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Duma Mxenge (Head of Business and Market Development at Satrix) joined me right at the start of the year to talk about some of the things we would be looking out for in the markets this year. With the benefit of hindsight, we could now dig into some of our winners, overall surprises and missed opportunities in 2025.

We also took the opportunity to talk about the nuances for entrepreneurs when it comes to personal financial management. Drawing on my own experience, I shared some of the strategies I use for dealing with variable income. As Duma has these conversations with other entrepreneurs on a regular basis, he threw some great insights into the mix about how entrepreneurs tend to think about their wealth creation journeys – and the biggest mistake they make: treating their businesses as their retirement plans.

This podcast was first published here.

Satrix Investments (Pty) Ltd & Satrix Managers (RF) (Pty) Ltd is an authorised financial services provider. The information does not constitute advice as contemplated in FAIS. Use or rely on this information at your own risk. Consult your Financial Adviser before making an investment decision. While every effort has been made to ensure the reasonableness and accuracy of the information contained in this document (“the information”), the FSP’s, its shareholders, subsidiaries, clients, agents, officers and employees do not make any representations or warranties regarding the accuracy or suitability of the information and shall not be held responsible and disclaims all liability for any loss, liability and damage whatsoever suffered as a result of or which may be attributable, directly or indirectly, to any use of or reliance upon the information. For more information, visit https://satrix.co.za/products.

Full Transcript:

The Finance Ghost: Welcome to this episode of the Ghost Stories podcast. It’s another one with Satrix and with a gentleman who I always just really enjoy chatting to. That is Duma Mxenge. He is the Head of Business and Market Development at Satrix. 

Duma, I always enjoy these podcasts with you. The last one we did was like 10 months ago. We seem to always do the annual kickoff show and then you go off, get into the washing machine of life and get basically thrown around for 10 or 11 months, as do I. Then someone presses pause and says, “Wait, these two should speak to each other again.” And here we are, to do exactly that. So, welcome! 

Duma Mxenge: Thank you! And I’m excited to be back on your podcast, Ghost. Thank you for having me. 

The Finance Ghost: No, it’s a great pleasure. It always is. So, let’s jump straight into it and let’s look back on the 10 months or so since we spoke. I’m curious about what some of the wins have been in the market that might have surprised you. Specifically your biggest win (if you’re willing to share), otherwise, any of the wins that you might have observed out there as well. And as I said, was it a surprise? Was it something that you expected? Give us the good news part of the report card here. 

Duma Mxenge: I guess I can’t speak of my own book. My approach, I have to be honest, is that I etcetera. What I tend to do is once a year, annually, I kind of sit down, look at the trends – so based on what we’re seeing in 2024, what we think 2025 would look like. And then on the back of that, I try and think, “Okay, cool, so how do I then position my portfolio?” 

And when we talk about that, I kind of think of it, Ghost, in three buckets. Your savings bucket remains the same, so it’s either in money markets or your income funds as well (or flexible income, if you’re into that). Then, when you get to your medium-term bucket, like three to five years – I typically put it into balance funds. 

The position that I’m going to talk about here is more in the bucket of more than five years, which is more wealth creation or aligning it as a complementary to my retirement. 

And essentially what I’ve done is pretty simple, basic weightings. I’ve got 30% in the local market (because I feel like I’ve got a better understanding of the local market) – and that’s normal ETFs – the Satrix Top 40. And then offshore, it’s been a mixture of the developed world versus the developing market, so I’ve got a slight overweight to emerging markets. I kind of like the story, especially in terms of what’s happening in China as well as in India, so I did that in December. 

But then you had tariffs. You’re like, “Oh my goodness, what’s going on? Like, shucks, man – should I be doing anything?” And over and above that – obviously you’ve got your own personal portfolio, so I don’t know how you felt – you’re also having clients saying: “Is this the time now to sort of sit out on the market?” I’m like, “No, no, that’s not what you do. This is a long-term portfolio. You’ve made this decision, stick it out.” 

But I have to say that, 10 months later, the local market has been roaring. I think we’ll get into it in terms of what the drivers were. And with the offshore market, I think my overweight to emerging market versus DM has actually also benefited quite handsomely. I’ve missed stuff, but I want to hear you before I share stuff that I’ve missed in the local market. 

The Finance Ghost: Yeah, look, there are always misses, right? A couple of things that I just want to comment on there which I really love: So, having the different buckets – it’s great. I think people can take a lot from that. And that’s really just risk buckets at the end of the day. It’s the immediate emergency fund stuff, then it’s, “Okay, beyond that, I need stuff that I can at least have access to if I need it, but it’s earning a decent return.” And then there’s, as you say, the “over-five-years wealth-creation, pure-equity-risk” bucket. 

