Becoming an Intelligent Investor: Insights from Bonnita Olerato Modukanele
Investing is an ever-evolving field that requires a strategic mindset, discipline, and continuous learning. In this edition of Becoming an Intelligent Investor, we had the opportunity to chat with Bonnita Olerato Modukanele, an Investment Analyst with a background in Corporate Finance and Investment. Bonnita shared valuable insights about her journey, the challenges she faced, and the lessons learned along the way. Her experience provides a roadmap for both aspiring and seasoned investors who are keen to make informed decisions in today’s market.
A Journey into the World of Investing
The Spark of Interest
Bonnita’s academic journey began at the University of the Witwatersrand, where she majored in Corporate Finance and Investment, as well as Risk and Insurance Management. She later pursued a Master of Commerce in Business Finance, a degree that solidified her interest in investments. Her passion was ignited by a simple yet profound quote she once encountered: “To be rich you need to save, but to be wealthy you need to invest.” This quote not only inspired her career path but also shaped her understanding of wealth creation.
She reflects on the pivotal moment that shaped her early understanding of investments: “My first job laid the foundation for investment-related work, but it didn’t provide the depth that I needed to fully comprehend wealth creation and investment to my preferred level. However, I am grateful for the journey. Currently, I am in a space where investments are at the center, and the journey I took all sums up and makes sense.”
The Importance of Financial Discipline
From a young age, Bonnita was financially disciplined. She recalls saving for no particular reason but realized that her savings were not yielding the returns she expected. This motivated her to explore investment opportunities that could offer higher returns. She made her first significant investment in a unit trust, which laid the groundwork for a deeper understanding of financial markets. “I think financial discipline, especially in your early working years, can determine what you think of financial literacy. Unknowingly, I had it at a very young age,” she notes.
Overcoming Challenges in the Investment Journey
Navigating Market Downturns
The investment journey is not without its challenges, and one of the most significant hurdles Bonnita faced was the market downturn during the Coronavirus pandemic. Many investors panicked as markets plummeted, and portfolios took a hit. However, Bonnita’s understanding of market dynamics allowed her to stay calm: “Because I know that markets react in the short term, I wasn’t particularly worried as I knew it would correct in the long run. I think during this period, if I didn’t know better, I could have disinvested, but instead, I’m grateful I did not. My returns speak volumes to this.”
Her patience and resilience in the face of market volatility are a testament to the importance of maintaining a long-term perspective when investing.
Memorable Investments
When asked about her most memorable investment, Bonnita cites her experience with ETFs (Exchange Traded Funds), specifically the JSE Top 40. Although she initially chose this portfolio without thorough research, she received valuable advice from a former colleague, an industry veteran in asset management, who reassured her of her decision. “The returns have stood out for me, and the income gained has supported the overall wealth creation,” she shares. This investment has played a crucial role in growing her portfolio, allowing her to reinvest distributions into other ETFs and further diversify her investments.
Lessons Learned from Investment Missteps
Even seasoned investors encounter setbacks. Bonnita recalls an investment in an ETF with the underlying asset being MSCI India, a decision she made with high expectations due to India’s promising prospects. However, the returns were not what she had hoped for. Nonetheless, her long-term approach prevented her from becoming discouraged. “I will not let the short period and returns deter me from the greater goal of letting this portfolio prove its worth,” she says, emphasizing the importance of patience in investing.
Managing Risk and Evolving Strategies
Risk Management in Personal Investments
Risk is an inherent part of investing, and Bonnita’s approach to managing it is rooted in research and a clear understanding of the companies in her portfolio. “I don’t move with the crowd of what’s hot or not as that may not make financial sense. They may be overhyped without the right fundamentals for a well-sound company,” she explains.
Her investment strategy has remained consistent over time, favoring passive portfolios like ETFs that offer good returns for lower fees. She reinvests income from these investments to grow her wealth without dipping into her disposable income.
Professional Insights for Aspiring Investors
Qualities of a Successful Investor
According to Bonnita, there are several key qualities that make a successful investor: discipline, patience, critical thinking, resilience, and continuous learning. She believes that staying informed about market trends and being open to new knowledge is essential. “The power of knowledge helps to better understand concepts and make sound decisions,” she states. For Bonnita, reading reputable financial news sources like Moneyweb, Financial Times, and Bloomberg is a daily habit.
Common Misconceptions About Investing
One of the most common misconceptions Bonnita encounters is the confusion between saving and investing, especially among older generations. “Pyramid schemes have robbed a lot of people, and most times they are masked as investments. This has made people cautious of investing and more inclined toward saving and stokvels,” she notes. Educating others about the differences between saving and investing is a critical step in fostering financial literacy.
Advice for Young Professionals
Getting Started in Investing
For young professionals looking to make their first investment, Bonnita advises starting with equities and adopting a long-term mindset. She emphasizes the importance of understanding your risk appetite before diving into offshore or local equities. “Each individual has different investment objectives,” she explains, underscoring the importance of tailoring investment choices to one’s unique goals.
Financial Habits for Building Wealth
If there’s one piece of advice Bonnita could give to her younger self, it would be to start investing earlier and perhaps begin with a dummy portfolio to learn the ropes. She also highlights the significance of developing financial discipline early on and avoiding the temptation to compare oneself to others. “Do not be easily influenced by social media lifestyle. Focus on your own goals; life is a marathon and not a race,” she advises.
About the Expert
Bonnita Olerato Modukanele is an accomplished Investment Analyst specializing in reporting. She holds a Master of Commerce (MCom) in Business Finance and has built a successful career in the investment industry. With her practical experience in managing portfolios and her deep knowledge of financial markets, Bonnita is a trusted voice in wealth creation. You can connect with her on LinkedIn at Bonnita Modukanele.