Investing: Partner with a financial advisor or go the DIY route?

JEANETTE CLARK: We are living in economically volatile times, and the debate is around where the markets are more volatile now than they’ve ever been in the past. Do we have more black swans circling the pond, or do we simply have access to more information and markets than we had before? One thing is certain: making investment decisions in this complex environment can be tricky, whether you choose to partner with a financial advisor or go the DIY [do-it-yourself] route with direct-to-consumer digital investment platforms.

Today we chat to Higgo van Biljon, CEO and founder of the community-based financial education app FinMeUp. The app connects industry experts and mentors with users, with the goal of taking them to financial independence.

Higgo, thanks for joining us today. What is your take on what is currently going on in the global markets, and how should anyone navigate these uncertain times to find the right opportunities?

HIGGO VAN BILJON: Yeah, it’s crazy times. There are a few reasons why we are seeing what we’re seeing. Some of the reasons include fears of inflation, and we are seeing that – inflation fears and uncertainty on interest rate hikes, uncertainty of geopolitical risks, uncertainty of recession. So there are so many contexts. Usually when we see that, there are red days in the market – and we’ve seen various consecutive red days, especially in the US market. And this is where I usually tell myself that when we invest in the stock market it’s important to know your plan and stick to your plan, and know that this is a long-term game. Investing should not be a speculative day-to-day thing, otherwise you’re a trader. So, know your plan, stick to your plan, and think long term.

JEANETTE CLARK: What advice would you have for investors who want to take control of their financial lives, and also have the appetite and risk profile to invest? Where do they find the insights and information required to make the right decisions?

HIGGO VAN BILJON: There are different appetites in the market. Some people prefer doing it themselves. Some people prefer giving their money to a financial advisor, or maybe investing in a low-risk index funds.

For me, make sure you have a plan and stick to that plan. Once you have that plan, stay in control of your emotions, look at history, look at all the charts [to see] what happened previously.

You know, if you look at the entire [JSE] All Share Index market, we’ve been through wars, we’ve been through recessions, we’ve been through bubble pops, and still the market goes up over the long term if you have high-quality investments – and if you stick to [your] plan.

It’s also important to know your time frame, thinking long term and not short term, and sticking to your high-conviction investments, because you need to be able to back yourself that you’ve done your research to stick to that long-term investment thesis.

One of the places – and that’s what we are addressing at FinMeUp – is giving the retail investor, the entrepreneurs and the hustlers, the necessary resources and information and education to make the best possible decisions in their investment lives. So we provide research, we provide the news, the information, all of that.

But it all boils down to personal belief and personal preferences when it comes to risk management, as everyone has different [approaches]. But it’s important to know your plan.

JEANETTE CLARK: So if you don’t have that personal conviction in whatever you’ve chosen, is that when you then run the risk of the classic knee-jerk [reaction] when we then do see a black swan on the horizon?

HIGGO VAN BILJON: The thing is, when you don’t have that plan and if you don’t have the conviction, and if you haven’t done the research or learn[t] from other people, or have various sources of information, you are likely to be emotional and make emotional decisions. Even in my own life, emotional decisions with investing and finances usually lead to regret. So it’s important to know why you buy something when you buy or invest, and to know what your plan is.

… you need to be able to ask yourself, if the stock market falls 20%, would you be fine? Usually when people invest their emergency savings, for example, it can end in regret. There’s a quote that says if you have trouble imagining a 20% loss in the stock market, you shouldn’t be in stocks. That is just on the stock market, but there [are] so many asset classes that you can consider – low risk, high risk, medium risk.

We cover all of those on the FinMeUp app itself, but it’s important to obviously [know] your risk level and know that shares and investments go up and down. But if you look at the long term, it goes up if you are in high-quality investments. It’s all about knowing your conviction and doing your own research and making sure that you know your plan, once again.

JEANETTE CLARK: Is the question ‘When is it a good time to buy?’ a relevant question, or is it actually always a good time to buy? Does it just depend on your goal, risk profile, choice of investment or stock?

