Thread by @KolaOyeneyin

Cash is King, but which kingdom?

Money is not something I like to write or talk about online, especially given the kind of environment we operate in and how easily one could be misunderstood. However, I owe it to the young people in my network, they need this now.

A thread!

Please pay close attention; if you don't understand money, you will taste poverty! I tasted it early in my life, and it was not pleasant. Story for another day!

Before, during and after COVID19, cash is still king. The question however is, which kingdom and whose cash?

Let’s assume that today I give you $1,000 and Ninja420,000 (that's the Ninja equivalent of $1k, according today's Ninja rate), and I ask you to keep them and return them to me in 10years. Don’t invest or spend them, just keep them safely and return when I ask for it in 2030.

By the time you give me back $1,000 in 10yrs, though it will still be $1,000 (in its paper form, with Benjamin Franklin), its true value is now $820. And by the time you give me my Ninja420k, its value in 10yrs will be Ninja135k. Same amount of money, but different values.

What changed? Over the 10yr period, the money was “eaten", "discounted” or "eroded" (choose the word you like) by something called inflation rate; think of it as the rate at which your shoes wear out over the years by simply wearing it about.

The Kingdom, sorry country, that “owns” the dollar, in this case, the US has an average inflation rate of 2% (actually lower but let's assume 2%). Over 10yrs, the $1,000 dollars that I gave you lost only about 17% in value; all things being equal.

On the contrary. The average inflation rate in the Kingdom, that owns the Naira is 11%. So what looks so big in Ninja420k today lost about 69% of its value over 10yrs, to Ninja135K. While both these currencies lose value over time, one lost about 3 times, compared to the other.

What should have said to me when I was giving you the money? Yes, you guessed it! Give me both in dollars or go and change the Ninja to dollars. If you changed the Ninja420K to dollar immediately I gave you. In 10yrs, the value would be Ninja344K; almost 3 times Ninja133k

What do wise people do with money?

1. Hold it in a currency that retains the highest value over time
2. Invest it in a low/risk-free investment that returns the value you lose per year
3. Invest it in a high risk venture that returns even higher that the rate you’re losing

What most people do with money?
1. They save it over time
2. They hold it in currencies that lose value sporadically
3. They spend it as they have it

Now replace Ninja with your country's currency. If its inflation rate matches or beats the dollar, keep it your currency!

As an entrepreneur and an investor, I do not believe that US dollar will be the best way to hold money in the long term. For now it is. While we wait for digital currencies to fully take their positions in the global financial system, the less Ninja you hold, the better for you

Until your govts sort themselves out, protect yourself; that's the only insurance you have it, with no premium attached. Trust me, your leaders and official are storing dollars under their bed.

I do believe that soon, my own country's currency, THE NAIRA will rival the dollar:)