
<p><em>“Forget all the numbers you saw in 2021. Carry on as if those numbers were never real. They may never come back” – Brad Gerstner, Founder &amp; CEO of Altimeter Capital ($18bn AUM)</em></p>



<p>Just two weeks ago, the US stock market was in meltdown. The S&amp;P 500 slumped into bear market territory, down 21% from record highs in January. Stocks started picking up last week, bringing some hope that we might be on our way to recovery.</p>



<p>Could this be the end of the stock market dip?</p>



<h3>Why were stock prices falling?</h3>



<p>The market is currently facing three key issues of uncertainty: Inflation, Interest Rates, and Recession.</p>



<h4>Inflation</h4>



<p>Inflation is the continuous increase in the general price level of goods and services in an economy. As we learned in this <a href="https://risevest.com/blog/what-is-a-recession-and-how-does-it-affect-you#:~:text=Inflation%20is%20the,causes%20a%20recession.">article</a>, inflation is good, but too much inflation isn’t. The US has a target inflation rate of 2%. Last week, the US printed the highest inflation rate it has ever seen in 4 decades, 8.6%.</p>



<h4>What’s driving the current US inflation?</h4>



<p>Brief economics lesson.</p>



<p>There are two leading causes of inflation, cost-push and demand-pull.</p>



<p>As the name implies, cost-push inflation is caused by an increase (or push) in the cost of inputs to production. Such as increases in salaries, oil prices, commodity prices, etc. While demand-pull is caused by a rise in demand due to consumers spending more money.</p>



<p>The demand-pull aspect of the current US inflation was caused by the COVID relief programs the US implemented. Primarily the quantitative easing and stimulus packages which injected over $5 trillion money into the US economy.</p>



<h5>How did the stimulus cheques cause this?</h5>



<p>The way economies currently run, the total money in circulation typically reflects the value of goods and services produced/available within a set time. For every $100 in circulation, there are goods (and services) worth $100 to account for/spend that money.&nbsp;</p>



<p>If we increase the amount of money in circulation without increasing the goods and services available, the price of goods and services has to rise to absorb the excess money.</p>



<p>For example, if the amount of money in circulation increased from $100 to $200 while goods and services remained the same, the price of goods has to double on average to account for that excess.&nbsp;</p>



<p>Put another way, when the amount of money in circulation increases to $200, there is more money chasing the same number of goods and services, and to balance the scale, the price of goods and services has to increase to account for the excess cash.</p>



<p>In the initial days of the pandemic, when people were in lockdown, and many were out of work, the US government had to stimulate the US economy with additional cash. Because, in terms of our example, while the goods and services available were still worth $100, the amount of money people were willing and able to spend was less than that.</p>



<p>So, the stimulus helped to balance the scales and avoid an economic recession in 2020. However, the subsequent stimulus packages that came in 2021 after lockdowns were over and things were going back to normal overstimulated demand and led to demand-pull inflation.</p>



<p>The US is also experiencing cost-push inflation caused by global supply chain constraints and the Russia-Ukraine war, driving up oil, wheat, and precious metals prices.</p>



<p>Interest rates are the most effective tool at the Fed’s disposal when fighting high inflation.</p>



<h4>Interest rates</h4>



<p>Raising interest rates is generally seen as one of the most effective tools to reduce inflation. Higher interest rates mean it&#8217;s more expensive for individuals and businesses to borrow money to spend. Thus causing spending and inflation to fall.</p>



<p>It&#8217;s worth noting that raising rates will not immediately solve the inflation problem. It could take more than three quarters before we see the full impact of interest rates on inflation.</p>



<p>Also, interest rates are more effective against demand-pull inflation but do little to curb cost-push inflation. In fact, higher interest rates are more likely to cause recession when inflation is caused by higher costs.</p>



<h3>Why?</h3>



<p>Because while higher interest rates drive down demand, prices remain high because costs are still high. And if prices remain high while demand is low, a recession is imminent.</p>



<p>The Fed cannot sit on its hands because inflation has both demand-pull and cost-push elements. So they must reduce demand even if it threatens a recession.</p>



<h3>What can the Fed do about Cost-push inflation?</h3>



<p>Not much. Global supply chain problems stem from the explosive demand at the end of COVID lockdowns. It’d take a year to get a car or a couch delivered now. The recent COVID lockdowns in China are not helping supply chain problems either.&nbsp;</p>



<p>The word “global” in front of supply chain constraints implies that the problems with the supply chain can’t be solved by just one country. Then there’s the Russia-Ukraine war.</p>



<p>Even if the war in Ukraine ends today, it will take several months to years before production can return to normal levels and reduce the cost of wheat. There are other political questions around whether the world will treat Russian oil the same way it did pre-war.</p>



<p>So, it’s a bit of a sticky situation. For now, the Fed can only raise rates, sell bonds (quantitative tightening), and hope it doesn’t trigger a recession.&nbsp;</p>



<h4>Recession</h4>



<p>A recession is when a country records two consecutive quarters of negative GDP growth. The US has already seen negative GDP growth in Q1 2022. If Q2 shows negative growth, the US will technically be in a recession.</p>



<p>As we learned in this <a href="https://risevest.com/blog/how-investors-can-hedge-against-recession">article</a>, recessions are generally not good for stocks. So if the US enters into a recession, we can expect that stocks will dip even further.</p>



<h3>When will stocks fully recover?</h3>



<p>Not any time soon.&nbsp;</p>



<p>Sharp falls in stock prices are often followed by moments of relief like what stocks saw last week. That moment of relief is called a “dead count bounce”. While it might be tempting to see those moments of relief as a sign of recovery, this might not be the case because there’s still plenty of market uncertainty.</p>



<p>Before US stocks can recover to the highs we saw in 2021; the US economy will need to get inflation under control, either avoid a recession completely or enter a recession and come out of it and get interest rates to neutral levels.</p>



<p>Nobody knows exactly how long this will take to happen. But we know it’s going to take a while.</p>


When Will Stocks Fully Recover?


<p>Marqeta is a stock that has been on our watch list for a while, but with the recent sell-off in tech companies and its subsequent 42% drop, we have initiated a position in the company.</p>



<h2>Background</h2>



<p>Marqeta is a pioneer in modern card issuing, an industry that has seen the explosion of custom payment cards, virtual cards, and payment tokens that run on or power platforms like Block(Square), Apple Pay, Cashapp, and more. They enable just-in-time fund transfers on all card services and payment wallets, which have changed the face of fintech and modern card payments.</p>



<p>They allow any fintech app or platform to create its custom cards and their customers range from Block to Klarna, DoorDash, Instacart, and more through open APIs. Finally, their platforms support debit, credit, and prepaid cards, including non-card payment tokens, making them a complete suite for any payment or fintech business.</p>



<h2>Business Operations</h2>



<p>Total Processing Volume (TPV) was at $37B in Q2, a 53% increase from the previous year. On an annual basis, their TPV has grown from $21.7B in 2019 to $111.1B in 2021. The net revenue growth in 2021 was 78% higher than in 2020, and they have incredible retention as their revenue from customers more than doubled year-over-year. Marqeta powers more than 400M cards across many fintech platforms.</p>



<h2>Thesis</h2>



<p>One of Warren Buffet’s maxims is that you should invest in a business selling picks and shovels during a gold rush. Marqeta fits this bill. They power custom cards and allow fintech platforms to issue their cards, a service almost every fintech platform wants to add to their offering. This puts them in an enviable position to benefit from the fintech revolution. They also have the advantage of being a first mover and the biggest player and leader in this category. This means that even the largest and newer fintech players all want to work with Marqeta. Lastly, their software and customer service allows them to build a moat around how easy and intuitive it is to integrate with them. Despite the current sell-off in growth companies, Marqeta’s valuation of less than $5B is an incredible steal.</p>



<h2>Risks</h2>



<p>One of the most significant risks with Marqeta is that their revenue from Cashapp cards (by Block) makes up a high percentage of their total revenue, coming in at more than 60%. This makes them vulnerable to a critical customer and the latter’s business performance. However, they are working hard to reduce this dependence, and we see it as a mark of just how early-stage they are. Another risk is that, given the current market environment, they will face some potential lower margins in the short term to invest in their platform and gain market share.</p>



<p>Despite these risks, we have a high degree of conviction in the value Marqeta holds in the long term and have opened a significant position in the stock.</p>


Marqeta Inc: Powering The Fintech Revolution

Rise Leaderboard Winner


<p>On this episode of MoneyRise, we spoke to Mudia Imasuen, a product designer and podcaster who began his design journey in 2018. Mudia has worked with Sanusi of CoLab in Kaduna and many other big guys in the Nigerian tech space. This is his story.</p>



<h2>Hi, can you introduce yourself to us?</h2>



<p>Hi, my name is Mudia Imasuen. I am a product designer, podcaster and design educator.&nbsp;</p>



<h2>Tell me about your podcast.</h2>



<p>It is called Conversations with Mudia Imasuen. The <a href="https://podcasts.google.com/feed/aHR0cHM6Ly9hbmNob3IuZm0vcy8xMDEwODQ0Yy9wb2RjYXN0L3Jzcw?ep=14">podcast</a> talks about different areas of life, technology, faith, family, friendships, people&#8217;s journey and everything in between.</p>



<h2>What inspired you to create the podcast?</h2>



<p>I feel like the entire virtual space has polarised conversations and conversations where you almost have to watch what you say, and I wanted to be able to hold in-depth conversations with people and share them on the internet. I wanted a space where we could freely talk about how we feel, our experiences, and maybe, our opinions on topics. I enjoy having conversations a lot. The idea came to me when I was chatting with my friends, and I thought it’d be so cool if we recorded it, so I decided to start the podcast.</p>



<h2>How’s that going?</h2>



<p>Pretty nice. I’m on a slight hiatus right now. Work has been a lot, and I don’t want to rush my editing. I like my edits to sound a particular way, so I took a short break. I have some unreleased episodes that I’ll get back to in about a month or two when I’m done with the task at hand.</p>



