The Story of Nqobani Ndebele
Brief history on how I got into investing.
I am currently a 2nd year Accounting with Finance student at the University of Portsmouth. My interest in Finance did not start in 2022 nor did it start when I started my university studies. Let me take you back 5 years.
From the tender age of 16, my interest in financial markets and investing arose from doing my IGSCE Accounting subject. The topic of Company Accounting provided me with an insight into the aspect of shares. Coming from a family of corporate professionals, my mother would send me Financial Mail magazine editions to me whilst I was at boarding school. Upon reading these magazines about mainly South African companies and the Johannesburg Stock Exchange, I was motivated to open a brokerage account that I still hold with FBC Securities Zimbabwe. At the age of 18, I purchased my first shares in ZSE listed entities. The first ever companies I bought shares for were Econet Wireless and Old Mutual.
I saw these two companies as the perfect maiden companies of my portfolio as they both had key elements I look into companies when making investment decisions. Both Econet and Old Mutual are high market cap companies meaning they are stable and they operate in different sectors. Econet operates in the Telecoms sector whilst Old Mutual operates in the Insurance sector. The beauty of Telecoms companies, not just in Zimbabwe but globally, is that they have high growth prospects and thus an investment today is highly likely to yield lucrative returns in the future. The beauty of Insurance companies is that they yield high dividends meaning that I am able to earn passive income from my shareholding in Old Mutual. I literally make money in my sleep!
Upon coming to the UK for my university studies, I used the same key elements to look into quality and undervalued companies. (I will discuss later on how you can identify such companies). My investments have ranged from alcohol companies to banks to tech companies to telecoms companies. The number one rule in investing is DIVERSIFICATION. Diversification eliminates unsystematic risk which is the individual risk of a stock. A current example is that banks in the UK are benefitting from the interest risk hikes because they earn more revenue (due to higher interests they will charge on consumers) whereas retail outlets like Boohoo or ASOS may experience reduced revenues due to the customers finding it more expensive to borrow money from banks and thus may purchase less clothing that they may deem as ‘unnecessary’ or ‘luxurious’. So if your stock portfolio only comprises of Boohoo and ASOS, you are likely to be in seeing RED. (Well Nqobani, what if I only had Barclays, HSBC and Lloyd’s?) Well true, your portfolio will be extremely GREEN but know that the stock market rhymes. The ‘greens’ can easily be turned into ‘reds’, especially with banks as they are constantly faced with fines and they are the most sensitive to the overall state of the economy. So literally tomorrow, news may break that banks are faced with new laws due to the soaring inflation and this could affect their share prices. As the famous saying goes, “Never put all your eggs in one basket.” Similarly, never invest only into one sector or industry!
Ultimately, my interest in finance did not occur overnight, it has been intensifying over 5 years and I will love to share my experience to you, the reader.
Kind regards,
Nqobani Ndebele