People & Money

It Doesn’t Make Sense to Convert My Dollar Salary, So I Don’t Invest in Naira Assets 

Every week, Yunus Ibrahim, speaks to a DIY investor about what they invest in and why. The interviews are anonymous. Who amongst us wants to share details about their growing stash of naira or dollars with the world!? This week, Yunus spoke with a Nigerian software engineer who earns a seven-figure salary! The guy is that Nigerian we all envy – he is paid in dollars!

“However, I am considering making local investments as long as I can invest directly with my dollars rather than converting to naira. I am currently unable to invest in Nigerian stock markets because it does not make sense for me to convert my dollars to purchase naira stocks”.

Could you please tell us about your occupation?

I work as a software engineer. I build mobile applications, including front-end and back-end, for tech companies. 

How much do you earn as a monthly salary?

I am afraid I won’t be able to tell you the exact amount, so let’s say I currently earn a 7-figure monthly salary.

What proportion of your income do you invest? 

I don’t have a financial plan or a deliberate approach to how much I invest. I invest at random. The only guide is that a substantial part of my income must be invested. Since I am the last child, I do not have many black tax obligations or responsibilities. But that has changed now. About a month ago, I created a financial plan with my fiance, so I now have a target of what to invest every month. I mostly invest in cryptocurrencies, especially Bitcoin, Ethereum, SHIB and stable coins like USDT. In fact, I was one of the early investors in SHIB when it was launched in 2020. I also invest in things like real estate. 

What would you say is your key motivation to invest ?

I do not have an immediate need for the cash that I earn. But I can’t leave the money in the bank because the interest banks pay on savings is too small. It makes losers of savers. So I invest to grow my wealth through capital appreciation. Also, saving your money in a weak currency like the naira doesn’t generate real returns that beat the stubbornly high inflation. 

How long have you been investing?

I began investing four years ago when I was earning NGN 15,000 per month.

So, how did you begin your investment journey?

It began with reading numerous books  on finance. Books like Think and Grow Rich, The Richest Man in Babylon, Rich Dad Poor Dad, and others. These books altered my perspective on money and taught me that investing is the best way to achieve financial independence.

How do you decide what to invest in? 

One aspect of investing is to educate yourself through research. I do a lot of due diligence.

For example, when I invest in physical assets such as real estate, I verify the existence of these assets through site visits, phone calls, and so on. I also visit websites of investment companies and use resources such as LinkedIn and personal networks to validate the credibility of investment specialists, fund managers, brokers, etc. involved in the opportunity.

Also Read: My Investment in MTN Stocks Has Appreciated By 15%

Furthermore, I do not hesitate to request and participate in calls where I ask many questions about the investment such as, what the investment entails, how the investment generates returns, when will the returns be paid, who has previously invested, and so on. Finally, I use my network to find people who have previously made similar investments and get their views on the investment opportunity. In situations involving stocks or cryptocurrency, I would contact someone more knowledgeable than I am to explain certain concepts or leverage their knowledge to validate my thoughts on the investment.

So you are in essence your own personal financial advisor?

No, I do not have a financial adviser at the moment, but it would be worth looking into. To add to what I said earlier, I do not run any financial or technical analyses because I am not very good at reading graphs and charts, which requires some financial knowledge. I just do my due diligence, check any historical data on the investment or comparables (if available), and tie this to my understanding of the industry and the economy to judge where the investment could be heading. Typically, I set a maximum amount to invest in a specific instrument, such as NGN 1 million for cryptocurrency. When I reach this amount, I look for another place to invest my money! I also have a return threshold for when I will liquidate my investments and take any realised profits. This has helped me avoid the market moving against me. I am not too greedy. I don’t keep my position in investment for too long.

Why do you like investing in cryptocurrencies?

Yes, I like to invest in cryptos because it is one of the few instruments I understand very well. However, I have had bad experiences investing in US stocks through Robo apps because I think the charges on these brokerage apps are pretty high on deposits and liquidation of investments. This could even erode any gains that you make on investments. 

How much have you invested in crypto so far?

Let’s say well over N1 million. 

Bitcoin has lost more than 50% this year, and Ethereum has lost more than 60%.