<h2>What was growing up like for you?</h2>



<p>It was pretty good, actually. My dad is a retired accountant, and my mum is a professor and a HOD at the university. It is a really academic home, and I grew up with a lot of books. Thinking about it now, it could be one of the reasons I started building my library. I grew up knowing there was a room in my house dedicated to books and reading called &#8220;The library&#8221;. My mom would travel to a few African countries like Tanzania and South Africa and return with books. I remember the first time my mom went to Tanzania and as a child, I was expecting chocolate and toys, but guess what my mom came back with? She came back with two things for me: one was a shirt that said &#8220;A friend who loves me got me this shirt from Tanzania&#8221;. And the second one was a book on spiders. It had about 200 different species of spiders. I read that book about 20 times because it was pretty interesting. It is how I discovered that scorpions are close relatives of spiders. I&#8217;d love to see Marvel explore that in the spiderverse series, by the way.&nbsp;</p>



<p>My mom is also the kind of person who would go out, and if she sees a book sale, she’d just buy them in bulk. These book sales usually come in baskets and my mom would just buy a ton of them and bring them home. (I actually took about 2 or 3 to put in my personal home library). The books she bought covered a wealth of topics, ranging from what vaccination is, explained with pictures, another one on space and time and some other random ones like Highways Of The World which I kept. Adventure series were there too. It was probably where I saw the first part of Artemis Fowl, before reading the rest of the series on eBooks.</p>



<p>I could literally pick up and read history or Shakespearean books written in English that I could understand and the rest. There were just a ton of books in my house. So yeah, I grew up in a very bookish home. You’d even think I’d graduate from university with a first-class, but that wasn’t the case. I just liked reading books that were interesting. The first class we have in my family is my younger brother. People think I read a lot, but my brother reads even more. I remember when I was in secondary school, in ss3 and he was in primary school or early secondary, but he would always read my own books like my Chemistry and Physics textbook. In summary, my childhood was pretty interesting. There was this whole love and gearing towards knowledge.&nbsp;</p>



<h2>Do you think that sort of influences what you are today?</h2>



<p>Oh, yeah. A lot, actually. I’m a very curious person, and I try to get as much information as I can. That has sort of made me really opinionated, so I enjoy arguing a lot. But it also helped me learn to listen. I always tell myself “<em>If you no know this thing, listen to who know”</em>. You could make your point and not back down because someone said something. So that improved my thinking growing up. And because I had parents who were pretty supportive, even when I proved stubborn, it helped my confidence.&nbsp;</p>



<h2>How did you start your career as a product designer?</h2>



<p>I’m someone who has tried out a bunch of stuff. Initially, I was learning data science which graduated to playing around with machine learning models with tensor flow, but not for production. It was just for practice. I did a lot of courses on that, and then I dipped a full arm into web for a bit — frontend development, specifically. As I said, I was doing a lot of stuff, and design happens to be just one of them. The CEO of CoLab, Sanusi, had asked if I’d heard of Figma and I decided to check it out and saw that it was a design software. I used to play around a lot on Photoshop before, so I thought I would take it up, too. Then I started exploring. And amongst all of the things I was doing, it was the one I loved the most, even though it wasn’t the easiest. Thankfully, during that same period, I had Tunji (4C &amp; Dear Des!gner) on my contact list. We had worked together before on TEDxArkilla when I served in Sokoto and that was how we got acquainted. He saw that I posted a lot of things on design and he reached out to me, recommending a design course by Henry Ikoh. It was a Design 101 senpai course that teaches you the basics of design and that made me realise that there was an academic path to understanding design. And that just kicked me into the world of learning design. The more I learned, the more interested I became. I started taking courses on Coursera around design. There was one course that the University of Minnesota offered on Coursera. It was a pretty interesting one on interface design and it just became a beautiful journey from there. I started learning and teaching and building a design community here in Kaduna with CoLab. CoLab was really essential to my growth. When I was learning design, I had people who supported me in my learning journey. These were people I was learning Machine learning with, and when I was transitioning to design, they showed interest in what I was doing. When I had meetups, they would show up. They were not designers, but they still showed up for my meetups. It just became pretty chill. One thing that happened during that period when I was doing multiple things was that I knew that I had to settle down and do one thing, but I was struggling with it because I felt&nbsp; it is expected that you have to put your hands on different things and see how you can be a generalist across the whole tech world. Then one day, I randomly saw a Russian proverb somewhere that said, “a man chasing two rabbits will go hungry”. So I decided to just focus on product design and nothing else. I was not going to do frontend or motion or graphics, I just wanted to focus on product design and it’s been great so far.</p>



<h2>Of all the other things, why product design?</h2>



<p>I think it just appealed to me being more. I like the fact that it’s one of those areas that allows me to go all out when having conversations with people — users/customers. I understood design from a very user-centric point of view. To be a great product designer, you need to know how to talk to people and understand them.&nbsp;</p>



<p>It was the branch of Design that at every point in time, reminds me that the things I build are actually for people. I remember one time that Sanusi wanted us to do a project and we had to go to the field and get insights. It was a medical project, so we had to actually talk to people in the field. My friend, Damilade, and I were flatmates then and although he is a data scientist, we agreed to do the research together. So we spoke to people, got insights, recorded and jotted things down. This made me realise that when you talk to people, the kind of solutions you come up with are usually pretty interesting and helpful. <em>This product design dey sweet me die, I no go lie</em>. It gives me the opportunity to create something useful and beautiful that impacts the lives of people. I’m very experimental in my approach to design, so it was that one thing that gave me the freedom to express myself and my essence in everything I’m doing.&nbsp;</p>



<h2>How has your life changed since you became a designer?</h2>



<p>I think I feel a bit more fulfilled being able to create stuff. There’s also the part where I’ve been able to meet more people because of design. I’ve made friends with people I’ve worked with, including clients from different countries, because of the work I’ve done for them. I’ve made tons of friends in the design and tech space. We’ve formed a close-knit community, just by working together. I love designers in the Nigerian tech space that I now know and am friends with because we do great work and we’re all just lit.&nbsp;</p>



<p>For me, one of the things I appreciate most is having really great friends and one of the ways I was able to do that was by&nbsp; sticking to product design.&nbsp;</p>



<p>On the part of finances, that has also improved. I’ve been able to increase my income and work with people from different parts of the world which is pretty cool. I think why I enjoy working with people from different parts of the world is that apart from context switching, there’s the cultural difference. It’s like working with someone from Nigeria and then working with someone in Europe. I once worked with a company that had a lot of Russians which was pretty interesting. I also worked with people who were very US-based. The cultural differences make it cool.</p>



<h2>What has your career progression been like?</h2>



<p>I professionally started designing in 2018. I started by doing a few freelance projects. The major ones I remember were in fintech, but there was one interesting and notable product I worked on in my early days. It was something called Transparency IT. Basically, it’s a platform for tracking court cases on financial crimes. It was quite an interesting project to work on based on the research and the people we had to talk to. From there, I did a bit more freelance work in the tech space, and then I moved into fintech where I worked for a bit. I worked with Payant which had other products within it; one was called Dot which was like a digital bank. Another one was MyFlex which was simply agency banking. Then I worked a bit&nbsp; for a digital agency. During the pandemic, I travelled. At that time, a lot of things shut down, but I was with my friend in Rwanda which was a really lucky thing for me because there was always light. So despite the pandemic, I had&nbsp; constant power supply which came in really handy. By the second month of the pandemic, people realised it was serious and began building stuff. I was introduced to a bunch of people and about two different projects from different clients. Through them, I was able to get a ton of other projects. The one I did with KadunaConnect on Twitter was a platform called Welkom-u that helped with immigration to Canada. Then I did another one with Caleb &amp; Praise called TravelWahoo that helped with business travels for companies. It’s like an enterprise relation, basically. Then I designed a bunch of applications around workplace productivity called Workwise. There was also a government gig that we did for FCCPC that helped with company mergers. So it was pretty interesting. It was a pandemic, but we were getting jobs. It taught me how to work with a team, refined my process, learned how to avoid scope creep, and improved on how to write PRDs and articulate my design decisions.&nbsp;</p>



<p>The pandemic lockdown was like a training period for all of us and my collaboration game took a beating and was shaped during that period. After that, I joined Printivo where I worked for a bit before officially joining BlocHq as a product designer and then transitioned into a Lead Product Designer.&nbsp;</p>



<p>I had a short-term contract with a blockchain company where I designed interesting products. One of them was to help with day-to-day payments with bitcoin and USDT. Something as simple as buying a cup of coffee and paying with BTC or SATS, using the bitcoin lightning network. I worked on two other projects for them. Both of them actually had to do with automated trading, but the first one I designed now became a form of “Paystack” for the other products. It became a checkout solution for the other product that also does automated trading. And that has basically been my career progression so far. This year, I applied to join Toptal and I got in and I currently freelance for clients there. I think design pays. It paid off for me, and I know it paid off for many others.</p>



<h2>What’s your relationship with money now, compared to when you started out in design?</h2>



<p>If I’m being really honest, nothing much has changed, except that I have more money now because I’m better at what I do and I have more exposure, collaborating with different types of clients. I have always seen money as something that should be used to meet your needs. It should be a tool that solves problems for you while also helping you buy time and comfort. I also sort of have very <em>free hands</em> when it comes to money, but I make sure that I save what I need first before spending in bulk. So I put away money in savings and spend whatever is left of that. I also don’t really work with a tight budget. However, if I have a range in mind and the commodity goes above that range, I don’t buy it. If it’s within that range, I do not haggle, mostly because it is not my sort of thing and it can be a waste of time. That side of me didn&#8217;t really change. I realised this when one day at home, my younger brother was arguing that I have always been this way. That I only seem to spend more now because I have more, but I have never been frugal since the beginning of time.</p>



<p>For investment, I’m still learning the ropes. I’m trying to fully understand the things I put my money into, but my savings game is pretty tight. I’m good at that. Investing is still something I’m just trying my hands around. I have done a few things here and there, which Agriculture is one of. But I’m waiting for the perfect time when I can settle to learn the ropes of investing.</p>



<h2>Do you use Rise?</h2>



<p>Oh, yeah. My friend, Sanni, invited me to Rise. I used his code to create an account and that’s how I started.</p>



