Terence Tobin — Entrepreneur, Financial Planner, Investor

Once more it is what's involved and I thought you know what we're getting into a new year and you know let's let's talk about responsible things as we get into this new year and the reason we're having this I must just say this, the reason that we're having this chat is all comes down to a post I made on Facebook and the post on Facebook said that I've been doing some financial planning and I've finally figured out that I can retire at the age of 80 and live comfortably for about 20 minutes and there was a response. And the response was from my guest who is he his name is Terrence Tobin and he is the founder and CEO of a company called rich ideas hello Terrence good morning good to have you on the show with us and nice nice to see that you are proactive because because you saw my post through one of my guests I've had on before Paula Quincy if I'm not mistaken. That's correct yes and you went well I can help you out there and I said well it was only half ingest but I do think people may need may need some help so before we dive into what what what the company actually does tell me a little bit about Terrence give me a bit of background but a history and how you ended up in the financial field.

David so I started in the financial services field almost 20 years ago and it was helping individuals create strategies to invest successfully on the stock market both locally and worldwide and part of that conversation with individuals was that a shared trading portfolio. Can give great returns, but it should be part of a larger portfolio and you should really sit down with an independent financial planner and make sure this fits in with your bigger picture. And one day I thought well, why can't I be that guy why can't I look at the bigger picture with people and that's when I started the studying and getting involved and I did work at one of the big four banks for a number of years which gave me wonderful exposure and education and then I set up rich ideas. Four years ago March this year, so we'll be celebrating our anniversary soon and the company philosophy and my philosophy is financial planning for families not selling you just another policy. Good because that's one of the things that has frustrated me in my past is you know you you get to talk to people who say their financial planners or consultants or whatever the case may be all they interested in selling your policy. Which you don't ultimately understand and then you never see them again and issue default then they're very quick to come and talk to you so i'm glad to hear that you do things.

A little differently but Terrence let's go back just a little bit did you always want to get into the financial arena, I mean is that something and to become an entrepreneur is that something you wanted to do from a young age. Yes, it was and when I was in school and we were doing accounting and business economics, the whole idea of business running your own business being in control of your resources fascinated me. And I started working in a local flea market when I was 16 and when I was 18 I opened my own flea market stand and I think at the time I was probably the wealthiest metric. In my schools and after understanding supply and demand acquiring stock replenishing setting up every Sunday to sell my ways on average, I made a profit of around 1200 to 1500 around a week. And that just you know got the ball going and it was well, I can exchange my time for money and be in control of it, or I can be in exchange of my time to somebody else and they'll pay me what they think i'm worth and I didn't like that I like to be in control. And that's where business economics finance money all linked and works for me and helping others make sense of what is often a very complex arena. Yeah, no, no, that that that is absolutely it is it's a very, very complex arena and I think one of the things, particularly in South Africa, you know, as I said, my post was only sort of said partly ingest but a lot of people and you might know what the figures are, but yeah, they just can't retire.

They don't have the funds I look at my mom she's now 78 and when they taken out all their policies and getting ready for retirement, etc, etc. You know, in those days, people didn't expect you once you retired to live very long and she simply cannot live on the money that she's got now because it just doesn't work. There's not enough money. How many people are in a situation like that? A lot of us? David tremendous amount and I chat to a significant number of people every week. Sadly, though, the sins of our forefathers have given this industry a very bad impression and they are unfortunately bad apples in every industry and every profession. And that's where sometimes I feel like I'm putting on a cape and fighting the world, but we can do good work and they are solid financial planners out there doing good work, not just selling unnecessary things. But the sad reality is, yes, people think they have a lot of time and when they realize they don't, then you know the poop who's hit the fan and now what do we do? And to try and live on a state grant of 15 or 1600 and a month for most people is just not sustainable when and give or take the figures who ever throws them around. It's over 90% of people can't afford to retire in their current standard of living and that we need to change. And just in closing this comment, a big thought for me and when I do retirement planning with clients, retirement planning doesn't mean your pension fund or doesn't mean your retirement annuity. We can do retirement planning around many different asset classes, budgets and cash flow to make sure that when that day comes and when you now want to stop being so active and so busy, your investments and resources can now sustain you for as long as you are alive and who knows how long that is. And that's like you've said 40 years ago, people didn't realize we would now live to 100.

