Investor’s Talk Episode 2

So today’s series would be a two part series, as our young economist, chef, and investor — Michael, has a lot to spill when it comes to his investment journey. Our first series would talk about his investment journey as usual, and our follow up series would be on his journey in the forex market, so do stay tuned in and I hope you grab one or two things during our discussion.

When was your first investment?

My first investment was in my 300 level, we had invited a team from the Cowrywise investment platform for a workshop event at school and they informed us about the mutual fund investments on their platform, as well as the savings options on the platform. So I invested part of my saved up money into their mutual funds and also started their saving scheme. And by the end of my 300 level I had saved about 200,000 naira from the small money that was deducted weekly from my account.

What would you say was your motivation to invest?

My motivation would be “Early Retirement”. It has always been my goal to stop working at the age of 30, because after 30 I would love to just focus on my cooking career-by the way, our guest today is an amazing cook.

So basically the returns from my investments would serve as a good passive income to back up my active income from my cooking gig, because to be honest, having a passive income gives a sense of security.

I also want to say that, when you start investing, it might look like you’re broke, because most of your money would be tied up in your investments, but when you start getting your returns for the month, it would serve as a good buffer to your active income.

Besides Cowrywise mutual funds investment what other investments have you made?

I have also invested in PiggVest’s agricultural investments, as well as treasury bills and real estate.

Can you tell us more about your real estate investment?

For the real estate investment I basically bought a land through a real estate agency firm. There are many ways of investing in real estate, but I chose this medium, because I believe land is one asset that truly appreciates in value over the years. And Yes, since I have bought the land, it has appreciated quite a lot.

Do you plan on selling this land?

Yes, but not in the near future.

Can you tell us about your Treasury bill investment?

My Treasury bill investment was in 2018, I actually just went straight to the bank to buy the Treasury bill, however, I did not undergo the process by myself, I was assisted by a friend that worked in the bank as at that time.

Can you explain how the Treasury bill investment works?

Basically treasury bills are sold by the government and are bought by individuals or institutions. It’s a loan given to the government by the citizens of the country, and they are usually for a period of 91days, 182days or 364days, depending on your preference. However the interest on such bills are fixed and are usually issued at par, which means if you buy a 10% 100,000naira treasury bill, instead of paying 100,000 naira and getting 110,000 naira after the loan term, you would pay 90,000 naira and get 100,000 naira, so you are basically getting 10% of the 100,000 naira.

Do you advise anyone to invest in treasury bills?

As at this moment NO. The rates on treasury bills are way too low and doesn’t really justify the investment. This is my opinion by the way. I think when I did this investment, the rate was about 6%-9% and even before 2018, the rates were around that 10%, but it seems like the rates are just declining as the years go by.

Have you invested in the stock market and how did it pan out?

Yeah despite my mutual fund investments, I also bought some shares in the Nigerian stock market in 2018, well someone actually helped me to buy these shares and it actually appreciated but I later sold it, and made some gain in the process.

Have you had any bad investment so far?

Well, I won’t say this was a bad investment, but it was not a profitable one. It was actually my worst investment experience. So basically it was a bank investment option, I can’t fully remember what my money I invested in, but the return on my investment was at 3.5% per annum. Yeah, I had to withdraw my money from the investment after few months and I basically got 5,000 naira from my investment. It aggrieved me because I knew if I had invested my money elsewhere I would have gotten a better return on that money.

What has been your biggest return till date since you started your investment journey?

My biggest return was a 100,000 naira return on my investment in a capital fund investment, they usually pay every 25 working days. So that was basically a 20% return on my initial investment.

What are capital fund investments?

These are companies that use your money to fund several of their investments and give you a percentage of their return based on the amount you invested with them.

What would you say is your biggest investment mistake?

I would say my biggest investment mistake, was not knowing how to apportion my funds effectively, like you know there are several investment periods, such as the short term and long term investment periods. The short term investments usually come with higher risk and returns, but when I started this journey I usually invested more money in short term investment funds so I could get bigger returns, but over the years I realized its best to mix it up, as this would yield a higher return over the long run.

What advice would you give anyone that wants to start investing?

My advice is actually four-fold; Firstly, I would advise you never to borrow money to invest, because no matter what, there is always an element of risk in any investment, and if things go sideways, you may lose part of this money, or even the entire money.

My second advice, is a follow up from my first one, I would say you should always save to invest-that’s basically what I do.

Thirdly, you should either reinvest your return from your previous investments or save part of your salary or active income for reinvestment if you chose to spend your return.

Finally, you should always have at least three types of investment in several sectors or platforms, do not put all your eggs in one basket.

Do you wish you had started investing earlier?

Yes definitely, I wish I had started investing in my secondary school days, by now I would have been at the top of my game when it comes to investments. But anyways I’ve started the journey and I know I will definitely reach my goal.