<h2>What has your experience been using Rise?</h2>



<p>I don’t have a lot there and I’m still trying to get the hang of it, but I usually log into the app to look at things and make sense of what is going on. However, one thing I appreciate so far is that it takes away the burden of me selecting stocks to invest in and has categories I can put my money in. That’s pretty great. It sort of says “hey, you don’t need to be an expert when it comes to stocks investments, because we put it in the right place for you.” That’s kind of reassuring to me, but I still need to understand the app a bit more before I go all in and move the bulk of my savings to Rise.</p>



<h2>What’s the next milestone you’re looking to achieve in your career and finances?</h2>



<p>Doubling my income will be great, so I can save more. I also want to do more impactful and quality work, while reducing my workload, however, that requires dedication and time. You need to take it step by step and be deliberate, which only works when you have a feasible amount of workload. It’s more like reducing your workload, and putting deliberate effort into the rest. I think that’s it for me.</p>



<h2>What was that moment you knew your life had changed financially?</h2>



<p>More or less, last year. My salary got a bit higher when I started doing contracts with foreign companies, but I really can’t point to one moment in particular even though I got a new car recently. Before then, I already knew I was good to go, especially when I started doing stuff for my parents, family and friends without breaking a sweat. I was able to be myself in terms of how freely I gave, my family was satisfied, my close friends were good, I, too, was satisfied and at the end of the month, I was not broke.</p>



<h2>What are your thoughts on black tax?</h2>



<p>I don’t see it as black tax, I see it as helping my family. That’s not black tax to me. It has never been that for me because I understand the sacrifices they made to get me to this stage. They are also one of the most supportive parents anyone could ask for, judging based on what I hear people say about their own parents on social media. When I told them I was moving to Kaduna, they were very okay with that and even went on to support me with 300k. These are two civil servants who didn’t have everything, but they gave their blessings and said I could go on and explore the world. Although I occasionally have fights with my parents where we argue on differences in ideologies, if they need half of my wealth today to do something important for the family, they can have it. It’s not black tax, it’s family. <em>Na all of us get the money</em>.</p>



<h2>What financial and career advice would you give young people who want to go into design like you?</h2>



<p>The only financial advice I can give is for them to invest in themselves. Careerwise, consistency and discipline will get you there. When you are consistent in your skill and are disciplined about your approach to work, it will take you far. Anyone who is skilled never goes hungry. There are a lot of ways to get money: you can invest or do other things, but if you want to be an Independent Contributor (IC), you must build on your skill. Once you invest in that skill, <em>you go put body</em>. It’s near impossible for you to go hungry</p>



<h2>Thank you for agreeing to do it with us.</h2>



<p>My pleasure Gee.</p>


“This Product Design dey Sweet Me Die, I No Go Lie. My Name Is Mudia Imasuen, And This Is How I Make My #MoneyRise.”


<h2><strong>Background</strong></h2>



<p>We are adding more shares of Meta (Facebook) to the portfolio to take advantage of great valuations. We believe the market has oversold this stock and the current valuations are very attractive for a long-term owner.</p>



<h2><strong>Thesis</strong></h2>



<p>We believe that Meta is still a growth company (even if it has slower growth than the average), priced like a stagnant, mature company. Its stock has fallen 42% this year, driven by a more significant sell-off in NASDAQ, macroeconomic challenges affecting the overall economy, and the slowing rates of user monetization on the company&#8217;s products directly, some of which can be attributed to changes in Apple&#8217;s privacy policies.</p>



<p>However, we believe that all the bad news has been factored in at these valuations, and investors are discounting the large, and still growing earnings engines that Meta has in the Facebook platform, Instagram, WhatsApp, and more. Active users are still growing on Meta&#8217;s platforms as they saw daily active people increase from 2.82B last quarter to 2.87B this quarter, a roughly 50M increase in active users. Also, talking about an earnings engine, Meta generates a lot of free cash flow relative to its current valuation. And even after deducting the cash, they are investing in capital expenditures and new developments.</p>



<h2><strong>Risks</strong></h2>



<p>The company faces a lot of short-term headwinds and some long-term risks. Advertising has gone down a lot, and Meta&#8217;s revenue from ads per user declined 8%. With COVID easing and macroeconomic pressures on all sides, the projected ad spend looks very poor. There are also some initiatives the company is investing lots of its time and money in, like AI, augmented reality, and their business platforms which may not all work out.</p>



<p>However, we believe these have been priced in and that Meta&#8217;s core products will deliver much growth, which the market seems not to appreciate. And that is why we are buying more shares of Meta for the portfolio.</p>


We Are Buying More Meta (Facebook) Shares


<p><em>Ogechi graduated from the University of Benin last year and has been on her National Youth Service in Calabar for about four months. Like other Corp members, she’s on a monthly allowance of 33,000 Naira from the Nigerian government. A friend just added her to a Whatsapp group with other corp members where someone randomly sends a message about investing. Here’s what the text says: “Hi, group. I invested 40,000 Naira in Chinmark investment group last month, and the company has just paid my returns of 100,000. That’s 140,000 Naira and over a 100% increase from my initial investment. This company is a tested and trusted investment platform, and like me, many people have cashed out. Check out their website and handles on social media.”</em></p>



<p><em>Ogechi sees this and becomes interested as everyone has been hammering about saving and investing. She has also been thinking about ways to invest. And here, at her doorstep, is what she’s been looking for. Ogechi reaches out to someone from the group, who then tells her that the company works this way: each investor has to bring in two or more people who will register under them, and each of them, in turn, brings in other people. Also, the number of people registered under each investor and how much they invest determine the level the investors reach.</em></p>



<p><em>They also tell Ogechi that the company runs different businesses, which is how they get returns to pay out to investors. She seems to like the idea, so she invests what she’s been saving from her allawee for three months, 100,000 Naira.</em></p>



<p><em>After her investment, she gets a whopping return of 300,000 Naira. “Wow! That works. It’s real.” So she tells her family and friends and puts more money into the company. Six months later, the news reveals Chinmark group as a Ponzi scheme after its crash, and Ogechi is left with nothing and even in debt, as she borrowed from friends and family to invest.</em></p>



<h2>What Happened to Ogechi’s funds?</h2>



<h3><strong>Ponzi happened to Ogechi’s funds.</strong></h3>



<p>Ponzi schemes in Nigeria date as far back as the 1980s and early 1990s, over two decades ago. The earliest recorded ones were the famous Umana-Umana investment platform in Port Harcourt and Calabar, which began in the 80s, the Planwell scheme in Edo State, and the Nospecto in Lagos. And despite the number of failed Ponzi schemes in Nigeria and the losses it has caused, people continue to fall victim to it.</p>



<figure class="wp-block-image"><img src="https://lh5.googleusercontent.com/TLT8-BvKbZwmtyrx6AtyIPTpwgq3uHNIl-qQ47svfVQGHwgYVoZF7hORthmIyZaXOu0ZGTorek5KQJzrNNdNtA-299iuA5JanpV-h-YnxMQcdp5e5hZUPfa2tekSfw60NBIlsZihnzREdN_cwg" alt=""/></figure>



<p>Image credit: <a href="https://www.researchgate.net/figure/Most-Popular-Ponzi-Schemes-in-Nigeria_fig1_326990411">researchgate.net</a></p>



<p>Just a little over five years ago, many Nigerians fell victim to another famous Ponzi scheme in Nigeria, MMM, subjecting them to unexpected hardships after its sudden suspension. MMM was first launched in Nigeria in February 2015, describing itself as a Mutual Aid Fund where people could help one another while making returns of 30% every month. Although that worked for a while, it came crashing down.</p>



<h4><strong>What are Ponzi Schemes?</strong></h4>



<p>Ponzi schemes are fraudulent investment scams that promise high return rates to investors, with little risk involved. They do this by using funds from recent investors to pay profits to earlier investors while maintaining the illusion of legitimate and sustainable businesses like sales of products and transportation. However, these schemes collapse when there are no more new investors to keep the fraudulent triangle going.</p>



<p>Let’s imagine a triangle of the story of Ogechi above: Ogechi is required to bring in at least two other people who are expected to pay a certain amount of money as an investment or commitment fee, which is then used to pay earlier investors within a certain period. The more people join, the larger the triangle gets. These fraud schemes are primarily successful because their founders front them as legitimate businesses. However, when these schemes run out of new investors whose funds are used to sustain them, they come crumbling down. Situations like this are like robbing Ogechi to Pay Tunde and robbing Tunde to pay Usman.</p>



<h3>Why People Keep Falling Victim to Ponzi Schemes In Nigeria.</h3>



<p>As mentioned earlier in this article, Ponzi schemes have always been around and have proved to be fraudulent and unsustainable as they continue to fail. Yet, they continue to thrive in the midst of all this. People attribute it to the exacerbating problem of unemployment and the persistent widespread poverty in the country.</p>



<p>Public endorsement and ambassadorship by famous and respected figures for some of these Ponzi schemes is also a significant enabler which has facilitated the loss of money for many people. There is some level of trust and respect for these figures as many look up to them and expect them to have verifiable information about the companies they are endorsing.</p>



<p>For Nigerian investors, the rising inflation rate and poor returns on investment in the Nigerian capital market and government securities are why they participate in Ponzi schemes. They believe this scheme to be the quicker and easier way for them to grow their wealth, so long as they can pull their funds out before it crashes.</p>



<h3><strong>How To Identify A Ponzi Scheme</strong></h3>



<p>Unrealistic or high returns with little to no risk</p>



<p>If it’s too good to be true, then it probably is. Promises of high and unrealistic returns are the easiest and most reliable ways to identify Ponzi schemes, especially if the level of risk involved is nothing compared to the guaranteed returns. This is because many legitimate investments have a level of risk associated with them, of which the higher the returns, the more risks involved. In the case of Ponzi schemes, they offer high, incredible yearly, monthly, weekly, or even daily returns with little or no risks to their investors. So when an investment platform guarantees you a “too-good-to-be-true” return with little or no risk involved, watch out as you may be onto something.</p>



<h3>Unregistered and unlicensed investment schemes</h3>



<p>One of the legal requirements for investment firms and professionals is registering under federal, state, or international regulators. In the case of Nigeria and many countries, the Security and Exchange Commission (SEC) is the primary agency responsible for regulating investment companies and advisers; and providing the necessary information about the companies’ products and services to its users. It also issues the proper licences to them. However, many Ponzi schemes are not registered and regulated by the necessary bodies and do not have the rights to run investment companies. So if, as an investor, you come across a platform that is not registered and regulated, beware as it is most likely a fraud.</p>



