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Tomie Balogun: Creating wealth through investment club

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Investment
Tomilola Balogun

By Henry Ojelu

In a generation where youths are scrambling for the next available job, Tomilola Balogun is making a difference by creating wealth through a unique business model- investment club. With over a decade expertise in management consulting, telecommunications, financial education and valued added technology, Tomilola through her Green Investment Club, have rallied thousands of young investors to invest over N1.5billion in multiple opportunities and small businesses in Nigeria. In this interview, Tomilola who is also the founder and Chief Executive Officer of Vestract, a financial education and technology company, shares how she is working to raise African millennial millionaires across the globe.

The decision to venture into finance, investments

I studied economics as a first degree, so I was quite exposed to the world of finance in the course of study and in my career. However, despite being exposed to finance, I got to a certain point in my career when I realised being knowledgeable about finance was very different from having working knowledge on how to manage my personal finance and investment decisions. This was a wake-up call for me and it set me on a path to learning as much as I could about how to put my money to work.

Thankfully, I found like-minded friends who were my MBA classmates at the time who shared the same sentiments. We decided to start an investment club for four key reasons; to pool our individual funds together so we could have a lot more cash to invest, to get access to bigger investment opportunities, to share the rewards and risks of investing together and to hold ourselves accountable to our financial goals. Starting an investment club gave me an education in investment I didn’t realise I lacked. I learned how to invest in treasury bills, the stock market, money market, small businesses etc.

It was quite exciting and scary at the same time because we lost money and we gained money on some transactions. Today, I manage the biggest investment club in Nigeria and a digital investment platform that curates credible investment opportunities in Nigeria as well. The digital investment platform is currently only open to members of the Green Investment Club. We plan to open up to the public sometime this year.

Investment club model

In one of my bestselling books, I shared my story on starting an investment club with friends. The book also shares the 4-step process to start, manage, invest and grow an investment club. Based on this 4-step process, the book outlines the 3 models of investment clubs I have implemented in Nigeria over a 5-year period backed by case studies from other people I interviewed who also manage investment clubs in Nigeria, Kenya, UK and the USA.

The three models of investment clubs include the financial model, the project-based model and the non-financial accountability model. The financial model is the traditional model of investment clubs which is quite popular all around the world.

In a financial investment club, members contribute an agreed sum of money on a regular basis towards investing in multiple investment opportunities as a group. This model comes with its pros and cons, all of which I outline in detail in my book. The project-based model focuses on investing in a particular industry or an investment opportunity in one industry. This model is quite popular for real estate projects.

I personally managed a project-based model for 2 years for 40 women who set out to invest in real estate in Lagos, Nigeria. This model offers a lot of benefits if you want to invest in an opportunity you cannot afford yourself or need to take advantage of the power of many. The non-financial model like the name suggests is simply an accountability group where members set goals, hold themselves accountable and share investment opportunities with each other. The green investment club currently implements this model and we have seen the club grow to close to 1,000 members across 13 countries who consistently invest in multiple investment opportunities in Nigeria.

Club achievements

Starting the Green Investment Club was an experiment. I blogged weekly on my personal website, www.tomiebalogun.com, about my investment club and received so many requests to start a club for those who thought they didn’t have the right friends to start an investment club with. I took up the challenge and started the Green Investment Club in October 2017. Today, we have close to 1,000 members (mostly Nigerians) who live in 13 countries.

My greatest achievement with the Green Investment Club is seeing the results of our members. Our members have actively built investment portfolios which have helped them make flexible life decisions. As a group, we have invested over N1.5billion in multiple investment opportunities and small businesses in Nigeria. Our members in the USA have also invested actively in real estate in USA.

Worst investment experience

When I and four other friends started our financial investment club in 2013, we were excited about the prospects of what we could achieve. We had read so many Silicon Valley investment success stories and I guess we were a bit naïve about what we could achieve in Nigeria. We set out to invest in small businesses with great impact potential and the ability to scale.

One of our very first investments was in a carpool service business for young working professionals. This was before the advent of Uber in Lagos. One of the members of the club subscribed to a car service that picked him up at home, dropped him off at work, picked him up at close of work and dropped him off at home every day. He paid for this service on a monthly basis and was relieved he didn’t have to think about how to get to and from work since he didn’t own a car yet.

This service was in demand and we saw the opportunity to help the owner scale up his operations. We invested and as MBA graduates, we thought we had mitigated all the risks that come with investing in a small business. Apparently we didn’t mitigate the risk of multiple bounced cheques. Did we lose money? Yes, but the lessons from this transaction have stayed with us, helped me make some more critical investment decisions afterward and teach others how to avoid these mistakes too. I know a lot of people avoid investment risk because they are afraid of losing money, but the truth is we win some, we lose some.

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Greatest investment discovery

My greatest discovery also counts as my greatest lesson, which is matching my investment decisions with my stage of life. I do not invest based on trends anymore. I only invest in what is right for me at a certain point in time based on budget and specific goals. I believe this frees from the pressure to catch on to any trends. I reach out to experts to learn as much as I can about the trend and based on the information shared, I decide if it is right for me at that particular moment or not. If we study the stories of world’s richest men, you’ll find a common element in the way they make investment and business decisions as well.

Common Investment mistakes

We fall prey to money scams too often. I do not know if it is the urge to earn a quick buck or the pressure of the economy, but we need to be careful with these numerous investment scams that spring up every day. When an investment opportunity promises you a return on investment that sounds too good to be true, it is probably too good to be true. We need to ask more questions on the credibility of these investment platforms or opportunities. What are they doing to earn the promised returns? Is it a legitimate business or simply a Ponzi scheme? Do they have clear operational activities and corporate governance? These questions need to be asked more often.

Financial problem among youths

The biggest financial problem I see is millennials/youths will not earn adequate income to sustain a basic lifestyle. Social media also doesn’t help as the everyday show-off of wealth by unscrupulous youth makes it look like building wealth is easy and anyone can get wealthy overnight. Well, maybe if you win a lottery. Seriously though, the dire economic situation and social media influence have contributed to a high level of greed and the willingness to do anything simply to make money. This is a problem we can address with the right mentors or role models and the right financial education.

Vanguard

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