Think about a ravishing Thursday night spent by the poolside, within the midst of vibrant Nigerian professionals, rubbing minds collectively on how one can make investments proper. That’s precisely what occurred on Thursday, February 27th, 2020, because of First Metropolis Monument Financial institution (FCMB) Nigeria.
The night started with the arrival of company on the Protea Resort by Marriot in Lagos Island. A time to satisfy and greet allowed the company to mingle and community, lengthy earlier than the principle occasion started. After which at about 7 pm, FCMB Nigeria’s Government Director in control of Retail Banking, Mr Olu Akanmu, took the microphone and formally welcomed all people. He mentioned:
“One factor that’s on each comparatively prosperous individual’s thoughts is how one can legitimately protect their wealth. And that’s what we’re all gathered right here to speak about.”
To assist dissect that subject material, the financial institution had invited Nairametrics’ very personal Founder, Ugochukwu “Ugodre” Obichukwu as a visitor speaker. Following his introduction to the viewers, Ugodre delved proper into the subject, albeit in probably the most interactive method.
What troubles you probably the most in regards to the Nigerian economic system?
That’s the query Ugodre posed to members of the viewers. As anticipated, there have been various responses to this query. Some individuals mentioned they anxious most about inflation. Others talked about devaluation, unstable electrical energy, unpredictable authorities insurance policies, and coverage somersault. In fact, there have been additionally issues about how one can multiply one’s revenue and assure returns on funding.
Inflation fee might rise above 14% by year-end
These are all official issues by the way in which, and every of them was addressed. Starting with Nigeria’s inflation fee which just lately climbed to 12.13%, Ugodre alarmed the viewers by predicting that there might even be an extra improve within the coming quarters. This is because of a lot of components which embrace:
- Nigeria’s land border closure;
- the latest improve in VAT which is continuous to push costs of products up;
- the excessive risk that the federal government will cease offering subsidy for electrical energy, thereby inflicting NERC to extend electrical energy tariff. If this occurs, the inflation fee will rise additional as a result of individuals’s price of dwelling will improve;
- there may be additionally a risk that gas subsidy could finally be eliminated. If this occurs, it has the potential to exacerbate inflation;
- one thing else that would set off inflation is taxes. As you might nicely know, the federal government has just lately been very aggressive in that regard; and
- he concluded by predicting once more that 2020 would possibly finish with Nigeria’s inflation fee nicely above 14%.
Don’t panic over inflation, until…
On whether or not the Central Financial institution of Nigeria goes to devalue the naira, Ugodre said that that is very unlikely. Nonetheless, there are some caveats. He mentioned that Nigerians ought to maintain their eyes centered on Nigeria’s exterior reserves. If the exterior reserves drop under $30 billion, then there isn’t any gainsaying the truth that devaluation will change into inevitable.
Extra so, if oil costs drop under $40 per barrel, then there’s a significant issue and the CBN could haven’t any alternative however to devalue. Final week, Brent Crude traded under $50 per barrel as Nairametrics reported. And that is no because of the Coronavirus pandemic which has wrought each well being and financial hazards the world over.
Shifting on to the issues about authorities insurance policies, Ugodre said that Nigerians ought to count on extra regulatory onslaught. This prediction was based mostly on latest happenings within the regulatory setting.
In the meantime, so far as returns on funding are involved, Ugodre advised the viewers that it relies upon totally on the business one is investing in. He mentioned:
“Some individuals consider that the banking sector is nice. However the CBN has been squeezing them just lately. So, they too could quickly be having points with returns on funding. The breweries business is already struggling, with all the highest three brewers reporting adverse performances of their annual financials. Possibly the telecoms sector could possibly assure returns on funding.”
The place else do you have to make investments your cash?
Actual Property: Ugodre additionally talked about the true property sector as a possible space that may assure funding returns. This he mentioned with a lot optimism as a result of the true property sector is without doubt one of the finest locations to spend money on when the economic system is shaky. That is despite the truth that the Nigerian actual sector is commonly missed by buyers, a scenario that has led to it not being fairly as developed/organised as what obtains in most superior international locations. This has, sadly, resulted in “a lot worth being locked in” he mentioned.
