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Question
I am almost 30, married with a son and I have been panicking about retirement. The constant devaluation of Nigeria has made it quite difficult to rely on pension. I am quite risk-averse, that’s why I haven’t ventured into stocks and crypto. I recently changed my car so I am rebuilding my savings. What would you advise me to do to prepare for retirement?
Answer
I understand your concerns. Planning for retirement can be overwhelming, especially with the uncertainty surrounding traditional options like pensions due to economic challenges. Since you’re risk-averse, it’s smart to proceed cautiously.
One approach you might consider is diversifying your investments. While you’re hesitant about stocks and crypto, there are other options like ETFs and money market funds, which tend to be more stable. Exchange-Traded Funds (ETFs) are investment funds that pool together a variety of assets like stocks, bonds, or commodities. They’re like baskets containing a diverse range of investments. This diversification makes ETFs more stable compared to individual stocks because if one company’s stock performs poorly, the impact on the overall ETF is cushioned by the performance of other assets within the fund. Essentially, ETFs spread risk across multiple holdings, reducing the potential impact of a single investment’s fluctuations on your overall investment.
Slowly building up your savings is also a prudent step. Even if you’re starting with a small amount, consistent contributions to a retirement-focused savings account can accumulate over time. This can give you more financial stability down the road.
I completely understand your hesitation towards stocks and crypto, but remember that understanding these options is crucial before dismissing them. Educating yourself about the basics of investing in stocks and cryptocurrencies might help ease your concerns. While these investments can be riskier, they also have the potential for higher returns. You can assign a small percentage of your investment portfolio to these investment assets. Just make sure you’re well-informed before diving in.
Diversifying your assets beyond the local currency is another strategy to consider. Given the devaluation concerns in Nigeria, allocating a portion of your investments to a more stable currency like the US dollar can provide a hedge against currency fluctuations. By doing so, you’re adding an extra layer of protection to your retirement savings, which could offer some peace of mind amid economic uncertainties.
Considering a consultation with a financial advisor could also be beneficial. We offer those services at MoneyAfrica. All you need to do is send us a DM on Instagram. Our financial experts can help you create a personalised retirement plan that aligns with your risk aversion, financial goals, and current circumstances. Preparing for retirement is a journey, and taking these steps now will definitely help you feel more confident about the future.
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Question
I am a young person and I am curious about where true financial growth comes from.
Answer
The co-founder and CTO of Paystack shared this on Twitter and we believe it perfectly answers the questions.
Paystack, an initial investment by Y Combinator in Africa, still stands as a leading startup on the continent. In 2020, Stripe, a worldwide payments firm, purchased Paystack for a sum exceeding $200 million, representing one of the African tech ecosystem’s most triumphant achievements. Following the acquisition, Paystack has maintained its identity and extended its presence to new markets, while also contributing to the growth of other African fintech ventures.
Here is what Paystack’s co-founder and CTO, Ezra Olubi, had to say with regard to your question:
“Ever since I started earning more than I reasonably needed to spend in a month on essentials (food, utilities, etc), I started paying myself a “salary” every month. Savings became effortless and by design.
I started this over a decade ago and when I recently became unbelievably liquid, I didn’t spend a dime until I did the math to determine a reasonable yearly budget, then moved that sum to my ‘operations account.’
I understand how easy it is to get caught up in the euphoria of a bigger paycheck or an unexpected windfall. Too often, people equate higher earnings with a license to splurge, forgetting their set financial goals or the volatility of life in general.
Ultimately, true financial growth comes from mindfulness in spending – not just the abundance of resources. Resisting the urge to mindlessly splurge today can create a buffer for the uncertainties of tomorrow.”
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