“Someone’s sitting in the shade today because someone planted a tree a long time ago.” — Warren Buffett
It may seem like a contradiction, but economies require both individual spending and saving to thrive. When people spend money on goods and services, it leads to increased job creation and employment, and that means more people with money to spend. When people save money with formal financial institutions, those institutions can lend to businesses or invest in growing sectors and return interest to the saver. The more people save, the more money is available to help businesses grow, which leads to job creation and employment. So, a strong economy needs its population to spend and save.
The savings rate is the ratio of personal savings to disposable personal income (i.e., what percentage of their income individuals within an economy choose to save rather than spend). A country’s savings rate is a significant determinant of economic growth. Investments are financed from savings, so countries with higher savings rates have more capital to invest leading to higher GDP growth. Economies with a poor savings culture likely focus on short-term consumption over long-term investment, this can lead to slower or stalled economic growth.
For individuals, the need to balance spending and saving is an ongoing battle. Most people must weigh what they want today against what they want for our future, e.g., ‘buy the nice car now, or buy a less expensive car and save the extra towards buying a home in a few years.’ It’s natural to crave the good things in life; you work hard, and you should enjoy the fruits of your labour. Enjoy them too much, however, and you can find yourself in trouble. When you spend all your money, you are less able to cope with financial shocks, like medical emergencies or unforeseen expenses. It’s also harder to take advantage of wealth creation opportunities or investments when they come up. Therefore, adopting a savings culture is vital for people who want to become financially free.
Halo Financial Services, a newly launched fintech, is leveraging technology to help people get the best possible returns on their savings. One of the innovations Halo is bringing to the market is its community approach. With Halo, when people save in groups their individual interest rate is calculated on the total amount the group is saving. Interest rates increase as the amount saved increases; thus, Halo allows each individual to benefit from the power of their collective. For example, if there are ten people in a group saving 10,000 Naira each, their interest rate would be calculated based on 100,000 Naira (the total amount the group is saving).
Chief Growth Officer for Halo Financial Services, Nnenna Onyewuchi, says, ‘savings improve the financial health of both the individual and the society. When those savings are channelled into investments, the benefits are even greater. When you invest, you put your savings to work. It’s why Halo is making it easier for people not only to save but to invest. Savings provide security, which is important. But investments are how you build wealth. Which is ultimately what our customers want.’
Many people believe you must be rich to be an investor. The truth is you become rich by investing. Start by setting aside a small portion of your income and channelling it towards savings and investments. Halo provides both fixed and goal savings plans, some you can start with as little as 1,000 Naira a month. Fixed savings allow you to lock an amount of money away for a specific period. This reduces the temptation to spend it and earns you good interest. Goal savings allows you to put money away regularly to reach a target amount, all while earning interest. This allows you to build up funds over time to reach your goal. On the investment side, Halo offers a variety of products including mutual funds, local and US stocks, and private funds for investment in real estate, commodities and more. Some investments, start as low as N5,000. When you invest, you put your savings to work.
Chief Investment Officer of Halo, Adekunle Akintunde, suggests, “with the current economic landscape, it has become apparent that one cannot merely save their way to wealth. Increasing earnings by making worthwhile investments is a life-changing choice you should consider. Halo is dedicated to helping you build and sustain wealth by providing you with both investment products and the information and advice you need to make smart decisions. We help you see why having an investment is a significant step towards financial security.”
One of the biggest barriers for individuals when it comes to investing is a risk. By their nature, investments can make or lose money. Successful investors learn how to manage their risk while maximising returns. Halo offers an array of investment options to suit a variety of risk appetites. From low-risk vehicles like money market funds and bonds, suitable for more cautious or inexperienced investors, to local and US equities that are more volatile and suitable for more knowledgeable investors. Halo also provides information, tips, and guidance to help individuals, no matter their level of experience, make the best possible financial decisions. Halo believes everyone, regardless of age, gender, or income level can, and should, build wealth through investments.
In addition to savings and investment products, Halo offers a full suite of banking products including a bank account, payments, and credit. Halo holds licences from two regulators, CBN and the SEC, this provides assurance to customers that their funds are safe, and the company has the highest standards of corporate governance and risk management.
A country’s economic health is founded on its citizens’ financial condition. For Nigeria’s economy to grow, more Nigerians need to achieve financial stability. Building a better savings culture and channelling those savings into investment is a sure way to start. The more Nigerians save and invest, the more capital there is in the economy for businesses to expand, which leads to greater job creation, which leads to more people with money in their pockets. A strong savings culture benefits us all. Companies like Halo, which are making it easier for individuals to save and invest, are contributing to Nigeria’s overall economic growth.