To be honest, I did not think crypto could fall so low. When the crash began, I was even buying the dip to take advantage of lower prices and later sell high. I had no idea the market would be down for so long. It is just dipping!

At what price did you buy the dip?

I bought BTC for around $15k, but it quickly dropped to around $9k, so I stopped buying. Well, I still believe that now is the best time to invest, just  as Warren Buffet says, “be fearful when others are greedy, and greedy when others are fearful.” Just a reminder that these prices are significantly lower than the all-time high of $65k seen near the end of 2021.

What is the current state of your cryptocurrency investment? 

My crypto investment is screaming red; my portfolio has accumulated losses. But I do not intend to sell anyways. Instead, I will wait until the market reverses and reaches high prices before selling.

When do you believe the cryptocurrency market will recover? 

I believe that cryptocurrencies will recover from losses as soon as there is a clearer picture of where the economy is headed.  Like crypto, other risky USD investments like stocks are seeing massive sell-offs due to rising inflation rates and aggressive interest rate hikes by the US Central Bank. Apart from investment and payment purposes, crypto has other uses and is critical to driving innovation in the tech space. Although I am confident that cryptocurrencies will recover, I cannot predict when.

What resources do you use to stay on the market or access the right information?

I mostly use Twitter and watch specific YouTube channels such as Bloomberg. However, as an active investor, I always seek to have direct information about market developments. I am a member of an investment community where information is regularly shared among group members on WhatsApp.

Are there other investments you would like to put money in?

I am currently exploring some commercial real estate investments like investing in the construction of buildings, malls etc. In fact, this investment could return about 30% of the rent proceeds monthly as ROI. However, one of the barriers I am facing here is that some of these investments are not dollar-denominated and require me to convert my salary from dollars to naira, which doesn’t make sense for me. But I will surely find a way around this.

30% monthly ROI appears very  high! Are you sure about making this investment?

It’s possible. A friend who has put some money in it introduced me. But I will still do my research.

What’s your risk profile?

I believe I have a high risk appetite. I am comfortable investing in risky instruments. I understand that with investments, you win some and lose some. But I take calculated risks by ensuring I understand what I am investing in. However, I do not invest in money-doubling schemes such as MMM because I know they are simply dubious schemes. I recommend that people should contact an investment advisor who can help with a short risk assessment test to determine their risk profile.  It’s a very good way to understand what you should invest in. 

Also Read: “CBN Rate is a Joke” – Six Nigerians on Why They Prefer the “Tainted” Black Market

Do you prefer to invest in local or global markets?

I am paid in dollars so I only invest in global market instruments that are mostly denominated in dollars. Dollar investments protect my money from Nigeria’s high inflation rate and the depreciating naira. The exchange rate is now NGN710/ $ 1. However, I am considering making local investments as long as I can invest directly with my dollars rather than converting to naira. I am currently unable to invest in Nigerian stock markets because it does not make sense for me to convert my dollars to purchase naira stocks. However, I am willing to investigate some naira real estate investments.

What does your investment portfolio currently look like?

I have 65% crypto, 30% dollarised savings, and 5% cash, which I occasionally lend to my network as no-interest loans! With the assistance of a financial advisor, I plan to diversify my portfolio further in the future.

Would you like to learn more about personal finance and how to make sound investment decisions?

I am very interested in this, mainly because financial education is not taught in Nigerian schools. Beyond the numerous YouTube content that speak more from a global perspective and do not necessarily communicate our realities as Africans, I believe it would make a lot of sense to localise financial education and adapt it to African realities. What does financial independence look like for you as an African man or woman? How do you navigate black taxes and build wealth in the face of economic uncertainty? How should Africans working in the formal or informal sectors approach retirement? How do you build wealth in an African culture based on a communal family system and network? All of these are important questions that deserve personalised answers!

Investment Chats Series with Arbiterz is hosted and brought to you by Yunus Ibrahim – A Finance professional in Lagos, Nigeria, with experience in Corporate finance, Investments and Venture capital. 

Disclaimer: Please note that this article should not be seen as a guide or recommendation for investment purposes. All contents have been curated based on the interview responses from the participant and do not represent investment facts. We recommend contacting your investment advisors if you are willing to maximise the benefits of investing.

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