When I was 10 years old, I was sitting in my dad’s car wondering why my dad was giving me some financial wisdom and advise. He thought me the importance of investment and investment varieties and how you shouldn’t depend on just salaries but making passive income. This was a great advice because those advise stuck with me and guided me on some financial decisions I made which I never regretted.
On how to make passive income through investment he talked about real estate and how it can never depreciate, taught me on how it’s a fixed asset and can’t be moved or stolen but natural disasters or fire can be the only variant or risk. Which was a very good idea and being a 10 year old boy everything was new and intriguing to me, because I was assimilating new ideas. But my dad forgot the second variant is the country we are in, Nigeria. The Nigerian economy has declined so bad that your real estate asset can’t really preserve your wealth in this country.
Let me explain how:
At about the time my dad was giving me this advise $1 = 120 naira. Imagine a person who bought a house in Nigeria for N20,000,000 at that time. That would be N20,000,000 / 120 = $166,666 in 2007. So a Nigerian spent $166,666 to buy a house in Nigeria, and 14 years later that house is either worth 25 million naira or more depending on the location.
In Naira the value increased but inflation has affected the value of naira today. The value of naira to dollar today is $1 = 510, so we are now working with 25,000,000 / 510 = $49,019. So this Nigerian has successfully converted his $166,666 to $49,019 by investing backwards. This person was only able to benefit shelter from this investment only if he lived in it.
Putting the money in the bank is not an option because it’s worse than the real estate. Let’s look at another scenario of another Nigerian who was a financial illiterate with no financial advise from any professional. That relocated to Nigeria and love the idea of $1 = 360 naira last year. He withdrew $10,000 converted it to naira and had 3,600,000 naira and left it in a fixed deposit account for a year because he wanted to make 10% interest. After one year he made 360,000 naira from the 10% interest. He currently has 3,960,000 naira now, but inflation is working harder. 3,960,000 / 510( the current dollar to naira rate) = $7,764.
But cryptocurrency shields you from all these being a Nigerian. Because the 1 million naira invested last year has way more value now. Let’s do the math, 1 million naira last year with the $1 = 360 rate is $2777. You bought a coin and now you are 100% in profit having $5,555. $1 now is worth 510 naira so you have $5,555 X 510 = 2,833,000. Congratulations you now have almost 3 times what you had a year ago because you invested in cryptocurrencies.
So with these information am not going back to the bank .
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This is a smart way to save money and still earn profits on the saved money...
Let’s say you didn’t even invest in a crypto but decided to buy stable coins to hold, 360$-510 in the space of a year will turn out to be a nice investment. It’s a sad story for the naira indeed and the reality is there are no signs of it ever getting better. This was how the Venezuelan currency started declining horrendously. Anyone saving in naira and in a bank these days are investing backwards and I can’t even be bothered because what else does one need to see what’s happening.
Posted Using LeoFinance Beta
Thank God we have the option of using cryptocurrency right now
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