How your money can work for you

THE PUNCH Newspaper- Gbenga Agbana

With the interest rate on savings accounts very low and unattractive, especially for small savers and people with small income, it is imperative for workers and small businessmen to look for avenues of enhancing the value of their money by putting it where it can work for them.

Though there are investment opportunities in the stock market, the global economic meltdown has reduced the interest of investors in stocks, but investment in mutual funds is still very viable for small investors, according to experts. However, investors are gradually coming out of their shells, as the indices of corporate performance which fell significantly in 2007 and 2008, are now rising.

However, the return on investment for small investors is still insignificant and the dividend they get is not much.

To some experts who spoke with our correspondent on the issue, rather than keeping monies that are insignificant and will not earn much interest in the bank, it is advisable that the owners of such funds should put them into profitable ventures, where they will make more money.

According to them, one of the ways people with small income or artisans can make their money work for them is by engaging in small-scale buying and selling of goods that are in high demand, like food items; engaging in mini transportation business, or providing some essential services like setting up a cyber cafe in a densely populated area, where there will be a ready market for the business.

A former member of staff of an indigenous oil company, Mr. Adebayo Dada, said he deposited N1m in a bank for six months in his savings account, with the hope of getting something substantial as interest at the end of the period, because he did not need the money immediately.

He was however, disappointed when he got to his bank, only to discover that the interest he earned was so little, which prompted him to withdraw the money and use it to start a small business, which has grown over time.

He said, ”I was not impressed at all with what I met in my account as interest on my money after that long period. Although I did not put it in a fixed deposit account, I did not expect the interest to be that low. I discussed with my wife on what we can do with the money. We prayed together and she came up with the idea of a small transport business, which we started with the N1m.

”We bought 10 motorcycles, otherwise known as Okada, and we got some people around to drive them through the leadership of their group, and it is working. We bought each of the motorcycles for a little less than N100,000, registered them and gave it to the riders on higher purchase at N140,000 each, with five months period for them to pay the full amount. The business is growing and we have made so much money from it. It however requires adequate monitoring and my wife is handling that aspect, because I do other things.‘‘

Mr. Kayode Ogunyemi, a staff of a private firm in Lagos also said small investors with little income should consider putting their money in mutual funds, if they must invest in the stock market, since it is a sure way of getting their portfolio diversified and ensuring they get better returns on their little income and savings.

According to him, the interest he earns on his savings account is not attractive, because he does not have the capability to put much money in the account.

He explained that he now put his money in a small-scale business, which is not only giving him more returns, but his cash flow has also been enhanced significantly.

He said, ”I have weighed the options and I discovered that there was no point tying my money down somewhere without allowing it to work for me. When I considered what I could do to enhance my cash flow and make my money work for me, I decided to start a viewing centre, where people can relax and watch football matches, especially during the premier league and other competitions. I have also expanded the business by adding a cyber cafe and through that, my money is working for me and I am making profit. I also have some money in stocks, for long term purposes and I am getting my small dividends and bonuses.”


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