Contest : Saving & Investment in the Global Uncertainty
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Even with all our scheduling ability and plannings, we can't effectively determine where we would be next week, or even tomorrow then how can we know for certain what is safe or not? While the investment and saving market is the same, we invest and may lose everything, and if we save, inflation sets in an our purchasing power is gone as well, so then what do we do? Well, it's up to you to pick a side and follow through and here is how I see it.
Considering the ongoing global crisis, do you think investing money right now is a wise decision? Why or why not? |
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We got this point today because we kept investing in our future no matter the situation we found ourselves in. Sometimes, in cases where others find chaos, there are those who see opportunities. For example, today, everyone is crying about the bearish nature of the market, whereas there are those who see it as an opportunity to buy and hold for the long term, therefore it all depends on what we want to achieve.
However, there is no easy answer for this as the global crisis makes things uncertain, and that's scary for anyone thinking about investing. Therefore, if we wish to invest, then we should consider:
Markets can be volatile:
When things are uncertain, asset prices can go up and down a lot, which could lead to us losing money if we invest at a bad time.
Inflation:
With the global crisis, inflation can be on the high side, which means that things will be more expensive, and this can eat into our investment gains. Just as we see in Nigeria today, we use more money to buy less and less goods.
Economy Recession:
An economic recession is a period in which the economy of a state is on a decline. i.e., if there is an economic recession, our investments might lose value.
Long-term growth:
Even with the current global crisis, the financial market will historically go up over the long term. That is to say, there might be growth over time after the crisis, so investing now could give us a chance to ride that wave.
Inflation hedge:
In the period of global crisis, some investments like real estate or gold can help us by protecting our money from inflation.
Opportunity:
Like I explained earlier, what some may see as a crisis, others may see as an opportunity, that is to say that crisis can sometimes be a good time for us to buy assets at lower prices, then wait to make profit in the long run.
| WHAT TO DO? |
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Have a goal:
This includes what are we saving for? How long do we need the money? How do we plan to save for it? etc.
Risk tolerance:
How comfortable can we be with losing money? This means, we should only invest a certain portion we can afford to lose.
Diversify:
This simply means we shouldn't put all our eggs in one basket. i.e., we learn to invest in different assets to spread the risk.
Seek professional advice:
Remember, I am not the financial adviser here, so to invest, please do well to talk to a financial advisor who can help you to create a plan that fits your needs.
Therefore, in all, it is a very tough call to invest and only you can decide what is best for you, whether to invest or not.
Which saving or investment options do you consider the safest in the current times? (e.g., gold, crypto, mutual funds, real estate, etc.) |
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Investing on its own is a risk as I have explained above. This is because no one can tell us what will happen tomorrow with certainly, hence we will be investing based on predictions and optimism. Therefore, it is indeed a very tough call to comfortably say which is the "safest" because "safe" in itself too is relative.
That is to say that, every investment has its own risks, and what I consider safe might not be safe for another person. Therefore, I will only try to breakdown some of the most common options, having in mind the current global situation and they are:
| HIGH-YIELD SAVINGS ACCOUNTS (HYSA) |
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Pros: They are insured by the government, so our investments are said to have some level of protection, and they offer a higher interest rate than regular savings accounts, which will help us grow our money.
Cons:
The interest rates are considered to be relatively low compared to historical norms, so our investment won't grow as quickly as it might in other investments.
Safe for:
This type of investment can be considered safe for those seeking a low-risk option to preserve their savings.
| NATIONAL TREASURY BONDS |
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Pros:
This is known to be backed by the full faith and credit of the nation's government, hence people consider it to be very safe, while also offering a predictable stream of income.
Cons:
The returns from this kind of investment are said to be generally lower than stocks, and as interest rates are rising, it can impact bond prices.
Safe for:
It is considered a safe investment plan for those seeking a safe, predictable income stream.
| REAL ESTATE |
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Pros:
This type of investment is usually known to be a good hedge against inflation, and can provide the investor with rental income.
Cons:
It is considered to be a high capital investment and illiquid (i.e., hard to sell quickly), and property values tends to fluctuate.
Safe for:
Well, this is considered safe for people with a long-term investment plan and a comfortable risk tolerance.
| GOLD |
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Pros:
Gold is usually seen as a safe haven asset during times of economic uncertainty, as it can hold its value in times of inflation.
Cons:
The major disadvantage is that it doesn't generate income and price tends to fluctuate significantly. It can also be difficult to store.
Safe for:
It is considered as a safe investment for those seeking to diversify their portfolio and protect themselves against inflation.
| CRYPTOCURRENCIES |
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Pros:
It is considered to have high returns potential and decentralized with potentially less vulnerable to government interventions.
Cons:
Cryptocurrencies are known to be extremely volatile and prone to high risk of fraud and scams as is not well-regulated.
Safe for:
It is considered safe for only those with high risk tolerance and deep understanding of cryptocurrencies.
Therefore, there is no "one size fits all" answer and the best option we can do depends on our individual needs, goals, and risk tolerance.
If you had $1,000 today, what would you do with it — save it, invest it, or use it differently? Explain your choice. |
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If I had $1,000 today, I believe the best I will do is to split it, that way, I can put some (maybe $300) aside for saving as a rainy day fund, something I can run to as my little emergency stash, since tomorrow is unknown to anyone, I can never know when I might need a bit of extra cash.
Then, I will also like to invest some of it, let's say like $500, because as I invest, it is likened to me planting a seed and watching it grow, not forgetting it might die also, lol 😂. But then, I will try to put the money into something that has the potential to grow over time for me, like stocks or bonds.
Lastly, I will also treat myself to something nice with the remaining $200, I could maybe change my wardrobe a bit as it's been long overdue, lol 😊 then go for fun outing with friends and loved ones, after all, it is good to have a little fun from time to time. Who's with me?
I want to take this opportunity to invite @bossj23, @ikwal and @ruthjoe.
Thank You for your Time
NOTE: Always have a smile on your face, as you are never fully dressed without one.