<h3>Ambiguous business model and investment processes</h3>



<p>Another good way to identify a Ponzi scheme in Nigeria is its ambiguous business model. Ponzi schemes often follow a particular structure: a triangle with processes too complex to understand. Although they claim to have businesses they put investors’ money into, there is rarely evidence of said businesses or legitimate ways they generate returns for investors. Hence, it is crucial to avoid any scheme or platform that does not have verifiable information and a transparent business model.</p>



<h3>Regular and consistent returns on investment</h3>



<p>Investment markets are often unstable, especially volatile ones like stocks and crypto, so, typically, your investment will experience some fluctuations. Regardless, they gain back momentum and grow over time. However, this spells different for Ponzi schemes because, despite the market conditions, they consistently generate high returns.</p>



<h3>Dependency on referrals</h3>



<p>As mentioned earlier, Ponzi schemes are a triangle; they survive on their ability to bring in new investors whose investments are used to pay off earlier investors. Often, investors, or shall we call them victims, are asked to bring in new people who register under them, pushing them to a certain level. According to each of these platforms, these levels have different names: gold, silver, bronze, etc. Without referrals, investors are sometimes not paid. So when the triangle runs out of new streams of investors, it wraps up.</p>



<h3>Ways you can avoid Ponzi schemes in Nigeria</h3>



<h3>Do your research</h3>



<p>Thanks to the internet, you can virtually get whatever information you seek. So before you begin investing, it is essential to carry out the necessary research and ask the right questions. Ask if it’s registered under the suitable bodies and has the licences required to run an investment company, testimonies about its operations, and processes from previous and current investors. What does it say about itself? Is its model of operation clear enough? If your information isn’t satisfactory, you may want to look elsewhere.</p>



<h3>Only invest in trusted financial platforms and companies</h3>



<p>It is likely a trusted investment if you can satisfactorily answer the above questions. One meaningful way to know a trusted financial firm is by checking if it’s registered with the Securities and Exchange Commission. You can ask for paperwork or check the SEC’s, state security, or other necessary databases to access this information.</p>



<p><a href="https://risevest.com/">Risevest</a>, which deals in dollar-denominated assets like US stocks, real estate and fixed Income, is a trusted financial institution you can use.</p>



<h3>Seek the advice of financial advisors and professionals</h3>



<p>Employing the help of qualified financial advisors is an excellent way to avoid falling victim to Ponzi schemes in Nigeria. They have the proper knowledge and will guide you through making the right financial decisions, even if that comes with a fee.&nbsp;</p>



<h3>Follow your instinct&nbsp;</h3>



<p>Again, if it’s too good to be true, it is too good to be true. Any investment that looks too shady, enforces some urgency in you, or calls you out of the blues without prior contact, thereby sparking some doubts, is a significant bleeding red flag; avoid it.</p>



<p>However, you can be a good investor and easily avoid the troubles associated with Ponzi schemes using these easy <a href="https://risevest.com/blog/how-to-be-a-good-investor">steps</a>. Risevest is also here to help you invest and grow your wealth in dollar-denominated assets like US stocks, real estate and fixed income. You can start <a href="https://risevest.com/">here</a>.</p>


Ponzi Schemes In Nigeria: Robbing Peter to Pay Paul


<p>An economic recession is when a nation&#8217;s Gross Domestic Product (GDP) falls for two consecutive quarters. It is a significant and widespread decline in economic activities. Investments generally perform poorly during recessions.</p>



<p>Some signs of recession include falling consumer confidence, rising unemployment, high inflation causing a fall in purchasing power, and declining sales and production for businesses. All these symptoms cause investors’ confidence and stock prices to fall.&nbsp;</p>



<p>Recessions are relatively rare and often do not last long. While most investments recover a few years after a recession, there are also ways to protect your investment against the poor performance investments suffer during recessions.</p>



<p>Learn all about recessions and how they affect you in this <a href="https://risevest.com/blog/what-is-a-recession-and-how-does-it-affect-you">article</a>.</p>



<h3>How to Hedge</h3>



<p>The most effective way to hedge investments against loss is through derivative contracts. However, derivatives are very sophisticated tools that mainly professional investors use in their portfolios.</p>



<p>Here are some hedging methods that involve derivatives and others that don’t.</p>



<h3>De-risk your portfolio</h3>



<p>The first way to hedge your investment portfolio against a recession is to move from risky to safe-haven assets. While every investment has an element of risk involved, some investments have higher risk than others.&nbsp;</p>



<p>Low-risk assets are government bonds, treasury bills, and corporate bonds of companies with high credit ratings in developed countries. All other assets have higher risk.&nbsp;&nbsp;</p>



<p>As fears of recession increase, investors looking to protect (hedge) against a fall in the value of their investment sell their risky assets to buy low-risk assets. This causes the prices of risky assets to fall. The stock and crypto markets are currently experiencing a sell-off. We are currently seeing a sell-off in stock and crypto markets.</p>



<h3>Explore Other Asset Classes</h3>



<p>Asset classes with returns that are less reliant on economic growth tend to perform better than others. These include precious metals like gold and silver and commodities like heavy metals.</p>



<p>Investors looking to hedge their portfolios against recessions tend to move their funds into precious metals and commodities.</p>



<h3>Short Risky Assets</h3>



<p>A more sophisticated strategy that professionals employ is to benefit from the fall in the prices of risky assets. They do this by short-selling risky assets like specific stocks of companies or Exchange Traded Funds (ETFs) of markets that are likely to be hard hit by the recession.</p>



<h4>Some definitions</h4>



<h6><em>Short selling</em></h6>



<p>The simple principle behind buying and selling is to buy at a lower price and sell at a higher price. If you sell when prices fall lower than the price you bought, you will do it at a loss. This is where short selling comes in.</p>



<p>Short selling is simply selling at the current price you enter into a trade and buying at a lower price in the future. It is promising to sell something in the future for a high price that was fixed today.&nbsp;</p>



<p>For example, if you go short on a stock with a strike price of 100 today and tomorrow, the price falls to 80, you can buy the stock for 80 in the market today and sell at the 100 you entered the short position in.</p>



<h6><em>Long buying</em></h6>



<p>Long buying or taking a long position is the opposite of short selling. It is the typical way investors buy and sell stocks on the stock market. To profit from a long position, you buy a stock and sell it at a higher price.</p>



<h6><em>Exchange-Traded Funds</em></h6>



<p>An exchange-traded fund is a fund that is traded on an exchange. A fund is a collection or pool of money from different people/sources to invest in a stated purpose. A fund, like the Vanguard S&amp;P 500, collects money from different investors to invest in all the top 500 companies in the US.</p>



<h3>Short Risk, Long&nbsp; Risk Free</h3>



<p>Another sophisticated strategy would be making a pair trade where investors short risky assets and buy (go long on) stocks or ETFs that are likely to do better in a recession. They profit when the price of the risky asset falls and when the lower risk asset rises in price.</p>



<h3>How to Invest During Recessions</h3>



<h4>Buy and Hold</h4>



<p>Some of the best deals present themselves during market slumps. That’s when value investors like Warren Buffett go hunting for good deals because many high-quality assets are selling cheaply.</p>



<p>So if you have some cash set aside, buying during the recession and holding for the long haul can be a good strategy.</p>



<h4>Dollar-Cost Averaging</h4>



<p>Dollar-Cost averaging is simply breaking a bulk purchase into smaller units and buying periodically. Here’s a simple illustration to explain how it works.</p>



<p>Let’s consider the story of Jack and Jill.&nbsp;</p>



<p>Jack and Jill decided to start investing in the stock market in January 2020. They didn’t do much research because they honestly didn’t know what to look at, but they knew Apple was a great company. Many people buy Apple products, so that means they should be making money.</p>



<p>They both had a total of $1,000 each to invest. On January 2nd 2020, they bought Apple shares at $75.09 (post stock split figure). The pandemic happened, and all of 2020 went on as we know it.</p>



<p>Nine months later, on the 1st of September, 1 unit of Apple share was trading at $134.18. Jack&#8217;s $1,000 investment on was worth $1,786.92, a 78.69% increase. On the other hand, Jill&#8217;s $1,000 investment was worth $2,147.34, a 114.73% increase.</p>



<p>Why the difference?</p>



<p>Jack invested all his $1,000 at once on January 2nd at the average cost per share of $75.09, which gave him 13.32 shares of Apple. On the 1st of September, 1 Apple share was worth $134.18, which meant that each share had made $59.09 or 78.69%, and his total profit was $786.92.</p>



<p>Jill instead, decided to break her investment into small units. She started with a $100 investment and initially decided to continue investing $100 every month. But she noticed that the value of her investment kept going up steadily till on the 27th of February, when her investment went down by 8.94% to $68.38.&nbsp;</p>



<p>She saw this as a great opportunity (a Black Friday kind of opportunity) to get more shares than she did in January for the same $100. On the 9th of March, she saw the price of Apple shares fall again to $66.54., &#8220;Another Black Friday&#8221;, she thought, so she bought more. As the price of the share kept falling, she kept buying more. Here&#8217;s what that looked like:</p>



<figure class="wp-block-image size-large"><img loading="lazy" width="1024" height="415" src="https://money.rise.capital/wp-content/uploads/2022/05/table-blog-260522-1024x415.jpg" alt="" class="wp-image-1632" srcset="https://money.rise.capital/wp-content/uploads/2022/05/table-blog-260522-1024x415.jpg 1024w, https://money.rise.capital/wp-content/uploads/2022/05/table-blog-260522-300x122.jpg 300w, https://money.rise.capital/wp-content/uploads/2022/05/table-blog-260522-768x312.jpg 768w, https://money.rise.capital/wp-content/uploads/2022/05/table-blog-260522-1536x623.jpg 1536w, https://money.rise.capital/wp-content/uploads/2022/05/table-blog-260522-1568x636.jpg 1568w, https://money.rise.capital/wp-content/uploads/2022/05/table-blog-260522.jpg 1908w" sizes="(max-width: 1024px) 100vw, 1024px" /></figure>



