The Sunday Mail
Business Reporter
The above is the title of Philippines’ best-selling author Bo Sanchez’s book on stock market investments.
Through the title of the book, Sanchez is saying anyone can invest in the stock market.
In other words, he is trying to demystify the long held notion that the stock market is for the elite.
By using his maid as an example, and not himself, he is trying to accommodate everyone.
If someone at the level of a maid can invest, then what stops anyone to invest. That does not mean the maid can be looked down upon, but it shows that anyone, at any income level, can save and invest.
The preface of this book is titled “Take charge of your financial future”.
In this preface, Sanchez writes that the purpose of the book is “to tell you that it’s not complicated to invest in the stock market”.
All you need is a little bit of guidance — and a lot of discipline, he writes.
The preface also has a subtitle, “Why your long-term savings shouldn’t be in banks”.
Again this speaks to our current situation. The interest rates that Zimbabwe banks are paying, if any, are insignificant.
Coupled with high bank charges and account maintenance fees, chances are that by the end of the month, the $1 000 you left in there would be $900.
How much is the monthly account maintenance fee at your bank?
Sanchez thus suggests, your long term savings should not be in banks. He implies that its better to take a chance in the stock market.
While the stock market does not guarantee gains, a little bit of guidance — and a lot of discipline might result in long term gains being attained.
From the beginning of the year, to the end of September, the Zimbabwe Stock Exchange All Share Index had gained 611,20 percent. It probably beat inflation for that period (January to September).
During that same period, CBZ was up 7 488 percent, Cafca 3382 percent, Bindura 2 372 percent, FBC Holdings up 2 265 percent.
With a little bit of guidance — and a lot of discipline, maybe these are the counters one could have picked. Inflation would not erode such returns.
Of course if one had picked Unifreight, then the capital gains of just 43,9 percent would have been eroded by inflation.
Such a return, like PPC’s 98,8 percent year-to-date gain, would fail the time value of money test, at least in the short term.
Probably such mixed performance is the reason why Sanchez talked about the need for “a little bit of guidance — and a lot of discipline.”
According to Sanchez, there are only “two kinds of money that should be put in banks: Business Money and Emergency Money.”
Chapter two of the book is titled “Follow a Simple System”.
The system is really simple, he says.
The moment one receives their salaries, they divide it into five envelopes.
First Envelope: Tithe Fund
Second Envelope: Expense Fund
Third Envelope: Support Fund
Fourth Envelope: Emergency Fund
Fifth Envelope: Retirement Fund
The first one is a Biblical principle. The need to give to God’s work. Sanchez believes there are blessings that come from doing this.
The second one is for daily needs. It helps one live within their means.
The third one is the support fund for family and friends.
If you don’t put such a fund aside, one day you might fail to help the people you love in their time of need.
The fourth one, Sanchez calls it the magic sauce. One needs it because every once in a while an uncle dies, the farm needs chemicals, a child is in hospital, etc.
Then there is the retirement fund. This is real savings. If one does not have a business, the best way to grow one’s money is to invest in the stock market, according to Sanchez.
This can be done by Owning a Great Company, which is the title of chapter four. When you own a great company with strong brands and visionary leadership, chances are that it will grow bigger, and so too will the value of your shares.
Let’s end here with a summary of what happened on the ZSE in the month of September.
The bourse closed the month of September up 17,5 percent. Inflation for the month is likely to be lower than this and this signals good returns were made during the month.
In terms of value, the overall
market gained approximately $30,8 billion to close the month at $206,5 billion.
Investors put in a record $4,6 billion, the highest single monthly turnover in years beating the $1,9 billion that was traded in June this year.
The number of shares that traded at 1,093,040,821 was more than double the previous high of 379,970,700 that changed hands in June 2020.