And I actually think it’s pretty cool that you sit once a year, figure out what you want to do, allocate accordingly (or at least have a plan accordingly – whether you allocate during the year or not), and then look again down the line or if there’s something major that’s changed, while you get on with your day job. 

That’s a very healthy relationship with investing, and I think a lot of people could do well by emulating some of that. There are far too many people who treat the market like an overexcited Jack Russell that’s just barking all the time: “You must give it attention. I have to do something now.” That’s not true. Not doing something is also a choice, and just leaving your money to compound is actually often the smartest choice. 

I would encourage listeners to go listen to the podcast with Kingsley from Satrix, which would have been released just before this one. Go and have a look because there we actually spoke about how valuable it would have been to buy the dot-com crisis and then just ride it out. Now, obviously, that’s one specific example that’s worked out brilliantly, but there’s a good lesson in there. 

JSE Top 40, Duma – I can’t believe you’re doing this podcast. Aren’t you retired on a yacht, if you had a lot of Top 40 this year? You’re basically a gold baron. Well done! 

Duma Mxenge: It was purely by diversification! There was no super thinking around that. I’ve really benefited from being in the right portfolio that actually gives you the right exposure in terms of what has done well in the South African market. 

The Finance Ghost: Well, well done, because it certainly did do well, and you would have done very well out of it, so good job. I’ll touch on a couple of my winners. I’ve had a few that have made me very happy this year.

So, I really timed it beautifully with Prosus right at the start of the year. Share price did this weird reaction to something that happened and I thought, “No, no, no. I really like the new CEO. I’ve been waiting to get in.” It’s kind of been on my watch list. I was waiting for weakness. And my Prosus position is up 80%, so that’s rather delightful. 

Duma Mxenge: Nice!

The Finance Ghost: International tech has obviously continued to do the things. I’m mildly terrified about when this bubble pops, not if this bubble pops. But all of those companies are in my over-five-years bucket, like yours. And the reality is, if/when it pops and things drop hard, I’m waiting. I’m waiting at the bottom, thank you very much. I’ll add to my favourite positions that I hope will make a lot of money for me over literally decades. 

Duma Mxenge: I see. So you’re saying you’re not in, you’re waiting. 

The Finance Ghost: No, I’m in. I’m in! I’m just waiting to buy more. The point is I’m not selling, so I am deeply in. I continue to have to manage myself in terms of not taking profit and not saying, “Oh, the run is over. Let me get out.” Because then obviously you create a tax event for yourself, is the first point. And the second point is that it can just keep going. And even if it goes another 50% and then it drops 20%, guess what? It wasn’t a smart move to wait for the drop. You still lost out.

So, that’s the point: it’s hard to time these things. Timing the sale is really difficult. I think timing a sensible purchase, in some ways, is easier. That has started to become my approach to the market.

Another single-stock win that I’ll call out: Weaver Fintech. There’s a local one for you. Really happy with how that’s gone, the little buy-now-pay-later business. That’s up more than 50% since I bought.

And then ETFs. So, tech, as I spoke about – I’ve still got some nice exposure into some of those. 

What we spoke about at the beginning of this year (you may recall we did a bit of a rent-versus-buy situation). I said to you that for the time being, I’m positioning a good chunk of my tax-free savings in REITs, because I think there’s still some upside in some of those property names. They’re paying good yields. That has pretty much been what’s happened, and the property market has gone from strength to strength. They’re doing capital raising now, which is always a sign that things are getting a little bit hot, but not quite there. So, that’s still a healthy market. I’m still very happy with that. 

I haven’t bought a house. I did change the target area, but we’re not going to… we won’t get into all the details on that. If someone wants to listen to rent-versus-buy in detail, go find the podcast I did with Duma earlier this year. TL;DR: I’m still renting, still happy with that. Still buying REITs in my tax-free savings account. 

Those have been some of the wins. I can’t say that any of them have been massive surprises, because I bought the stuff I bought because I thought it would do well (if that makes sense). So, it’s more the stuff that I maybe missed. I had some gold. Obviously, I wish I had all the gold. That would have been amazing. Everyone wishes that, that’s just how it goes. 

What’s been your biggest disappointment? Because I’ve definitely had a couple of those. 

Duma Mxenge: It is exactly the same thing that you just mentioned – it’s more the misses than disappointment in the current environment. And for me, it’s gold, definitely. And as well as resources, more like the RESI, because our RESI has done exceptionally well. I give myself a little bit of leeway and say, “Look, I really didn’t do the work.” 

And not having done the work, and now you want to participate on the next biggest craze. It’s also problematic because you’re going in for the wrong reasons. You’re going in because everyone else is talking about that specific asset class or that specific strategy. 