<p>By September 1st, she had 16 shares (compared to Jack&#8217;s 13.32 shares) at an average price of $62.49 (compared to Jack&#8217;s at $75.09), which led to a profit otf $71.69 on each share or 114.73% growth and total profit of $1,147.34.2131</p>



<p>What Jill did is called Dollar-cost averaging (DCA). As you see asset prices fall, if you have some cash and still believe in the asset you are invested in, you can buy some more to reduce your average cost per unit. This can improve the return you eventually get if the asset eventually recovers.</p>



<h4>Don’t panic sell</h4>



<p>Don’t panic when asset prices fall. If you sell at a price lower than what you bought, you will incur a loss on your investment. Some investors say they will sell at a loss, buy at a lower price, and recover their losses as prices rise. While this is a decent strategy, in theory, it’s often tough to implement.</p>



<p>It takes a tremendous amount of resilience to sell at a loss and decide to continue investing after. It’s like having your fingers burnt or cut off. It’s difficult to go back in afterwards. Also, it is hard to buy at the bottom. It is more likely that you will buy at a point where the stock will get worse before it gets better.</p>



<p>In theory, it’d be more profitable to sell at a loss, buy at a lower price and make a larger profit when the stock recovers. But it’s challenging to execute this profitably. You’ll be better off staying invested and dollar-cost averaging if you have some extra cash set aside.</p>



<h4>Cut your Losses</h4>



<p>If something has fundamentally changed in the company you are invested in that makes future growth prospects seem bleak, it is reasonable to sell at a loss. Some stocks will never recover after they fall during a recession.</p>



<p>If you feel uncomfortable with the risk or believe that the assets you are currently invested in are unlikely to recover to previous highs, you should probably sell at a loss now. Because remember, the asset price can go even lower, which will lead you to lose even more money if you don’t sell.</p>



<h3>Conclusion</h3>



<p>Recessions can be very hard on investing. But with the right investment and hedging strategy, you can protect yourself and sometimes even make profits during recessions. If you need some help investing your funds, check out <a href="https://risevest.com/">Rise’s</a> portfolio offerings today.</p>



<p></p>


How Can Investors Hedge Against Recession


<p>We are adding to our Apple Inc. position after we analyzed the company&#8217;s latest earnings result. Despite harsh economic conditions since the turn of the year, the smartphone giant recorded impressive returns, a testament to Apple’s resilience and a validation of our investment thesis on the company.   </p>



<p>At the end of first quarter, March 2022, Apple Inc. recorded $97 billion in revenue, representing a 9% jump from the $90 billion it had recorded 12 months ago, March 2021. Meanwhile, supporting its better than expected financial performance is the Iphone maker’s Services business segment which made $19.31 billion. This is the highest Apple has recorded of all time in its Service Segment. Improved customer demand for iPhone, Mac, Wearables, Home and Accessories helped the company achieve an all-time high for its installed base of active devices.</p>



<p>The wearables category also contributed greatly to the company overcoming inflationary pressures and Fed rate hikes as Apple made $8.8 billion from sales of things like AirPods and watches, compared to the $7.8 billion it made this time last year.&nbsp;</p>



<p>&#8220;Our wearables business has doubled in three years and is nearly the size of a Fortune 100 business. If you&#8217;re keeping track, that means the Services category made Apple almost twice as much money as Macs, which is the next closest category” &nbsp; &#8211;&nbsp; Luca Maestri, Chief Financial Officer (CFO) at Apple Inc.&nbsp;&nbsp;</p>



<p>Rise believes that despite harsh economic realities such as record inflation, hiked interest rates, and supply chain logjams across the US and other markets, Apple, having established itself as an industry leader through its relentless focus on innovation and ability to create the best products and services in the world will still continue to experience future growth.&nbsp;</p>



<p>Like we said in our <a href="https://risevest.com/blog/apple-earnings-report">Q1 report</a> of the company’s performance, Rise believes that the trend of working from home and learning remotely, has reinvigorated growth for the iPad and Mac. We understand that these products are much more important now as we continue to make our way through the post-pandemic era, changing Apple’s offerings story from being just a story about the iPhone to including tablets, Macs and services.</p>



<p>We take absolute pride at Rise by exposing our investors to the best assets in the world so that they can do what they know how to do best while we help them compound their wealth. You can start building a stock portfolio from today. <a href="https://rise.capital/">Download the Risevest app</a> to start.&nbsp;</p>



<figure class="wp-block-table"><table><tbody><tr><td>Financial Ratios</td><td>Q2 2021</td><td>Q2 2022</td></tr><tr><td>Return on Asset</td><td>7.01%</td><td>7.13%</td></tr><tr><td>Return on Equity</td><td>34.16%</td><td>37.11%</td></tr><tr><td>EPS</td><td>$1.41</td><td>$1.54</td></tr><tr><td>Gross Margin</td><td>42.51%</td><td>43.75%</td></tr><tr><td>Net Margin</td><td>26.38%</td><td>25.71%</td></tr></tbody></table></figure>



<figure class="wp-block-table"><table><tbody><tr><td>Net Sales by Category</td><td>Q2 2021</td><td>Q2 2022</td><td>% growth</td></tr><tr><td>Iphone</td><td>$47,938</td><td>$50,570</td><td>5.49%</td></tr><tr><td>Mac</td><td>9,102</td><td>10,435</td><td>14.65%</td></tr><tr><td>Ipad</td><td>7,807</td><td>7,646</td><td>-2.06%</td></tr><tr><td>Wearable. Home and Accessories</td><td>7,836</td><td>8,806</td><td>12.38%</td></tr><tr><td>Services</td><td>16,901</td><td>19,821</td><td>17.28%</td></tr></tbody></table></figure>


Earnings Report: We Are Increasing Our Apple Position After Impressive Q2 Performance


<p>In the simplest of terms, a recession signifies moving backwards, the opposite of an advancement. Under normal conditions, we all would like to advance/grow in our endeavours.&nbsp;</p>



<p>For an economy, growth means an increase in the value of services and goods produced — Gross Domestic Product (GDP). While economic growth means the price of goods and services will steadily become more expensive over time, for most people, it is a good thing.&nbsp;</p>



<p>As the economy grows, companies make more money and can afford to pay current employees higher salaries, hire more people, thus creating jobs, and give shareholders more returns. This gives everybody more money to spend and continues the cycle of growth.</p>



<p>Economies generally grow most of the time. But sometimes, the value of goods and services in a country falls. An economic recession is when a nation&#8217;s GDP falls for two consecutive quarters. The US National Bureau of Research (NBR) defines it as a significant decline in economic activity spread across the economy.</p>



<p>In numerical terms, a recession would be if the GDP for the 1st quarter of 2022 was 1000, the 2nd quarter GDP was 900, and that of the 3rd quarter was 800. Experts consider recessions as an unavoidable part of the economic cycle.&nbsp;</p>



<h3>What causes recession?</h3>



<p>There are several causes of recession. We will focus on the three likely causes of the impending recession the world currently faces.</p>



<h4>A sudden economic shock</h4>



<p>This means a serious problem that no one could have reasonably foreseen. A good example of this would be the global lockdown caused by COVID-19. The global shutdown caused factories, businesses etc., to close down, creating a huge shock to many economies.</p>



<h4>Too much inflation</h4>



<p>Inflation is the consistent and general increase in the prices of goods and services. Inflation is an essential part of economic growth. We need the price of goods and services to increase, so companies make more money, create jobs, create value for shareholders, pay higher taxes to governments etc.</p>



<p>Like many other things, inflation is good, but too much inflation is bad. Central banks generally set their inflation targets. In developed countries like the US and UK, the Central bank aims to achieve an average inflation rate of 2%.</p>



<p>When countries begin to see too much inflation, as we’ve seen all over the world this year, the price of goods rises so fast that the cash available to citizens cannot keep up. This is what causes a recession.</p>



<h4>Excessive Debt</h4>



<p>Many countries borrow to finance the difference between their expected revenue and budgeted expenses. However, when countries take on too much debt that they can’t afford to repay, this can lead to recession.</p>



<p>When countries can’t afford to repay their debt, they default. This means those who lent money to the government, e.g. large companies, banks etc., no longer have that cash to spend, invest, or in the case of banks, to lend to others.</p>



<p>When banks don’t have cash, they cannot lend to companies who need the money to grow their business and improve GDP. This causes GDP to fall and creates a recession.</p>



<p>Fun Fact: Global debt stood at $300 trillion as of 2021, about 356% of global GDP. For every $1 of goods/services produced, we borrowed $3.56.&nbsp;</p>



<h3>How does a recession affect you?</h3>



<h4>Business</h4>



<p>The problem starts when sales and profits start declining. To cut costs, businesses stop hiring, stop buying new equipment and pause all development of new products.</p>



<p>Other businesses that supply those large businesses with equipment, raw materials and other services they require will see their revenues fall. To increase revenue, companies might reduce the quantity and quality of their products to maintain the same price.&nbsp;</p>



<p>There are many examples in Nigeria of packaged products now having more air than content. If any of these companies have too much debt and cannot pay back with the revenue they have left behind, they might have to file for bankruptcy.</p>



<p>The government tries to support businesses during this challenging time, as we saw in countries like the US and UK during the first COVID lockdown. They offered loan programs to businesses of different sizes and in badly affected industries.</p>



<p>However, these loans are not always enough and sometimes they don’t come in time. Thus, the damage is probably already done before the loans come along.</p>



<h4>Employment</h4>



<p>Unemployment levels generally rise during recessions as companies see their profits and revenue shrink and have to reduce expenses to stay afloat. This causes many companies to have mass layoffs leaving many unemployed and those left behind having to do more work for the same or even less pay, creating more stress for them.</p>



<p>Those who are now without jobs find it difficult to get jobs because most companies have stopped hiring, so they too are under stress to earn money to meet their needs. This forces them to start businesses or turn to crime to survive.</p>



<h4>Investment</h4>



<p>Declining revenues and profits cause share prices to fall and companies to either reduce or completely stop paying dividends. The loss of their jobs or reduction in earnings will force some investors to sell their investments even if it&#8217;s at a loss to get cash further, causing companies&#8217; share prices to fall.</p>



