Financial Literacy
Step by step guide on how to secure your e-dividends before the December 31st deadline
Shareholders in the country who are yet to fill electronic dividend forms have been given a few months as extra time , as the Securities and Exchange Commission (SEC) has moved the deadline to December 31st 2017.
The nuggets;
- The deadline was extended so more shareholders could take part in the e-dividend registration.
- The deadline was also extended in order for SEC to finalize its guidelines on issuance of e-dividend warrants.
- SEC’s sponsorship of the e-dividend registration by commercial banks will also continue till December 2017.
- 2.2 million investors had mandated their e-dividends as at April 30, 2017.
How to go about this;
Here is a step by step guide on how to go about this;
Step 1
Visit the website of SEC via the dividend portal
Step 2
Once you visit the portal, type in your name or the name of the company that was used in buying shares into the search bar.
Step 3
The portal pours out a list of the companies you own shares in and the registrars. It also displays your account name and account numbers.
Step 4
Click on any of the links inserted in the names of the registrars. It will take you to another portal that will display e-dividend forms
Step 5
Download the forms and print them out.
Step 5
On each registrars e-dividend forms you will see against it the list of companies that they manage. Check for your companies you have shares in and tick as appropriate. Fill out other portions of the forms. Attach your passport photo, sign behind it and also sign the form. If there are more than one signatories to your account when you purchased the forms (like other directors), get the other signatory (ies) to sign. If you bought the shares using your company name, you might need a board resolution authorizing you to sign on the company’s behalf. This will be important for the next step. You may also need to apply a seal to the form. Also, if the shares belong to a deceased relative then make sure you have documents that prove that you are next of kin or acting on behalf of the estate.
Step 6
Take the form to your banker to counter sign. This can be a bit frustrating as your signatory has to match what they have in file. The reason why you go to a bank is that they will be the ones to verify if the signature on your e-dividend form corresponds with what you have in your bank account opening form. They also use it to identify your legitimacy. If it is a corporate account, then you will need to attach your board resolution authorizing you to sign on their behalf. A director and company secretary signs board resolutions.
Step 7
Go and submit the forms with your registrar. Once you are there they will inspect to be sure you filled all the necessary information. Once done, they will confirm that everything is okay and ask you to await payment.
Step 8
You await an alert for payment of your dividends.
Why you should get your e-dividend asap
SEC launched the e-dividend platform in July 2015 and set December 2015 as a deadline. After protests by shareholders, the deadline was shifted to December 2016. In January this year, it decided to extend it till June 30, 2017. Over N30 billion dividends that were hitherto unclaimed have been collected by shareholders. SEC has also granted an amnesty of some sort to shareholders who bought shares in an irregular fashion to come forward and claim them. Failure to do will lead to forfeiture of both the shares and dividends that accrue from them
SEC intends to convert the unclaimed dividends into a trust fund, a move the Central Bank of Nigeria (CBN) and National Deposit Insurance Corporation (NDIC) have opposed. The Securities and Exchange Commission (SEC) is the apex regulatory body for Nigerian capital markets. Current rules on unclaimed dividends state that they revert to the company after a period of 12 years.
Financial Literacy
How to invest for retirement
Planning for retirement means planning to reduce obligation in the future by investing today.
“If you plan to retire in five years what should you be doing today?” That’s a question I got last week, and talking with the client, a lot came up which I have decided to share.
First off, What is retirement?
Nigeria’s public service has an official retirement age of 60 or thirty-five years of unbroken active working service, but in financial planning, retirement is a financial, not a chronological event. Retirement can occur when your passive income can meet your non-discretionary expenses.
You start to plan for retirement the day you start to earn an income. Your retirement plan will centre on how to generate passive income and reduce expenses. In Financial Planning, Four distinct stages are usually described in a so-called Lifecycle Chart. These are the Accumulation, Consolidation, Spending, and Gifting stages. Chart 1. Financial LifeCycle seeks to segment investing priorities, recommended asset allocation, and risk profile in a chronological timeline as the person gets older. I will take each of these stages and explain how they are linked to your retirement plan.
READ: How to choose the right Pension Fund Administrator (PFA)
Chart: Financial Life Cycle
Early years: Use Your Time and Make Money, (Accumulate)
The first stage is called the Accumulation stage. Imagine a 22-year-old who has just graduated and is a management trainee. He typically has a low credit score and assets and income are also substantially lower. What he has in abundance is time. So it’s important to deploy his time in the best way to make money. Hence in the accumulate stage, the goal is to generate cash flow either from a job, multiple jobs, working longer hours, saving, cutting unnecessary expenses, etc.
The key measure in the accumulation stage is the Savings Rate which is essentially how much of income earned or generated has not been spent. On average, the participants in the accumulation stage have fewer dependents and maintenance needs which should theoretically make it easier to save.
