MONEY AND RETIREMENT PLAN (I)
(Over 20 years investing experience in Nigeria’s financial markets)
True happiness does not come through the possession of things or being a slave to material things, but in the ability to use material things to enjoy total freedom and being a good master of such material things. When it comes to money, the mindset you need to be financial independent and free from financial worries is this: it is not what you make that counts, it is what you keep. A healthy financial reserve is an insurance against financial ruin.
Most people unfortunately do not care to save and invest for the rainy day. We have had cases of young Investment Bankers who earned millions of dollars on Walls Streets, but had to move back to their aged parents’ homes during the last global recession.
Anybody that wants to experience financial freedom must learn to engage in three activities: working, saving and investing. Most people have a career plan, but do not have a saving and an investment plan.
The day you discover these three activities: work, saving and investing is the day you liberate yourself from financial slavery. The wealth building potentials of compound interest and regular investment no matter how small cannot be overemphasized.
Smart workers, business-people and professionals are building and sustaining their wealth through investments in real-estates, stocks, bonds and other financial instruments. We can all start our investment plan today and set a target date for ourselves, when we hope to get out of the rat race.
The starting point for most people is to get a job and earn a salary, but one MUST move a step ahead by saving and investing a minimum of 10% of the salary earned in financial instruments that beat inflation. We must also allow our money to work for us while we are asleep. No matter how much we earn, if our money does not work for us we can never get out of the rat race.
Let me share a story I read in “secrets of making money in shares” by Peter Ayeromara. Two close friends worked in one of the Federal Ministries in Nigeria. At the end of the month when they receive their salaries, one will use part of his salary to buy shares and advised his friend to do same. This friend will laugh at him and complain that the money was too small to set aside for saving and investment, but he had enough money to buy new cars. A day came when they reached their mandatory age of retirement. They were both retired but were told to go and later come for their gratuity and pension. They waited endlessly for their benefits, but government did not pay them.
Meanwhile the wise man who invested his money in shares and real estate, visited his stock broking when he was retired in 2000 and his shares excluding real estate was valued at over N10 million, which must have grown to over N120 million in 2014. The wise man was looking younger and healthy after retirement while the foolish man was looking older and pale. The foolish man later died while waiting for his entitlements to be paid.
This real life story teaches that what we save and invest now can make a lot of difference in our later life; we must discipline ourselves and delay gratification.