<p>In countries where people can take mortgages (loans to buy houses), a fall or loss in income can make borrowers unable to make their mortgage payments and make them lose all the money they have paid in the past towards their home in a foreclosure.</p>



<h4>Borrowing</h4>



<p>Borrowing becomes more difficult during recessions. As more people and companies cannot pay their bills, lenders make it more difficult to get loans. They increase interest rates and the&nbsp; requirements individuals and businesses need to get loans.</p>



<h4>Health</h4>



<p>Many <a href="https://socialsciences.mcmaster.ca/econ/faculty/decicca/unemphealth_0807_web.pdf">studies</a> found that suicide and mental illnesses increase in <a href="https://oxfordre.com/economics/view/10.1093/acrefore/9780190625979.001.0001/acrefore-9780190625979-e-282">recessions</a>. One <a href="http://citeseerx.ist.psu.edu/viewdoc/download?doi=10.1.1.434.5147&amp;rep=rep1&amp;type=pdf">study</a> found that death rates were higher for people who lost their jobs even 20 years after the job loss.</p>



<p>However, some researchers have found that recessions might actually be good for some people’s health. One group of <a href="https://www.jstor.org/stable/2587005?refreqid=excelsior%3A043c759e2544727778e13b1b76b22470">researchers</a> found that death rates during recessions were lower than rates recorded during economic booms.</p>



<p>Another group of <a href="http://citeseerx.ist.psu.edu/viewdoc/download?doi=10.1.1.936.5204&amp;rep=rep1&amp;type=pdf">researchers</a> found that during recessions, the reduced economic activity reduced air pollution, which reduces diseases caused and worsened by air pollution. <a href="https://www.aeaweb.org/articles?id=10.1257/aer.99.2.122">They</a> also found that being unemployed reduced workplace and road accidents.</p>



<p>Researchers also found that the fall in personal income forced more people to reduce <a href="https://ifs.org.uk/uploads/publications/wps/WP201529.pdf">alcohol</a> and <a href="https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1294522">cigarette</a> consumption, reducing diseases linked to them. Another <a href="https://ftp.iza.org/dp9326.pdf">study</a> found that reduced income means fewer people travel, thus slowing down the spread of viral diseases.</p>



<h3>What can you do to prepare and protect yourself before a recession</h3>



<h4>Have an Emergency fund</h4>



<p>An emergency fund is 3-6 months of your monthly expenses in a low-risk vehicle that you can quickly convert to cash at little to no cost. For example, if you spend ₦100,000 on average every month between housing, food, entertainment etc., your emergency fund would be ₦300,000 to ₦600,000.&nbsp;</p>



<p>Ideally, you should put your emergency fund in a savings account that gives you some interest, so you aren&#8217;t losing too much to inflation. You don&#8217;t want your funds in any investment vehicle, so you don&#8217;t run the risk of losing money if there&#8217;s an economic downturn.</p>



<p>No rule says your emergency fund must stop at six months. If you can afford to have up to 1 year of expenses stored up, that&#8217;d give you even more legroom if something affects your primary source of income.&nbsp;</p>



<p>However, experts generally recommend 3-6 months, so you have something for emergencies but not too much money tied down and not working for you. This advice goes for individuals and businesses alike.</p>



<h4>Avoid Short Term Risky Investments</h4>



<p>If an investment already has a low chance of survival during normal periods, it is even more likely to crash during a recession. Investments that are risky during regular periods would be extra risky during recessions.</p>



<p>You should avoid risky investments altogether as fear of recession rises, but if you must, ensure that you can afford to stay invested for at least five years which allows you to wait out any downturn in your investment.</p>



<h4>Strive to be an Invaluable Employee</h4>



<p>During recessions, companies might be forced to lay off some staff. While it is not a 100% guarantee, being incredibly good at your job reduces your chances of being laid off. If you weren’t already putting in your best, as recession looms, you might want to increase your effort.</p>



<h4>Diversify your Investment Portfolio</h4>



<p>Risky assets are harder hit during recessions. Although lower-risk assets like bonds tend to offer poor returns, they don’t perform as poorly as riskier assets like stocks in the short term. Commodities tend to perform better in the short term than most other asset classes during recessions.</p>



<p>Having exposure to a diverse pool of assets can reduce the losses you suffer during a recession. Check out the diverse offerings Rise offers today.</p>



<h3>Silver Lining/Final Thoughts</h3>



<p>Most countries have experienced few recessions in their lifetime. The UK had one recently in 2020. Nigeria has had 2 in the last five years. According to the NBER, the US has experienced 33 recessions since 1857.&nbsp;</p>



<p>While the word recession can seem like it spells doom, many nations sustain recessions for short periods. The average recession in the US, for example, lasts for 11 months. Things should return to normal in no time.</p>


What Is Recession And How Does It Affect You?


<p>There are typically four stages of the economic cycle. The first stage is the expansion stage or boom stage when credit is expanding, stocks are booming, the economy is growing and everyone feels like their investments are green and going up. This is followed by a slowdown stage where asset values have reached their peak and are no longer growing, company profits slow, credit starts to tighten and the economy tends to slow down a lot. The third stage is the contracting stage when asset values start to fall, credit supply begins to contract, there is less money flowing and companies lose money. The economy tends to experience declines in this period and sometimes job losses and loan defaults spike. This is a traditional recession. After this recession we enter into the final stage which is the recovery stage where things start to pick back up, credit starts to flow again and the economy rekindles. If the recovery is sustained it grows into a new boom or expansion cycle, on and on.&nbsp;</p>



<p>Today we are in a slow down stage of the cycle. Cost of capital is increasing due to the Fed raising interest rates after years of zero rate. Stocks and company earnings have slowed down. What does this mean for your investments?</p>



<p>First, it is important to stick to your investment plan through every market cycle. There are opportunities in every market cycle and leaving the markets can be detrimental to your long term returns. While you need to avoid overly risky investments at this time, this does not mean you should abandon stocks entirely. It takes about 30 months on average for rate hikes to start to impact stocks so for now there is still some time to shift strategies to more value stocks. The good thing is that Rise does this for you automatically without any extra work on your part.&nbsp;</p>



<p>The biggest worry for most portfolios at this time is inflation. The US economy has now experienced 14 months of above 2.5% inflation, proving that inflation is not as transitory as most analysts thought earlier. While rates hikes are still happening across most central banks, it has not been enough to slow inflation down. We expect some kind of decline in stock market prices possibly followed by a recession.&nbsp;</p>



<h2><strong>How are we navigating this?</strong></h2>



<p>In the last two years we have seen more opportunities in real estate than in the stock market. With home prices at great highs and available inventory at less than two months supply, we believe the opportunity in real estate is coming close to being maxed out. Which means that while real estate will continue acting as an inflation hedge, growth will come from non-US markets and nontraditional strategies like Airbnb rentals (we are test running our first Airbnb rental as we speak). At the same time, as stock prices fall we expect to see a lot more opportunities to buy great companies at a lot cheaper prices. So we expect the markets to deliver great returns once we go from slowdown back to recovery. Remember that it is when everyone is selling that the best investors buy.&nbsp;<br>At Rise, our goal is not to outperform massively in the short term. Our goal is to outperform modestly but consistently over a long period in order to compound your capital into real tangible wealth over time. So despite all the market upheavals, Rise will monitor the market for the best opportunities to acquire high quality assets at great prices in order to grow your wealth. No need for you to worry and stress about your investments. We do all that so you don’t have to. Start investing with Rise at <a href="http://www.risevest">www.risevest</a>.com today.</p>


Investing During This Tightening Economic Cycle


<p>US homeowners continue to reap returns in the US housing markets as rents for single-family houses and apartments continue to trend upwards, putting the Rise real estate portfolio in a prime position to deliver even higher returns.</p>



<p>Rents of single-family houses across the US jumped by 12.6% in January. The spike is the highest the housing market has experienced over the last 12 months and represents the 10th month in a row of record rent increases.</p>



<p>All indicators show that the rental market is heating up, as would-be buyers of houses increasingly turn to rentals because they can’t find and can’t afford their dream houses.</p>



<p>Meanwhile, due to historic stimulus payments and increased wages, renters are bringing significant incomes and paying rent on time.</p>



<p>Historically, low numbers of homes for sale and skyrocketing home sale prices fuel the rental demand. This means it is an excellent time to invest in the Rise real estate portfolio, which primarily comprises single-family apartments.</p>



<p>Become a landlord in the US today, and make your money grow with <a href="https://risevest.com/real-estate#get-rise">Rise</a></p>


Why You Should Invest in the Rise Real Estate Portfolio Today


<p>Savings can be traced back to the 16th century, when people stored items and spare coins in jars and clay pots for rainy days. </p>



<p>Over time, however, savings gradually and progressively evolved to what it is today &#8211; local club savings (Ajo in Yoruba), traditional banking systems, and even digital savings.</p>



<p>According to <a href="https://focusedfinancial.co.uk/the-history-of-investing-what-the-past-can-teach-us-about-market-cycles/">Focused Financial</a>, the modern investment structure can be traced back to the 17th century when the Dutch East India Company listed its shares on the Amsterdam Stock Exchange in 1602.</p>



<p>However, evidence shows that investments had long started before. One of these pieces of evidence is the Hammurabi Code, which dates back to 1700 BC and provides a legal framework for investing.</p>



<p>In a Wikipedia <a href="https://en.wikipedia.org/wiki/Investment#History">article</a>, stocks, bonds, and other securities buyers were described as speculators in the media, academia, and commerce at the beginning of the 20th century.</p>



<p>At that time, investments, like the current financial markets, connected investors to businesses and helped them grow their wealth.</p>



<p>Saving in finance is putting money away in cash or its equivalent, after subtracting your expenses from your income over a certain period. </p>



<p>It is storing what is left of your money after making the necessary deductions, expecting little or no interests.</p>



<p>On the other hand, investing means buying assets or investing your money into ventures in hopes of increasing value and getting higher returns. </p>



<p>It is basically putting your money to work to earn more money for you. One of the things you could invest your money in include Eurobonds.</p>



