Friday, July 19, 2024
Speak Your MindCatching Up: Rethinking investments, loans as costs rise

Catching Up: Rethinking investments, loans as costs rise

Inflation and the cost of living have been and continue to be the most pressing topics of discussion among Ethiopians, especially in recent years. Affording basic necessities like food and shelter has become progressively more difficult for most, particularly those living in towns and cities. The cost of rent is the primary factor that many Ethiopians find extremely challenging to manage, followed by the cost of food items. Despite the government’s efforts to curb inflation and ensure a minimum standard of living for Ethiopians, it seems that not much has changed.

Although agricultural production has reached record highs this year, it has not convinced our fellow citizens. People are forced to compromise either on quality or quantity of the food items they consume due to the market’s unaffordable prices. Those of us residing in major cities face the burden of skyrocketing rent costs.

Owning a house, even a small one, is an unimaginable luxury for many. Only the wealthy have the disposable income to acquire housing in cities. However, people continue to endure because they must. Ethiopians are, in my opinion, remarkably adaptable individuals with a high tolerance for suffering and hardship. It takes considerable pain and suffering to finally voice their grievances and defend their basic rights.

While the high cost of living has particularly impacted civil servants, even salaried individuals working in international NGOs, who can be considered relatively wealthier than others, are gradually feeling the burden. A friend of mine working for one of the highest-paying NGOs in the country once told me that even staff members at her organization cannot afford housing loans due to the exorbitant prices. These individuals earn salaries in the hundreds of thousands of birr per month, yet they are unable to purchase an apartment or manage the significantly high monthly interest rates associated with such loans. According to her, these individuals are opting to buy expensive cars instead of investing in properties. As a result, houses have become the exclusive domain of wealthy businessmen and the diaspora community.

Personally, the high cost of living has taught me one thing: those who can afford it should focus on investments and minimize cash savings in banks.

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In my opinion, individuals should keep in the bank only the cash they need for emergencies, and not much more. Any person with disposable income should invest their money in assets such as shares in organizations, gold, or even furniture. Those who have access to loans, whether from financial institutions or from friends and family, should not hesitate to take advantage of those opportunities.

My motto is that “things are always cheaper today than tomorrow.” Instead of waiting for cash to accumulate before purchasing shares, gold, furniture, a house, or a car, take a loan from those who are able and willing to provide it, and acquire those assets. Then, you can relax and repay your loan over time. By the time you have fully repaid your loan, the value of the asset you purchased with borrowed money will have earned you a profit far greater than the amount borrowed. So, I believe those of us who fear loans shouldn’t! Loans are, in my opinion, our only viable option to keep up with the soaring prices of assets.

[speaker]
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