This week’s article is mainly for our youths and their parents, as we seek to explore ways in which the former can become independent from the Daddy and Mummy Bank. Certainly, times are tougher for today’s youths than it was for their parents. Unemployment is rife because the world’s economy has changed but university curriculum has not changed to address the current skills requirements of the job market. Career guidance counsellors are failing our youths because the counsellors themselves are not up-to-date. This is not a sociology column, so we will limit ourselves to financial matters. How do our youths who have been blessed with jobs maneuver themselves from positions of dependency to levels where others can rely on them financially?

Some lessons should have been learnt from childhood. The first lesson is the principle of selflessness. Youths should know that life does not revolve around them. Parents need to instill into children the need to demonstrate financial selflessness by regularly giving out hard-earned money to charitable causes. Birthday cash gifts should not be consumed totally by the child, instead, it should be split into donations, savings, and spending. A youth who has grown up with the principle of charity would find it easier to release his mother’s apron strings because he would realize that he is more blessed than others.

The second lesson is the lesson of delayed gratification. Children who have practised this grow up into financially prudent youths. They are more careful in spending their salaries and find it easier to establish a savings habit. The third lesson is financial literacy. Children should be taught how money works, the basics of budgeting and the benefits of savings and investments. However, not all youths were exposed to these lessons, yet they all need to achieve financial independence. The three lessons mentioned earlier must now be learnt and diligently practised.

To become financially independent, you must be financially literate and current. Not everything that worked for your parents will work for you, the global economy has changed, new investment vehicles like cryptocurrency and crowdfunding are emerging daily. Learn for yourself and choose the ones that suit you. But you cannot even talk of investments and wealth creation when you are still dependent on Daddy and Mummy Bank for your basic needs.

Financial independence starts with budgeting and financial discipline. To have a budget based on your monthly salary implies you are now choosing to live within your means and any income or expense outside the budget would not be considered. This would require commitment and self-restraint, a deliberate choice not to compare yourself with your mates. The question you may ask is, why should I suffer myself unnecessarily when the Daddy and Mummy Bank is not closed, and my parents would gladly shower me with cash? If you think you feel good spending your parents’ money, I can assure you that the feeling you get from being financially independent is much more rewarding. It is a natural high, which is not substance-induced.

Pay yourself first! It is not how much you make, but how much you keep! Therefore, put money into your savings before you give anyone else your money. Do this by establishing a monthly standing order with your bank. As soon as your salary is paid, the savings would be moved out. Avoid using your savings for frivolities; instead, invest in yourself and save towards house rent, home furnishings, car purchase, professional examinations, wedding etc.

Do not spend salaries you have not even earned. This means that you should avoid buying things on credit with the intention of paying from future salaries. Consumer debt is a road you do not want to travel on; it exchanges dependence on parents for dependence on expensive creditors. Buy items only when you have the full amount. This puts you in a position to shop around for the best bargains and to negotiate hefty discounts. Learn to negotiate prices. Never accept the first offer. Improve your bargaining skills in order to reduce your expenses.

If you are hunting for a better job to increase your income, clean up your online presence. Recruiters check out potential employees online, you should therefore ensure that every picture and posting in cyberspace projects the image you want HR managers to have.

Parents, you need to help your young adults by demonstrating restraint yourselves. If you need to support them financially, avoid carrying the burden 100 percent. Let them contribute the bulk of the cost. The success from one transaction would build their confidence for the future and ultimately lead them to financial independence.

Happy investing.

As you seek avenues for capital appreciation, please ignore instruments that promise unrealistic returns.

These are truly perilous times. We are bombarded with a rare combination of high inflation, low interest/ investment yield, currency devaluation and stagnating personal incomes. In Nigeria, inflation has reached exceeded 13%, heights we have not seen in years. Meanwhile yields on money market instruments are at a record low. The popular Federal Government Treasury Bills (TBs) that used to be the darling fallback position of investors is delivering a mere average of two percent per annum. This means that cash invested in TBs would buy 11 percent less goods next year than what the same amount would buy this year because, whilst the fund may have grown in nominal value, its real value has been eroded by inflation. In addition to these things, the increases in petrol prices accompanied by increases in electricity tariffs have dealt a double whammy on our purses. But survive we must. We should even do more than survive, we must thrive. We need to protect the nominal value of our investments as we strive to find ways to increase their real value.

