Did you know we have over 200 securities brokerage firms in Nigeria? Ye, they are that many.
If you want to buy/sell stocks and bonds in Nigeria, you’d need to open a brokerage account with a stockbroker that is a dealing member of the Nigerian Stock Exchange (NSE). Interestingly, in recent years, we’ve also seen some fintech platforms provide brokerage services in affiliation with a licensed dealing member firm.
In recent years, we have also seen some fintech platforms provide brokerage services in partnership with some dealing member firms. For instance we have wealth.ng partnering with Sankore Securities Limited.
Please note that this is not an exhaustive list and we would continue to update it with time.
Just contact any of them via their website to get guidance on their internal processes and fees.
First off, we all need to take seriously the social distancing guidelines issued by the government. The health and lives of many people depend on it. __ Asides from the current social and economic effects of the corona virus, there would be aftereffects.
For instance, would we be surprised to see a baby boom in the next 9-months? Also, could we see global warming dial back given the sharp reduction in emissions from factories, airplanes etc.
Now that couples are stuck with each other in the house, maybe they actually have those deep conversations. It could also pan out that they are in each others face to much and that could throw up issues of its own.
Anyway, I’m certain we would come out of this situation. However, many areas of our life and business are going to be completely upended.
While some industries/ businesses are going to be hurt and we would have some new industries/businesses and some would start bloom.
After this COVID-19 situation it may pan out that businesses realize they can do this remote work thing, so they scale back on leasing large office spaces in favor of co-working spaces. It may also pan out that people figure they can leave in Ikorodu and work on the Island, if they only need to make the commute once or twice in a week.
Anyway, I think there would be many unintended consequences from this crisis and those who are able to correctly identify the winners and losers would be the success stories of this decade.
Remember the popular 50.30.20 budget? Do you feel it’s appropriate for you?
Last weekend, someone in the Tribe asked why he should allocate only 20% of his salary to savings/investments. He felt it was too small.
I just want to point out that the 50.30.20 budget is only a guide. You can spin it anyhow you want. The important takeaway is you need to have a structure that works for you in terms of where you are financially and where you want to get to as well as the things that are important to you.
Here I share about 4 systems:
50.30.20 – I call this the balanced budget basically because all the main allocations are close together.
22.214.171.124 – This is basically the balanced budget but with a dedicated allocation to giving.
126.96.36.199 (Aggressive Saver)- This could work for a dual income family. It could also work for families that live in their own house and don’t have to pay a rent or mortgage.
188.8.131.52 (Extreme Saver) – This could be a typical graduate on his/her first job and living with their parents. It could also be someone looking to hit financial independence very fast.
Just to reiterate, you can spin the ratios anyhow you want. So long as you have an allocation for savings and investments and you want that to be at least 10-20%. The rest you can change as you please.
These are debt securities that pay a pre-determined rate of return on pre-determined dates and also promise to repay the principal at a pre-determined date.
You are pretty much giving out a loan just like a bank would do to a company or the government.
These are more risky than cash/cash equivalents, hence they offer higher returns particularly when it involves a corporate or a state government.
The investment options here include:
▶FGN Savings Bond – Medium term loans to the federal government of Nigeria. With tenures of 2 & 3 years. This has a minimum of N5,000 and is sold in the first full week of every month.
▶FGN Bond – Long term loan to the federal government. It can be as long as 20 years. You get your coupon (interest) every six months. This gets advertised in the newspapers.
▶State/Municipal Bonds – Issued by state governments and local governments.
▶Corporate bonds – Issued by large companies.
▶Eurobonds – Dollar denominated bonds issued by the government or companies.
▶Supranational Bonds – Issued by multilateral organisations like the World bank, IFC.
These typically get snapped up by institutional and high net worth individuals, so you may not see this advertised. To know about these, you’d have to be on the mailing list of an investment bank, stockbroker and other closed groups. They typically would have a minimum threshold of about N5 million.
Some investment banks and fintech platforms also retail them.
According to a 2018 report by UBS and Campden Wealth, the world’s super rich had 7 percent of their portfolio in cash and near cash instruments.
So even though the rates have dropped, you still need to have some of your money in this asset class, particularly your emergency savings.
