This has been an interesting season, no doubt! And for me, my greatest growth game has been in the way I think.

When I tell my friends I am really proud of the growth in my mindset, they don’t believe me. Well, it’s true. I have grown more in the way I think this year than in any other year in my life. 

When I say wealth is a by product of who you become. It’s because I’m living it. Everyday, I am becoming everything I think about.

I’ll share more about how the growth in the way I think has influenced how I invest this season in a subsequent email but this week, my focus is on sharing my investment lessons in the phase 2 of my investing activities as a millennial during this pandemic season. 

Let’s dig in.

1. Investing in the US Stock Market. 

Investing in the US stock market has been on my wish-list for a while. I remember feeling really bad, way back in the early 2000’s, when I found out I had to have a social security number to invest in the US stock market. Thankfully, today that’s a different story. 

There are now mobile apps that make it super easy for anyone to invest in the US stock market from Nigeria. I have tried investing on one or two mobile apps and they work. Unfortunately, I’m not at liberty to recommend any app in particular.

We had a webinar with the co-founder of one of the mobile apps making this happen with the members of the Green Investment Club and it was a great session. I am keen on independent opinion and we talked about other apps in the market on that webinar as well, so make your decisions wisely. 

I’ll be honest, while I’ve been actively following up on my stock portfolio and what’s going on in the US stock market. I have not been trading stocks for my portfolio myself. I’m working with an active trader in the US. That’s because of a couple of reasons; he lives in the USA so he’s on ground, he can monitor the market actively and take advantage of opportunities when they come up. I do not have the time right now to do that so this passive investment method works for me. 

I’m sharing this fact openly so you understand why it’s important to recognise when you cannot be an active investor in some markets and when you need to get help. If you can actively trade the market, feel free to be an active investor

That said, here’s one key thing I’ve learned from reviewing my portfolio and watching my trader’s activities; It is important for investors to understand the reason behind moves in the stock market.

Unlike the Nigerian stock market, the US stock market is very dynamic and reacts quickly to news and earning reports. For instance, In the US, the most predictable time to expect a stock price to move significantly is after a company releases its latest quarterly earnings report. Sometimes, the change is so precise, especially when a company meets or exceeds earning expectations. 

However, long term investors focus more on the underlying value of the stock and given enough time, a company that does well will eventually give investors great returns.

Case in point; Amazon. In 2010, Amazon traded at ~$134. This week, Amazon is trading at ~$3,200. That’s a huge leap (2,300%+) and it makes sense because Amazon has grown significantly as a company to support that growth. 

One of the reasons why I’m also working with a stock trader is because I don’t want to simply purchase stocks of popular companies I know. There are over 4,000 companies listed in the US stock market compared to about 161 companies in the Nigerian stock market. I’ll have to study stock analyst reports passionately to stay updated.

And trust me, I tried to keep up. I paid for the stock advisor newsletter subscription by The Motley Fool but I couldn’t keep up. When I realised I was missing out on great opportunities, I decided I’ll focus on my portfolio in Nigeria and outsource this. If you would like to get stock recommendations, I recommend The Motley Fool or Benzinga.

You can also invest in ETFs (Exchange Traded Funds). They are funds that track an index on the stock exchange and make it easy for you to invest in portfolio easily. For instance, you can invest in an ETF that tracks stocks of companies that pay dividend or stocks of companies in a particular sector.

2. Investing in a Venture Capital Fund

Investing in a venture capital fund is a long term decision and quite risky. When you invest in a venture capital fund, you’re basically saying, ”I’m going to take a risk on this company becoming the next big thing”. The truth is the company may or may not become the next big thing. If it does, the odds of earning really great returns on your investment is high. 

I have always wanted to invest in a venture capital fund. Maybe because I love to read stories about the investors who took a chance on companies like Apple,Uber and Airbnb and how it paid off handsomely years later or maybe I am just the incurable optimist who likes to support small businesses. Whichever is the case, I am glad I finally got the opportunity to invest in a fund this season 

This fund invests in Series A and Series B fund raising rounds. A series A round (also known as Series A financing or Series A investment) is the name typically given to a company’s first significant round of venture capital financing while Series B is the next round after Series A.

In simple terms, when a company raises series A from investors, they are raising funds from people that are not friends and family for the first time. To invest in this type of fund, you need to be aware that it can go either way, you can earn a high return on your investment or lose all your money. You don’t start out as a first time investor by investing in a venture capital fund, you need to build capacity first. 

Build capacity by learning how to invest and investing in traditional investment options so you have a buffer if you lose money by investing in a venture capital fund. A good example of a venture capital fund in Nigeria is Future Africa by Iyin (Co-founder, Andela and Flutterwave)

3. Investing in Real Estate in Nigeria. 

I love real estate. The first time I invested in real estate, I invested in bare land. 

Investing in land is a long term prospect and gets you on the real estate ladder but my family had a bigger goal to invest in property so we could earn rental income. While the prospect of earning rental income is still sometime in the future, we got closer to our goal this season.

How did we do it? We negotiated a flexible payment plan and stretched the timeline for payment over 12 months. 

This was a major feat for the location we wanted because the only reason why the real estate company was willing to accept our offer was because they had a high rate of payment default this season and were willing to work with anyone who was ready to invest.

Real estate companies have had to face the fact the real estate as an asset class is not so liquid (Cant be converted into cash easily) and right now people need access to cash when they need It. So they are facing payment defaults and a lot distressed sales. Distressed sales offer a great opportunity to buy an asset at a discount while a real estate company facing payment defaults will be happy to negotiate with an investor that can provide consistent payment over a period of time.

There you have it. These are the additional investing activities I’ve been up to this season. 

Just like you, I’m hoping the pandemic comes to an end or they find a vaccine soon. While we hope and pray, let’s all continue to stay safe and take advantage of opportunities to learn and grow when we can.

P.s. I was talking to a mentor recently and he told me those in his generation do not like to share their investment lessons openly. He said he was glad my generation was different. I am glad too! I share my lessons openly so we can all grow in wealth together. I’ll keep investing and I’ll keep sharing.

Ps. Did this blogpost resonate with you? Did you learn a tip or two? If you did please share a screenshot of this blogpost and tag me @tomiebalogun in your Instagram stories or on twitter. Let’s connect as the world continues to evolve into a virtual social space this season.

Until next week!

Warm regards
Tomie Balogun

 Ps. I’ll be sharing an update to this post with those on my email list. I have taken advantage of new opportunities in the US stock market, a US private equity fund and real estate since I wrote this blog post in March. Sign up to join my email list to read all about it!