And for my daughter, that's going to be 100 plus. So how do we budget and factor that in?

I mean, I read an article the other day that said the first person that's going to live to 200 years old or 200 years of age has already been born. So, you know, we need to make a plan with this kind of thing. But where does one start? And I'll give you a prime example. I mean, I've been an entrepreneur in business for many years. And like all good entrepreneurs, some of my ventures haven't been particularly successful. Others have. Some of them I've gone to the wall with. But, you know, these things start to lose their importance and they shouldn't. But as you are going the daily grind to survive, now, you know, then it's like, oh, I can't keep up with the retirement annuity. And you go, yeah, but I'm only in my 20. So it doesn't really matter. I'll get to that later. Life insurance, I can't do. And then you sort of go, do I need a medical aid or a hospital plan? Budgeting, you know, I mean, I wish when I was a youngster, somebody sat down and said, this is what budgeting is all about. Is this where Rich Ideas and Terence Tobin comes in? Yes. And unfortunately, as budgeting is, it's boring and it's horrible and no one wants to do it. But it's so important to know where your money is going, where it comes from, where it's going, what you're spending it on.

And it's not to say like, OK, I'm going to put aside 287 rand this month and I can only buy six cappuccinos. It's have your entertainment expenses, you know, go and enjoy life. I drink coffee all the time and probably spend a bit too much money on coffee, but I know where my money is and where it's going. And once we have that in place, we can now start making some magic happen. And exactly what you've said, when you're 21, 22, you know, who the hell wants to plan for retirement? You know, that's for the 70 year olds. But the magic and beauty of compound growth is a gift that you cannot truly understand until sometimes it's too late. I did a presentation, David, last year to a company who had new recruits. These were young ladies, 21 and 22 years old. And I showed them the beauty of they started investing 250 rand a month for the next 40 years. So till they roughly 60, they would end on about 11 million rand. If they delayed that by 10 years, they would now end on 6 million. And to make that back up, they'd have to now be contributing almost a thousand rand a month. So starting, getting going, getting started and whatever means you have is always beneficial. I'm often asked the question, but isn't it too late or isn't this this is not going to be enough?

You know, my only my thousand rand a month is not going to be enough. Trust me, invest a thousand rand a month, because one day having some money in the pot is better than having no money in the pot. And that's like you've said, the philosophy and Rich Ideas is we want to hold your hand through this process and give you that guidance. We're not trying to tell you what to do. We have to work with you and make what you want to reality come true. Wonderful. OK, my special guest is Terrence Tobin from Rich Ideas. We're talking about financial planning and hopefully we're going to dive into some other areas as well. We'll be hearing some more from Terrence when we come back. This is what's involved. And we're back with my special guest, Terrence Tobin. He is from Rich Ideas. And as you said, Terrence, making having some money is better than none. But there are people and a lot of them now because of covid, the dreaded word, and a lot of them have been retrenched. People are out of jobs. This covid thing is given many, many people a huge knock. I know some people who had fairly good share portfolios and suddenly when covid hit, that all went straight down the toilet. What do we do if you sort of my age, you know, in between 40 and 60 and suddenly you're staring at a very bleak future?

Where would we start? We have to go back to your plan. And so few people have a documented plan outlining where they want to be. Let's say in five, 10 and 30 years time. And what is the strategy? Now, I know it's terrifying. I mean, I'm in the same boat. I have investments. Covid strikes, you know, March, April, last year and all upward failures are down 30 to 40 percent. I feel the same pain as everybody else. Understand salaries are cut. Incomes are cut. The advantage of keep on investing is a concept called Rand Cost Averaging. Every month, your debit order goes through and your contribution gets allocated to your portfolio. You buy more and more units or more and more shares potentially now at a lower cost as the market has come down. So as the market now goes up and, for instance, year to date, since first of January, we're up almost eight percent on the J.C. this year. And last year we ended positive. Nothing great, but it recovered all the losses and still at a positive end. It will reward you for perseverance. But a big one here is to manage risk. And when you 40 to 60, you can still take on a fair amount of risk in these asset classes. As we now get into retirement, we can't de-risk too much because you still want to make sure you outperform your cost of living.

