THE POWER OF INVESTMENTS IN REPOSTIONING OUR FINANCIAL DIRECTIONS DURING THE COVID-19 PANDEMIC AND POST PANDEMIC ERA

BY:
IGWE GEORGE

Earlier this year, specifically during the heat of the COVID-19 lockdown, I wrote an article on the relevance of having a saving culture as a palliative to financial quagmire, particularly during unanticipated events like war, famine, flood, pandemic diseases, such as COVID-19, amongst others. But, I want to emphasize here that, ‘investment ideology” is the nexus and the focal point of savings. This is because, when you invest, you are invariably saving for the bigger future. Before I explicate further, permit me to briefly illuminate the term, “investment.” Investment connotes a lot of things. One can invest their education, time, and so on. However, our chief concern here is the financial meaning of investment. Hence, it can be defined as a commitment of one’s capital (money) in anticipation of profit or interest. Investment is also seen as the placement of one’s current financial resources in order to achieve higher gains in the future (Capital Market Authority). The definitions of investment given above, particularly the one puts forward by CMA, place investment in a rather lucid manner, especially for neophytes in the financial market. The definition by CMA lucidly depicts the main essence of investment as “making bigger gains or profits.” So, the crux of investment is to increase our capital (money).
Financial investment takes place in financial markets, where the main commodities traded are financial assets. This trade may take place physically (face to face), or virtually (online). There are different types of financial investments --- Cash, Bonds, Mutual Funds, Exchange Traded Funds (ETFs), Stocks, etc. Our main focus in this discourse is on “Cash Investment” because, this one spells out specifically, the interest rate; and investors have the precise knowledge of their returns. In addition, it also stresses that the investors may get their capitals back.
Investment is regarded as one of the surest ways to plan for the uncertain future, especially in this era of vagaries. Aya Laraya once said: “When you invest, you are buying a day that you do not have to work.” Investment plan gives a financial freedom. Though investment is a huge risk (it is a 50:50 chance), success comes from daring and taking risks. After all, life itself is full of risks. When we go to bed at night, our chances of waking up the following morning is 50:50. Therefore, in as much as investment is a huge risk, it is worth taking, because if you fail to take the risk, it is also risky! You may live to regret it all through your life! In short, investment risk is worth taking for diverse reasons.
First, investment plan ensures longer life expectancy. Believe me, poverty is the gateway to death. The thought of what to eat, bills to pay, and how to take care of one’s family, is the chief cause of High Blood Pressure (Hypertension), mostly among adults aged 45 and above. But good investment plan helps to curb those issues. This is because, even when the body is weak and unable to sustain one anymore in the world of work, one can always bank on their investment(s). You will also agree with me that, hunger and starvation have claimed more lives than natural deaths in the rural areas. The reason is that, they lack the wherewithal, or the financial capability to seek proper medical attention, when down with ailments. This is why some of the rural settlers die of common malaria parasites. You may want to ask, “how does investment ensure higher life expectancy?” I will answer straightforwardly that, aside natural death, some death could be averted with good investment that promises good money. For instance, if someone is rushed to the hospital at the point of death, the first thing that the hospital will demand for is “money” (Some Nigerian doctors value money more than life). Suze Ornam summarises everything that: “A big part of financial freedom is having your heart and mind free from worry about the what-ifs of life.” This is what quality investment brings to the table. The “what-ifs” of life are; “what if I get sick?” “What if I lose my strength to work?” “What if I lose my job?” etc.
Moreover, another reason to think of an investment plan is the rate of unemployment in our society today. Did you know that unemployment rate in Nigeria has hit 27.1% as of 2020? This means that, about 27.1 million of the labour forces are without jobs (Nairametrics, 2020). Some of these people are parents with children. The big question is, how do these people take care of their bills? In addition to this, the International Labour Organisation (ILO) said that, about 3.3 billion people were employed in 2019 out of the 5.7 billion working-age population. The figure is just slightly above average (57%). This implies that about 2.3 billion people (39%) were without jobs. The organisation further added that, most of the 3.3 billion employed were working under poor conditions that do not guarantee them a decent life (ILO, 2019). Although no official statistics has been released as to the rate of unemployment in 2020, if the unemployment rate was that high in 2019 when there was no Corona pandemic (At least, it had not started to ravage the world then), as a rule of thumb, we should expect the percentage to be worse than the year 2019. Besides, even in the United States, unemployment has risen to 8.4% as against the 5.5% in 2019 (IMF, 2020). This is just to show the presage of what awaits us in the year 2020 and beyond, if we do not have a concrete investment strategy. With solid investment plans, this unemployment rate does not pertain to you. This is because, good investment plan ensures that every man is independent of himself; it makes you a self-subsisting man. You do not have to be carrying files everywhere in search of unavailable jobs. This is the power of investment; you are the boss and staff of your company; you are in charge!
Furthermore, the high rate of tax is another reason to think of investment, rather than keep money in the bank. It would not be gainsaid that the rate of tax has grown geometrically in our country today. I believe we all heard about the actions of some irate customers of Access Bank PLC, when they woke up one morning to see some outrageous deductions from their accounts as “STAMP DUTY.” In as much as we would blame the bank for not communicating first with its customers before carrying out the said transactions, I would want to emphasize here that, the instruction was directly from the CBN. The STAMP DUTY charges are fees levied on all electronic transactions from #10,000 and above. It is another step from the government to increase revenue generation. These charges do not affect other bank charges, such as card maintenance, SMS alert, ATM charges (when used more than 3 times in other banks), amongst others.
The implication of all these charges is that, supposing someone sends #10,000 to you, as the money arrives, #50 is deducted for STAMP DUTY, you are left with #9,950. If you have not been debited for card maintenance fee for the month, #50 will be removed, remaining #9,900. Monthly SMS alert is there too, say #30 (depending on how often you make transactions); remaining #9,870. If you have exceeded the 3 times grace with other banks and you want to withdraw from other bank, you will be charged #35 (some banks even charge more). That means you are left with #9,835. No ATM will dispense #9,835, so prepare to withdraw #9,000, or at most #9,500 (if there are still some machines that dispense #500). Is this not outrageous? Mind you, the above calculation is just for a month only, and this happens every month. It is sufficing therefore to say that, even bank is no longer safe to keep our money. Is this not a cogent reason to think of an investment plan? Why not think of an investment that, in lieu of reducing your money, will boost it with interest? You need to commit your hard-earned money to a place where it will yield more money. Saving money in the bank gives you back nothing, but takes back something. Robert Allen says: “How many millionaires do you know who have become wealthy by investing in savings account? I rest my case.”
Aside from the above points, have you ever thought of what would happen to your family, should you go on an impromptu journey, or in case of an eventuality? How do you think your family will be able to meet up their basic needs? The answers to these reality questions will give you a big reason to start thinking about an investment plan, no matter how small, because, a good investment plan is like a house built on a solid rock; it can never fall during bad weather!
In conclusion, Dave Ramsey mused: “Financial peace is not the acquisition of staff, it is learning to live in less than you make, so you can give money back and have money to invest. You cannot win until you do this.” I will like to add that, “Financial liberty is not all about meeting up with your daily financial needs; it is the ability to spend less on daily needs and prepare for the precarious future.” Enough of the excuses, you can start today. If you do not know how to start, ask questions from experts to guide you. I will leave you to ponder over the advice of Warren Buffet, who’s regarded as one of the leading American investors; he says: “Never depend on a single income, make an investment to create a second source.”