Friday letters are usually dedicated to taking questions from our community. Do you have a question for us?
Please feel free to:
- send an e-mail to info@themoneyafrica.com; or
- send a DM to any of our social media channels, or
- simply fill out this form. Don’t worry, your responses are kept anonymous.
***
Question
With the current wave of inflation, can I still achieve my financial goals and protect my investments against inflation?
Answer
The inflation rate in Nigeria has increased significantly in recent years. The National Bureau of Statistics pegged the current inflation rate at 31.7% in February from the 29.9% that was recorded in January. Based on yearly data, a 9.79% increase was recorded compared to the rates in February 2023. Food prices inflated, reaching over 30% as well. With the price of essentials rising by the day, could there be a way to still smash our financial goals even with the inflation palava? The answer you’ve been looking for is right here!
Hold on, I don’t even know what inflation means.
Inflation, in simple terms, is when the prices of goods and services increase, thereby causing the value of the currency to decrease in return. If you could buy a notebook for 200 naira some years ago, you will need double that amount to buy the same notebook now. This is because the naira has lost its value, and now you need more of it to purchase the product.
The inflation rate is calculated using the Consumer Price Index (CPI) which tracks the changes in the price of various goods and services like food, shelter, transportation, and so on over time.
Inflation, if not closely monitored and controlled, can lead to serious economic issues affecting the citizens of the country, especially those who don’t have the luxury of a corresponding increase in their earnings.
High inflation rates like we are experiencing now can impact citizens in that as prices increase, it may become harder to afford certain things, especially when there is no simultaneous increase in one’s income. This could also translate to how much you can save to meet those financial goals. If the high inflation persists, it can also negatively affect the value of your savings.
This doesn’t sound good, but how can I still achieve my goals now?
There is no cause for alarm, as you can still achieve those goals if you take the steps I will be sharing with you here. Just stay with me.
Here are the steps you can take to achieve your financial goals and protect your investments against inflation:
- Understand that not all investments are affected: Don’t panic, not all investments are negatively impacted by inflation. If you do your research well, you will find that some investments will still do well when inflation hits.
- Re-evaluate your spending: This is the first step to making sure you meet those goals you set at the beginning of the year. Now is not the time to spend a huge chunk of your earnings on your wants. It will surprise you how much you can save by cutting out certain items from your budget consistently. Now is also not a time to delay a major purchase. If you truly need it, buy it as soon as possible before the price rises again. Practice renegotiating bills where applicable, too. If you already have a tight budget, don’t worry, the steps should be helpful.
- Take on a side hustle: This affords you the means to increase your earnings. You can also renegotiate your salary with your employer, especially if you have not received any raise in a few years.
- Invest in assets that rise with inflation and cannot be easily replaced like gold, land, and properties. They always appreciate and are a great way to protect your investment against inflation.
- Review your investment allocation and diversify your portfolio: You want to be sure your existing investments are not negatively affected by inflation, and you want to diversify your investments if you have not. Having a mix of investments is your safe bet.
- Stay invested in stable currencies and growth stocks: It might not look like the best decision now, but in the long run, it will prove to be a wise choice. The dollar-cost averaging approach has shown this over time as your investment evens out in the long-term, especially when you have invested in assets that grow over time like stocks and real estate. Be sure these are stocks that are well-run with growing dividends by checking their historic data.
- Stay consistent: Consistency is key to building a formidable portfolio. You just need to stay committed to the goals you have set for yourself.
I will leave you with this; the inflation season is not new to us and we will thrive as long as we stay determined and committed. Do not make any drastic moves based on the current situation. Instead, take the steps mentioned above and stay focused on your long-term goals.
At MoneyAfrica, we encourage people in different phases of life to take charge of their finances. Join our community here to learn more and gain access to a pool of resources. Currently, we have a webinar series in partnership with SendSprint for entrepreneurs and freelancers who want to build a sustainable global brand. Register here to be a part of the last session happening on Sunday, April 14, 2024.
You can also watch the recap of the first session here, after which you should fill this form to gain access to the loads of resources SendSprint has provided for you!
Topic: Simplifying Foreign Payments for Business Owners and Freelancers
Time: Apr 14, 2024 07:00 PM Africa/Lagos
Join Zoom Meeting
Meeting ID: 860 5799 5343
Passcode: 274999
***
Would you like to know the state of your finances?
Take this test to see how you are doing financially
***
Do you know that we have our own podcast? It’s MONEYTALKS!💚
Here’s a link to listen to all the amazing episodes we have!
***
Thank you for reading Money Africa’s Blog.
Please feel free to share it.
Do you have any questions? You can send an e-mail to info@themoneyafrica.com or send a DM to any of our social media channels.
***
MoneyAfrica premium plan
Are you a mid to high-income earner? Do you find communities a bit too busy? You should sign up for our premium plan.
You can learn more about that here.
***
We often get questions regarding how to plan your finances to align with your relocation plans, especially for students seeking to further their studies. As always, we have heard you, and we have put together an e-book to help you navigate this. Follow this link, to get your FREE copy of the e-book: The Japa Encyclopedia.
***
Get our annual subscription and learn more about investing safely and building a solid portfolio in 2024.
Don’t forget to:
- Join our community, if you want to smash your 2024 financial goals. It takes at least 30 days to build great habits that will last you a lifetime. So why not start now? There is a lot you can achieve.
- If you would like to document your financial journey in 2024, then our journal would be an excellent fit for you. It costs ₦7,500 (excluding delivery).
- Get a budget sheet to track your monthly expenses. Click here
- Get an investment tracker to be on top of all your investments. Click here
MoneyAfrica is a financial literacy platform. Our goal is to make everyone better with their finances.
We do this by engagements via our:
– social media handles
– platforms for paid community members (for adults and students)
– webinar sessions with corporate clients
Would you like to join any of the communities? Please click here
Would you like us to hold a webinar for your company’s staff? Please send an email to info@themoneyafrica.com