We should consider strategies for capital preservation before looking at opportunities for capital appreciation. We must defend the nominal value of our investments through careful portfolio management. Our first strategy would be a flight-to-safety. Investments in well known, proven assets managed by well known, proven managers. Stay with the familiar, those with good, verifiable track records. This is not the time to experiment. With the record low interest yields coupled with the currency devaluation, many are being lured with new investment options. We must be even more careful than before, exercising the utmost due diligence and caution. If in doubt, do not deal. Even the familiar, proven investments must be reviewed more frequently than before.

The lockdown has had severe negative effects on many businesses; therefore, the companies who were faithfully delivering good returns may not be able to continue. If we cannot relax with familiar investments, how then can we trust new ones? We must monitor the economic sectors we have invested in, to confirm their continued viability. If we choose to invest in new assets, we should not rely on investment advisors alone, because many of them earn a commission if you invest in the assets the recommend, therefore their advice may be self-serving at times.

If we have the luxury of time, a second capital preservation strategy would be long-term investing. Investment yields always even out in the long term; the graph of highs and dips usually result in a healthy average, but only over a considerable period of time. So, investing long term in good equities would enable you ride the highs and lows and achieve not only capital preservation but also capital appreciation from reasonable investment yields.

The common strategy for protecting investment portfolios against erosion by inflation is to invest in inflation-indexed bonds. These are money market instruments that guarantee yields above the inflation rate. The fund managers of such instruments invest the pooled funds in equities, commercial papers (CPs), and derivatives.

Whilst some company equities may not deliver good returns in the current economic environment, CPs and derivatives can still manage to deliver above 13%, the only concern would be the availability of enough of such assets in the market. With the Central Bank of Nigeria generously supporting the market with single-digit loans, fund managers may not be able to find enough assets that can deliver yields above 13 percent per annum.

Capital appreciation requires a more careful assessment of both the asset and the asset manager especially at this time. Even you choose to invest in new asset classes; the assets should be new to you the investor, not new to the investment market. This means each asset and each asset manager must have a verifiable track record that you can review and conduct your due diligence on, before arriving at the decision to invest.

In this column, we have spoken several times on crowd funding instruments. Readers have reached out to me privately for recommendations, but I prefer that people do their own due diligence and be personally convinced before spending their money. Agriculture is a profitable venture because human beings would always eat. Sadly, some investors attempt to invest directly into farming without sufficient prior knowledge and so lose money. Investing in agriculture through a crowd funding platform may be the way to go at this time.

As you seek avenues for capital appreciation, please ignore instruments that promise unrealistic returns. Let us avoid the risk of losing money so that we can at least achieve capital preservation.

Happy investing.

IDENTITY theft is the crime of obtaining a person’s personal or financial information with the sole purpose of assuming the person’s identity and carrying out financial transactions with the assumed identity. It is probably the fastest growing crime globally. Accounts are hacked and information like card details, bank account details, BVN, passwords, email addresses etc. are stolen. Online purchases are then made. In this post-COVID era, we cannot conveniently side step online shopping or having our financial information travel through cyberspace. But we can avoid being victims of cybercrime by keeping our electronic financial information and transactions safe.

Start with your device. Ensure your phone, tablet, laptop or PC has the latest version of anti-virus, spyware and malware protection. So that it will alert you if you visit a compromised webpage. Buy the best product and update it regularly. Scan your device frequently to ensure it remains secure because new spyware is being created daily.

Shop only at well known sites or the sites of vendors you can personally vouch for. You should not only vouch for their personal integrity but for their corporate governance standards that ensure they have installed the best up-to-date firewalls and protection on their websites to reduce the dangers of hacking, and that the information you input is encrypted end-to-end. They must publish this assurance visibly on their website. If this assurance is not available, you should explore other ways of payment – PayPal, Alipay, Amazon Pay, bank transfers, etc. These third parties who have invested in adequately secure payment infrastructure can collect the payment on behalf of the vendor. The vendor gets the money while you keep your information safe.

