The Path To Financial Independence

One day I hope to take that dream vacation. First on my list is a tour in Europe’s finest cities, starting from the western cities of London, Manchester,Dublin into Paris, Brussels, Amsterdam, Oslo, Zurich etc. I just want to see the world with my future family and my dream or fantasy will cost me money. Money I don’t have now but plan to make in the nearest future. Think about your own dream vacation, maybe your dream home; guess it will cost a lot of money too. Without gaining financial independence these dreams will only remain a dream and will never see the daylight of reality. We need to build our own personal wealth, masters of our own faith, free from the snare of poverty; after all you only live once.

The secret to building personal wealth is from savings!. However cliché this might sound, I’m sure you have heard it a million times from your parents, mentors, and teachers how putting aside a percentage of your income into an investment account or a savings account to be re-invested into something, future business, definitely an asset to generate extra income far reaching into the uncertain future. Saving is an attitude you should cultivate, painfully adapt or better incorporate into your lifestyle. Most times some of us buy things we really don’t need rather because we want to show off to friends, make a statement of our personal wealth. We tend to forget that life is not a competition, we get motivated to spend on unnecessary things rather than focus on things that really matter; we let the pressure of friendship get to us. If only we can sit to learn from the story of the ant, that works all summer, saving for winter.

First and foremost you need a saving plan. A long term plan that is flexible, one you can afford and stick to conveniently. Imagine how much you could have saved if you put aside one thousand naira a month since you were age 15?, in 30years time you will have amassed  over N360,000 with interest. However small, if we get aggressive and save whooping N10,000 per month for the next 5years you have well over N600,000. What if we get more viscous with N50,000 per month for the next 5years you will have N3,000,000. I know not everyone earn that much but we can all come up with a reasonable percentage of our earning to be saved. Sometimes we need to ask ourselves why we work, if we can’t save for the future or for emergencies that we only live to survive the next day or month with our future earnings. Self employed folks too can come up with a plan, especially those who don’t earn salary monthly, however the flow of income, we can work out a percentage for savings.

How best to invest your saving is completely left to you but the sole purpose of saving will be completely defeated if you squander your savings. I can only give a few pointers as to how best to invest your savings. If you’re saving for a future business that is very good, while saving you should take time to research whatever business you want to startup, I don’t want to scare you with the percentages of startups that fails within the first five years of existence, that’s why it is important to carry out your research well. For those looking to invest in an asset that will bear income while capital invested remains intact. If you are in your mid twenties/early thirties it’s wise to have at least seventy percent of your savings in stocks and thirty percent in cash (foreign currency). Opening a domiciliary account for saving foreign currency is easy, same process as opening a normal account. The reason for this is to hedge against the risk of the depreciating naira. Having your cash in foreign currency such as the dollar/euro/British pounds helps preserve value rather than having it in naira, this is always under pressure as a result of our import driven economy that’s solely dependent on oil export.

Moreover, for stocks, I know lots of peeps will raise an eyebrow because of the losses that is currently experienced in today’s market. The truth is that the market today presents us with opportunities that comes once every 10years with the economic cycles of boom and burst. If you ask around from good and trusted stocks advisers, there are really good companies you can buy now at ridiculous low price.  The returns you will get from dividends yield and capital gains from upward price movement in the next five years will be overwhelming. Obviously real estate is a no brainer but the gestation period from initial point of investment to making profit can be longer than expected. The stress of buying a land and developing it is another factor to consider. In the end real estate are a fantastic asset to own, most times you are guaranteed to make profit.

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