Why you should avoid Naira-Based Investment and Savings.
Disclaimer: I am not a financial adviser; the following insights are derived solely from my personal experience.
During the initial stages of my financial journey, I was part of the PiggyBank community, now known as PiggyVest. My primary goal was to cultivate a consistent saving habit on a monthly basis through their platform, albeit without accruing interest due to my choice of the Halal account. However, this endeavor was short-lived for several reasons.
While PiggyBank facilitated my saving efforts, I soon realized that I was incurring losses due to various bank charges such as SMS alerts, among others. Furthermore, my inability to resist the temptation of withdrawing funds outside the designated free withdrawal dates led to additional charges imposed by PiggyBank, ultimately penalizing me for what was deemed a suboptimal saving behavior.
In July 2023, my financial journey took a new turn when I discovered Cowrywise, a platform that not only aligned with my Halal preferences but also offered investment options. This allowed me to preserve my funds and potentially yield profits when necessary, acknowledging the inherent risks associated with financial ventures.
Reflecting on the past seven months, I pondered the possibility of converting each saved amount to USD at the time and subsequently exchanging it back to Naira whenever needed. This contemplation arose from the notion that such a strategy might have yielded more favorable outcomes compared to my previous approach.
I created a sheet, as shown in the image above recording all the money invested and found the equivalent in USD using the highest rate at the time. You can get this from https://twitter.com/naira_rates using the format below.
You only need to change the date to match your needs.
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The below chart shows a summary of each portfolio, the total amount invested, the profit, and the amount in NGN if the initial deposits are converted and saved in USD.
In summary, had I chosen to convert my NGN investments to USD at each respective date, utilizing the highest exchange rate available, and subsequently decided to exchange it back to Naira as of today (January 19th, 2024), I would have gained an additional ₦483,990.72 compared to the original sum of my investments.
This analysis prompts a compelling question for investors: Is it more prudent to persist with NGN-based investment platforms like Cowrywise, PiggyVest, marbles, etc., or should one contemplate the strategy of converting NGN savings to USD and patiently await the future for potential financial gains?