So, what I’ve actually now told myself is, again now in December when things quiet down, I do want to spend some time just understanding the resource market – in terms of where that’s going. Whether it’s going to persist. There are also talks about how the central banks are concerned about the policy stance of the US trying to undervalue the US currency in order to compensate for the tariffs around trade. Which means that central bankers will buy more gold, so the gold bulls are saying this thing is going to continue. 

I want to spend some time just getting my own understanding and my own position in terms of: is this an asset class that I want to actually take a strategic weight in from my equity exposure? Maybe a 1% or 2% of my total portfolio. So those are the things I’m weighing up at the moment. 

The Finance Ghost: Yeah, that’s the topic on everyone’s lips at the moment. And at the time we are recording this (it’ll go out a couple of weeks later) we’ve actually finally seen gold roll over a bit. It’s dipped back below $4,000 an ounce. So, I had a look, the Satrix RESI ETF, which is a really nice pure way… it’s not a gold ETF, it’s the resources index, but because of the shape of the South African market there’s a lot of gold in there. 

And that ETF is up year-to-date 87%, at time of recording, but it has come off pretty hard from the 52-week high. Let me actually just work it out quickly because it’s fun. You see, these are the dorky things I do, is look at things like, “Oh, how far off the high is it?” Anyway, it’s over 18% off, roughly, from recent highs. That’s a nice little healthy correction there. 

And I am actually looking at doing a bit of rotation in my tax-free savings account, so the RESI is kind of on my shopping list, but I’d like it to come down more.

I think there are a lot of good reasons why gold long-term remains solid. I mean, you’ve raised them there: it’s the state of play in central bank policies, etcetera, etcetera. But, things do correct. Things get hot, they extend, then they come back – It’s how markets work. If you can kind of time those pullbacks nicely…

Duma Mxenge: It’s all about valuations, so you want to get in at the right time. Even from a tariff perspective, the US obviously has slapped tariffs on different sectors of the market. 

And the only market that actually hasn’t been taxed or given the tariff is the precious metals, because the US wants them. So that’s at zero, which means that there’ll still be demand for those specific commodities, as well as that specific sector, so that sector will probably continue to do well.

But you want to get in at the right time. You don’t want to overpay for a sector or a company. 

The Finance Ghost: Yeah, it doesn’t matter what you buy – if you overpay, it’s going to be trouble.

And the other thing in the RESI is to look at the platinum group metals miners – the PGMs are on a charge at the moment. The narrative coming out of all of the international car companies is that they assumed too much around electric vehicles. The Europeans just keep pushing this narrative and the rest of the world is really not as interested in EVs as they are. So that’s good for PGMs, because that’s the primary use for them. It’s good for the South African economy, thank goodness. We’ll take the wins where we can get them. We need the money to be flowing into Rustenburg. 

Duma Mxenge: Like the greylisting – we’ll take it. We need all the good news. 

The Finance Ghost: No, we do. We absolutely need the good news. We do a lot of things wrong and we make things harder for ourselves. It’s like Bafana qualifying. We made it as hard as possible. That’s what we do with our economy as well!

Anyway, biggest disappointments my side, Duma – I’d love to be able to tell you that it’s only things I missed. Unfortunately, it’s things I own, so that’s a bit sad, but it is what it is.

I wish I’d sold Cashbuild at the end of last year, because I bought it at the right time last year and then rode that kind of post-GNU exuberance. It got very silly. And I should have let it go, but I was like, “No, I don’t want to let it go. It’s a long-term thing.” Anyway, it’s ridden all the way back down. So, I recently added some more – because Cashbuild now is a better company than it was a year ago when I bought it and it’s at roughly the same price. 

So, fair enough, it’s still in the long-term bucket. I still like the underlying story around them just ticking things up over time, interest rates hopefully will come down. It’s just some exposure that I do want in my portfolio. That’s a small position, though. And there it’s just profits that I missed out on taking, rather than in the red. 

There are places where I am in the red. Lululemon, by far the worst one in the US market – that has turned into a lemon. It’s not great. Apparel brands, hey. You invest in apparel and FMCG at own risk. You really do. The biggest brands in the world can turn you into a pauper or a king, and it’s hard sometimes to know which way it’s going to be. 

But I can tell you the one that’s upset me – like, sincerely irritated me – is Accenture. And that’s because my theory was, “Okay, Accenture is a management consultancy, but they’re very focused on a lot of AI stuff, or just tech stuff. So, in a world where corporates, governments, etcetera, are trying to understand AI, surely Accenture is in the pound seats? Surely they’ll do well?”