But these are all part of economic cycles. And what goes down, I promise, will go back up in a well-diversified portfolio. All right. Now, that's that's all good and fair. And again, I've come across some people I've I've learned the very hard way about scaling down and downscaling, downsizing, et cetera, et cetera. But these people have continued to try and live at a certain standard. And what has happened and it's not just there's many, many people like this. They're living from paycheck to paycheck. They are living from credit card payment to credit card payment because they haven't been prepared to to look at downsizing or they haven't been able to. You know, I know a lot of people that during this period, their credit cards have maxed out. And it's not just in some cases, not just one credit card, there's several credit cards. The future on the surface looks bleak. Where would we you talked about a plan, but where would we start with that? Would we start with somebody like you? And is that does that meaning that before I even start, I'm going to have to fork over cash? So, David, if we want professional advice and expertise, much like visiting our visiting our doctors or accountants, we've got to know that we are going to pay something for that.

No advice is free. And unfortunately, the history is, you know, financial plan has worked for free because we'd sell you a policy. But to do good financial planning must come at a fee that's discussed between the planner and the client concerned. And like you've mentioned, where many people now are living month to month can't afford a financial disaster. You know, if they had to replace four tires on their car, that might just cripple them and their credit cards are maxed out. The two biggest things everyone needs to do is have a budget. So they've got a guide on what's going on with their money. And most important is at least three months of living expenses in an emergency fund like a money market to bail you out when, you know, times are tough and when you need funds for critical emergencies, not discounts that you want to buy something from game stores type of story. Yeah, I remember my one of my mentors always used to tell me about the importance of having what he called an FU fund so that if things if things got got hairy in touch, you had that. And his advice was, yeah, between three and six months of, you know, those expenses available. But where do we start? You know, as I said, I've been through a very, very hard process.

And part of that is going and saying, do we need to buy X, Y and Z? Because we have this, I don't know, perception of what people think about us. And in terms of spending on groceries, entertainment, et cetera, et cetera. You know, we don't want to be seen as, you know, being a little pressed for cash. So where do we start that? I mean, budgeting, good. But I mean, in order to to free up money, if you've only got a finite income, something's got to go. Something does got to go. And unfortunately, it's often some of the luxuries. A number of years ago, my wife and I canceled our satellite subscription service and she wasn't impressed. But we needed that extra 800 ran a month to build up this emergency fund. So there are times when it's going to be very uncomfortable and you're not going to enjoy the journey. But the rewards and the outcome a year, two or three years later, you'll look back and be very proud and happy with yourself. You know, it's like New Year's resolutions. I'm going to get stuck in at the gym. You're as stiff as hell for a month, but you keep going and keep going. And slowly that body starts looking a bit better. It's the same with your finances, small, small actions repeated regularly will give you a great result.

OK, that makes sense. And I do agree with you on that one. One of the subjects, though, that is that has come up for me repeatedly in this last year is this need as we go forward into the future for multiple streams of income. Now, where do you stand on that? Is that something that you talk about? Absolutely. If it's possible to have multiple streams for sure. And in the world that we are now in today, there is significant amount of opportunities to monetize your knowledge and expertise, create extra streams of income. It also helps mitigate and reduce risk. You don't want to have all your eggs in one basket. You know, if your employer goes bang, well, there goes your income. But at least if you had something on the side that brought in 40 percent of that income, it's not terrible. And this is especially true for salaried earners, but also entrepreneurs. And you don't want to be I've got a client where I saw yesterday. 85 percent of his revenue comes from one business. If that one business goes under, his business will go under. And he needs to find ways to attract other clients and add other revenue streams to himself and to his cash flow to protect himself. It sounds to me almost like, you know, a lot of people would get life coaches or business coaches.

Is financial coaching becoming more of a thing? Most certainly is. And that's what I'm specializing a lot more in is we know a lot. And I am to do financial planning. You can go and sit on YouTube and you'll probably get 80 percent of it right yourself. What coaches do, and I've had two wonderful coaches and as you said, your previous guest, Paula Quincy, I attended her program is they can see what you can't your blind spots and they help keep you accountable to where you want to go. They're there as a sounding board and a bounce board, because this is what we do every single day, all day. So we've got our fingers in the pie. We know what's going on. We want to make sure that you know what's going on and what's relevant to you. And the decisions you make, you might not think of the ripple effects on it, such as tax and estate planning. And that's where coaching comes in and planning comes in. The advice side from a product point of view is the lost in what I discuss with clients. So it sounds very different. It does. And that's what that's that's what what what fascinates me about what you do, because you seem to be going at it from from totally the opposite side of it. And dare I say, you actually care about your clients?