Obtain your mobile banking apps only from Google play store or Apple store. Avoid downloading apps from banks’ websites, and certainly not from third-party websites. Do not stay permanently logged in to mobile apps. Do not initiate auto-login nor allow your device to store your login details. Switch off Bluetooth when conducting financial transactions, in fact switch on Bluetooth only when needed. Keep your device itself locked when not in use, initiate auto-lock feature. Unlock it using both a PIN/ pattern and a biometric ID e.g. fingerprint. Banks too now have the biometric access option, so we can safely lock both the device and the app. Audit your bank statements regularly to fish out strange transactions.

Avoid inputting your payment card details in the presence of others, including members of your household. If you cannot guarantee continuous privacy every time you shop, you can input your card details into your Google account once. Every time you want to shop after that, Google would automatically furnish the information. It would fill in the card details but anyone looking at the device screen would see significant parts blocked out. We must treat our payment cards like we treat cash. Since we would not leave our cash lying around, we should not leave our ATM card lying around. We must not share our PIN with anyone. It is personal to your identity and should only be known by you. If you feel that your PIN has been compromised, change it immediately. Do not use an ATM with any gadget attached to it, it is probably a skimming device that copies the information of all cards inserted into the ATM. Always collect and destroy your ATM and POS receipts. Do not respond to suspicious emails, they may contain spyware that would steal financial information from your device.

Avoid using shared devices for financial transactions. If you must, clear the browsing history when you finish. Also never use free WI-FI or questionable ISPs, many are not encrypted. Instead, use the service provided by your Mobile Network Operator by using your phone as a mobile hotspot. If you must use a free WI-FI, ensure you have a good antivirus that can alert you on its insecurity.

If you suspect a breach of your data, report without delay to your financial services providers, so that your cards can be hot-listed. Cancel cards and replace. If a card has already been used, contact the vendor for help with recovery (e.g. delivery address of goods sold). Ask your bank for your recovery rights. You are not liable for transactions conducted after you report the breach to your bank. Close bank accounts if unauthorized online transactions have been conducted in them and open new ones. Use new alphanumeric passwords. Move your subscriptions and standing orders to your new account/ card. Exercise due diligence and caution in managing your information and transactions.

Electronic financial transactions are convenient and easy. Let us do our part to make them safe. Happy investing.

EVERY year about this time, we discuss back-to-school financing because our children are about to commence new academic sessions and this usually brings with it heavy spending on fees, books, stationery, uniforms, materials,and accessories. This year has been a tumultuous year firstly for parents as our income sources were seriously threatened, depleted or in some cases totally dried out, secondly for children, who endured social traumas cocooned in closed places, and many were unable to get the sound academic trainings their young minds need. Thankfully, schools are resuming now and hopefully, they will be able to catch up.

We have always recommended starting early to prepare for September through target savings accounts. These accounts (in-bank, trust and insurance companies,finance houses etc.) encourage small but regular savings towards a target event; so that the financial burden is spread out and eased. Target savings accounts are also useful for other financially heavy expenses like annual rents, weddings, perinatal care etc.However, many of us may have had to dip into these savings during the lockdown. We must therefore look for other ways to reduce our current school expenses.

In previous years, many school proprietors would consider a discount if a parent has two or more children in one school. Others were willing to give discounts to parents who can afford to pay the full session (three terms) fees in September. However, schools were one of the most badly hit sectors during the lockdown. Their income sources dried up completely. Many had to put their staff on half-pay or no-pay. Therefore, it may be near impossible to expect them to offer sizeable discounts at this time; but parents should still request. Nothing ventured, nothing gained. Besides, the schools know that parents also suffered income and job losses during the lockdown.

Apart from tuition, other hefty expenses are textbooks, school- branded stationery, uniforms, sportswear etc. Parents need to consider hand-me-downs from older siblings, so long as the items being handed down are well preserved and would not cause embarrassment to the receiving child. However, some textbook publishers are frustrating the hand-me-down culture. They change pages of topics and move chapters around without changing any of the learning material in the textbook, all so that children using another edition of a book cannot flow along with their classmates. Their antics may not work in this post-COVID session. When we buy new uniforms and books, we need to label them well (not too conspicuously as to cause embarrassment) so that it can be returned to the child if lost. Backpacks, pencil cases, math sets, sandals, socks, and stationery should also be appropriately labelled.