And I was right (kind of) in terms of: yes, they have got demand for their services. But the thing I missed – and that they clearly also missed – was along came Donald Trump, and there was a changing of the guard in terms of the US. There was DOGE, there was cost cutting. And the US government is a huge client for Accenture, and they were totally on the wrong side of that. Got absolutely hammered by that. To the point where, in Accenture’s last earnings transcript, they’re talking about doing a partnership with Palantir (because obviously Palantir is so close to the Trump administration). 

So, yeah, you know. It feels like we’re talking about an African government story, right? It’s a big changing of procurement, then one company gets thrown out and the other one who knows them too well is in. But that is the United States government, ladies and gentlemen. 

Duma Mxenge: No, that is true.

The Finance Ghost: The US is just South Africa that went to private school.

Duma Mxenge: It actually reminds me – remember way back we had Gijima Technology, when they were actually listed? 

The Finance Ghost: Yes!

Duma Mxenge: And that was exactly the same thing. I mean, you were banking on the government contracts, essentially. 

The Finance Ghost: Yeah, and that was my own fault – I didn’t realise just how much exposure inside Accenture was US-government-focused. So, I’ve bought the dip there a couple of times and we’ll see what happens long-term. 

Look, if you’re going to play in single stocks, you’re going to get some winners and you’re going to get some losers. That’s a reality that I’m comfortable with. And anyone who plays in single stocks needs to be comfortable with that. 

If you’re going to do long-term ETFs, the market long-term, on average, goes up. That’s the beauty of it, right? That’s kind of the point. 

Duma Mxenge: Yeah – thanks to diversification.

But since you’re talking about the US, I’m interested to get your take. The big driver in terms of performance at the moment is anything that is AI or AI-related. All those stocks have done exceptionally well. Are you concerned that that price has not been backed up by the earnings? Do you think those stocks are overheated?

The Finance Ghost: So, I recently became more concerned with some of these deals that NVIDIA has done where – it’s like that Spider-Man meme, you know? With all the Spider-Mans looking and pointing at each other. It’s like, “Oh, wait. I’m buying from you and you’re buying from me, but I’ll invest in you and I’ll make your market cap bigger.” It’s very dicey. That is classic top-of-the-cycle behaviour. 

The other thing I’m worried about is that I hear really good stories about AI implementations out there actually doing the things, and then I’ll have my own experiences with Copilot where I’m just like, “This is nonsense. Just absolute rubbish.”

Literally this week, I asked Copilot to go and download – because I couldn’t get the Netflix investor relations website to work – for some reason it wasn’t working properly for me. In desperation, I thought, “Okay, wait. Maybe AI can go and fetch this PDF for me, so I don’t have to go hunting for it on the SEC site.” I ask Copilot, “Can you get this PDF?” It comes back with, “Oh, these are the PDFs. Would you like me to download it?” Great. “Yes! I’d love you to download it.” It comes back, “You can download it from this link.”

Thank you, Copilot, for completely wasting my time (and some electricity and some water along the way). I’ve had a few of these experiences with Copilot. 

Duma Mxenge: Yeah, you need to have patience. But the Copilot feature – it’s actually quite smart of Microsoft to do that, because that’s like the easiest way to get into the enterprise space. I couldn’t see a world where ChatGPT would have been able to convince big corporates to actually adopt it. 

The Finance Ghost: It’s exactly what Microsoft did with Teams, right? And just smashed Zoom. Product bundling is their game. And that “kill-off-the-competition” ethos at Microsoft was built by Bill Gates from the start. It really was. It was literally, “How do we just crush everyone else through product bundling as far as we can do it?” So… 

Duma Mxenge: Yeah, it’s exceptional. 

The Finance Ghost: …maybe, to give a better answer to the question: my AI position in my tech positioning is very focused on the market leaders. I’m not buying any of the super-frothy, all-of-a-sudden-everyone-wants-it kind of names.

Oracle comes to mind. I mean, that share price went parabolic. I would have loved to have owned it before that. I didn’t. I’m definitely not chasing it now, because if there’s a rug pull in AI, those are the share prices that will lose 60% – 70% of their value. 

Whereas, Microsoft was a great business before AI. It will still be a great business in whatever version of AI survives. Hence, that’s my biggest individual position – Microsoft. For exactly that reason. 

Duma Mxenge: I hear you. I’m more orientated to the emerging market in terms of things that I’m looking at. Have you taken a look at China? It’s an interesting market because there are two sets of stories: The tech is doing well, but the local demand is quite challenging. There’s a lot of deflation that’s happening in that market. And they’ve tried the stimulus – it hasn’t worked. People are not buying, which is like the weirdest thing ever. Everyone’s sitting on cash!

The Finance Ghost: It is fascinating, right? So, I have a small exposure to a China ETF, but it is pretty modest. I do have a decent-sized position in Prosus, which obviously has look-through to Tencent. So, you’ve got to take that into account as part of your China exposure. And then I also look at the extent to which I have consumer brands, because there, China is a big story. That’s a really important story.