Apart from making cash available for unforeseen events, it also makes some cash available to grab so fantastic opportunities.
In general, these are low risk investments with tenures of less than one year. As such the returns are quite low. However, it is possible to get higher returns if you are placing money with non-bank financial institutions or a microfinance bank.
The investment options here include:
Traditional savings account with a commercial bank – This have the lowest return and are insured by the government to a certain level.
Online savings account – They have much higher yields and offered mostly by fintech startups. They mostly do not have any form of deposit insurance except for those affiliated with commercial banks.
Fixed deposit account with a commercial bank – This is a termed deposit account and the rates are negotiable depending on the size of the fund and the duration of the deposit.
Fixed deposit account with a microfinance bank – Same as fixed deposits with commercial banks but offered by microfinance banks. As such, they are higher risk given that Mfbs give unsecured loans.
Treasury Bills – Short term loans to the federal government.
Commercial Paper – Short-term borrowing by the biggest private companies. With tenures of less than 1-year. This has a minimum of N5 Million.
You can invest in any of these directly or through money market fund.
Many founders kill their businesses and ideas with bad personal finance habits.
They’ve got a great idea, built a solid team and actually execute excellently. But the business fails. Their business has barely got of the ground and their product is only starting to gain traction, but because they have the title CEO, they feel the need to look the part.
So they go off to buy a luxury SUV, move into a porshe area of town, start flying business class etc. And typically, they don’t do this out of their pocket, they’d expense this to the company.
A few years/months down the road, business slows down and their isn’t sufficient capital to tide the business through. And they are left with selling or shutting up shop. __ Dear founder, give that business some time to grow and flourish. You will not only fly business, you’d fly private if you so desire.
Of course as CEO, you represent your brand and shouldn’t go around looking tacky or in a a jalopy. That is however not sufficient grounds to blow cash you have raised from investors or revenue your business is only starting to generate.
Incredible 50% savings off a new ultraHD TV! Is it really saving, if you’ve just spent some money?
That’s not really savings but something called spavings – a combination of spending and saving. Spaving is spending money during a sales promotion to save money.
Savings in its true form is money set aside for future use and not necessarily money left unspent because of a discount.
But you can convert your spaving into savings by transferring the discount received into a savings account. Though in practice, it may not always be possible especially if you have a tight budget and immediately used the spavings to buy other essentials.
So when next year’s Black Friday comes around, don’t say you saved a lot from discounts, the right word is I spaved a lot.
I wonder how much money people have stuck in banks without anyone to claim it?
Whether you choose to manage your finances separately or combine everything or any other way you choose to deal with your family finances, you should share relevant financial information to avoid problems.
It’s common for couples to have one person handling the money but if the responsibility unexpectedly has to pass to the other person, it could be very challenging and lead to a major headache for the person now who has to deal with them.
Situations that require a spouse to take over the handling of family finances are quite stressful on their own, you don’t want them to deal with the additional issue of a financial difficulty – not because their is no money but they don’t know where it is or how to access it.
To make life easy for your partner, you need to get on the same page regarding the following among others:
➡️Account details – how to access them.
➡️Properties and investments – What is owned and where they are held.
➡️Income sources – How much is coming in and from where.
➡️Household bills – When they become due and how to pay them.
➡️Amounts owed – How much and to whom it’s due.
What shall it profit a man or woman to have high yielding investments but zero cash flow?
So Tiwa is on her first job out of school and has just been paid a year end bonus. She’s all about saving and investing, so when she hears of how land prices in Lekki have jumped for the early invesors, she makes a quick move to purchase some real estate.
Some months down the line, the investment is doing very well but she has an emergency and needs some cash that exceeds her emergency savings.
Unfortunately, investments in bare land don’t pay any dividend. The only way to get cash is to either sell it, lease it or do some business on the land. Now, those aren’t things that can often be done at the snap of a finger.
Also, it should be noted that she only needs some money but it isn’t easy to sell a fraction of a piece of land.
So with no cash flow from her investments, she has a crisis situation and may have to take a high interest loan, sell the land at a huge discount or more embarrassingly go begging.
Often, investments with the highest rate of return would require you to tie up your funds for a long time. And while it’s important to maximise your returns, you need to also have some investments that generate some cash flow.