By Oma Ehiri, Head of Communications for SFS Group
One would be familiar with investment billionaires like Elon Musk, Bernard Arnault, Jeff Bezos, Bill Gates, Warren Buffett and many others that amassed significant amount of wealth over the years. Even closer to home, we are familiar with the likes of Aliko Dangote, Femi Otedola, Tony Elumelu amongst other astute businessmen in their various sectors.
While we celebrate their wealth and are inspired by their success stories, a common trait that can be found from these magnates is their continuous eye for investment opportunities. More interestingly, is the fact that they started their investment journeys at a very young age.
Aliko Dangote is reported to have started investment at the age of 21, shortly after graduating from college. Femi Otedola started much earlier at the age of 6, after starting a business he called Femco. The same trait can be found in almost all successful businessmen and investors.
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It is imperative to build and create wealth, especially in a country like Nigeria given the quantum of headwinds ravaging the economy. The National Bureau of Statistics (NBS) reported recently that Nigeria’s inflation rate touched a 17-year high of 20.77% in the month of September 2022, indicating how much the purchasing power of Nigerians have been eroded by the rising cost of goods and services.
The rate of inflation in the country puts Nigerians who rely basically on their monthly remuneration at a disadvantage, considering the high prices and fixed level of income. This is further impacted by the lack of job security, with Nigeria’s unemployment rate standing at 33.3% as of 2020 and could have gone worse.
More and more Nigerians are falling below the poverty line. The World Bank projects that over 90 million Nigerians will be poor at the end of 2022. This could even be more considering recent downsides in the macro and fiscal aspects of the Nigerian economy.
However, investments of ones’ savings could give young Nigerians the opportunity to multiply their funds and hedge against the galloping inflationary pressure. It is worth adding that keeping money idle in the Nigerian economy is tantamount to losing money, as the value of such funds will be eroded by rising cost of goods and services.
The persistent depreciation of the local currency against the US dollar has also made the tale of the Nigerian economic headwind worse. Increased demand for FX and inadequate supply has seen the parallel market rate risen to a record high of N742/$1, while at the official market, it has surged to as high as N440 to a dollar.
What to invest in
There are several investment opportunities available to young Nigerians, ranging from stocks, fixed income instrument such as treasury bills, bonds amongst others, ETFs etc. There is however a much more suitable investment vehicle for passive investors who do not have as much time to monitor the events in the market, a mutual fund.
- A mutual fund pools money from many investors and invests the money in securities such as stocks, bonds, and short-term debt. This means that each shareholder who buys into the mutual funds participates proportionally in the gain or loss of the fund.
- These funds are managed professionally by investment experts, hence offers the partakers the advantage of diversification, affordability, liquidity, transparency, and professional management.
- Mutual funds are also adequately regulated as they are required to be registered with the Securities and Exchange Commission and are obliged to follow strict regulations designed to protect investors.
A major advantage of investing in mutual funds is that investors can continue their usual daily routine jobs and be sure that there are experts monitoring the performance of their investment and will make adequate investment decisions in their favour to maximise returns.
It is also important for investors to be able to buy into any mutual fund of their choice from their comfort, be it at work or at home, one which SFS Fund Mobile App provides its several clients.
Why you must start young
A noteworthy fact to young Nigerians and aspiring investors is that nobody becomes rich by relying on their monthly income. Being rich is a function of wealth creation and the law of multiplying, which can only be done by investing and reinvesting.
Following the trend of the rich and wealthy businessmen and women, who we will often draw inspiration from, it is safe to say that starting at a young age when still agile and energetic is the best time to create wealth for the later days.
In conclusion, the quote by Walt Disney, a co-founder of Disney is apt; it says “the way to get started is to quit talking and start doing.”