So, China continues to fascinate me, bluntly. It really is interesting. 

It’s true for all the emerging markets. There’s a lot of good stuff happening in emerging markets that is actually worth looking at, because where the win is not really happening – if you look at Europe, for all of the noise around, “This is Europe’s time to shine, and now they have to really come into their own.” In reality… 

Duma Mxenge: The numbers have disappointed. 

The Finance Ghost: Yeah, “European innovation” is basically an oxymoron. There’s really not much of it. Their automotive sector has been murdered by the Chinese. They’ve got two decent-sized tech companies, one of which is ASML (which is in the chip manufacturing space, so obviously look-through into AI – that’s done well this year). The other is SAP, which has been very sideways. It’s software as a service (SaaS), you know? How exciting. And even the US SaaS names are getting hurt, actually. Adobe, Salesforce – they’ve both had horrible years.

So, it is interesting. I think it’s great to be in South Africa this year, and that’s why I was saying: your JSE Satrix Top 40 ETF is fantastic. That’s the one you wanted this year, because you’ve had the diversified exposure. Well, to a point. Obviously, there’s been one or two big drivers of that performance. 

Duma Mxenge: Of course. 

The Finance Ghost: It’s never the case that all 40 companies do well. What’s happened this year is that a big portion of the market has done really well, and that’s worked out.

I guess the point is: diversification remains your friend – a theme that’s come through on many of my podcasts with Satrix team members. And that’s because it’s true – you’ve got to try and spread your money. You can look like a real hero one year in a highly concentrated portfolio, but at some point, you are also going to get hurt. This is just how markets work. 

Duma Mxenge: Yeah, it is what it is. But that being said, I’m also super interested, when I actually sit down at the end of the year and look at opportunities and try and see if I want to rotate my portfolio, I hope I still maintain the same buckets – in looking at the emerging markets, seeing if there are opportunities between China and India.

India is also a place that’s looking quite interesting. But, performance hasn’t been great, it has gone sideways somewhat.

The Finance Ghost: It’s just been very, very overvalued.

Duma Mxenge: It could be a buying opportunity, so I still want to see that. 

When it comes to SA: If you look at SA Inc. stocks, they haven’t really done exceptionally well. It’s been primarily your telcos, your resource companies, as well as Naspers and Prosus. That’s pretty much what has been driving the market in South Africa.

But we really need the Government of National Unity (GNU) to actually come to the fore. I’m also hoping this greylisting will help somewhat. At least now, we’re back, we’re getting foreigners buying bonds now. That’s quite positive.

So, I don’t know. We have to be optimistic, but at the same time, you don’t want to be buying these opportunities at overvalued prices. 

The Finance Ghost: Absolutely. That was one of the things I wanted to ask you. Where in the market are you seeing some interesting opportunities at the moment? And I think you’ve touched on it there, which is that SA Inc. has largely been left behind by the rally. That Top 40 performance is masking a very bleak year-to-date on SA Inc. – less bleak if you look versus the period before elections last year, because what happened was you had this huge run-up to the end of 2024, and then we came into 2025 with a lot of promises in those stocks that then didn’t materialise. Plus at a macro level, tariffs! This then really hit global markets in certain areas pretty badly, emerging markets outside of stuff like gold. A lot of those companies were sold off. 

Cashbuild is a perfect example. Cashbuild’s business, like I mentioned earlier, is better now than it was a year ago, but the share price is exactly where it was. And in the meantime, it went bananas purely based on promises. 

So, a lot of SA Inc. stuff is getting ignored. I recently bought into City Lodge, because… 

Duma Mxenge: Interesting!

The Finance Ghost: …yeah, because this is how the South African market behaves: they release results, the results for the year are kind of okay, but there’s this nugget in there about how it’s picked up so much in the couple of months since financial year-end. Like, materially picked up. You think to yourself, “Okay, that’s… pretty interesting.” And the share price just doesn’t respond. It just goes sideways, flatlines, beeep – it’s like watching Grey’s Anatomy. It’s just horrible. 

And you’re like, “Hang on, this is an opportunity.” Because if that kind of narrative goes out on a US stock, the market goes nuts. There are 10 interviews on CNBC and the share price is up 30% because someone said the word “AI” in a transcript. So, it’s frustrating. You have to wait for the value catalysts in South Africa, you have to be patient. But, at least you know you’re buying something at a rational valuation.

Generally speaking, I have an offshore bias, but I can’t bring myself to go and throw money at some of these valuations we’re seeing in places like the US. 

Duma Mxenge: No, it’s astronomical. 

