Whatever you do, make your money work for you
When Randall McPherson moved his investments to 10X Investments after joining the company as an Audit Co-ordinator he couldn’t believe how much he was saving in fees.
Before he joined the company Randall, who already had a retirement annuity with one of the big, well-known providers, decided to open a second one after seeing how various family members had such different experiences at retirement.
“My parents and other family members had retired and I could see what a difference there was between those who had prepared and those who had not.”
At the same time, Randall, who lives in Montana in Cape Town, decided to also set up an investment policy for his son’s education “knowing what the cost of education was likely to be in approximately 15 years’ time”.
Some of Randall’s friends expressed surprise that he was worried about his son’s education since the little guy had only just turned one, but he wanted to make sure he would be able to give his child the same chance his parents had given him.
“My parents stressed the importance of a good education and did everything they could to put my brother and me through good schooling.”
Randall set up an appointment with a financial advisor, who he describes as “a friendly and well-spoken guy”.
The advisor was telling him about RAs and the returns other investors are getting over the long run, but when Randall mentioned that his parents had recently retired and were looking to invest some of their savings “all of a sudden, I was no longer the topic of conversation”. The adviser was clearly more interested in helping his parents invest their life savings than Randall’s plan to start a savings programme for his son.
Nevertheless, Randall says, he went through with opening these two new investments. He remembers walking away wondering if he was doing the right thing. He reassured himself that the adviser knew about the business and must know what was best. He told himself: “You will be rewarded for your decisions one day … surely.”
Some time later, Randall was interviewed for a position at 10X Investments. During the interview he shared some information about his personal investments. He was asked if he knew what he was paying for them. “I automatically answered: ‘It’s a total of 2k a month’.”
His boss-to-be replied: “That’s great, but I’m talking about the management fees you are paying.”
Randall sheepishly answered that he didn’t know, adding: “Are you supposed to know? Does it matter?”
Fast forward a few weeks and Randall, now a 10X employee, has his eyes opened during an induction briefing by 10X’s senior investment analyst Chris Eddy. He learnt about “how investing works, a bit about the vehicles used and the concept of real return after inflation and fees”.
“It was then I realised how little I knew,” says Randall. “After this briefing, I thought I had better bring my investments over to 10X as I realised that I would save money on fees.”
After doing an analysis of Randall’s policies, 10X retirement expert Dewald de Vos had some rather shocking news for him: “The investment I was in had a minimum fee of many multiples of what I should be paying.”
Remembering that Chris Eddy had shown him the devastating impact that even an extra 1% in fees can have on your savings Randall knew that things were about to get much better for his retirement plan and his son’s education fund.
Dewald then shared with Randall more good news: he would be paying 10 times less than before.
“How ironic is that, I come over to 10X to pay 10 times less fees,” says Randall. His playful tone disappears when he thinks of the fee he was paying.
“How exactly could I have made money?”
“Was I being robbed?”
“Probably,” he says, “but somehow it’s legal.”
