My Money Mistake is a weekly PiggyVest series that explores the worst money mistakes real Nigerians have made, and the lessons they learnt from it.
For this week’s episode of My Money Mistake, we spoke to a real estate executive who exchanged his savings of $50k for naira and now regrets the decision. He tells us about the decision, and why he no longer listens to online financial analysts.
Could you tell me about your money mistake?
I work in real estate and often deal with substantial amounts of money. To safeguard the value of my investments, I typically save in dollars. When I’m paid in naira, I quickly convert it to dollars and store it. I’ve done this since the exchange rate was around ₦400 to a dollar.
After the swearing-in last May, there were numerous speculations about the naira strengthening against the dollar, making it unprofitable to hold onto dollars. This was also the general sentiment on Twitter and among some of my financial analyst friends. Even the BDC clerks I knew were expressing similar opinions.
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So, I converted all my dollars back into naira.
You did what?
Yeah, it was around $50k in total. I converted all of it to naira. I did end up making a little profit because, at the time, a dollar was going for about ₦800/₦900, and the highest exchange rate I had used to purchase dollars was ₦600. But thinking about it, if I had just held on, I’d be balling by now.
But aside from the speculation, did you see any proof of the naira gaining against the dollar?
Not really, but there was a moment not too long after the swearing-in when the naira gained briefly against the dollar, and it seemed like that trend might continue. I was concerned about potentially losing the value of my money because I had bought most of it with naira.
And considering that all these folks who are supposedly smarter than me — some with better insight into the economy and access to information from the president — were saying the same thing, I thought there might be some truth to it.
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So it must hurt seeing how badly the naira is performing now.
It does. I should have never done it because there’s no coming back from it without incurring a loss now. I didn’t need the money for anything urgent, so there was no pressing need to convert it. The naira has depreciated so much that I could’ve doubled the amount by simply waiting.
When did it become clear to you that the forecast was false?
Around November/December. The naira just continued to drop rapidly.
What lesson did you learn from this experience?
I should’ve been wiser in managing the money. There was definitely no upside to converting that significant amount of money to naira. If I wanted to hedge my bets, I could’ve exchanged some of it and observed the market before converting the entire amount.
I am also more sceptical of financial advice, especially from Twitter. I’ve seen, firsthand, how unreliable it can be.
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[You can save in dollars using PiggyVest’s Flex Dollar feature. Try it here.]