The Finance Ghost: And the rand is actually doing pretty well. That’s the other thing you’ve got to remember, if you go and take money out. If you go into dollars and buy an overpriced thing in dollars – the rand keeps getting better, the “dollar thing” goes sideways or drops, you’re going to be pretty grumpy if you compare that to the Top 40 ETF you could have bought. So, it is nice to see the local stuff looking relatively more interesting now.

And that, for me, is what the story of the next year will be (I’m hoping, at least). Some of the JSE, like the really good mid-caps and some of the small-caps – and there’s a lot of rubbish on the JSE, there really are a lot of companies that are underperforming – but there are some goodies, and those are worth finding. So maybe that should be your December reading?

Duma Mxenge: That is my December reading. It sounds like one has to be contrarian.

I think, with the current holdings that I have, I’m not missing out in terms of what’s happening in the market. I will get that momentum, I do have exposure to all these themes that we’ve spoken about. 

But, for where I think the opportunity sits, it’s these unloved sectors or regions that one has to do a bit of homework and start putting a position there. It will turn around eventually. So that’s the work I want to do, come my December. 

The Finance Ghost: Absolutely. And that’s where stock picking can be really fun. It’s so important to have those ETF building blocks, make sure you’ve got your broad market exposure – that’s the truth. But a little bit of stock picking on top can be a really fun way to engage in the markets. 

I’ll give you another example, Duma. Remember a little company called EOH? Now it’s called iOCO. It’s been fixed up. It’s a lot less dodgy than it ever was, that’s for sure. It’s solid now, nevermind “a lot less dodgy” – it’s been fixed.

And kudos to them – share price, 74% up year to date. They released results in the week of us recording this, and they put out guidance for free cash flow next year that suggests that they’re on a free cash flow yield of like 14% in rands. That’s really solid. 

Duma Mxenge: Sho, where would you get that?

The Finance Ghost: Right? So, go and read the stuff. That’s the thing. If you want to track these kinds of JSE mid-caps: watch when the stuff comes out on SENS, go read it, go read the source materials (certainly read Ghost Mail), read anywhere else. Go and do the research, because it’s really fun and it can really pay off. 

I’m hoping that in the next year, we’ll start to see some more catalysts for a lot of these JSE companies that deserve a break. A lot of them don’t, but some of them really do. 

Duma Mxenge: The nice thing is we do have professional analysts that are covering these markets. So, that valuation will definitely… there will be an unlock eventually, which is the beautiful thing about our market. It’s not just largely driven by individuals, we also have institutional buyers participating as well. 

The Finance Ghost: Absolutely. That seems to be where some of the opportunities are at the moment.

So, Duma, we’ve covered off a lot of the discussions about what we wanted to chat about in the markets this year – stuff that’s gone well, stuff that’s maybe not gone so well. It’s been really interesting, thank you.

Something that you wanted to raise – which is obviously coming from discussions that you’ve been having in the market with clients, with retail investors, and presumably with business owners (because that’s what this is themed around) – is the difficulty of managing a personal finance budget versus a business budget. It’s really interesting.

So, let’s dig into that. What are some of the things that have come up in conversations for you? Why do you think this is relevant? 

Duma Mxenge: Thanks, Ghost, for raising that. So we’ve been engaging clients, specifically entrepreneurs, small business owners, guys that are doing side-hustles, also the creator economy – there’s a big focus within our business to also look at that. And what we’ve seen is that there’s been a huge focus on personal finance. But what we’ve never really spent a lot of time on is talking about, “Okay, you’ve got your personal finance, but how do you also think about it in terms of your business? Can you use the same tools to assist your business in one way or another?” 

And I guess the first starting point, what actually surprised me (I don’t know if that’s the case with you) – a lot of business owners, especially if it’s a one-man shop, tend to mix their personal bank account with their business account. It’s like one and the same thing. So, when we start talking about personal finance/investments, it’s like they can’t actually untangle the two. 

So I first want to just get a sense from you. Have you built your business distinctively to say “this is my personal account” versus the business account? 

The Finance Ghost: Yeah, that’s been an interesting journey for me. I registered The Finance Ghost as a separate business, basically from the start, because I wanted it to be distinct. But I think, even if you take that route (and you have a separate bank account, the separate legal entity, the whole story), you still have to be very careful when you start a business that you, number one, keep the business income as clean as possible. Take advantage of the things you can do, but you’ve got to be very careful. Don’t put silly personal things through your business. Not least of all because it can get you into trouble down the line with SARS, but it also just makes the whole business hard to understand. So, commingling expenses is hard. 

The other trick (and this is something you really have to get used to) is when you’re earning a salary, the number you see in your account is after tax, after deductions, usually after retirement savings – it’s after all of these things, right? When you’re running your own business, the number you see is the number before you pay VAT, before you pay income tax, before you pay anything else. It’s this much higher number, but it’s not all yours. 

