M36 webinar highlights lessons for investing in today’s world
As the world slowly but surly recovers from the all round ramification impacts of the global COVID-19 pandemic, M36, a new digital lifestyle and investment platform powered by Union Bank has highlighted five lessons for investing in the post-COVID world through its webinar.
The webinar which was tagged “Investing in These Times” was held in collaboration with Sankore, a local boutique wealth management firm, presented an opportunity for participants to get insights and ask questions about wealth planning and trends to watch and jump on in today’s economy.
The speakers at the webinar included Olayemi Agbe-Davies, Chief Dealer at Union Bank, and Titi Odunfa-Adeoye, Founder and Chief Investment Officer, Sankore, who shared insights on Nigeria’s economic outlook, the investment outlook for this year, and how to set the right investment strategy.
With the unprecedented times brought on by the Coronavirus pandemic which gave rise to considerable volatility and uncertainty in the financial markets, the speakers treated lessons on how investing in fixed income instruments such as FGN bonds and Treasury Bills should be a focus for everyone at this time. They highlighted the importance of developing a rigorous long-term asset allocation plan while understanding the ‘risk and return’ dynamics within the asset classes.
They stated that all investors risk-averse, moderate and aggressive need a long-term asset allocation, irrespective the yields, as fixed-income returns give the security and confidence to take risks and make returns. “If you don’t have a long-term investment allocation, it is important to create one now. With that in place, you can then think of the various channels to grow your portfolio.”
Also, diversify your portfolio and stay liquid – cash flow is essential considering how the stock market reacts to what goes on in the world, which is ultra-sensitive to existential crises such as a pandemic. “Hence, diversification of a portfolio is the key to going through tough times. The purpose of diversification is to spread the risk associated with your investment portfolio, which implies not putting all your eggs into one basket. Having a diversified portfolio across stocks, fixed income and other asset classes can help to smoothen out these peaks and troughs and generate more consistent investment returns.”
The second lesson further clarified that an integral part of a good investment strategy requires that a significant part of your portfolio stay near liquid as this can come in handy as a buffer against any unforeseen events. Staying liquid allows you to tap into new investment opportunities when they emerge.
The third lesson identified buying of real assets inflation and rising interest rates as some common themes for both long and short-term goal setting, and the primary purpose of real asset investments in a portfolio is to serve as a hedge against rising inflation. “Unnecessary risk can be avoided with clearly defined objectives. Real assets such as gold and real estate delivers many benefits, including strong and steady returns, protection from inflation and portfolio diversification.
The fourth lesson addressed tactical trades as many individual portfolios tend to be unprepared for shocks, and the pandemic highlighted the need for investors to be prepared for the unexpected. This can be achieved with tactical trading which is a style of investment that involves long or short-term view in different asset classes as opportunities arise. “Tactical trades help investors optimise their returns to improving their returns in the short-term returns.”
The speakers further recommended asset classes for 2021 in the long and short term such as Real Estate, S&P 500, Agriculture, Treasury Bills, FGN Bonds Private Equity/Venture Capital opportunities and NGN/US equities, and Gold.
“While these are the suggested trades for 2021, it is important to remember that your core portfolio should be in fixed income and near liquid.”
The fifth lesson emphasised on the need to seek expert advice. “While many individuals believe they can navigate the investment landscape without expert advice, it is important to seek the services of an experienced investment advisor who can guide you. Investing in today’s world comes with a lot of uncertainties and having the right investment partner that understands your lifestyle and investment goals can make all the difference. Your portfolio needs to be set up for unprecedented occurrences like a pandemic and even if your portfolio was not initially COVID ready, the goal is to make it ready for whatever will come next.”