Observe that yields within the Nigerian actual property are usually throughout the charges of 6-8%, he mentioned. Curiously, the worth on a bit of actual property solely retains going up over time. He additionally suggested potential buyers to be strategic in selecting actual property in areas with important industrial worth.
Treasury Payments versus FGN Bonds: Return on funding within the Nigerian Treasury Payments market shouldn’t be fairly as excessive and profitable because it was a few years in the past. Ugodre defined why. In accordance with him, CBN’s choice to limit people from collaborating in OMO gross sales compelled many individuals into the treasury payments market. Consequently, charges dropped, thereby making treasury payments a much less fascinating funding choice. Alternatively, FGN Bonds is an efficient funding choice in that it presently ensures greater returns than treasury payments.
The inventory market: That is additionally one other comparatively good funding choice, though it will also be disappointingly dangerous. Whatever the associates related to it, Ugodre suggested the viewers to spend money on inventory as a result of that is in all probability the very best time to take action. Nonetheless, he clarified that buyers mustn’t make investments all of their cash in inventory as there may be at all times the necessity to diversify one’s portfolio. Furthermore, additionally it is essential to make sure that buyers keep away from what he referred to as “danfo shares”.
Cryptocurrency can also be one other funding choice that may assure excessive returns as a lot as 60%. The one draw back is that it’s not regulated in Nigeria, primarily as a result of authorities regulators such because the CBN and the Securities and Alternate Fee do not support it.
Buyers may also rigorously take into account agrotech schemes which are claiming to supply excessive returns, Ugodre said that Mutual funds additionally make for good investments, primarily as a result of it’s good for passive buyers who don’t have the time or the technical know-how to continuously maintain a tab on their investments. He additionally inspired everybody to not solely proceed to spend money on themselves however to at all times recognise alternatives round them and spend money on these alternatives, together with investing in individuals and startups. He mentioned:
“One factor that I’ve realized from what the federal government is doing is that the federal government is mainly telling us to spend money on companies as an alternative of pursuing treasury payments. So, if you’re any individual who has a deep pocket, go searching you for family members who could also be needing somebody to spend money on their enterprise concepts.”
In the meantime, FCMB Group might help Nigerians to actualise their funding potentials
On the finish of Ugodre’s keynote handle, the Chief Advertising and marketing Officer of FCMB Pensions, Osarhieme Osaghae, took the stage to speak about how he and his workforce might help Nigerians to higher handle their pension contributions with a purpose to guarantee a very good retirement.
He, subsequently, urged all FCMB prospects whose pension accounts should not presently being managed by FCMB Pensions, to plan in direction of transferring their pensions to FCMB Pensions. In accordance with him, the Pension Fee will, by July 1st, 2020, make it attainable for pension fund contributors to have the ability to switch their accounts from one Pension Funds Administrator to the opposite. Nigerians ought to reap the benefits of that and transfer to FCMB Pensions, the one PFA that’s bank-backed, he mentioned.
Shifting on, the Managing Director of FCMB Property Administration, James Ilori, additionally took the stage to share some essential recommendations on how one can make investments nicely with a purpose to retire comfortably. A few of these ideas might be seen in Steven R. Covey’s ebook “5 Habits of Extremely Efficient Folks”, in addition to George .S. Clason’s “The Richest Man in Babylon”. See the ideas under:
- At all times have your funding finish objective found out from the onset. This lets you decide whether or not your funding must be short-term, medium-term, or long-term.
- At all times put aside small quantities frequently. That is essential to do as a result of on the finish of the day, the small quantities which have been put aside compounds to kind some huge cash sooner or later.
- According to the second tip, Ilori spoke about INEST, an FCMB Asset Administration product that permits Nigerians to take a position as little as N500 frequently. Over time, the compounding impact together with the curiosity ensures buyers some stage of economic safety sooner or later.
Observe that FCMB Property Administration additionally affords mutual fund companies, portfolio administration for each native and foreign exchange, credit-linked funding plans, and more.
The night of funding talks ended on a pleasing observe, with gentle meals served and extra networking among the many invited company.