Payday is coming and I’m as excited as you are. It’s essential to think about how you can make the most of this pay that is approaching, especially as the CBN has announced a new Monetary Policy Committee (MPC) rate.
Here are the key things from MPC that can impact your money:
- The MPC rate was raised by 150bps to 26.25% which means a 1.5% rate increase
- Cash Reserve Ratio for deposit money banks was retained at 45.00% and liquidity ratio at 30.00%
Wondering what this means? This implies that as inflation keeps rising due to higher food prices, increased power tariffs, and currency depreciation, we think the CBN will keep raising the policy rate in the near term. As such, you should stick to short-tenor instruments in the fixed-income space in order to avoid duration risk.
With this essential information, here are 3 key actions you should take to manage your money considering the new MPC rate:
- Invest a part of your funds in the Zedcrest Money Market: Keeping all your money in a savings account may not grow it enough to keep pace with inflation. Instead, you can consider investing a portion of your salary in low-risk investments like Zedcrest money market which is a short-tenor fixed income instrument, to potentially earn returns over time.
- Diversify your funds: Diversifying your investment portfolio can help spread out your risk. Instead of putting all your money into one investment, consider diversifying across different asset classes. For example, using the Zedcrest wealth app, some of your funds can be in the flexible or target savings and some can be in the dollar fund. In diversifying your funds, you can also invest in ETFs (Exchange-Traded Fund) by RiseVest. This way, you can take advantage of the benefits from the different types of investments.
- Invest in treasury bills: T-bills are considered a safe investment because they are backed by the government. This minimizes the risk of default. It offers a stable return with maturities ranging within a short term and this can be purchased with relatively low minimum investment.
By taking action on this, you can make the most of your salary by taking good decisions that align with your financial goals and protect your money against rising inflation. Also, our investment managers are on standby to advise you on the best decisions to take with your money.