<figure class="wp-block-image size-large is-resized"><img loading="lazy" src="https://money.rise.capital/wp-content/uploads/2022/03/Investing-2.jpg" alt="Savings and investment
 " class="wp-image-1531" width="414" height="316"/><figcaption> </figcaption></figure>



<p>Eurobonds are bonds or debt instruments denominated in a currency other than the local currency of the country in which the bonds are issued. </p>



<p>They are the most common form of fixed income securities and one of the safest investments. </p>



<p>A bond denominated in Japanese Yen and issued in the UK, or a bond denominated in US dollars and issued in France or the UK are examples of Eurobonds. </p>



<p>Eurobonds are securities that are issued by the government or a company to raise the money needed to finance projects, without any form of forex risk. Investing in <a href="https://risevest.com/fixed-income">fixed income</a> on Rise guarantees you 10% returns in dollars per annum.</p>



<p>Other forms of investing include stocks and real estate. You can start <a href="https://risevest.com/">here</a>.</p>



<p>How much money should you save or invest from your income? Well, according to the <a href="https://www.investopedia.com/ask/answers/022916/what-502030-budget-rule.asp">50/30/20 rule</a> by financial experts, 50% of your income should go into paying for those expenses that are essential to your survival like groceries, healthcare, insurance, taxes and other basic utilities. </p>



<p>30% is expected to go into your wants like buying that chanel purse, ordering from your favourite restaurant or organising a house party. While 20% is allocated to your savings or investment.</p>



<h3><strong>Here’s an example</strong>:</h3>



<p>Yemi makes 500,000 naira monthly and following the above rule, 50% (250k) is expected to go into his essential needs; 30% (150k) into his wants; and 20% (100k) into savings or investments.</p>



<p>Although a brilliant budgeting rule, this may not be ideal for every earner as everyone has different needs and different earning rates. So how much you choose to save or invest is <a href="https://risevest.com/blog/how-to-be-a-good-investor">dependent</a> on how much you make and your level of needs.</p>



<p>It is also important to note that despite being essential to building wealth and gaining financial security, both concepts are different and often used interchangeably. </p>



<p>While one helps you pile your money with little or no returns and with minimal risk involved, the other helps multiply your wealth, exploring various options amidst the risks involved.</p>



<p>As a finance enthusiast, bearing in mind the Naira&#8217;s rate of devaluation and the level of inflation around the world, it is crucial to understand the differences and similarities <a href="https://risevest.com/blog/investing-is-for-you-6-women-on-why-women-should-invest">between</a> savings and investments.</p>



<p>This way you can make the right financial decisions and take the right steps to growing your wealth.</p>



<p>One common similarity between savings and investment is that they are both strategies we can use to achieve our financial goals and secure our financial future.</p>



<p></p>



<h2>Six major differences between savings and investment</h2>



<h3><strong>Returns</strong></h3>



<p>Savings, compared to investments, have lower or no returns, especially in the Nigerian banking system where accounts, regardless of type, are often charged different minor fees. This sometimes reduces the total sum of a saver’s funds. </p>



<p>However, with the wide range of options that investment offers and the possibility of diversification, higher returns are expected.</p>



<h3><strong>Devaluation</strong></h3>



<p>While investments offer a hedge against currency devaluation and inflation as their value primarily increases, a currency’s value drops as inflation skyrockets. This, in turn, reduces the value of your savings.</p>



<h3><strong>Purpose and Duration</strong></h3>



<p>Why are you saving or investing? Are you targeting a specific goal? How long do you want to do it? It is crucial to identify your objectives before deciding whether to invest or save. </p>



<p>Although both are goal-based, savings are better for short-term, specific and straightforward goals. They are targeted towards easy goals, irregular spending, and emergencies, as they are easier to meet. </p>



<p>To achieve a long-term goal, investments are the best fit. They meet bigger financial goals while promising you higher returns.</p>



<h3><strong>Risk</strong></h3>



<p>Savings come with little or no risks. This is because they are often deposited into bank savings accounts or fixed deposits.</p>



<p>Local savings systems like the Ajo and piggy banking are also relatively safe, as there is a level of trust and prior relationship among the community of savers. </p>



<p>However, there is a higher risk of losing money with investments, as they depend on market situations and fluctuating return rates. </p>



<p>These risks are even higher when an investor fails to invest in quality assets with long-term growth potential.</p>



<p>In addition, you could lose your capital in investment, as there is often no guarantee of possible returns. However, the higher the risks involved, the higher the returns.</p>



<h3><strong>Diversification</strong></h3>



<p>Investments offer various options like stocks, real estate, crypto, gold, bonds and mutual funds. </p>



<p>These allow investors to earn from different sources and shield them from harsh market conditions. When one investment option is down, the other is up or doing reasonably well. Savings, however, have limited options.</p>



<h3><strong>Access to Funds</strong></h3>



<p>In times of emergencies or urgent needs, it is easier to access savings, as they are liquid.</p>



<p>You have access to them and can withdraw at any time, although this could incur early withdrawal charges. </p>



<p>While this is a good thing, it leaves your account prone to withdrawals at any time, leading to unplanned and unnecessary spending. </p>



<p>On the other hand, investments do not allow easy access to your money, especially when the markets are neck-deep in loss. This helps investors examine their spending and stay on track with their goals of building wealth.</p>



<h2><strong>Summary of the key differences between Savings and Investment</strong></h2>



<figure class="wp-block-table"><table><tbody><tr><td><strong>Key Differences</strong></td><td><strong>Savings</strong></td><td><strong>Investments</strong></td></tr><tr><td><strong>Returns</strong></td><td>No or low interest rates</td><td>Relatively higher returns</td></tr><tr><td><strong>Devaluation</strong></td><td>Does not provide a safety net against devaluation and inflation</td><td>Provides safety net against devaluation and inflation</td></tr><tr><td><strong>Purpose and Duration</strong></td><td>Short term and short-term, specific goals</td><td>Long term and long-term goals (two years or more)</td></tr><tr><td><strong>Risk&nbsp;</strong></td><td>Little to no risk, as they are often deposited in banks and fixed deposits or using the local savings systems</td><td>Risk level varies according to the investment option.</td></tr><tr><td><strong>Diversification</strong></td><td>No diversification option&nbsp;</td><td>Allows diversification across different investment options</td></tr><tr><td><strong>Access to funds</strong></td><td>Savings are more liquid</td><td>Investments are less liquid</td></tr><tr><td><strong>Options</strong></td><td>Bank savings account, piggy bank, local collective savings (Ajo)</td><td>Stocks, real estates, mutual bonds, crypto and NFTs</td></tr></tbody></table></figure>



<h2><strong>Savings and Investment, Which Should You Choose?</strong></h2>



<p>Should you be saving or investing? Knowing all the above, and having a defined vision of what you want to achieve helps you to make better money decisions.</p>



<figure class="wp-block-image size-large"><img loading="lazy" width="537" height="390" src="https://money.rise.capital/wp-content/uploads/2022/03/1nu8au.jpg" alt="Saving and Investment, what is the difference in wealth creation " class="wp-image-1529" srcset="https://money.rise.capital/wp-content/uploads/2022/03/1nu8au.jpg 537w, https://money.rise.capital/wp-content/uploads/2022/03/1nu8au-300x218.jpg 300w" sizes="(max-width: 537px) 100vw, 537px" /></figure>



<p>However, whether it is saving or investing you have chosen to do, Rise has you covered.</p>



<p>Risevest has three asset classes for people who are looking to invest. There are <a href="https://risevest.com/stocks#get-rise">stock</a>, <a href="https://risevest.com/real-estate">real estate</a>, and <a href="https://risevest.com/fixed-income">fixed income</a> options.</p>



<p>There are also goal-based plans for people who want to allocate funds towards a specific goal; dream wedding, travel, school, owning a home, rent, and even saving for your kids’ trust fund.</p>



<p>But remember, savings are targeted towards short term goals while investments are for the long term. </p>



<p>Savings do not yield much returns whereas, investments often provide higher returns, despite the risks involved. And the higher the risks, the higher the returns promised.</p>



<p>You can only achieve financial freedom and create the wealth you dream of by investing. Start <a href="https://risevest.com/">here</a>. To be a good investor, here are some <a href="https://risevest.com/blog/how-to-be-a-good-investor">things</a> you need to know.</p>


Savings And Investment: What Makes The Difference In Wealth Creation?


<p>Hi Risers,</p>



<p>We are currently in a period of high inflation across most markets and many investors are facing the problem of how to achieve a level of returns that beats inflation and grows their money.&nbsp;</p>



<p>What assets provide the best protection against inflation and what investment strategy should long term investors follow in order to grow their portfolio through inflationary periods? As your investment managers, we have answered your questions through this article.</p>



<p>The last time inflation hit these levels in the US and other developed economies were in the 1930s and 1970s. In the early 70s, easy money policies were implemented by the US central monetary authorities in an effort to generate full employment. This resulted in high inflation numbers, with the rate of inflation going from 5.9% in 1970 and hitting 13.3% by the end of the decade. As a result, the US Federal Reserve raised interest rates to nearly 20% to curb inflation, leading to the decline of the stock market by nearly 50%  over a 20-month period. </p>



<p>Research has also shown that during periods of high inflation and a volatile economic environment, an investor whose first priority is safeguarding their funds while having a pure inflation target should invest mainly in Government Treasury Bills when the investment horizon is short; and should increase their allocation to inflation-linked bonds, equities, commodities and real estate when horizon increases. This is because these asset classes are able to outperform inflation in the long term. </p>



<p>Meanwhile, in a more stable economic environment with high inflation shocks, the optimal set investment changes for an investor even while still invested in Government Treasury Bills, especially when the investment horizon is short; the investor should increase their investment in equities and nominal bonds commodities when their horizon increases. As various research outcomes confirm the value of alternative asset classes in protecting the portfolio against inflation.    </p>



<p>However, generally, when it comes to the stocks market, our research suggests that reducing the number of stocks bought during inflation may be beneficial to portfolio returns in the short term. Stocks linked to energy and commodities are usually the best bet during such times as they tend to outperform a diversified equity index when the economy is suffering from structural inflation. This means that these equities provide fewer diversification benefits than commodities. Compared to commodities, equities provide a poor inflation hedge but offer better long term returns.</p>



