The Richest Man in Babylon

The Richest Man in Babylon is an ageless literature that is written in old-fashioned English. Though written in the 1920s, it has become an indispensable companion for anyone who craves for wealth. Scintillating stories were used to expound the essentials of financial prosperity in an ancient setting (Babylon) for readers to have a grip on the subject-matter. George Clason seeks to acquaint the readers with the “Wisdom of Age” which is, undoubtedly, immutable even in this dynamic environment of ours. According to him, “Gold is reserved for those who know its laws and abide by them”.    

RULE 1: “Gold cometh gladly and in increasing quantity to any man who will put by not less than one-tenth of his earnings to create an estate for his future and that of his family”.

The only way to secure your future is to earmark 10% of your income for asset accumulation. Endeavour to keep your expenses under control. A well-designed budget will instil discipline into you so that you could set aside your “seed money”.

RULE 2: “Gold laboreth diligently and contentedly for the wise owner who finds for it profitable employment, multiplying even as the flocks of the field”.

Make gold work for you. It is a tiny seed that grows into a mighty tree. Therefore, take advantage of opportunities to multiply your seed money.

RULE 3: “Gold clingeth to the protection of the cautious owner who invests it under the advice of men wise in its handling”.

The need to seek professional advice before investing cannot be overemphasized. This is the only viable option available if you want to preserve your capital.

RULE 4: “Gold slippeth away from the man who invests it in businesses or purposes with which he is not familiar or which are not approved by those skilled in its keep”.

Only invest in companies whose businesses you grasp easily. Dig deep to unearth valuable information before investing. Avoid climbing on the bandwagon- do a thorough analysis.

RULE 5: “Gold flees the man who would force it to impossible earnings or who followeth the alluring advice of tricksters and schemers or who trusts it to his own inexperience and romantic desires in investment”.

Gambling is different to investing which is concerned with purchasing something of value that will yield a fair return commensurate with the risk assumed over the holding period. Gamblers fall easy prey to fake financial advice.

These laws will help to fatten your lean purse and enjoy the best things of life.

Mitigating your risk with exchange traded funds

It is probable that the expected return from an investment  differs from the actual return. The investor has to contend with two major types of risks-diversifiable and non-diversifiable risk. Some risks cannot be diversified away by holding a portfolio of investments. The investor still has to face the risk associated with the whole economy e.g. exchange rate, interest rate, environmental, legal and inflationary risks. But it behooves the investor to avoid the security-specific risks by holding a diversified portfolio of securities. But oftentimes it is expensive for the investor to hold a diversified portfolio of investments. Exchange Traded Funds (ETFs), like mutual funds, can do the magic. But unlike mutual fund, they may trade at a discount or premium to their Net Assets Value (NAV) per share. NAV is total assets minus liabilities.

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With ETFs the investor is afforded the opportunity of owning part of a portfolio managed by an experienced fund manager for a fee. An ETF could be designed to track equities, government bonds or corporate bonds.  The fund manager aims to replicate the performance of an index by holding a portfolio that is a typical representative of the constituent securities of the tracked index such as S & P 500, Nikkei 225 and DAX.  For ETF that tracks a stock market index, it can hold all the shares or a sample of a stock index or target a specific sector of the stock market.

ETFs are not constantly traded by the fund managers to take advantage of daily movement of the indices. Therefore, the expense ratio of an ETF is often lower than that of an actively managed portfolio of investments. However, they are reappraised at regular time intervals to reflect changes in the composition and weighting of the securities in the benchmark index. ETFs are actively traded on the stock exchange like other stocks or bonds and can be obtained through the stockbrokers.

An astute investor can benefit from investing in ETFs in Nigeria. Although the Nigerian economy dipped 1.5% in 2016, the fundamentals remain strong.  Many stocks are trading at a hefty  discounts to their intrinsic values. The NSE All-Share Index lost 5.1% year to date but has gained 21.6% over the past 5 years.  Unitholders of ETFs are usually exempted from paying taxes on the dividends they receive and capital appreciation upon disposal.

 

LOTUS HALAL EQUITY ETF

It was listed on 14th November 2014 to track the NSE Lotus Islamic Index(NSE LII) of the Nigerian Stock Exchange. NSE LII comprises 15 Shari’ah compliant stocks from five sectors of consumer goods, industrial goods, healthcare, agriculture, oil and gas. It is reviewed periodically in order to ensure that component stocks continue to comply with Islamic principles. Distillers/brewers, tobacco companies, non-islamic banking companies are excluded. It comprises large-cap companies like Dangote Cement, Nestle, Mobil, Dangote Sugar, FO, Mobil ,etc.