I absolutely do. And I get so invested in them, their family and their plan that I want lifelong relationships. I want to know that, David, we start working together today. I'm going to be your guy for as long as we're breathing, because I want to make sure that the goals we set and the plan we design actually comes together and we celebrate that at the different milestones. I had a client in December send me a message. He got a surprise bonus from his employer. He was going to spend it. But he says, my plan says I need to pay off debt within two years. I'm taking this. He now squashed his credit card 14 months early, freeing up eight thousand in his cash flow on a monthly basis. He's keeping a thousand of that because he must enjoy himself seven grand. We've diverted to other investments. That's the partnership I like to have with my clients. That kind of makes sense. And that's where so many of us and this is a cultural thing, I think, across the board in South Africa, is this desire for instant gratification and living beyond our means. Terrence, when we come back, I'd like to dive in a little bit more to some of the aspects that you cover as well, because you mentioned things like wills and estates and all those kind of things.

I want to figure out exactly what you will discuss with people. So when we come back more with Terrence Tobin of rich ideas, this is what's involved. And we're back with Terrence. So Terrence, what else? I mean, wills and trusts. Again, I'm going to use my own experience in the past when I was a youngster. I was like, what do you need a will for? I ain't got anything to leave to anybody. OK, now I'm pretty much still in the same boat. But, you know, why is having a will important? And what is the difference? Because we've just experienced now my fiancee lost her mom last year. It was not not covid related, but there's now that they're having to deal with a will, there was a trust in place, all sorts of bits and pieces. And it's like a minefield. It's very, very confusing. Where do we start with this? Get professional advice. Don't try and draft your will yourself. Please never, ever use a template of the Internet. Because you are unique, a template concator for your unique situation. So going back to very basics, a will is your voice when you are no longer around. You might not have much today. Like you said, you're a 20 year old, 21, you've started a job and you've bought yourself a cheap little car to get to and from work.

But times can change and things can change in your life very, very quickly. And you might forget to make provisions for that. If you don't have a valid and executable will, then in South Africa, the law of intestate succession would apply. And in basic terms, this act will decide who inherits from your estate. Could be that cousin you no longer talk to and you don't want to give up your freedom of choice to the government to make those decisions for you. It also creates significant delays. So in my opinion, a will is vital and everyone should have one. It is very important when you are married and if you have children, it is a critical non-negotiable document because you want to make sure that your wishes and the provisions you want to make for your family and your children are documented, there is no ambiguity, and it's easy to follow for that person, which we call an executor to handle and wrap up your estate as quickly and as efficiently as possible. Yeah, because I've heard estate, the state wrapping up an estate can take a while. In fact, we're going through that process now. A lot of times, though, Terrence, you'll hear, I will just go to the bank. They'll they'll do one for you.

I know that's an option, but is that necessarily the best option? I wouldn't say it's the best option. It's a good one. It's a nice stock gap and you can often get it done. The catch is banks do banking. They don't do wills in estates. It's like this little extra service they offer on the side. You know, they've got three or four lawyers on site and they'll try and wind up your estate. Sadly, I had a client last year pass away and he worked at a bank for 40 years, so he was very loyal. He did his will with them. He didn't want to review it with me or make changes. He passed away in September. I spoke to his wife again in December before shut down, Christmas shut downs and closures. They are still waiting for an executor to be appointed almost four months later. That is horrendous. The stress she is going through as a grieving, surviving spouse. You cannot fathom and understand. It's also another reason why I never recommend a spouse be your executor. Unless they know how to wind up in a state, they should never get involved in that process as it can get exceptionally complicated. Yeah, no, definitely. There's also all sorts of other bits and pieces that you talk about. And I kind of think we're going to need to have some more chats with you to see and to unpack all of this, because there's things that I'd like to find out about.