And this takes a little bit of adaptation. You quote a client something or whatever and it’s this number, and it’s like, “Wow, that’s great!” And then you have to remember, “Yeah, well, it’s this much for that, and that much for that.” You’ve got to cut the pie… 

Duma Mxenge: Correct. 

The Finance Ghost: …into a lot of slices, so that’s an important thing to remember. And maybe the other thing that I’ve applied which I’ve found really important is I pay myself a salary out of the business. I pay myself the same salary every month, and I’ve set that salary significantly lower than what the business earns on average. 

The reason for that is it forces me to live to that salary. And I’ve been really lucky in this journey, it’s doing well and that’s great, so I can do it. But it kind of creates a buffer, because I think it’s far too easy – specifically in a small business – to say, “Oh, you know, things are going better. Great. Let me just adjust my lifestyle up.” 

Stuff goes away. It comes, it goes. You have good months, you have great months, you can have a relatively bad month. And just dealing with that variability in income requires a huge amount of discipline, because it’s not a reality when you have a salary. You’re getting the same salary every month, and you do with it what you do. 

I will say this, though: as a small business, it actually creates a lot of discipline. Whereas I think people, when they earn salaries, just assume that salary is going to be there forever. And it’s just not actually real life. Retrenchments do happen, jobs do get disrupted. We are in an AI era. I actually talked about this with Lauren a couple of Satrix podcasts ago and this point kind of came up as well, which is really interesting. 

So, I think there’s an element of discipline as a small business owner that you can bring in, that actually puts you above where salaried employees often behave in terms of discipline. 

Duma Mxenge: Just on that, I think you raise a very good point around salary and how you basically pitch the salary. Based on the design and how you’re thinking about it, it sounds like (and I want you to correct me or not, because then it gets into this whole passive income discussion) you’ve basically done the budgeting based on, let’s say, your personal expenses being covered. But is there also a portion that’s set aside, for example, for investment or buying a tax-free savings or retirement annuity and the likes within that ‘salarised’ amount that you’ve set aside from your business? Or, which is what we are seeing, mostly, is that a lot of business owners see their business as their investment and their only investment. 

The Finance Ghost: Sho, anyone who’s assuming that their business is their retirement plan has never seen corporate failures, deals go wrong – I’ve unfortunately seen a lot of that, and I know how hard it is to sell a small business. 

My strong recommendation to anyone with a small business would be: do not rely on that small business as your retirement savings and everything else, because then all your eggs are truly in one basket. That thing is your income, it’s supposedly your retirement – it’s just not right. I’d strongly recommend not doing that. 

In the amount that I pay myself as a salary, I leave an allowance for what would be the correct percentage excess, over and above my monthly expenses, to be invested. So, the investing is happening even out of my salary. Then, I come from an investment banking background, so I love my children a lot, but I love bonuses too! And so what I do is every year I pay myself a bonus based on what I can, and then what I do with that is what I do with that. That’s kind of the way I’ve structured it. I’ve almost tried to emulate some of my old investment banking life with that behaviour. It just works well for me. 

But, I would certainly say: business owners, you’ve got to be diversifying your wealth. You really, really do. It’s almost more important, when you’re a business owner. You definitely cannot be relying on this one thing. You are then in a hyper, hyper concentrated portfolio in a small business that relies on you. Like that’s… yeah, that’s way past my risk tolerance. 

Duma Mxenge: Thanks for saying that, Ghost. That’s essentially what we’ve been telling clients. And as I said, we’ve gone on and on about ETFs (how simple they are, how easy to understand), but what’s been quite surprising with the engagement is that a lot of business owners, obviously, do appreciate risk. When you’re running your own business, you feel like you’re in control. So when they have that excess amount of money, they tend to put it in cash, as if it’s an emergency fund. And we’re like, “But, you should be taking more risk. This is towards retirement.” 

I think guys view their own personal wealth differently in terms of how they’re running their business. It’s been quite difficult and challenging to get them to understand that actually you need to start thinking a lot deeper and more seriously in terms of how you build wealth alongside your business in a passive income strategy. 

The Finance Ghost: And it’s funny, right? Because any business owner is a risk-taker by design. It’s a guarantee: you are a business owner, hence you are a risk-taker. But then, you really do get two types of entrepreneurs like this. I have friends who are entrepreneurs who are the worst kind in the market – where it’s basically gambling, essentially. It’s like, “What’s hot? Let me have a punt. Okay, cool.” They’re almost tickling their need to gamble, a little bit.

And, it’s certainly better to gamble on stocks than to go and do sports betting (which is obviously all over the news at the moment). But better than that, even, is to go and actually invest. 

