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Esther.Dumbiri posted a topic in Investment Vehicles In NigeriaIn 1983, when America experienced a boom in many businesses, gold and the acquisition of gold was trending because many people anticipated that currencies would crash. The key thing at that time was, buy gold in order to edge. Mr Stone gathered money from different people to invest in the golden opportunities but only few people understood the risks he was exposing them to. He was buying gold on margin. Many people had seen him make a lot of money in the past because he knew when to go in and when to step out of any investment, so it increased the confidence they reposed in his abilities. Sadly, the danger with buying gold on margin is the fact it was an unstable form of investment. This is why: If gold was sold at $50, you are encouraged to add 10% , which is an extra $5. This $5 was a lot of money for people at that time. But as the price of gold continued to rise, at $100, to retain your position, you had to keep up with your 10% by adding more money. This meant you needed to pay an extra $5 but if you are unable to keep up by a particular deadline, the $5 that you put in will be forfeited. In other words, buying on margin is similar to a situation where you borrow money but cannot pay. When the price of gold took a run in 1983, many people who invested everything they had into the gold business were left with nothing. For the Nigerian counterpart, prior to experiencing the stock market crash, many people went into debt to make more out of stocks. Seeing how well their stocks were faring, there were many who decided to borrow large sums of money just to double their ROI within a particular period. Sadly, when the stock market crashed, many people ended up with critical health issues and some even committed suicide. The extreme reactions to the crashed stocks was a result of them being caught in the downside of stock investment as debtors. For Mr Stone and many other Nigerians who fell victim to the crash, they learnt a truth the hard way; emptying your savings or borrowing for investment is not the wise way to go. Only excess money should be put in any form of investment; always keep the cash needed for sustenance aside. This is what turns many people into beggars because they are suddenly under pressure as they make frantic efforts to raise the cash needed for basic necessities of life. The blood runs hot when they begin to fail in responsibilities to pay the rent or other fees but runs hotter when the lender comes calling. Always cover the basic expenses needed for your day to day living as an individual or as a family before diverting funds into any form of investment; only use a part of your savings for investment. Never ever empty your purse no matter how juicy a deal sounds. Investing via exclusivity will also lead to problems later on; you must build a balanced portfolio concerning your investments. Look for investments on different platforms; Cash, stocks, real estate, agriculture, etc. So that if one fails, you have a backup plan. In the meltdown of 1992, people lost millions of naira when the technology market crashed. A more recent event was when MMM seemed the main deal for Nigerians in 2016. Many people, spurred by greed, emptied their savings, diverted funds meant for other projects and even went as far as borrowing. In the end, they got their fingers burnt. Wisdom for investment states that before you make the choice to invest, ensure that you have covered your daily expenses, then take out just a part of your savings. My dear friend, learn to diversify investments and never ever empty your savings for any investment opportunity.
Most people believe that it is not possible to save with a low income. This is not true. For you to actually save at all, it starts with you making the decision to save. Any decision you want to take starts with the mind. It is the mind that controls you and tells you what to do. When you want something done, it all starts with you thinking and believing that it can be done. If you think you can do it; you will do it. If you think you can’t do it, then you can’t. So when you avoid saving with the little you make, it’s because you think it’s not possible. Saving is very important and it will help you a lot in the future. Your ability to save helps you become financially secure. Therefore, whatever money you receive, save from it. Your savings should be the first thing you put aside. Yes, your income may be meager but you can still save little out of it. You might think your monthly savings is too small; but it’s okay to start small. As long as you are saving something, it’s better than saving nothing. What you think is small today, in the next three to five years, it could amount to a lot of money. Saving is for everybody, irrespective of how much you earn. It is your decision to make. So, once you set your mind to do it, you can do it. For you to be able to save, you should assess your financial health. Know how much you get daily or monthly and how much you spend on a monthly or daily basis. You should monitor your income and expenditure. You need to know where your money is going. Do you know how much you spend on recharge cards, food, transport, fuel etc.? When you do this, you may realize you spend a lot on things that are not very important. It doesn’t mean you won’t spend money on these things, but you can cut down on the amount you spend on them. You can have it on records which could be on your phone or a note pad that you can easily access. This will help you save better. When you are able to assess your financial health, then you can re-examine your budget. You need to have a budget. A budget will show you the important things you need to spend money on and the things that are less important. You need to be ruthless in managing your spending. Get ready to make sacrifices. You can decide to spend less money by cooking at home rather than eating out. Have a budget on how much you want to spend every day; how much you spend on recharge cards, shopping, internet, health, beauty products, visiting friends etc. Write out all existing expenses, including the small ones, then list out each monthly expense. Also, set goals for yourself. This will make saving easier. When you have a goal; you have a plan. It could be a short-term or long- term goal. This will help you save towards it; you become conscious of what you want to achieve at that period and with that, you are mindful of your spending. It is also important to save for the unexpected. An emergency may occur in the future; planning for it will help you be prepared. A set-aside emergency fund could cover for an unexpected job loss, or a difficult health situation. Money should be set aside for emergencies to avoid going into debt. Remember that an emergency can actually be more than your income, so it’s best to start saving for it on a daily or monthly basis. One may need to retire in the future; the money you have saved will take the place of the income you will no longer receive from your job. The sooner you start saving for retirement, the less you will have to save in the future. In all, saving is very important. It doesn’t matter how much you are earning, you can do it and you should do it. It helps you avoid going into debt and you can secure a better life for yourself.