Investors have the opportunity to invest without compromising their religious beliefs. The index has lost 24.6% since inception. However, the NSE LII gained  6.5% month on month. It is managed by Lotus Capital Limited. 

International Breweries Plc

INTBREW, formed by Dr. Lawrence Omole in December 1971, did not start operation until 1978 when its flagship product, Trophy Lager, was first produced. It became a public company in April, 1994. Subsequently, the company got its share quoted on the Nigerian Stock Exchange a year later.  

In a bid to prevent the company from going under the company embarked on reorganisation of the business. In 2008 funds were sourced from the Nigerian Capital Market in order to put INTBREW on the pedestal of profitability and growth. In the same year the Warsteiner Group relinquished majority of its shareholding to the Castel Group, a French brewer. These climaxed in the overhaul of its operations and the subsequent resuscitation of the Trophy Lager beer. In addition, other world class brands were introduced to widen its product portfolio and its revenue base. In January 2012, SABMiller Plc, a South African brewer founded in 1895, entered into strategic alliance with the Castel Group. 

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Turbocharge your portfolio with Access

With an asset base of over NGN3 trillion, ACCESS remains one of the biggest banks in Nigeria. Its expanded branch network has contributed to the growth it has achieved.

Deposit expansion trails loan expansion. Therefore, it has raised $300 million Eurobond and commercial papers of NGN35 billion in the year in a bid to shore up its capital and take advantage of opportunities in the countries where it operates.

We believe that the decision of the management to explore the retail market will drive cost of funds down and impact the bank's net interest margin positively going forward. Revenue from this segment jumped by 38.7% in 2016 compared to 33.6% of 2015.  However, it accounts for only 17.2% of total revenue and 3.1% of total assets. Its contribution to total PBT is 13%; PBT margin is   17.9%, up from 1.8% of the preceding period.

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The Business of the 21st Century

Robert Kiyosaki was brought into  spotlight by the Rich Dad Series which counselled readers to take charge of  their  finances. The Business of the 21^st Century was written by Robert Kiyosaki, John Fleming and Kim Kiyosaki.

The authors averred that the rules of the 21^st century are entirely different from those of the industrial age. Employment in the corporate world, pensions and real estate could secure one's future in the industrial age. There is no such thing as job security in the information age and establishing your own business is the surefire way to securing your future.

Capital should not be an obstacle to creating your own business. All you need to do is persuade the customers to purchase your products. And your employees will make a lot of money for you. Ayn Rand, author of Atlas Shrugged, said, “Wealth is the product of a man’s capacity to think.”

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Are you an intelligent investor?

Being an intelligent investor is not dependent on your IQ or academic prowess. It is more of the character than the brain. Fortunately, everyone can cultivate this character! An intelligent investor is one who does not give full rein to his emotions. He exhibits enthusiastic desire  to learn and is patient enough to dig deep before committing resources to any investment vehicle.

Your best investment ideas will come when you do your homework. Spend time reading annual reports of companies, industry articles and investment magazines like InvestmentFrontiers. Stop wasting your time predicting the direction of the market. Always do your own investigation. Stop depending on those who make a living advising people to take unreasonable decisions.

Sir Isaac Newton was a failure!

He was a man of genius and, undoubtedly, one of the greatest scientists of all time, by all standards. Isaac Newton discovered gravity and made immense contributions to mathematics and science. His investment in shares dates back to 1720 when he bought the hottest stock in England then South Sea. Newton cashed in on the unsteady nature of the stock market, walking away with £7,000 (making 100% profit).

However, he later succumbed to the madness of the market participants by buying overvalued stock. By allowing his judgement  to be clouded, the world's greatest scientist acted like a fool losing £20,000 (worth over $3 million now). Until his death, Newton prohibited people around him from mentioning "South Sea". Sir Isaac Newton was indeed an investment failure!

How to finance your child's education

Secure your child's future

The cost of financing good quality education is becoming a financial burden on parents. It is therefore absolutely imperative for parents to seek alternative sources of funding their children’s education. There are many affordable plans by financial institutions in the country that can ease the burden on parents and help secure their child’s future. But parents should take into consideration factors such as interest rate, flexibility, additional benefits and ability to use it as collateral for loans.

Your dream of  giving  your children the best education they deserve can be achieved if you start with as little as NGN1,000. We will apprise you of products that can ease the burden on you.

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