In this short video, Ndubuisi 'Andy' Egwim emphasizes the importance of establishing a financial safety net before committing any money to investments. He outlines common life emergencies—such as car breakdowns, medical bills, job loss, or urgent travel—that can require immediate cash. Andy warns that if all spare funds are tied up in equities during a market downturn, an investor may be forced to sell at a loss, turning a temporary dip into a permanent loss. Drawing on his personal experience of living through three major market crashes, he explains how having liquid cash reserves allowed him to avoid panic selling and even take advantage of discounted buying opportunities during the last two crashes. He concludes with a clear call to prioritize an emergency fund before investing, balancing prayer for the best with planning for the worst.
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Before I start thinking about investing, I need to think about safety. What happens when life happens? When things don't go to plan? Do you have a financial safety net in place? Are you about to invest your last penny? What happens if your car breaks down, your boiler packs up, you lose your job? I mean, don't pray for these things, but you have to plan. You have to prepare. You suddenly need to fly home because of an emergency, family emergency. You have an unexpected medical bill. Life is life. These things could happen. We've seen them happen with doctors as well. So where does that money come from? Now, I know someone is already saying, especially if you're Nigerian, probably people say things like, God forbid, it's not my portion.
God forbid. Again, God forbid.
And absolutely, we pray for the best, but we plan for the worst. Because here's the problem. Suppose virtually all your spare money is invested in shares, then an emergency happens. And unfortunately, if it happens during a market crash, and market crashes do happen, I've lived through 3 major market crashes, If a market crash is happening and your investments are down 30%, you need the money. So now you are forced to sell at a loss, even though these are solid companies. And something that might have been a temporary fall in value becomes a permanent loss for you because you had no choice but to sell your stocks or even index funds. I've lived through 3 major market crashes as an investor. And one thing that helped me enormously was this. I wasn't under any pressure to sell, especially in the last 2. In fact, if I desperately needed that money during the crash, I might have crystallized those losses and I had to start again. So far, the last were very helpful for me because I was buying at a discount. So before investing, think about keeping aside money for emergencies.