<p>This can be a line of thought for an investor thinking about how best to achieve an objective of return above inflation. But unlike commodities, portions of the equity market, especially those that are more related to energy or materials, provide stronger inflation hedging properties.&nbsp;</p>



<p>However, Real Estate Investment Trust (REITs) in general, provide a poor inflation hedge, although residential REITs do seem to provide better hedging characteristics than the broad REIT index.&nbsp;</p>



<p>Also, cash and leveraged loans provide reasonable inflation hedging characteristics, despite the fact that the former does not provide sufficient return for most long term investors. Non-US currencies provide diversification and potentially better returns than cash. Commodities are a non-homogenous asset class and sub-sectors such as energy and industrial metals provide good inflation betas. Implementation of a commodity’s position within a portfolio is key to ensuring that this does not result in a drag on the portfolio due to their lack of cash-generating properties.</p>



<p>Finally, the best investment strategy all depends on your time horizon; and because Rise believes in building or creating wealth over a period of time, we have provided asset classes that perform well for investors with both short and long term horizons.&nbsp;</p>



<p>Showing below are the various asset classes and how they performed during periods of inflation and periods of low inflation.&nbsp;</p>



<figure class="wp-block-image is-style-default"><img src="https://lh3.googleusercontent.com/qOvMbYGyABlB3MXDOBLdpv9rEmzaDPqp120y5tuFnbI9UFN1CfA2gRXwqSxvDQfyLcb0HlMftFUJKkutN6vRYsPcpQKBuSYG-KcfFH_ouLMhJNScqFyuxceAM5QyB17GW5A2b2WB" alt=""/></figure>


Investing During Inflationary Periods


<p>As the world progresses, more people understand the need to invest and how investment helps you attain financial freedom, especially with the rule of compounding.</p>



<p>The right investment, regardless of the risk involved, provides you with long-term financial security, rather than just putting your money away in a bank or using the traditional savings system. It also allows you to build wealth at your own pace while giving you access to compete with other investors.</p>



<p>For someone new to investing and still trying to understand how it works, choosing what to invest in can be daunting, as there are many factors to consider.</p>



<p>If you are looking to avoid scams and be a good investor, here are some things you need to know:</p>



<h2><strong>Commit to a certain amount of money</strong> </h2>



<p>For anyone looking to be a good investor, discipline and commitment are key to growing your finances. It is important to adopt a sense of financial discipline, as it helps you develop the habit of setting aside a particular percentage of your weekly or monthly earnings towards your investments. While doing this, it is also important to understand what you want to achieve at the end of your investment period. A target or goal-based investment and follow-up action plans make it easy to focus and commit towards achieving your goals</p>



<h2><strong>Understand how the market works</strong> </h2>



<p>Good investing involves understanding the market dynamics and how things work. Reading books on finance and investments, taking courses, and following trusted financial advisors and investment, experts are key to making the right investment choices. It is also essential to research the options available to you: the company, its investment strategies, past performances and its average annual return. Warren Buffet, one of the world’s greatest investors, said, &#8220;Never invest in a business you cannot understand.&#8221; If you don’t understand it, don’t do it. Understanding the rules of compounding is also essential in investing. The higher your investment, the more returns you’re likely to make.&nbsp;</p>



<h2><strong>Know what type of investor you are</strong> </h2>



<p>There are many types of investors, but the most common ones are the high-risk investor, moderate or medium risk investor and low-risk investor. As a good investor, you need to “know thyself” and your level of risk appetite. Although investments are often long-term, the low-risk investor prefers to stick to a shorter investment period and safer investment options, as they are usually risk-averse.&nbsp;</p>



<p>The medium-risk investor has a moderate risk level and prefers to invest in low-average risk assets like real estate and stable stocks, while the high-risk investor goes all in. They are not scared of taking huge financial risks with high promising returns. These types of investors invest mainly in stocks and crypto, and because the goal is usually long term, they are not afraid to invest.</p>



<p>To make the right choice of investment, it is important to know what category of investor you fall under.</p>



<h2><strong>Diversify</strong></h2>



<p>Diversification is a key investment strategy that helps reduce an investor’s risk by allowing them to allocate funds or capital across different investment platforms and options. It also offers the opportunity to make different returns across these options. The Rise app offers three different investment options for our users, who are looking to diversify their portfolio while promising decent returns.</p>



<h2><strong>Avoid get-rich-schemes</strong></h2>



<p>When the offer sounds too good to be true, then fly as far as your wings can carry you.</p>



<h2><strong>Learn to drain the noise</strong></h2>



<p>A good investor knows not to follow the crowd for fear of missing out. When the market is red and everyone seems to sell, a good investor knows it is one of the downsides of the market, and because they have confidence in their choice of investment, know that everything will go back up again.</p>



<h2><strong>Learn the language of the market</strong></h2>



<p>The financial/investment market has a lingo, and a good investor knows it is important to learn, as it makes it easier to understand and navigate the market. Words like FOMO, bear and bull market, APR, ROI, dollar-cost averaging, and the most common one on the internet right now, WAGMI, are some of the investment lingo out there.</p>



<p>Lastly, a good investor plans a clear, defined exit strategy for when the markets are down. With Rise, you can become an even better investor, as it helps you achieve all of this while managing your investment and providing you with the best financial updates. <a href="https://risevest.com/">Get started</a>.</p>


How To Be A Good Investor


<p><em>Seun is currently undergoing his National Youth Service Corps program. He earns N33,000 from the Federal Government and N5,000 from his place of primary assignment.&nbsp;</em></p>



<p><em>Last Saturday was his father’s social club meeting, and Seun was asked to buy drinks for the celebration. Seun sent N40,000 for the drinks; everything he earned last month went into purchasing them. I asked why he did that and he replied, “I had to do it.”&nbsp;&nbsp;</em></p>



<p>Are you like Seun dealing with added responsibilities from family? You are not alone. We spoke to several young Nigerians who are struggling with the financial pressures of being the family breadwinners.&nbsp;</p>



<h2><strong>What is Black Tax?</strong>&nbsp;</h2>



<p>Black Tax, in its simplest form, is money that black people or people of colour (POC) give every month to their family members, especially struggling ones to support them.&nbsp;</p>



<p>90 million Nigerians live below the national poverty line, and this puts pressure on those who earn more to support those who don’t.&nbsp;</p>



<p><em>Bolaji</em> works for a telecommunication firm in Lagos, earning N160,000 per month. Last month, she told the MoneyRise team she had to buy 2 mobile phones for her siblings; and this month, she is preparing to pay half of her parent’s house rent. Asking if she can save or build wealth, doing that, she says it has an impact on her ability to save or build wealth.</p>



<p>In her words,<em> “Instead of saving a significant portion of my money, I always have to worry about that cousin that needs to go to school or the little brother that needs new shoes”.&nbsp;</em></p>



<figure class="wp-block-image"><img src="https://lh4.googleusercontent.com/EepB48Dn2iR2rWWc2whJKWv6ZJdKRjE1v3s8vBS7j5edp24OH_T2Kd6r3CkoiPZtuRxn_-t5pm38GjG71qKQz7gaKgyLp7-z4YiDIYeV8pLW8oNCAq2qNyIdNINilBzOZ5kEKVEj" alt=""/></figure>



<p>The root of the culture of Black Tax, can be found in the African philosophy that says “It takes a village to raise a child”. In return, the child grows up and takes care of the village that nurtured them. This care comes in the form of providing for parents and community members who supported you while you grew; and it ranges from paying rent to paying school fees of a relative, buying clothes and starting a business for them and generally, catering to their financial needs.</p>



<p>Speaking to <em>Chukwuma</em> on how black tax affects his income, he sounded quite excited like he had been waiting for someone to broach the conversation with him. He says the biggest challenge he faces with black tax is not knowing how to say no.&nbsp;</p>



<p>Chukwuma is currently in a tight corner as his dad wants him to contribute N150,000 towards his younger brother’s school fees. In his words, “I don&#8217;t know how to tell him that I do not have the money.”&nbsp;&nbsp;</p>



<p><em>Taiwo</em> likens Black Tax to a rat race — an endless or pointless pursuit. He is struggling to be financially free and the family weight on his shoulders keeps dragging him back every time.&nbsp;</p>



<p>“I earn money, but can’t seem to get my finances in order”, he said. “I have just rented and furnished my parents&#8217; new apartment and next month, I am going to pay for my brother’s school fees.”</p>



<h2><strong>How to Deal with Black Tax</strong></h2>



<p>It’s a blessing to be able to provide for the family but if black tax is not properly managed, it can lead to resentment and the inability to save and build generational wealth.</p>



<p>Here’s how to deal with it</p>



<ul><li><strong>Everyone does not need to know how much you earn:</strong> When people know how much you earn, it’s easier for them to be entitled to your help. Try as much as possible to not disclose your earnings.</li></ul>



<ul><li><strong>Set a black tax budget:</strong> Set an amount that you can give out in a month. Once you’ve reached that limit, tell them to wait till next month, except it is an emergency.&nbsp;</li></ul>



<ul><li><strong>It is important to have a necessity test:</strong> This means choosing your battles and only paying for what is necessary like education and basic physiological needs. There’s no reason to pay for things like parties or drinks.&nbsp;&nbsp;</li></ul>



<ul><li><strong>Learn how to say no:</strong> If you didn’t exist they would have found another means to solve their problems so be comfortable with saying no.</li></ul>



<ul><li><strong>Insurance is important:</strong> To avoid emergency bills, it is important to pay for insurance that can cover unforeseen expenses. Paying for insurance such as home insurance, health insurance, comprehensive car insurance will help ease the financial stress relating to issues like this.</li></ul>



<ul><li><strong>Pay Yourself first:</strong> Putting some money aside for retirement is a way to avoid not falling into the cycle of dependency. Rise has a build wealth plan where you put the money you set aside.&nbsp;</li></ul>



<ul><li><strong>Financial goals are important to you</strong>: Set specific, measurable, achievable, relevant and time-bound goals that will give you the financial freedom and wealth you seek. You can start by creating a <a href="https://risevest.com/">build wealth plan</a> on Rise.</li></ul>


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