Things like income protection. You know, what happens if I lose my job or my business? A disease of some description. I mean, now we've got covid and some people, you know, we talk about people recovering from covid, but there's this long term effect. That means a lot of people are not able to go back to work. Are these things that you cover? Give me in a nutshell what what all you cover when you talk to people. Anything and everything to do with your financial well-being. So I know that sounds very broad, but we go through budgeting, cash flow management, especially well-drafting. We look at what your goals and objectives are, where you at the moment, what you would like to achieve in the future. We obviously also look at anything you have in place. So like you've said, it might be your life policies, funeral plans, income protection. We look at your payslip and how you are remunerated. And especially if you are self-employed or an entrepreneur, how we can structure that in the most tax efficient ways possible, as there are many provisions in the Income Tax Act that allow for significant tax deductions and structuring of your income. So we want to make that as efficient as possible.

We want to see your short, medium and long term goals. We want to help you set up that emergency fund and help you reach that goal of the three to six months worth of income protection in it. It's kind of like having self-insurance, having an emergency fund. And going through from that to kids education and investments, general investments, your retirement planning. So the whole spectrum of wealth and finance, both locally and abroad, that we can discuss and look at. And especially once you now have different role players and stakeholders in our lives, so like spouses and children and parents, we might be looking after is making sure we have a solid estate plan. And these are the type of things that I love working with people because this is financial planning. It's helping you get there. You know, it's like going on a holiday, you know, the trip, you know which highway you're going to use, you know, all the stops you're going to make and which restaurants you're going to go to. You need to do the same with your money as that thing gives you choices and options. So I'd love to have a lot more conversations with you around this. Fantastic, Terrence, we kind of are running out of time.

This is going to be a little shorter interview than we normally do due to commitments on your side and my side. So if somebody's now been listening and they go, OK, fine. And I know the world we live in today, a lot of people go, well, what's in it for me? Are there any resources that you make available to people so that they can start their journey? Yes, there is exceptionally active on Twitter, which is at Terrence Tobin. It's T-E-R-E-N-C-E-T-O-B-I-N. The same as my website, TerrenceTobin.coza. I've got a podcast that I put out on a regular basis and I'm resuscitating my YouTube channel. So I'll be putting out one to two videos a month. And I use that as an education medium and I want to help people skill themselves also so that when we work together, it's a partnership, it's a collaboration. It's not a Terrence telling me to do something. So I love educated and empowered clients because we can make good decisions together.

Fantastic stuff. So essentially, if we just look for Terrence Tobin, Terrence with one R, not two R's, like I did it initially, Terrence with one R, if we look there, we'll find you on the social media platforms, etc, etc. Your website, you said, is TerrenceTobin.co.za? Correct. All righty. And then, of course, also we can go to the business website as well, which is richideas.co.za. From there, Terrence, are people then able to reach out to you and say, OK, I'm keen on this. And then you could have a discussion with them about the kind of fees, the kind of investments that they would be making in order to retain your services. Correct. That's how I do it. So the first session is complimentary. There is no product sales. There's no advice given. It's you and I have a chat because I want to make sure that we are a good fit. It's a joint interview, if I can call it that. So on my website is my calendar. It is live. People can use it to make appointments directly into my diary. At the moment, we're sticking to virtual. And because of that, I have clients throughout South Africa and in a number of countries around the world. My email address and phone number is on their WhatsApp. I'm going to be one of those that still keep WhatsApp.

So you're welcome to reach out. And lastly, on my website as well is the six step process that I follow with you in the journey we go through together, as well as the fees are disclosed. For me, nothing is hidden. There's never a surprise. Always full disclosure. Fantastic. There's a couple of couple of blog posts you wrote as well. One of them is on Terrence Tobin.co.za. Financial resolutions, you should consider this new year. So that was well worth the read as well. Terrence, thank you. Thank you for your time and having a chat. Just this is such a complex subject that, as I said, you know, I think we might need to talk some more about this, but I do appreciate it. Once again, if you'd like to go and find out more, it's Terrence Tobin.co.za. Terrence, thank you so much for taking the time out and having a chat to us. I do appreciate it. Thanks and take care. There we go. That was my special guest, Terrence Tobin. It wraps it up for this edition of What's Involved. Whatever you do, stay safe. Take care of yourselves. And thank you for listening.