175. The Hidden Role Of Chance In Money Decisions

One random event can separate two people’s futures by millions and it can happen with money too. We’re Bronwyn Wayner and Craig Finch from Growth Financial Planning, and we’re back on our bookstall with The Psychology of Money by Morgan Housel, focusing on Chapter 2: luck and risk.

We start with the Bill Gates story and the uncomfortable takeaway that timing, access, and chance matter more than most of us want to admit. From there we bring it home to everyday financial planning in South Africa: the career turns that feel like luck, the risks that can pay off, and the risks that can break you if you stake everything on one outcome. We talk about treating setbacks as feedback, keeping perspective when plans change, and why smart people still need a plan that survives bad breaks.

Then we get practical. We unpack why we don’t believe in “only property” thinking, why diversification across asset classes matters, and why your retirement savings should be protected and prioritised from your first pay cheque. We also touch on the Australian superannuation model, and we discuss how the South African two-pot retirement system helps preserve a portion of retirement money for future you while still allowing limited access in extreme situations.

If you want to dream bigger without putting your whole life on the line, press play. Subscribe, share with a friend who is taking a big financial leap, and leave a review so more people can find Know Your Money.

Transcript

Welcome To Know Your Money

SPEAKER_01 0:12

Hello everybody, welcome to Know Your Money. I'm Bronwyn Wayner.

SPEAKER_00 0:16

And I'm Craig Finch, and we are from Growth Financial Planning. We hope you enjoy our podcast. Bron, how are you today?

SPEAKER_01 0:24

Very good, thanks. And you?

Luck And Risk In Bill Gates’ Story

SPEAKER_00 0:25

Yes, all good, thank you. So we're on the bookstall.

SPEAKER_01 0:28

Yes, chapter two.

SPEAKER_00 0:30

Psychology of Money.

SPEAKER_01 0:31

By Morgan Housell, yes.

SPEAKER_00 0:33

Chapter 2. I think started with Bill Gates.

SPEAKER_01 0:36

Yeah, the chapters luck and risk, right?

SPEAKER_00 0:38

Luck and risk. So Bill Gates went to a school that had a computer. And in those days, it only had one computer. And that school was probably the only school in the surrounding areas that had a computer. Bill Gates realized that this computer was very important to what he wanted to do in life. And he had a friend who worked with him on that computer. His name was Kent, I think. Yes. And the luck and the risk scenario is that Kent went on a hike in the mountains as a schoolboy and he died in the mountains. That was very sad. And the chance of that happening is one in a thousand anyway.

SPEAKER_01 1:21

One in a million.

SPEAKER_00 1:22

One in a million, even. Wow. So there's Bill back in his computer room, and there's Kent in heaven.

SPEAKER_01 1:28

Yeah.

SPEAKER_00 1:29

Look how different that would have turned out. But they were together and it would have been an incredible story if they were both still together. But yeah, it's luck and risk. So how does that play out in our lives every day?

SPEAKER_01 1:42

Well, I mean, have you seen luck and risk in in your life in any way?

SPEAKER_00 1:46

Oh yeah. I've been very fortunate in in a few instances in my life. So joining this industry, uh meeting you as well. So we had this business together. So that was complete luck in complete ways our it was really an amazing way.

Take Risks Without Betting Everything

Diversification And Protecting Retirement

SPEAKER_01 2:03

So And it could have turned the other way, right? When you joined this industry, it could have been the worst thing that ever happened to you back in the day when it was lots of going out and partying and doing all of those things in this industry. Your whole life could have turned a different way. And it may have never worked out with me. But I think the biggest thing or the biggest takeaway that I took from this book is that life, you have to take risks. Sometimes those risks aren't going to plan out, and that, you know, it could fail, but there's no such thing as failure. There's just feedback, as Lisa Emmett would say. You anything that you do, you've just got to learn from it. And I think anything you would go in and do, you have this option of it being really, really good and an option of it being really, really bad. And what we should do is if we're going to take a risk on something, not put all our eggs in one basket and then your whole life is blown up because you've done that. And I think that's where our signature program at Growth Financial Planning of the Seven Relationships with Money is so important. So if there is this business venture that you want to take a risk on, do it. But use the portion of your savings that's called business venture risk. Don't go cash out your retirement sanity, rebond your house, all of those kind of things. Because every single coin has another side. Yes, it can go well, but yes, it can also go bad. And it's just about that, I would say. What do you think?

SPEAKER_00 3:50

No, absolutely, because uh sad sadly, some people back everything on one solution. Hopefully it's going to come out in the right way. But those are very far and few between. That often so some people say, I only buy property, I won't put money into unit trusts or retirements. No, we don't believe in that. We believe in, as you say, across the board of all asset classes as one example. And your retirement savings is sacred. You should be putting away immediately when you come and start working, you should be putting money away. The Australian model is amazing because they force you from the time you start earning money to put money in a retirement, they call it a superannuation fund there. It's a retirement annuity. Essentially, it's yours. It's not in the form part of any big company. You can go and work for the Beers or whoever, and then that's not their pension fund, it's yours. You take it wherever you want to go, and you cannot touch it until you're 65 years old. So that's one part of making sure that you all have money in retirement. In the meantime, you're right. You can start a business, you can fail in that business. Hopefully you don't, but you can have experiences that you can learn by, but don't back everything in one on one hopeful dream. Yeah, exactly.

South Africa’s Two-Pot Retirement System

SPEAKER_01 5:05

And there's a beautiful video, I don't know if you've ever watched it, Steve Jobs. He um does like a commencement address to all the graduates of Stanford, and it was in 2005, and it is probably one of the best videos I've ever watched. And in that video, he talks about being able to connect the dots and like see how all the different experiences that he went through led him to where he is today. And you know, when he got fired from Apple, like he thought, oh my gosh, how can I be fired from my own company? But that led him to go do other things, which then brought him back to even to be even more successful. So you've got to see these hits as a good thing and take the the let the beauty out of it. And when it comes to your money, don't let your money be that thing that stops you from dreaming, stops you from taking risks, because you've put everything into that and then it fails. And that's, you know, we you we were saying off-air earlier how good it is that the two-pot system has come into place in South Africa because it is locking away that portion till that retirement age to know that that version of you has something. And I think just use the tools that are around is probably one of the best tips.

Book Recommendation And How To Subscribe

SPEAKER_00 6:29

Yeah, the two-pot is a means that you can only draw a third of your retirement money in hopefully extreme circumstances, but you have to preserve the rest for retirement, which is it's it won't you we won't see it right now, but the next two generations are gonna see the fruits of that, which is gonna be an amazing really good.

SPEAKER_01 6:50

And that chapter also had so many other beautiful things. So if you can, I really encourage you to get a copy of the book The Psychology of Money by Morgan Hausel. But we'll keep going on. Thank you.

SPEAKER_00 7:02

Thank you for listening. If you have enjoyed this podcast, would like to subscribe, please visit our website www.growthfp.co.za. The information we have provided in this podcast is our personal opinion. For more detailed information, please discuss your financial situation with a financial planner.