And it’s interesting how you then get the other type of entrepreneur who just sits in cash, basically. It’s almost like they are so scared that something goes wrong with their business that they almost refuse to take any risk of any other kind, which is also not right.

It’s all this behavioural finance stuff. And I can confirm, the journey as an entrepreneur – it is hard. You’ve got to be tough. You always feel like you’re one phone call away from some or other kind of disaster. That’s part of what makes me very hesitant to buy a house, I suppose. 

If I could say what my little personal finance “ick” is, coming from a business owner, is that I am very nervous to take on a bond. Because it just feels like many millions owed to a bank and, yeah, it scares me, you know? I’d much rather rent, invest the excess, and be liquid. Liquidity is your friend. It really, really is. No one ever got anything repossessed because they were “too liquid”. That I can tell you. 

Duma Mxenge: It’s usually the other way around! I think where we started off, I was talking about the buckets, right? And I think, even for business owners or people running their own business, the biggest feedback we get is that they’re too busy. They don’t have time to do this. So that’s why, most of the time, the investment is actually sitting in cash. 

And I think it’s important, especially at the end of the year, that one just takes time out to look at their financial situation. Think about the buckets, make a decision, put down a debit order, forget about it, revisit again in the new year. That’s the approach one can take. And then during the year, you’re busy trying to put out fires, growing the business, finding clients, etcetera, etcetera. 

I think for them, the difficulty of trying to be active in the market – they just don’t have the time to do that. But I think with the products we’ve got from an ETF perspective, they’re easy to understand. You can just sit down for a week, maybe a week-and-a-half, in any given year and just plan your life accordingly leading up to the new year. 

The Finance Ghost: So yeah, the encouragement to business owners is: Just keep building that diversification.

And maybe a nice way for those business owners to think about it is that we’re so used to, as business owners, getting an income. You’re chasing income all the time, whether it’s sending out an invoice or whatever it is.  But the best kind of income, and this is really hard for business owners, is passive income. While you are sleeping, when you are exhausted after a hard night (or a hard day, rather), you want your money to be working for you – and ETFs can do that. Because they pay dividends, and you can pick ETFs that have a bigger dividend yield. 

So, I know that’s something else that’s close to your heart: ETFs as a tool for passive income. Maybe walk us through that, so that listeners can understand: what does that opportunity actually look like? What do you mean when you say “passive income” and using ETFs to achieve that? 

Duma Mxenge: So, just going back to where we started, every business owner, in terms of how they need to think about their investments specifically, is in those different buckets (the short term, the medium term, as well as the long term), and be very clear in terms of what goals you’re trying to achieve. 

And the beautiful thing about all these ETF products is that they’re very easy to understand. You can make a decision on any given year. Let’s say December is your time where you just sit down and say, “Okay, I just want to look at my plan and plan accordingly.” And then during the course of the year, depending on what strategy you invested in (for example, dividend yield – there you get a nice dividend payout), the money works for you whilst you’re still working on your business. So, it’s something that you don’t need to check during the year or be concerned about. You know that in the background, your money is growing, dividends are being paid out. You can decide whether you want to actually cash out or reinvest. 

But we do try and encourage clients to do two things: (1) to reinvest their dividends, and (2) to make sure that they actually set up a debit order account and get into that consistency of just making sure that their future is also well-handled. 

Over and above that, of course, we’re assuming that all business owners will be successful, and they’ll also be successful in terms of selling their business. But you have to hedge your bets. At least then you know, whilst you’re running your business, you’ve got a pot of money that’s set aside in any eventuality. 

The Finance Ghost: Yeah, I would agree with that. And it really is great to build up that working capital. Build it up in your business, get it into a proper interest-paying account, earn the interest in the business, do that in your personal life, build up those ETFs, earn the dividends.

That is how you start to turn life from hard mode to easier mode. I don’t know about easy mode – I’m hoping that comes somewhere down the line. But right now, I think the most we can hope for is easier mode. So, yeah, lots of tools to do that. 

Duma, as always, we’ve had such a fun chat about not just the markets, but also just adulting and making progress in this life. And this time we spoke about business owners and how they should think about the world. I would really encourage listeners to go back to the one we did in January, if you’re keen to hear about the rent-versus-buy argument – I think everything we’ve spoken about there is still valid. 

So, yeah, it’s just always fun doing these with you, Duma, thank you so much. I look forward to the next one. I guess it’ll probably be early next year, and we can talk about your 2026 plan. So, thank you, as ever, for your time. And all the best with the December research. I’ll be interested to hear what you dig up. 

Duma Mxenge: Thank you, Ghost. Yeah, you can hold me to it. We should have an interesting chat in the new year. 

The Finance Ghost: Cool. Ciao.

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