Many parents pay for school lunches without asking if they can opt out. Packing lunch for children may seem like an additional task that parents are unwilling to add to their morning routines. But calculate the monetary gains and see if it is worth your while. Home-packed meals are usually cheaper, healthier, and fresher than school meals. Try a main dish with a small fruit and a dessert (e.g. biscuit or cake); the uniqueness would make your child very happy.

With the increased cost of petrol, car-pooling must become our culture. It does not make any sense for every family to take their car to pick up one or two children, when the cost of this pick-up can be spread thin amongst groups of families. Children who live near each other and go to schools close to each other should be organized into car-pools to save money. The necessary security clearance should be obtained from schools as required so as not to frustrate the car-pooling initiative.

The lockdown brought us fully into the e-learning age. Many children attended classes virtually using devices owned by their parents, who were also at home with them then. As schools resume, the expected trend is that teachers would continue to give assignments online and students would also submit online. Save money by not buying children top-of-the-range products to take to school. Firstly, children need to learn that getting luxury items is a result of hard work. Secondly, many of them are unable to care for these devices properly and they soon malfunction. Thirdly, a luxury item is a target for thieves – students, teachers and support staff can easily steal these devices. Therefore, it is best to buy cheaper but good and sturdy devices that would serve your children well.

We need to manage our finances creatively in this post-COVID era so that a little would go a long way. Happy investing and happy new school year.

In this time of economic slowdown, there is a need to look at new ways of managing our finances in line with the current economic realities. Many small business owners have their revenues compromised, and the incomes of the self-employed have been particularly decimated by this lockdown.

There is therefore a need to revisit our personal spending budgets. Budgets are derived from income, so if income has changed then the budgets must change. We may not be able to reduce the expenses on essentials; in fact, these may actually increase because of the need to stockpile supplies. However, our costs of feeding may reduce because we cook all our meals at home and have eliminated expensive restaurant/ takeaway foods. Entertainment costs for movies, partying and clubbing would reduce since we cannot go out. However, these would be replaced by the cost of WIFI in order to keep the family occupied as they stay indoors. As we stay at home, let us ensure we have adequate (not too much) cash for small purchases in the local markets and neighborhood kiosks that do not have POS machines.

We would need to rework our financial goals if our incomes have reduced or our short-term priorities have changed. Our mid-to-long term goals should remain the same, but the target dates of achievement may need to be extended.

This lockdown is presenting novel ways of generating income. Let us come up with creative ideas. Some people are holding online seminars aka webinars and charging a token fee. If you are a respected guru in your field, charging the bored and idle populace a meagre N5,000 to share your wisdom would be seen as an extremely generous offer. Payments are made upfront directly into your bank account and access to the webinar is granted only after payment. Each access is unique to each payment using a unique QR Code. If 100 people register for the webinar, you and your banker would be smiling. Other service providers like interior decorators, life coaches, Maths teachers etc. are selling their services online in unique ways. Some people are doing so well that they may not go back to their regular 9-to-5 jobs after the lockdown.

A few of us have loan repayment obligations which we may no longer be able to meet due to our reduced income. Do not ignore them and assume your creditor knows “what is going on in the country”. Be proactive. Engage your creditor and negotiate favorable loan rescheduling terms. The Federal Government and the Central Bank are already championing this, so rescheduling should be easier now than at other times.

How about our personal health and medical care? This pandemic brings to the fore the need to have adequate health insurance for the whole family. We may also need to buy other types of insurance. For instance, the self-employed could consider taking life insurance policies that pay them a salary when they are unable to work and earn an income. Please speak to an insurance broker on the various types of policies and the benefits of each type, so you would know the ones that suit your peculiar situation.

