So you graduated from school, got done with the National Youth Service Corps, and are either on the lookout for jobs, self-employed or working full or part-time, truth is, you will never truly feel okay until you begin investing your money. Sadly, the reality is that most young persons who want to begin investing, and also start saving early for retirement, have no idea where to begin. And that is all we will be doing today – helping young investors make the most out of their money.
Investing at an early age comes with many benefits, like the importance of compound interest. It is a powerful force that tells you how much your money can grow within a certain period. Put simply, it is interest earned on the interest previously accrued, and it is highly useful when it comes to building wealth.
Imagine investing ₦5000 a year beginning at age 25 and stop investing when you turn 35. Assuming a rate of 7% interest, you would have a whopping ₦602,070 by the time you retire—without saving another dime past the age of 35!
Compare that with someone who did not start saving until they were 35 but saved ₦5000 annually from age 35 to 65. In total, this older saver would have invested ₦150,000 (three times the amount you did) and still only have ₦540,741 by the time they retire.
The amount used may be ridiculously low, but the point is, the earlier you begin to invest, the more effectively you can take advantage of the principle of compound interest. Moreover, money becomes less valuable over a period of time, all thanks to inflation. That means those who started investing at an earlier age can outpace inflation by the interests they accumulated.
Now, there are many opportunities in 2019 which all youths, especially in Nigeria, should key into. In fact, it is good that most of it has also been digitalized, allowing you to be an investor from the comfort of your room. This piece, among other things, will be considering digital banks, digital savings/investment platforms, and cryptocurrencies.
All banks should have a mobile app, right? Well, we are not concerned about those; they are only physical banks with an online or digital presence. What we are concerned with are banks that have a digital presence, without a physical structure with ATMs and people standing in queues. As youths, especially the students, you would find these banks very useful. Because at this stage, you want to ‘chop life’ as well as save some money for unforeseen circumstances. Those demanding money from their parents would often get asked: “what happened to the money you were sent last month?” That tells you that your parents are saving and giving you from it, and they expect you to do the same.
One good thing is, whether you are trying to open an account, or you need an ATM card, or you want to set up your savings goals, with digital banks, you do all of these easily from your phone. So you do not need to worry about finding a time to visit your bank to complain or do any of the above.
With some interesting and important innovation in the digital banking field, ALAT – Nigeria’s first fully digital bank – came up. And most recently is Kuda Bank, which is still in a beta user mode. The good thing about these banks is that they do not charge ridiculous fees on transactions like the regular banks, no excuses and no drama. You get to do any and everything on your phone.
On investments, they do not really tell us what they are using the money for, but they operate something similar to a Fixed Deposit Account and give as much as 10-15% interests on yearly savings. For those who do not save much, this may not be very appealing. That is why you have to read further.
DIGITAL SAVINGS & INVESTMENT PLATFORMS
These may not be banks the way we know them but are platforms which let subscribers save and invest money, at the same time growing wealth. These platforms allow users to pump money into projects and make a profit when the business is set up. It is like buying shares in a company, only that this is done on the internet.
Platforms like PiggyVest, Cowrywise and Fundall are letting users build their wealth. And as you may already know, when it comes to financial services, the more money you can amass, the better rates you get on investment vehicles. PiggyVest, especially, lets you earn 10 – 13% interests on your savings while you earn over 25% return on investments. They let you relax knowing your money is secured, while they act as the bridge between you and the business you are investing in. Investments range from technology to agriculture, to transportation, and even a combination of all. And as many investments are expensive, it is hard for young people to give in to, but with these platforms, you can invest with the little you have and still enjoy same returns in amazing opportunities which you get to decide for yourself.
While PiggyVest and Cowrywise basically run the same thing, Fundall works just like the others, letting its users save and invest, and goes a little further by allowing subscribers to seek loans while growing wealth. In fact, when you register as a business/entrepreneur, you are not only saving, investing and borrowing; you are also given access to inventory financing and business management tools to even better your business.
These platforms are much secured, and have some support from Nigerian Banks and Insurance Companies and also the Securities and Exchange Commission. With this, you know where to start from when anything goes wrong. But for now, these are still very legitimate investment opportunities.
Cryptocurrency is not only an investment; it has come to disrupt the regular banking system. A cryptocurrency is a currency, though digital, created and controlled through advanced encryption techniques called ‘cryptography.’
The first time cryptocurrency made a leap from an academic concept into reality was in 2009 with the formation of Bitcoin. This coin attracted a huge acceptance in subsequent years, but it was only after 5 years that it got the attention of the media and investors. Immediately, it peaked at a record of US$266 per coin.
Note that, Bitcoin is only one out of thousands of cryptocurrencies. There are other currencies in usage, like Litecoin, Ethereum and Ripple.
Just like many investments, it comes with risks, and cryptocurrency is no exception. If you are considering investing in it, it may be best to treat your “investment” in the same way you would treat any other highly speculative venture. That is, you must acknowledge the fact that you run the risk of losing your investment, if not totally, then some. You must also know that cryptocurrency has no permanent value. Value is determined based on what a buyer is willing to pay at a particular time. This makes it very much susceptible to huge price swings, which in turn increases the risk of loss for an investor. Bitcoin, for example, plunged from US$260 to about US$130 just within a six-hour period on April 11, 2013. As a Nigerian youth, you already have a government not properly functioning and a host of other things on your mind to accomplish with money, therefore, it will be better that you look elsewhere for investments that suit you, unless you can swallow such volatility.
Views are deeply divided about the worthiness of Bitcoin as an investment. Advocates continue to point to its restricted supply and growing patronage as value drivers, while critics see it as just another academic exercise – a debate that a young conservative investor would do well to avoid.
However, you must also know that there are other digital currencies for special purposes, like the Gric Coin for the agricultural sector, AQRE for the real estate, and others. All of these operate under a Blockchain – a secured block of digital information stored in a chained public database and resistant to modification.
The beauty about these modern and digital investment opportunities is, it allows you to put (money) into financial schemes, shares, property, or a commercial venture with the expectation of achieving a profit, and whatever it is you have resolved to go with, the best investment choice as a youth should be to save as earliest as possible and to start investing as soon as you can. The world is digital, and it is best to follow the trend. Putting away more money and learning about your investment options will poise you for financial success, even before you get to realize it.
Kator Tarkaa is a budding investment writer. He enjoys writing about real estate, businesses and finances, especially as it concerns youths. He loves marketing products and services via social media.
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