Investment Advice for Young Women (And Even Not So Young Women)

A young women asked me for investment advice.

This is what I told her.

Anything can happen. Have enough in your savings account to cover a minimum of 6 months living expenses. This could be for you alone, you and your child or you and your partner and offspring. Save 20% of everything you earn. Just sock it away and make do with what ever is left over.

Once you have reached your savings threshold invest any excess in shares and bonds. Shares and bonds are pretty liquid so if you have an emergency or if after 6 months you haven’t restored  your income stream you can raise cash pretty quickly. Get a qualified stock broker to advise you but also read the business news and know when to buy and when  to sell.

Set your own threshold for your share portfolio. When the opportunity arises or when you feel comfortable start diversifying into landed property holdings. You want to buy the type of land that is cheap now but could appreciate significantly in ten or even twenty years time.

Landed property is a long term investment and it isn’t liquid which means if you have an emergency you will not be able to sell it quickly at the price its worth. It can take up to a year or longer to sell landed property. As your income grows buy more Pall Mall and less Mediterranean Avenue. Your objective should be to hotels. Ever play Monopoly? Check it out.

Last but not least decide how much of your revenue/income/investment you want to save in gold. Gold is the baba of all value. Even if there is a nuclear holocaust or all the banking systems are completely distorted by a super computer virus your gold will have weight and value.

If you are buying gold jewellery as an investment buy it by weigh and not by designer. If you need to fling it in a hurry they will buy it by weight. It doesn’t matter if its Cartier unless its 100 years later at Sotheby’s.

In a hundred years your descendants may be able to sell your Rolex or your Phillip Patek  watch for a significant return at auction but these things also take time (ok, even you might be able to sell it for a profit it in your old age). The other brands don’t do so well and have lower investment value. Go follow Sotheby’s for a while and find out for yourself.

When you buy art to hang on your wall think in terms of investment too. Buy artists who you think will appreciate over the years and who may already have a track record at auction. While you are at it invest in African artists. A Diseye Tantua, who I invest in, has sold at auction for NGN2.5 million. It was originally bought for NGN500,000. Google it. Educate yourself. Decide. For yourself.

Don’t be in a hurry to repay mom and dad for their investment in you. Except it is an emergency. Wait till you have built some net worth before taking care of every body and the dog. The difference between financial security when you are older and constant crisis is those early investments. If you spend all your discretionary income when you are young you will suffer it later.

So my investment strategy –

  1. Build emergency savings
  2. Open stock portfolio with licensed stock broker
  3. Invest in gold – as jewellery or as coins
  4. Invest in landed property on the outskirts of urban developments
  5. Decorate your home with art pieces that appreciate in value. Picasso’s sell for outrageous sums for a reason.
  6. Invest in jewellery and watches that appreciate and resell well at return

Please Note: This advice is not meant to replace the expert advice of  your stock broker, banker, or investment adviser. Educate your self.

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