Suppose in 2013, two friends, Ayo and Chijioke, each had an equivalent of $10,000. Ayo decided to keep his money in a Nigerian bank, and Chijioke chose to hold his in USD. Let’s see how their investments panned out:
Investment A (Ayo):
– Initial Amount (2013): ₦1,570,000 (equivalent to $10,000 at 157/$ exchange rate)
– Annual Interest: 15%
– Total after 10 years: ₦4,051,224.36
Investment B (Chijioke):
– Initial Amount (2013): $10,000
– Annual Interest: 0% (held in USD without any yield)
– Total after 10 years: $10,000
In 2023, let’s convert Chijioke’s $10,000 back to Naira at the current rate:
– $10,000 x 1200/$ = ₦12,000,000
Comparing the two:
– Ayo’s ₦4,051,224.36, with a decade of 15% interest annually, pales in comparison to Chijioke’s ₦12,000,000, even with 0% yield, all due to the currency devaluation.
This real-world example starkly showcases the erosion of purchasing power and wealth when solely relying on high-interest rates in a currency experiencing significant devaluation. The stability and strength of holding assets in stronger currencies, even without substantial returns, can result in more substantial wealth preservation and growth.
GuardianWealth, recognizing this, provides Nigerians the opportunity to leverage such stability, diversifying their portfolios into assets that not only hold their value but can appreciate significantly over time.
The Power of Real Estate: Extending the Illustration
Suppose in 2013, a third friend, Ifeoma, also had an equivalent of $10,000. She decided to invest her money in US real estate. Let’s consider average annual appreciation rates for US real estate and potential rental income.
Investment C (Ifeoma):
– Initial Amount (2013): $10,000
– Real Estate Annual Appreciation: 5% (This is a conservative estimate. US real estate appreciation can vary based on location and other factors.)
– Annual Rental Income: 7% of property value (after expenses, maintenance, etc.
– Total after 10 years from appreciation alone: $16,386.85
– Total Rental Income over 10 years: $8,715.57 (This accumulates as the property value grows each year.)
– Combined Total: $25,102.42
In 2023, when Ifeoma decides to convert her returns back to Naira:
– $25,102.42 x 1200/$ = ₦30,122,904
Comparison of Investments in 2023:
– Ayo (Naira with 15% interest): ₦4,051,224.36
– Chijioke (Holding in USD): ₦12,000,000
– Ifeoma (US Real Estate with appreciation and rental income): ₦30,122,904
Ifeoma’s decision to invest in US real estate, which not only appreciated in value but also provided a steady rental income, outperformed both Ayo’s and Chijioke’s strategies, yielding a return that was more than double Chijioke’s simple USD hold and returned more than 7x Ayo’s Naira investment.
This tangible example underscores the appeal and potential of real estate investments, especially in stable economies. Not only does it act as a hedge against currency devaluation, but it also offers avenues for consistent passive income and capital appreciation.
GuardianWealth provides Nigerians the roadmap to embark on this journey, transforming their investment strategies and propelling their wealth to new heights.
