Uncertainty over what tomorrow holds is one thought that unsettles every one, irrespective of the nature of profession or business one finds oneself in. While some people seek the best way to plan for the future, others would just remain unperturbed.
It is not uncommon to see people earning good pay but who never bother to commit the tiniest fraction of it into any type of investment. There have been instances of people who have once earned millions of naira for years, but once they lost that source of income, they became wretched within a few months.
A financial management expert, Dr Adepoju Asaolu recently counselled Nigerians on the benefits of investment. Dr Asaolu, who has a 20-year banking experience, urged Nigerians to cultivate the habit of financial prudence, and not to stop investing until their last breath.
But he quickly warned prospective investors not to invest in what they do not have a clear understanding of. In his words, the cost of ignorance is very high in investment. He said many people rush into what he called “over the counter or internet-based investment” that they later regret.
It is indisputable that millions of naira has gone down the drain due to poor or no feasibility studies while starting a business. In order not to invest wrongly, Asaolu advised Nigerians to always seek the help of experts who would guide them on different portfolios of investments. He clarified that failing in any of the initial investments does not mean one should hands off. He encouraged the potential investor to continue trying without repeating same mistakes that cost the earlier failure.
He stated that people need to put on their lenses in order to see that either saving or investment is deliberate planning and not a wish.
“When you sow nothing, you reap nothing,” he emphasised. “And the earlier you take a bold step, the brighter the future looks.”
Dr Asaolu spoke recently at a weekly online interactive session tagged Man-to-Man Frank Talk, hosted by the Class of 87, Christ’s School, Ado-Ekiti Alumni Association Worldwide. The session was moderated by Joe Adeleye, Principal Consultant, McRehoboth Consult Limited, London, Akinola Elegbe, an Abuja-based businessman, and Tope Adeboboye, Features Editor of The Sun.
The lecturer, who is also a member of the set, explained savings and investments as funds set apart for purposes that deny present consumption with the aim of adding and attracting higher values from where they are placed.
He opined that no investment or saving was ever too small, and he pointed out that those individuals now seen as big investors started somewhere. In his view, no time is ever too late to start investing. He also advised parents to introduce investment to their wards as well as build their children’s passion for savings and investment early in life.
Asaolu who specialises in small and medium enterprises/retail credits, capital structure, corporate training, turnaround financial management, and treasury management, said: “Savings are monies you take out of your income, that you do not spend now to meet some emergency needs or targeted at a project or purchase, while investment emanates from funds that are set apart to purchase assets or securities such as stocks, bonds, mutual funds or real estate with expectations of returns from such ventures.
“Most investments take longer time than savings in maturity. We can thus say that savings are mainly for the short term and, investments, for the longer time. The interest or profit you earn on both is what is paid to you for taking risks and for waiting. You may never have enough money to save or invest, but you’ll always have money when you save or invest. You have to save today to be safe at old age.
“Virtual money is not inferior to physical cash. In fact, it makes no sense therefore to be keeping huge livestock of money around you. I personally view money as a ‘living’ thing. This is because whenever you have it around you, it keeps whispering “spend me”, “spend more”, “and spend everything.
“If you should compete in anything, let it be in the area of investment and may be not in expenditures or personal aggrandisements. When you spend more than you earn, you have no space for investment. Even if you are on loan repayment, a little space of at least 20 per cent of your income for investment should be held sacrosanct.”
Asaolu, who is Chief Executive of Nu Platforms Inc, with partners in three continents, said one could consider investing in money market and capital market in the areas of special savings, fixed deposits, bankers’ acceptance or commercial papers, and stocks, securities and bonds respectively.
Other areas that are open to investment, according to him, are real estate, cash-regenerative businesses (restaurants, filling stations, trading, among others), value chain investments, entertainment sponsorship – art exhibition, comedy shows, beauty pageant, lottery or betting, hygiene products (rave of the moment), education – self development and healthy collaboration.
As a caution, the expert recommended investing in several sectors to avoid concentration risks. He warned that concentration risk could be an expressway to one’s Waterloo.
He advised people to reduce the quantum of their investment as they age. He prescribed that from 65 years, one should start to enjoy oneself fully, saying that the high blood pressure that goes with drop in investment value shouldn’t be toyed with.
He stressed: “Your 20 per cent investment or savings today translates to 80 per cent of your well-being in future, therefore, do not spend the 80 per cent. Be deliberate in your investment. As an investor, know when you are investing; know when the weather is favourable or not and when to harvest. To start any journey, you must have an end in view. Never lose sight of what you want to reap from your seed investment.”
On whether to invest in the banking sector, especially at this period of coronavirus pandemic, Dr Asaolu said that the Nigerian banking sector still remains one of the most fertile and profitable, considering the financial space.
“They have been leading all share indices at the Nigerian Stock Exchange (NSE) for a long time. However, it takes patience and it is quite risky, especially now that the graph is fast going flat. If I may advise, I will advise a mix between some specialised banks and some microfinance banks. On the whole, patience is key. Post COVID-19 picture is a bit bleak for now,” he counselled.