READ: This thread exposed everything that’s wrong with Nigeria’s VAT
Mid Years Use Your Money To Buy Assets (Consolidation)
In the consolidation stage the focus shifts from saving to investing. At this stage, the income earned and credit scores have improved. This is when the talk of buying a home or starting a business takes concrete shape because, at this stage, those dreams can be funded. Hence capacity to take on debt is improved, and debt is used to invest in assets like a home. Remember debt is simply front-loaded consumption, which means we are taking our future income to invest today, intending to repay with future income generated from today investment.
The key measure in the consolidation stage is the Rate of Return which is essentially how much has been generated from the investments made.
READ: How to choose the right Pension Fund Administrator (PFA)
Spending & Gifting Phase; Use Your Assets To Generate Cash Flow and Time (Spending and Gifting)
Why is it called the spending phase? Because that’s what the individual is doing, spending down accumulated investments. The spending will include buying annuities or perhaps relocating to another city, your dependant’s college needs, etc. At this stage, typically very few are still earning “new” income but are rather spending from the return of prior investments.
The key measure in the spending stage is the Withdrawal Rate which is essentially how much of investment can be withdrawn as cash annually to ensure we do not outlive our investments.
READ: How interest rates impact your wallet
Retirement is All About Passive Income
Passive income, which is the income we are making from investing from the accumulation and consolidation stage is now sufficient to generate income and reduce expenses to meet our expenses in the spending/gifting stage.
To give an example, assume we took a mortgage to buy a house in the Consolidation Stage, in the Spending stage, we pay no rent, thus we save cash, which reduces our Non-Discretionary Expenses. In essence, retirement is planning to eliminate your future expenses to the point where you need less income when you retire.
What Should You Invest In Before Retirement Or In Retirement?
Our objective is simple, Income. In retirement, we invest solely to make income to meet our spending needs, Risk profile is also very low because there are fewer recovery options if your investments sink.
The retirement portfolio is an income-generating portfolio that will be overweight in fixed income products. First, determine what the risk-free rate is. In Nigeria, we can take the yield on a ten-year FGN bond as a guide, this means we can have a target of 10% as our huddle rate for the long term. Thus I will recommend an 80/20 portfolio with 80% going to Fixed Income consisting of long term bonds, REITs, and other top-grade commercial paper.
However what happens if we lock in our funds for 10 years at 10% and rates jump to 20%, meaning a loss to our portfolio. To avoid this risk we can create a bond ladder, where we break down the bulk sum and duration of our total bond investment outlay. Let us assume we have N10m in cash to invest, instead of one single lot investment of N10m, we split into 5 equal investments of N2m and place for 6, 7, 8, 9, and ten-year maturities. This means by the 5th year the first N2m will mature, if rates are higher, reinvest, if rates have fallen then reevaluate.
READ: 10 Side gigs to venture into while working a full-time job
What about Equities
Yes, equities also pay a dividend. In buying equities, we must ensure we are only buying stocks that pay a dividend above our huddle rate of 10% which is the 10-year FGN bond rate. Which Nigerian stock meet that huddle rate?
- Lasaco
- Zenith
- GT bank
- United cap
In closing, let us summarize. Retirement is not chronological age. The event occurs when our passive income pays our bills. Planning for retirement means planning to reduce obligation in the future by investing today. Investing in retirement is income-based with a huddle.
Financial Literacy
Steps to take to bag international scholarships
Here are the steps you should take if interested in pursuing international scholarships.
Studying abroad gives you exposure among many other things, and that is precisely why many Nigerians have been looking for ways to study abroad. However, not everybody is privileged with the resources to study overseas and this is where the international scholarship option comes in.
If you are interested in studying abroad and don’t have enough funds, you should consider applying for international scholarships. This article lists the steps you can take to bag international scholarships but before delving into that, here are some types of scholarships available to you as an international student:
- Location-based scholarships
- Course or program-based scholarships
- Sports-related scholarships
- Research-based scholarships
- University-funded scholarships
- Organization-funded scholarships
- Government-funded scholarships
Having discovered the types of international scholarships available to you, here are the steps you should take to bag any of these international scholarships.
Research: Research is vital if you don’t want to miss out on good opportunities or make mistakes during your application. Research scholarship opportunities available in your prospective college or location and be on the lookout for hidden scholarships.
Check your eligibility: Having done thorough research and discovered the available scholarship opportunities, check to see if you are eligible for them. Many international scholarships have their criteria and requirement, so you should confirm that you are the right fit first.
Get the required documents: After confirming your eligibility, you should get the necessary documents. If the scholarship requires you to write an exam, prepare for the exam, write a good statement of purpose and prepare all other documents.
Start your admission process: Some international scholarships require that you start your admission process and probably get the admission before starting your scholarship application.
Contact past scholarship winners: You might want to contact the previous scholarship winners to know what they did right and how you can learn from them.
Apply for the available scholarships: The last step is to apply to every available scholarship.
The best way to get funds for your undergraduate, postgraduate, or PhD pursuits abroad is by applying for international scholarships. If you do thorough research, you can find fully funded scholarships that won’t require you to pay any amount. One of the essential steps to getting an international scholarship as a Nigerian is staying abreast of current information and this will require you to network with others.
3 Comments