Should I Sell My Land to Buy US Stocks?

Good morning and how are you doing?

Friday letters are usually dedicated to taking questions from our community. Do you have a question for us? Please feel free to send an e-mail to [email protected] or a DM to any of our social media channels.

Question

What ETFs can I buy as a beginner?

Answer 

ETF means Exchange Traded Fund. Think of it as a hamper. In a hamper, you have different items, even though you can get each item individually. Having the hamper gives you access to all the items in it. 

ETFs work in the same manner. So rather than having to hold individual stocks, one can buy an ETF that covers different sectors, countries or even stock markets. Holding ETFs helps to diversify one’s investments, and at the same time reduce the time needed to monitor different investments.

Question 

I would like to save and invest in dollars, how do I go about it?

Answer 

Technology has made savings and investing in dollars easy for us. We now have different types of fintech (financial technology) apps that allow us to save and invest in dollars. 

All you need to do is download any of these apps and do all the necessary registration and applications and start saving and investing. 

However, these investments are best when you plan to invest for the long term, and not for just a short period of time because you would get more value from it than investing in the short term.

Question

I bought two plots of land for ₦1 million in 2017. I haven’t fenced it or done anything to it. In 2019, when I asked if it had appreciated, I was told I could get double the price for what I bought.

Now, I’m confused about whether to sell and invest in the US stock market and other dollar assets, or fence it and just hold on taking into consideration pricing of cement and other things if I decide to fence now.

Answer 

There are a lot of questions to answer before you can actually decide on what to do.

Why did you buy the plots in the first place? Did you do so with the intention of selling in the future or to develop it?  

While they have appreciated in value, long run inflation of 12% per annum means that your potential gains may be far less. Inflation is the rate at which the price of goods and services increases over time. Put another way, it is the rate at which money loses value over time. 

What are your financial goals? 

Financial goals are objectives that you want your money to cover within a specific time. It can be a short or long term goal

Do you have other investments in naira or is it just the land? 

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Do you think the person should sell the land to buy US stocks or not?