HIGGO VAN BILJON: I actually had a question yesterday from a friend who asked me how low the US markets will go before he should buy. You can’t answer that, because nobody knows when [it’s] the bottom or the top of any share price. The strategy I use is ‘dollar-cost average’. But it’s important to note that not all falling knives are good opportunities. That is where high conviction comes in. So, if you’ve done your research on a specific company, and you are committed for the long term because of various strategies and various reasons, and belief in the management and the vision and all of that, then if it’s at a lower price … think of it like Warren Buffett. If it’s, let’s say, bread; if bread is R20 and it falls R12 then it’s a bargain. You can buy it at a sale. The same with a farm. If you invest in a farm and nothing in the farm has changed, none of the fundamentals have changed and you get it for 20% less, it actually makes it a bargain.

So I use the strategy of where it’s something I believe in and it falls, I buy as it goes down – not all at once because a low can even go lower. So, it’s [about] sticking to your high-conviction investments.

JEANETTE CLARK: And where should investors turn to find long-term winners, and what exactly is ‘long term’? People have different views on that.

HIGGO VAN BILJON: I view long term as five to 10 years, or five to 10 years-plus. It can even go longer, because [with] anything shorter than that there’s obviously going to be volatility. There are uncertain factors, there are black-swan events. So many things can happen, [whether] good or bad, that I see it as five years-plus. If you look at ETFs [exchange-traded funds] over the five-year time horizon you usually do well. It sometimes even outperforms some index or fund managers. So that’s my take on that.

JEANETTE CLARK: You’ve mentioned a little bit about what FinMeUp does, but can you tell us a little bit more about the FinMeUp app, and how you curate the content on the app? You mentioned that you have to look at a range of voices when you are gathering information to make investment decisions, so how do you curate the content that you then offer on the app for investors?

HIGGO VAN BILJON: FinMeUp is curated in the form of various industry experts … creating content on the FinMeUp app. So, before a mentor is accepted on the FinMeUp app to create content – various forms of content, videos, podcasts, stock picks, or just normal notes and blogs – we first go through a vetting process, making sure that the mentor is vetted and that the content that they will produce is high quality.

It’s not like Twitter, where anybody can just post, for example. They have to be industry experts that will contribute value to the FinMeUp platform.

And it’s various forms of content, as I just mentioned, but it’s specifically for the retail investor that wants to get an extra bit of research.

So some of our mentors take many, many hours to research one company and they post in a very simplified format on the FinMeUp app.

For example, for US Tesla shares, or in South African Shoprite shares, there’s likely to be a research note on one of the companies you are watch-listing, and every day there’s more and more content. There’s also daily information, but only the highlighted information.

So back to the curation aspect. If you go on the internet or on YouTube or news channels, there’s so much content; so we focus on only providing our users with the relevant content that they need to know to stay updated and informed about the daily happenings as well – so when directors of companies are buying or selling big portions, or when a company releases new results. Because, if you are investing in individual stocks, it is important to stay updated with the various companies that you follow, and also get research from other people than just yourself, because sometimes we can miss some information.

JEANETTE CLARK: And could you share some numbers? How many users do you have at the moment?

HIGGO VAN BILJON: FinMeUp is extremely community-focused. We have a community off-app as well, which is around 50 000 now. But on the app, the new app launched three weeks ago, we currently have around 5 000 app users, and that’s growing by the day. The more the users grow, the more mentors we add, the better the platform gets.

But for us it’s all about creating value in everyone’s financial life on the app. As I said previously, our mission is to get a way to financial independence for our community, and all the decisions we make on a daily basis are to do exactly that.

JEANETTE CLARK: All the data in the world will not help investors make good decisions unless it is distilled into insights. So, whether you are comfortable picking stocks and funds on your own, or you would like to follow the guidance of an investment specialist, the fact remains that it has been proven better to do in-depth and proper research before investing, and then investing for the long term.

That was Higgo van Biljon, founder and CEO of the financial education app FinMeUp.

Brought to you by FinMeUp.

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