Let's assume a finance detective approaches you and asks: "Who loves to have a dependable car?" "Who loves to own a house?" "Who loves to dress well and be the talk of the town?" I am certain he will get the same reaction from you as the one playing out in my head. The right question actually is, "Who doesn't?" We live in a materialistic world and it is absolutely normal for people to desire good things. However, when you live in a society where the economy is not friendly, it is crucial to be careful when sorting our priorities. The word 'Debt' is not new to man and has been the cause of some drastic decisions that people made in our society. Have you ever been in a situation where you were not able to handle an emergency due to lack of adequate finance? Or you had issues with your friends and loved ones because you owed them a lot of money and couldn't pay back? Or ever seen cases where people lose their lives owing to a build up of stress over accumulated debt? Very recently, the news of a major oil firm bedevilled by crippling debts was trending. Though the borrowed funds were meant for business expansion, the day of reckoning eventually arrived. That's what happens with debts; as the day of reckoning draws close, the heart of the borrower beats faster. However, there are practical ways to staying debt free. Let's discuss some. First, make a budget. Creating a budget helps you avoid overspending. Though you earn a great income, it is not wise to spend beyond your budget. It will only leave you with less money and your family gets affected. Creating a budget helps you to set your priorities right. It will enable you to make the right sacrifices to financial stability. You may have to cut down on some luxuries like taking a vacation abroad, eating out every weekend, going to the movies on Saturdays, wearing the latest designer clothes and shoes, and many more of that. You will learn to be more resourceful and seek our less costly luxuries. Instead of expensive vacations in a very faraway country, you can find equally luxurious ones less faraway and costs less. Parents should also re-orientate their children in being prudent with money and cut down on requesting for meaningless luxuries. In order to be debt free, know exactly how much you earn, how much you spend and how much you should spend. Monthly is most recommended. This will help you cut out unnecessary expenses and ensure you live within your means. Secondly, nurture self-control. In the society we live in, people feel pressured to keep up with the latest fashion and trends. I once heard a quote; "Don't try to live up to the Jones, the Jones are broke." Life is all about how you make most of what you have; so restrain your thoughts and focus your your mind on the things that matter the most. That's one sure way of escaping the trap of grabbing everything that appeals to you and accumulating unnecessary debts. Contentment is a must-have virtue; life is not all about expensive toys. Always remember that if you keep spending money on things you don't genuinely need, someday you will have to sell the things you need when the storm of life comes. But if you've been prudent in keeping your expenses low and your savings/investment fat, you are better positioned to weather the storms when the assuredly come. Lastly, save, save and invest. Set savings/investment goals and draft a plan on how to achieve them. You want your children to attend one of the best schools? Good, plan towards it; start saving in an education fund/account for it. When the focus isn't on immediate gratification, you make smarter decisions. You want to own a house? You want the best for your children? That's beautiful, all you need to do is to save for it. Saving for a long term goal also gives you the time to consider if you really want that particular thing. Always monitor your spending. For you to save better, trick your mind into believing you make less income. And in truth, there were years you made less income and lived well. Just don't let your mind get used to spending everything you earn. This will help you put more money aside -- the extra from the salary raise, the new side income etc -- for the long-term financial goals you want to achieve, for example, buy a house, take your family on a vacation. In summary, to become debt-free: change your habits and develop a healthier way of spending. Staying debt-free helps individuals and families to live happily. They are able to avoid unnecessary stress, achieve more and build better relationships.