that we work in, because there’s a whole process that you need to follow before you buy shares. There’s actually a personal-account trading policy that we have in-house. Well this podcast is aimed at young investors, young professionals, people entering the job market. They start to earn salaries. They would like to build up a portfolio for various reasons, maybe save for a deposit on a house. Maybe they want to start an investment journey to create generational wealth. But many people open an account at a stockbroker like Easy Equities, and then they put in the first money and want to start that investment journey – and don’t know what to buy. So what would your advice be to somebody like that? Let’s assume this is money outside of their formal pension fund contributions and retirement savings. How do you think somebody like that should approach it? I would say you can start investing with very little – I think R250 or R300, or less than R500 into Easy Equities. So I would advise somebody who is starting out – especially somebody who is not necessarily in the finance world or investment world – to buy an exchange-traded fund, because it has a lot of other stocks. It gives you diversification from the word go. Observe how it goes. Learn about stocks within that, read a lot of information that they send you. Some of it is really written in a language that is not very friendly, [so] go online, find reputable people. There are a lot of non-reputable people [out there]. Find reputable people, read basic stuff, buy the Financial Mail, buy the Business Day. Just learn and follow … Read Moneyweb. Read Moneyweb, read Moneyweb. And then follow the news, listen to business news; you will pick up something. Right now some of the big themes are the social issues, the governance issues – because we have seen what has happened to the likes of Steinhoff. Read: When you actually look you’ll see that there were big governance issues [at Steinhoff]. So you start to pick up that language. I wouldn’t say ‘go big’ when you start, because you don’t really know. Just dip your toes. But I would say maybe go into an exchange-traded fund because it gives you diversification from the beginning, and keep going like that. That is a conservative approach. I’ve spoken to many other guests on this podcast and many also pick companies to invest in which they know. Many people have a Vodacom cellphone contract, and then they buy Vodacom. I don’t always think that’s the best approach, but people are buying stuff they are familiar with. Is that a good way to start? I don’t think it’s necessarily a bad thing because, like you say, you have an MTN cellphone, you’re very happy with them, and you buy MTN stock. Now you start taking an interest in them. You start wanting to see whether they are paying a dividend. You start hearing stories about Nigeria and you’re interested. What are they doing in Nigeria and why? And you actually learn quite a lot because it’s something that you like. Suddenly maybe then you don’t go to Pick n Pay, you go to Shoprite. And when you start hearing that Pick n Pay is changing its CEO, this and that, you start wondering what’s happening. That in itself is a learning. Read: Or you buy Old Mutual and then you hear stories about people claiming under their insurances and Old Mutual is not paying out, and people are taking dead bodies to Old Mutual. Then you learn things to [make you think] maybe I’m investing in the wrong [stock]. It is good to do that. Because you have skin in the game you look at those developments through a totally different lens. That is very interesting. What are the biggest mistakes you think young people can make when they dip their toes into the investment world? I think sometimes they go with hype. They go with what’s trending on social media or they follow advice from people who are maybe famous but people one shouldn’t be taking advice from. And then they go in there and they go big, because I think young people these days believe what they see, and people are always flashing things – [and they] think, okay, if I follow this guy, what he says, I’m also going to be there. It’s very much as case of ‘I want it, and I want it now’. And then they end up following the wrong advice. So I would caution against that. You’ve got a big mathematics background, and you are also a CFA. That marries the mathematical part with the investment theory, at least. How smart do you think people should be to be successful investors? Is there a correlation between being smart and well educated, and being able to make money on the stock market? I don’t think there’s a strong correlation there. We’ve seen people lose lots of money. Very smart people put money in Steinhoff; put money in a lot of companies that have gone bust. I think if there was a correlation between being smart and making money we wouldn’t be seeing any of those things. Nobody thought we would have Covid. People [have always said] ‘property is a safe thing’. And then look at what Covid has done to property. I think it gives you [motivation] to maybe ask the correct questions, or pointed questions, like somebody who’s completely out of that world. But I don’t think it gives you any kind of advantage. Maybe I expressed it not as eloquently as I could have. Non-financial people – you get very smart lawyers, you get very smart engineers and doctors, and then sometimes there’s a perception that because they are smart they should also be good at investing. Anyway, I think that is maybe a debate for another day. [Such as] Let’s ask sports people’. Sports people – absolutely. Sometimes sports people get roped into markets, certain investment products. Look at the issue of [Jamaican runner] Usain Bolt; apparently he took all his money and put it in a venture capital fund and it went bust; he trusted people because … That’s maybe not the fastest start you will have in the investment world. [Laughter] Let’s talk about you. What has been the very best investment you ever made, the one you are the proudest of? I think studying further is one of the best returns on investments I have had, because doing [the CFA] programme – I paid for it out of my own pocket, even though my employer could have paid for it. I thought if I take this money and I pay for it I’ll make sure I sit down and actually do this thing and do it properly. My Master’s was the same thing. And even when I was doing my honours in advancements of finance, I had a sponsor from the then Iscor – so you can tell how old I am – and they wanted me to come and work after computer science. I said, no, I don’t want to work. My mother had to take out the loan, but I stood surety for it because they said: ‘Well, you’ve got a good degree. We know Iscor is going to hire you, so you can pay us back.’ So investing in my education has been the best return on investment I could ever ask for. Absolutely. And now – what has been the worst investment you ever made? One you don’t always want to talk about. Oh, I had a friend who was starting a spa/beauty business. I think she has an amazing mind, but I think she might have been a little bit ahead of her time. She wanted to [start] a beauty business. I looked at her numbers as she presented them. I knew at the back of my mind that you can’t have a business plan based on family and friends. You just can’t. I thought, look, if this thing runs, my upside is going to be amazing. If it goes bad, hey, maybe there’ll be some nail polish and stuff left over that I can use. Let’s just say it didn’t survive even six months. So that was the absolute worst, but the friendship stayed intact. Normally that is a friendship-ender. Do you regard investments [that are] outside of regulated markets like the equity market as investments? For example, or or one of those types of assets – if you can call them assets? I don’t have enough money to go into that world. But I like art. I’m not a wine drinker, so I wouldn’t go there. I like art, just because I like it. If it increases in price, great. But it’s not something that I’ll actively look to invest in. It’s not for me. You look at it for its beauty, not for the investment value. Exactly. Definitely. Isabella, thank you so much for joining us today and for sharing your insights. And thank you so much, Ryk, for having me here. That was Isabella Mnisi. She’s from Rand Merchant Bank.
Read more: moneyweb
