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By Henry Uche
As Nigerians grapple with socio- economic headwinds rocking and (almost ravaging) the ship of the country, financial experts are proffering solutions to get everyone out of the woods, one of such solutions is the adoption of sustainable investment strategies.
At a webinar put together by Sovereign Finance Company Ltd (SFL) with the theme ‘Sustainable Investment Strategies for Changing Times’, the investment and financial experts believe that putting money and other resources in the right portfolios (all things been equal) would not only yield desired returns but would also position the investor/s to stand head and shoulder above in event of unprecedented circumstances.
Given the futuristic economic uncertainty, people must learn to consult economic and financial czars on best ways to utilize their scarce financial resource to guarantee financial stability and achieving their long term goals in a volatile, uncertain, complex and ambiguous business environment (VUCA). Moreover, government must be wary of the implications of fiscal and monetary policies on investments, they maintained.
Speaking, the Managing Director/CEO, of Sovereign Finance Company Ltd, Mr. Olusola Dada, affirmed that despite Nigeria’s multitude of challenges, stemming from both domestic and external factors, something can still be done to ameliorate and salvage the situation.
Sad narratives like dependency on oil revenue, population growth and unemployment, structural weaknesses, corruption and governance issues, fiscal Challenges, security concerns, monetary policy challenges, according to him demands that every hands to be on deck from our respective domains to extricate Nigerian from its current economic quandary.
“Some principles that guide investments process are: setting clear objectives, risk tolerance, diversification, check time horizon, understand investment vehicles, stay Informed always. More so, one needs to understand market timing, reinvest returns, create emergency fund and seek professional advice.”
According to him, diversification answers to volatility /risks and other related questions for investor; however, understanding the dynamics of a proposed sector (with the help of professionals) and ensuring due diligence is imperative to reduce risk and potentially increase returns.
“Regardless of the current economic situation, investment is still essential, because it helps protect your money from the eroding effects of inflation. As prices rise over time, the purchasing power of your money decreases. By investing in assets that historically outpace inflation, such as stocks, real estate, or commodities, you can maintain or even grow your wealth despite rising prices.
“Investing with a long-term perspective can help you build wealth over time. Markets tend to recover from downturns, and patient investors who stay the course often see their investments grow substantially over the years”
SFL boss stressed that investment windows with diverse opportunities for investors to build wealth and achieve their financial goals would either be in the traditional Investments, alternative Investments, equities (stock market), fixed Income securities.
Others are through savings account, private equity and venture capital, blockchain market, real estate, mutual funds and money market instruments.
Investing across different asset classes, such as bonds and commodities, helps spread risk. During periods of economic uncertainty or market volatility, diversified portfolios are better positioned to weather downturns.
“Investing allows you to manage specific risks, such as currency devaluation or geopolitical instability, by diversifying into assets less affected by these factors or by using hedging strategies. For those concerned about preserving their wealth or leaving a legacy, investing can help maintain or grow assets over generations. Strategies like estate planning and trust structures can further ensure the sustainability of legacies”
Dada recommended that investors should consider investing in defensive Sectors – sectors that are inevitable and indispensable, that pays off no matter the condition of the global economic environment. For instance, health care sector, food/consumer staples utilities, telecommunication, because their demand is always high at all times.
Also, investors should invest in diversified portfolio products that spread investments across multiple asset classes, including bonds, and cash equivalents, noting that diversification helps to reduce risk by spreading exposure across different types of investments and market segments, however, they must cautious of over – diversification and hidden risks.
Other recommended investment strategies include: Real Estate Investment Trusts (REITs) which offers exposure to the real estate market without the need to directly purchase and manage properties. Also, emergency savings and liquid assets help in uncertain economic times. So it’s ideal to maintain an emergency fund consisting of liquid assets such as cash, savings accounts, and short-term deposits.
“Having readily accessible funds can provide a financial buffer in case of unexpected expenses, job loss, or economic downturns, helping to avoid the need to liquidate long-term investments at inopportune times. Diversification maintain steady returns and enhance opportunities.
“Consider seeking advice from a qualified financial advisor or investment professional like (SFL) who can provide personalized guidance tailored to your financial situation, goals, and risk tolerance. We can help you access and capitalise on different investment windows and opportunities, develop a tailored investment strategy, review your existing portfolio, and provide expert guidance and market insights in line with your objectives and the prevailing economic conditions” he assured.
Similarly, the General Manager/COO, LiquidCrest Microfinance Bank, Mr. Temidayo Osanyintade, maintained that pre- covid -19 and post covid events like trade war, physical war, and other crises brought with such radical cum disruptive changes in business world, hence the need for business leaders to think radically to remain in atop, while heads of governments are expected to deploy the best brains for economic resilience and progress.
“As investors navigate the dynamic landscape of global financial markets, a nuanced understanding of prevailing trends and outlooks is essential to informed decision- making. The factors shaping the current global financial outlook directly influence investment strategies, risk assessments, and opportunities for wealth creation” he posited.
