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Saving Money is A Trap! These 3 Reasons Explain Why

saving money

Saving money should be a short-term proposition. You should only save money while looking for your next investment. When the right investment appears, invest the money you’ve been saving in something that will give you a higher rate of return.

Here are three reasons why saving money is a trap.

1. Interest rates are less than 1%

Interest rates on savings throughout much of the world are extremely low, almost nonexistent in some parts. Your savings account is actually a loan to your bank. The bank takes the money from your savings account and loans it out to its customers at a much higher interest rate than they pay you. You basically finance your bank’s business for a ridiculously low rate of return on your money.

2. Inflation

The rate at which the general level of prices for goods and services is rising and, consequently, the purchasing power of currency is falling is called inflation. Central banks attempt to limit inflation, and avoid deflation, in order to keep the economy running smoothly.

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What does inflation mean in everyday terms? It means that your dollar buys less, i.e., your favorite brand of shoes or jeans will cost you many more naira, dollars, euros, yen, or pesos in the future than they do today.

saving money
Saving money compared to investment

3. Don’t work for money, have your money work for you.

It seems like a simple math equation: effort=reward. You work hard, you earn more, you get more for your effort, and it seems like it should work. Once upon a time, it may have worked that way. If your goal is to become financially independent then you need to get your money working for you. Meaning, investing in a cash-flowing asset is the true path to wealth.

Don’t fall for the trap. Get a financial education and start your path to financial freedom.


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Otoaye Godfrey Martins, an author and a public speaker, is the CEO of PrelMedia Communications Limited, the publishers of Business Investment Tabloid, the host of Entrepreneurship Campaign and Awareness Tour and the founder of African Communities of Entrepreneurs Network. He is an innovative serial entrepreneur with interests in tech and start-up developments. Otoaye Godfrey Martins, a specialist in management, business development, project management and consulting, is an advocate for financial and entrepreneurship education. He is also a social media strategist, a global commentator, a political and an economic analyst.

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ARTICLES

Source Beauty is pushing the boundaries of Egyptian e-commerce

Egyptian e-commerce

Egyptian e-commerce: the county’s digital drive has not yet gotten to the growth typically seen in European countries and North America. However, as businesses have started shifting online, customers are now following suit, resulting in the gradual development of the digital eco-system.

Innovation, such as digital marketing, is reinventing the consumers’ path to purchase. The Egyptian e-commerce market is expected to grow at a rate of 33% annually to approximately $3bn by 2022, according to Oxford Business Group.

Source Beauty and disruption

The increase in e-commerce comes from rising internet penetration rates, driven by connected and digitally savvy millennials. Several platforms, both locally and internationally, such as the direct-to-consumer beauty platform Source Beauty, have disrupted the beauty industry in the region to drive their growth by truly connecting with their customers.

By being aware of the changing consumer behaviour trends in the e-commerce landscape, service providers like Source Beauty are continually fostering customer engagement with a community they have created. The customer service team, along with the editorial and marketing teams, respond to each comment and direct message, making customers feel listened to.

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Lydia Schoonderbeek, the founder and CEO of Source Beauty, said:

Egypt has traditionally been a price-driven market. After devaluation and high inflation rates, people have become much more price sensitive. People are consuming less and are shifting away from imported products due to price, accessibility and inconsistency in supply. As a result, they’re looking for local alternatives.”

Egyptian e-commerce
Founder of Source Beauty, Lydia Schoonderbeek

In line with its digital transformation and financial inclusion agenda, the Egyptian government has set in place directives to raise the limit for electronic payments for individuals via mobile phones to EGP30,000 (USD1,905) per day, and EGP100,000 (USD6,350) per month, since March 2020. Traditionally, 70% of online purchases were cash on delivery, which has proven to be a major challenge to e-commerce growth throughout the region. This preference has changed to credit card payments, increasing to 30% from 16% due to the spread of Covid-19, but it remains to be seen whether purchasing behaviors will be affected in the long term.

The CEO of Source Beauty further added that, the company had seen substantial growth thanks to the COVID-19 global pandemic, with existing and new customers wanting to limit in-person beauty services and adhering to social distancing and mask-wearing requirements. Beauty customers, she says were changing spending habits, moving towards products that allow them to recreate the salon experience in their homes and protect them from the potential impact of an increasingly digital lifestyle. Finally, she believes they have seen customers prioritising skincare and haircare purchases over makeup.

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The question is, ‘Is anyone in Egypt going to buy beauty products online?’. Who thought people would buy books on the internet from a website called Amazon! Well, the answer seems to be YES. Consumer spending in Egypt on non-essential goods has reached EGP 3.90bn in 2020 and is set to reach 8.81bn in 2021, according to FitchSolution’s 2021 Report.

According to the Egyptian e-commerce beauty company, Source Beauty, it believes that the world is in an era where consumers are looking to associate with brands and not products, to make their beauty purchasing decisions and this is where homegrown brands like theirs will doubtlessly lead to economic growth in Egypt.

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