It’s 2023! Another new year has made its way to us, and I can’t be any happier. At the end of last year, I bought a new binder, took out my pen, and wrote down a few resolutions. Very lofty ones for that matter, I think this is my most ambitious year yet in that regard. One of my resolutions is to put out a Newsletter weekly, so if you enjoy what I do here, you’re in luck (or will be if you stick around for long enough. I promise there’s something to enjoy).
I don’t particularly want to write about new year's resolutions because that’s what everyone is talking about these days. I wonder though, what do you do when you aren’t hitting your goals for the new year? A mentor of mine dropped this awesome thread where he pointed out that even if it seems like you fell short of reaching your goal, you’re still in order. All you need to do is pick yourself up and go again. Very sound advice if you ask me.
What about in the case of a certain central bank that gave us new naira notes to celebrate Christmas with, and slated the 31st of January as the day that the former notes cease to be legal tender? What happens if it does not look like they are going to make it? Since these notes were released, I personally have not touched a single one of them. This is shocking because I visited more ATMs and POS points than Santa visited houses during the Christmas season. I thought my experience was isolated till I heard and read similar complaints from others
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So, why haven’t banks started disbursing these new notes in mass? And if we are still holding the old notes by the end of January (due to the fact that not enough new notes are in circulation) would that mean that we lose all our cash? These are the questions I have on this matter, and I sincerely hope that the CBN has plans to solve this little problem that is brewing.
Of course, I might be wrong, the notes might just be concentrated in one area, as a few people have posted photos of them holding the newly minted cash. I would have thought that the focus would begin with rural areas since the inhabitants usually withdraw large amounts to use for their daily transactions as opposed to mobile and online transactions. Either way, this is not a failure, it might lead to an extension. But remember, all good goals take time to achieve.
My Resolution is to Make More Money
Photo by Josh Appel on Unsplash
Speaking of goals and money, a lot of people wrote about investing as one of their goals (I am a lot of people). The problem is that I hardly know what to invest in, or where to start, or what the different investment vehicles are.
I had a conversation with a very good friend of mine, Esther, about investing. Our little talk led to me looking into the different investment vehicles that someone like me can start with. I believe this can help.
Warning: This is not investment advice; I’m just sharing what I know so far. You should know what you want to do. I wish you Godspeed on your sojourn.
I will be explaining each vehicle based on its yield, risk level, and duration. If you need any more info, you can check out Investopedia, or YouTube, or reach out to me.
1. Fixed income: These are investment vehicles where the issuer (the body you gave your money to that is expected to give you returns) must pay you a fixed yield amount on a fixed schedule. These are the safest types of investments, as the issuer is always a highly established body that needs the money to take care of quick/pressing needs. E.g. are:
a. Bonds: Remember when your mum collected your Christmas money and promised to pay you back? Now imagine she did that and paid you extra on the money periodically. That’s how a bond works. It can be issued by a government (Sovereign bonds) or a large corporation (Corporate bonds). They collect your money in exchange for a note to use it for a project or an expense. And promise to pay you based on a fixed rate over a long period of time (think 10 years). Sure, 10 years is a long time, but bonds are long term investments. Designed to build wealth in the long run (and let’s tell the truth, it’s a lot better than your mum that still hasn’t paid you back your Christmas money). You can always sell bonds to a third party by selling the note to the next guy, that person then owns the bonds.
b. Eurobonds: They are bonds too, but in this case, the government or company issued the bonds in a foreign currency. So, think Dangote in Nigeria issuing bonds in US dollars. It is important to note that the name is a bit misleading as the bonds are not denominated in Euros.
c. Commercial Papers: These are unsecured debt instruments issued by companies to take care of short-term liabilities. They are short-term investments and require huge amounts of money. Since it is short-term and riskier (unsecured debt), the yield tends to be higher than that of normal bonds.
d. Treasury Bills (T-Bills): Another short-term debt instrument, but this time from the government. So a lot more secure than Commercial Papers. It is meant to last for about 6 months. While it yields more than Bonds, it yields less than Commercial papers. T-Bills in the middle.
2. Stocks: Almost everyone knows about this. While in the first instance, you were lending the company/government your money, in the latter, you are putting your money into a company with the hope to share the profits when they start coming. The problem with this is that you can lose all your money if the business crashes, or if you constantly lose the money that was put into the company. It is very risky and can be very rewarding. It may be sold and bought at any time via the stock exchange or whatever channel you bought the stock through.
3. Mutual funds: Imagine you’re at a buffet and you want a taste of everything. You might probably need to use a tablespoon to fetch only little bits to use. That’s how mutual funds work. They buy mouth-watering stock of major companies, using the little bits of money from you and many others. That way, you also get to be a proud owner of apple stock with just cents.
4. Exchange Traded Fund (ETF): This refers to pooled investment securities (like mutual funds) that can be purchased or sold on the stock market (unlike mutual funds). The price of the ETF fluctuates all day as it is bought or sold. It contains all types of investments (Bonds, stocks, etc,).
This is not a full scope of all ways to invest for good returns over time: You can also lend money (Sycamore is a great place to do this). Invest in agri-business (procurement, storage, transportation, etc.) and other commodities or goods (these might not feel like “investments” as they are short-term and will usually require you to be heavily involved. They can be classified as businesses). For real investment advice, you can check online for great courses, articles, and videos on investing for beginners.
Thanks for sticking with me this far. I do have one piece of investment advice for the year though: invest some time in your development. I know I would. You can always reach out if you need an accountability partner or just someone to bounce ideas off of.
Hope to hear from you soon!
What has been up?
1. I had an awesome Christmas and New Year celebration
2. Travelled to Kaduna for a wedding, and had so much fun there, I didn’t want to come back to my city.
3. My good friend Suchet (Notice the famzing?) curated the best art show that the north has ever seen in the second edition of Arts&Vibes. Even TVC had to talk about it!
4. Chiprent is still the best place to break down your house rent into monthly bite sizes. So, you can live within your budget and throw all your worries about housing away.
5. January can be such a long month with so many bills to take care of, and sometimes it might feel overwhelming. Don’t die alone, reach out to a friend for help using Loan Friends.
6. Elections are so close; I can smell the season. Who are we voting for?
7. Thank you very much Dalipa Gwary for being an avid reader of whatever I put out here. May your work also be read by multitudes!
That’s all for now guys, see you next time.