As we rework our budgets, revisit our financial goals or reschedule our loans, we must do so based on empirical facts. Do not rush to making hasty decisions under pressure or out of fear. Take the time (within reason) you need to calmly review the pros and cons. But avoid analysis paralysis – which in itself, is being immobilized by fear and refusing to make any decision at all. Refuse to be pressurized by your creditor. Stand back and appraise your options. Ask for help from 3^rd parties if needed.

Some of us are using Personal Finance Management (PFM) Apps to manage our finances. These would be very useful at this time when we want to redo our budgets, reschedule our financial goals or rearrange our loan payment plans. Once we input our new income figures, the app would suggest ways of achieving these. This way, we are immediately presented with several options and can choose the best ones faster.

Some of us may need financial help and cash support. Please take advantage of the numerous platforms that are providing material and financial help. Everybody falls into rough patches at different times. Rough times are temporary. If we take the help being offered by the federal /state governments or NGOs, we would be able to keep our heads above the rough waters and escape quicker. Helping hands make burdens lighter. Please ask for and receive help. Stay home. Stay Safe. Happy Investing!

Global stock markets are being battered by the Coronavirus effect as we speak. Many stocks are trading are far below their market value – that is they are a bargain. Now is the time to consider new investments in the equities because, certainly the prices would rebound. The only issue is – no one can accurately predict when they would rebound. But as we have said on many occasions – individuals should invest in the stock market on medium to long term basis and leave stock trading/ gambling to the professionals.

The market has cycles. There is the “bull run” and “bear market”. The bull run is when the entire stock market and most of the stocks on it are increasing in price and value. The bear market is the opposite. Every bull run is followed by a bear market and every bear market is followed by a bull run. It is the length of each one that determines the overall performance of the stock market at the end of the year. We should always expect these cycles, they are the way in which the market corrects itself. Investment experts advise us to enter when the market is down and leave when the market is up. But the current bear market is not market induced. It is artificially created by the COVID 19 pandemic.

The four most basic considerations in choosing shares are investment objectives, risk appetite, investment tenure and ethical considerations. All these must be carefully considered before investing. Investment objectives, especially at this time, would center on capital appreciation and portfolio growth. Risk appetites define how well we can tolerate the fluctuations that accompany share prices. If we are very risk averse, it’s best to avoid the stock market all together and choose investments that assure us of principal and profit e.g. money market investments and government treasury bills. However, if we invest in during a Bear Market, we have a greater chance of capital appreciation in the medium term. Warren Buffet, the most successful and richest stock investor and third richest man in the world advises a medium to long term tenure for each investment. When looking at ethical considerations we look at the businesses of the companies we want to invest in. Some may choose not to invest in alcohol and tobacco manufacturers, others would not invest in companies that manufacture using child labor in developing countries. These four factors help us to ensure we stay true to our financial goals and plans.

In choosing stock during a Bear Market we need to look at the price history of the stock. If the stock usually traded between N20 – N25 but is now priced at N15 without any serious problems occurring in the company, it is obvious it is suffering from coronavirus effect and there is value to be obtained in the medium term if we buy the stock at that low price.  Always do your due diligence and speak to your stockbroker for more insight. Buying during bear markets may seem contrary to conventional wisdom, especially because no one can tell if the prices would drop further before they begin to climb up again. Hence the need for a medium to long term investment horizon. When the market is down, share prices are generally low, as is currently playing out in many global stock markets – many good stocks are underpriced. That is the time to buy, one would buy at a bargain. To leave when the market is up is to sell when stock prices are generally high. That way one would make a good return on the investment and fulfill the stock market motto – buy low, sell high. Also, we may choose to keep the stock in our portfolio indefinitely and enjoy good returns via hefty dividend payouts.

It is important to point out, that there is a big difference between damaged stocks and damaged companies. Damaged stocks are stocks that have low prices, but the underlying companies are doing very well. Damaged companies are stocks whose prices are low because the underlying companies are failing. In a bear market, buy damaged stocks and not damaged companies.

The stock market is a major vehicle for wealth creation and income generation for most investors. Some investors have lost money but many more have been enriched by it. Empower yourself with relevant information, work with the right partners and do your due diligence before, during and after you commit your finances to equities or any investment asset for that matter. Happy investing.