Stories by Omodele Adigun

Mistake, they say, has no master! But money mistakes can do if you learn to spot and correct them early. By so doing, you can save yourselves fortune and few sleepless nights.

Writing on this topic online, Wendy Connick of The Motley Fool itemises six money mistakes that should be nipped in the bud before one  loses a pile of money.

Keeping all your money in savings

If you just stick all your money in your savings account, your bank will love you — but inflation will eat away at that money over time until you have nothing left. Because inflation averages about three per ent over the long term, you need to make at least a three per cent return on your money just to break even.

And it’s safe to say that there is no savings account in existence that pays three per ent interest. Keep just enough money to cover your expenses and protect you from overdrafts, and only sweep enough into a savings account to cover emergencies (perhaps with an online-only bank, which will pay far more in interest). Then direct the rest toward retirement and/or brokerage account investments.

Buying a house you can’t afford

Everyone knows what a great financial asset a home can be. However, buying a house is not like buying some shares of stock. It’s a huge investment of money, time, and energy. And if you overextend yourself financially to buy that house, it may end up being a pretty lousy investment.

Not saving at least 10% of your income (and more is better)

Setting aside a reasonable chunk of your income on a regular basis can reap huge rewards for you. First, buying investments that have decades to grow will get you an enormous return thanks to compound interest. Second, having a savings account with a few months’ worth of expenses can spare you from having to rely on credit during emergencies, which means you’ll save a fortune on interest and other debt-related charges. And third, having money saved up gives you more flexibility in your lifestyle choices.

Ignoring your investments

A buy-and-hold investing strategy has a lot of advantages, not the least of which is that it requires far less time and effort on your part to maintain. However, that doesn’t mean you can set up an automatic investing plan and then ignore it for the next 30 years.

At a minimum, review your investments once a year and decide whether or not you’re happy with their performance. This annual checkup will allow you to rebalance your portfolio and replace investments that no longer suit your needs, whether they’re underperforming or they don’t fit within your changing strategy.

Timing the market

Yes, it’s possible to make a fortune if you time your investments perfectly by buying stocks at market lows and selling it at the highs. Timing the market turns investing into gambling, pure and simple. Because no one can predict with certainty whether stocks will rise or fall, even professional investment managers get it wrong more often than they get it right.

To make matters worse, you’ll have to pay commissions and possibly taxes each time you make a transaction — and market timing typically requires lots of transactions. These expenses can severely erode your returns, even if you manage to time all your trades perfectly (which you won’t).

So unless you have a crystal ball that will tell you exactly what the market is about to do, stick with buying quality investments and hanging on to them for long periods of time.

Related News

Not having goals

Where do you want to be in 10 years, financially speaking? How about 20 years? If you don’t have a goal, you’ll have a hard time coming up with a savings plan — and that means your money will be flying out of the door for expenses instead of quietly making you thousands of dollars in maturing investments.

But if you set reasonable financial goals, and have a plan to meet them, you can accomplish amazing things.


Heritage Bank pledges to empower NYSC members

In line with its culture as a wealth partner, Heritage Bank Plc has restated its commitment to support National Youth Service Corp (NYSC) members and young entrepreneurs to grow their businesses as a start-up or prospective business owners.

Its Managing Director, Ifie Sekibo, stated this at the weekend during the Leadership Development Programme for Corps member organised by Guardians of the Nation International (GOTNI).

The bank is currently in partnership with GOTNI, a capacity building organisation, to present leadership programs in all the NYSC Orientation camps in the 36 States.  

According to Sekibo,  the partnership is a demonstration of the bank’s commitment to using financial inclusion to boost entrepreneurship development, which is critical to its mission to create, preserve and transfer wealth across generations.

He explained that Heritage Bank’s various entrepreneural schemes in the support for business had always focused on dependable job-creating sectors, such as agricultural value chain (fish farming, poultry, snail farming), cottage industry, mining and solid minerals, creative industry (tourism, arts and crafts), and Information and Communications Technology (ICT).

Sekibo added that the aim of Heritage Bank, being in the forefront of youth empowerment, is to emancipate the latent entrepreneurial spirit in the teeming youths.

“At Heritage, nothing else is more fulfilling than to groom-to-empower young aspiring start-up entrepreneurs, as we mentor them to grow and become large corporates enlisted on the Nigerian Stock Exchange.

“In recent times, we have worked with NYSC and the Central Bank of Nigeria to support youth corp members and young entrepreneurs to grow their businesses as a start-up or prospective business owners.

“As a timeless wealth partner, we are here today to support you in your endeavours and empower and hold you, hand-in-hand, thereby providing timely quality business support services for promising and better future after your service year,” he explained.

The bank’s MD, however, commended the Corp members for their willingness to obey the clarion call to serve their nation, whilst urging them to serve and put the Nation first in all, with service and humility, in order to make Nigeria great again. 

Meanwhile, he reiterated that the bank had continued to make efforts to lead the recovery of the Nigerian economy through championing several empowerment schemes like Youth Innovative Entrepreneurship Development Programme (YIEDP), Centre for Values in Leadership (CVL) on Young Entrepreneurship Business Training Programme (YEBTP), Young Entrepreneurs and Students (YES) Grant and Nigerian Youth Professional Forum (NYPF), amongst others.