For many would-be investors, the question of how to invest in Nigerian mutual funds still presents a very daunting challenge. As part of our process to provide tangible value for our customers, we had a tweet chat with Kalu Aja. Kalu is the CEO of AfriSwiss Capital Assets Management Limited.
Kalu is quite popular in the financial space being a leading voice in areas of financial planning and personal wealth management. This blog post is a summary of his experience with mutual funds. The following statements highlight questions we asked about his experience with investing in Nigerian mutual funds. You’d love his brilliant answers!
You’re quite popular in this space, but we’d love you to share something many of us don’t know about you.
I’m a Chelsea and Enyimba fan and I have visited all 36 states in Nigeria.
That’s quite an interesting mix! How would you describe mutual funds in simple English?
Mutual funds are pooled investments managed by a professional asset manager.
Apt! When did you first try out mutual funds?
A long time ago, in the early 2000s (yes!) and the fund is still existing.
You’ve been in the game for long! Can you share any notable lessons from your first experience?
Yes, quite a while. A few lessons I’ve learnt:
- I should have set up a direct deposit to invest periodically and buy more units.
- I should have bought more units when the markets ‘crashed’. I separated value from price; when markets crash, usually the price not value drops thus buying more means I buy value stocks in the fund at lower unit prices.
- Naira cost averaging is buying every month a great investment whatever happens to the price.
Amazing breakdown. What would you describe as your big investment goal with mutual funds?
My big investment goal is saving for retirement. I want to grow my passive income. Retirement is not an age, it’s when your passive income exceeds your necessary expenses. Mutual funds are a means to take my active income and convert it to passive income. Passive income is money earned with little or no effort.
Sounds like a goal everyone should have. We love it! What is your investing strategy for mutual funds?
- Get a clear objective.
- Research for a fund that meets that objective. There are lots of funds that set out to achieve different objectives.
- Start investing with a set direct debit plan.
- Reinvest dividends.
Really smooth! Now, what would you describe as the biggest hurdles faced by the everyday person who wants to invest in mutual funds?
There are a lot of hurdles that exist for individual investors from a lack of financial knowledge, no access to financial markets and stockbrokers to irresponsible fund managers that unnecessarily buy and sell investments they manage to ‘churn’ holdings and incur expenses.
Well said! What solutions would you suggest?
- Increase your knowledge and interest by studying investments.
- Technology means you can buy assets without physically seeing a stockbroker, I know a great app called Cowrywise.
- Attend AGM of funds, ask questions, ask what is ‘expense ratio of the fund’.
Final remarks?
Don’t ignore investing because of it’s just 1 Naira. Start early, invest consistently and watch inflation.
What has your experience with mutual funds been like? Share your lessons and hurdles with us and suggest your solutions!
Cowrywise helps you invest in mutual funds with as low as NGN1000 and we provide a fine mix anyone can choose from.
Download the Cowrywise app from Google Play Store or the Apple App Store and start saving and investing, or visit the Cowrywise website.
Ex – shopaholic here ?
Some days, it’s difficult to ignore the sales – genuinely so ??
But a locked plan plus the fear of going back to the past (the time when I had no personal savings but still thought I was living the good life??♀️) keep me going ??
No 7!!
I’m going to remove my card ASAP! :sob:
No. 4. very important
Always know your needs and your wants .. not all WANTS are NEEDS
We make that mistakes countless times , buying the things we don’t really need and later regret buying them but worse still keep repeating same mistakes again and again ??♂️.
Bye bye to buying by impulse ?
I am not sure if I am a shopaholic. You know that saying that you can’t know how you will behave in a particular situation if you haven’t been there.
I have mastered the art of taking time before buying anything. I also try to explain to a friend if I am at a crossroads of either buying or letting go.
Most times, we don’t know there is a difference between want and need because of love at first sight. Asking someone might help.
I love tips 5 & 7. 5 is important for everyone, we have been deceived to believe that we are saving money when we go for discounted goods (lol), my eyes do clear.
For 7, I have found myself several times letting go of buying something because my credit card isn’t near (this is my table)
All the tips are helpful.
Couldn’t help but scream for joy reading this article. . truly intentional limited cash develops your Survival skills . .by force!! – Lock your Funds today & Help your future finances!
As an ex – shopaholic., such habits comes with sinking emptiness and a certain point in Life it could be quite destructive.
Cowrywise indeed makes such transformation journey a lil’ easier.
????ope why did I have to open your mail just let me get this ear pod on discount in peace na ??