The Economy is Changing…Recession has Happened

After all the speculations and signs that it was looming, the recession finally happened in Nigeria thanks to the strain from the global pandemic and other events which almost ground to a halt all economic activities in Q2 2020 and a slow pickup in economic activities in Q3 as lockdown curbs were gradually eased.

It was reported by the National Bureau of Statistics in its Gross Domestic Product report for Q3 2020, that Nigeria’s GDP recorded a growth rate of –3.62% YOY (in real terms) in the third quarter of 2020. This represents an improvement of 2.48% points over the -6.10% growth rate recorded in the preceding quarter.

These data points reveal that two consecutive quarters of negative growth have been recorded in 2020, plunging the country technically into a recession.

So now what?

What is a Recession?

Recessions are typically defined as a drop in output or a slowdown in growth and economic activity for at least two quarters (about six months).

The State of the Nation

When you hear about recession, fear grips you and you start to wonder how long this will last and how that affects your money. Hmm, now with the way Naira keeps depreciating in value (N500 to $1) and watching the news even makes it worse.

As many Nigerians grapple with what could be the worst downturn in over 35 years, it is now a battle of the fittest. With rising debt levels, fluctuating markets, and dropping oil prices, lots of people are concerned about job security among other things, as the effect of coronavirus devastating the financial markets and the economy hits differently.

Unfortunately, the economy going into recession could be inevitable, but we can control how we respond and prepare for a financial recession. While being in the middle of a recession is never really good news, there’s still a lot of good work you can do with your own personal finances despite what the country’s economy is saying.

When you are in control of your money, you don’t have to live at the mercy of what the economy is doing.

Should You Keep Saving & Investing During a Recession?

Absolutely! Having monthly savings & investment goals is never a bad idea, even during a recession.

You might be tempted to pull your investments during a recession, but that isn’t really a good idea either, so please don’t even consider doing that.

There is nothing like taking a quick look at your account and seeing some good-looking numbers staring back at you even in the middle of a recession. Good feeling right?

But here’s what you need to keep in mind, if you already have your money invested, you are good. The long-term benefit of investing & diversification cannot be over-emphasized.

For those who haven’t started investing, guess what, you’re in luck. Try the Wealth Cash product on Wealth.ng. In its simplest form, Wealth Cash is just a place to hold and grow your money. You deposit into the account, earn interest, and take money out when you need it.

· Simply signup or login to Wealth.ng

· Select Wealth Cash

· Invest and pay

You can add to the account as often as you like. The minimum investment is N1,000 and you get to enjoy interest up to 6% p.a.

Ride it out Over Time

Dear investor, don’t make any hasty decisions just because the country slipped into a recession due to COVID. As unsettling as being in a recession might seem, the important thing to remember is that a recession isn’t permanent.

There is no reason to pull your stocks or liquidate your existing Fixed Income assets. Stay calm, stay level-headed, and stay on the investing train. Ride it out over time, and your future self will thank you.

Of course, we know money is to be spent and it’s just right that you enjoy yourself because YOLO. However, if being in a recession has got you worried, perhaps this is the time to check what you are doing with your money and how well you are managing the funds.

Wondering where to start from?

Eliminate Debt: Pay off any outstanding debts so you can have peace of mind and free your resources to invest. You will not be able to save/invest when you are in debt.

Beef up your Emergency Fund: You need to reserve some funds for the rainy day. Even if you are paying off debts, you should still prioritize saving up to one month’s worth of living.

Be Prudent: Now is the best time to closely monitor your expenses and learn how to live frugally. Categorize by essentials(needs) vs Luxury(wants). Food, shelter, groceries, etc should fall into the essentials bucket while you can put those expenses that are not time-bound on hold. Takeout and dinners and exotic trips can wait. Long and short, live within your means at this time.

Diversify your Income: If you have a fairly flexible schedule you can consider getting a weekend job, and if you have a particularly strong skillset or are developing one, you can look for ways to cash in on those skills. Why rely on your salary alone when you have other skills….

Diversify your Investment When it comes to diversification, the smart choice is to put your money in a number of investment vehicles such as Stocks, Treasury Bills, Bonds, Eurobonds, Agriculture, Wealth Cash available on Wealth.ng.

Conclusion

How awesome would it be to get to a place where you could invest and make good returns when the economy swings back? Don’t waste any more time especially as Wealth.ng is a viable platform for your investment needs.

Taking precautionary measures to safeguard your finances for the future can make a world of difference. If you haven’t started investing yet, now might be a good time to start, so you can live peacefully knowing that while you can’t control the recession, your finances are under control.