Saving in a Depressed Economy

The current economic environment in the country has led many people to think that saving in this present economy is simply impossible, not to mention investing. Many investors have become pessimistic about investing and investments in general.

Investor's confidence is low, and unemployment is on the increase. According to the national unemployment and underemployment 2018 report by the Nigerian Bureau of Statistics (NBS), both numbers are on the increase. As of Q3 2018, the rate of unemployment was 23.1%, up from 22.7% in Q2 2018 and 18.8% in Q3 2017. How do you get to save or invest when you do not have a source of income, or from income in which you can barely meet your expenses? The question is, can you save or invest in a recession? Investment analysts believe that it is during a depressed economy that bargain hunters can best find uncommon opportunities.

In a depressed economy, cash seems to be the king not readily available because meeting basic needs becomes an uphill task. There are always investing opportunities in different sectors. However, a lack of knowledge is what has made a lot of people lose their hard-earned cash and the fear of getting involved in a market that is very volatile and not being able to access cash immediately when you need it is one of the reasons why people tend to shy away from investing in some sectors that seem difficult to understand.

There are very practical ways of saving, and it is a common belief that it is impossible to save. On this contrary, it is possible to save in a depressed economy, and the first step is to know your expense profile and put a plug to excessive spending, that way you can save on your expenses. Let me explain this; a typical example is if you are used to eating out and hanging out with friends – "hanging out with the boys" during weekends, reducing the frequency or cutting it out entirely while you choose to eat at home. Another easy way is to ensure that any excess income, like monetary gifts, is saved. The conventional ways of savings are through the bank savings accounts, local "Ajo," thrift collectors, cooperatives, or easily cutting off the cost of Aso-Ebi's and using the colour of the day to feel that you are part of the occasion. Now we have digitalized systems that have made it easier for you to track your savings and investments.

As human beings, we tend to look for easy wins, but these turn into losses if we do not get adequate knowledge. And with the information explosion on the internet, we can be easily carried away with all the buzzwords and investment opportunity flashes. Not surprisingly, people tend to fall for Ponzi schemes and Wonder banks promising mouth-watering investment returns.

One of the easiest ways to lose hard-earned money is by following the crowd. Fear causes many investors to rush to the safety of Treasury bills and Mutual Funds. These assets do have value, but are they the best opportunities? They could be the safest and surest investment assets, but they are not the best. We all can make do with some extra income from being able to invest in the right place and get an appreciable return. You never want to chase an investment when it is trading close to its all-time high valuation. So is it better to save your money than to invest your money?

"We are all looking for a nice return on either our savings or investors. Today's interest rate on savings accounts by the banks does not encourage one to save, so should we turn our attention to the new FINTECH savings products that are on the increase or investments that investors are avoiding. Stocks and exchange-traded funds (ETFs) in the financial sector have been underwater for years now. Many banking stocks are still trading at prices below their true value. These investments are long-term holds that could reap serious rewards for risk-taking investors."

A great alternative to savings in a depressed economy is to build another income stream. Unemployment may be running high, but that shouldn't deter you from starting your own company. A depressed economy has brought out so much creativity in a lot of people. Some have developed startups; others have started very vibrant online businesses. There is a huge need for consultants, webpreneurs, social media agents, to mention a few. All of these businesses require very little startup funding while starting from the comfort of your own home. Most require a laptop with internet connectivity or a little amount to get a website developed.

A part-time job, in addition to your present job, is not a bad idea and can also add a little more income into your pockets, which can help meet an expense or into that savings vehicle. So, what can you do with your spare time, or what is that passion that is burning in you? You can do freelance writing or design work for other companies and bring in extra cash in a month. You can start your own catering business or run errands for people in your neighbourhood. If you love children, then you can start a Saturday kids club in your neighbourhood. Your entrepreneurial venture could end up turning into a full-time job if peradventure your company decides to downsize.

The reality of a depressed economy is that companies would downsize; there is a possibility that the job one holds today might not be there tomorrow. Now is the best time to implement your wealth-building strategy, because the economy is in a downswing doesn't mean that you cannot emerge from these difficult times in better financial shape than you entered. It is not too late to decide to start whichever strategy you wish to implement, savings, investments, or to create other streams of income.

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