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How To Choose Whether To Buy A Car or Rent An Apartment

How To Choose Whether To Buy A Car or Rent An Apartment



buy a car or rent an apartment

Bode is faced with a decision on whether to buy a car or simply just get an accommodation. He has been living with his parents for some time now and thinks now is the best time for him to move. He also needs a car as commuting to work every day for him has been very stressful. He doesn’t know how long he can keep jumping buses and hitching rides. His dilemma is compounded by the fact that his two most immediate needs are mutually exclusive. He only has enough money to fund either of rent or a car and not both or so he thought.

How often do we find ourselves in this situations and rather than apply common sense we let our emotions and subsequently indecision influence us to make wrong decisions. I believe there is a better way to handle this dilemma facing Bode. Let’s explore some of them.

Which is absolutely more critical?

One of the most important thing you must do is determine which one is absolutely more critical. If for example, you are squatting with friends or a relative and have been given a deadline to move out then getting accommodation is absolutely more crucial especially if you do not have an alternative. You certainly can’t live in a car for too long. Looking at things this way helps you rank needs in order of priority. It also requires that you think less of your emotional attachment to either a car or an accommodation.

Opportunity cost?

Understanding which of the two cost more if left undone is also a very good metric for easier decision-making. For example, if you decide to pay for an accommodation will it mean spending more on transportation and suffering a lot more in terms of inconvenience? Using Bode’s example above, he still stays with his parents and his reason for wanting to leave is probably because he needs his space and independence. Therefore, if it is more inconvenient for him to jump buses than it is for him to live with his parents then I’d rather he bought a car.

Which will be more difficult to get if you miss the opportunity?

There are some opportunities that are presented to us that when lost is hard to come by again. When faced with the dilemma of whether to get a house or a car, I suggest you also ask yourself which will be easier to defer and still have the opportunity to buy or pay for. For example, you might get a house in a choice neighborhood at a fairly good rent. It may even be that you just love the house. Not taking it now may mean not getting that opportunity again. It could also be that the car itself is coming at a very good price considering its market value and not buying it now may mean the opportunity is lost forever. Understanding wants and scarcity this way helps you also make the right judgment call.

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Which cost less

You can’t be considering this decision without finding out the cost of taking either decision. The absolute cost and carrying cost of the two options are also very important to consider be taking that decision. If you buy a car as against renting a house, will you have the money to maintain the car? If it is a house, are you now able to pay your light bills, water bills, maintain the house, furnish it and even afford the next due rent? This might all look very unnecessary considering the urge to just take a decision but it’s important to assess the cost implication of either options.

What are the Substitutes?

Most things in life have natural substitutes. An alternative to buying a car for example may be to get a cheaper one, a lower model car or even a fairly used car. If avoiding public transportation is your ultimate goal then it hardly matters what sort of car you buy. Thinking this way broadens your mind and gives you a wide range of options to choose from. Same goes for a house too. You can decide to rent a two bedroom or three bedroom apartment. Or you choose to live in a relatively cheaper neighborhood. This all depends on if your compelling reason for looking for an accommodation. I know some people who would rather live in a one bedroom apartment just because they love the neighborhood and would rather not move to a cheaper area even if it’s a bigger apartment. Your principle will guide what is the right substitute.

Which one gives you peace of mind?

In making a decision, you also do not want to forgo buying a car (or a house) if not buying it will constantly make you unhappy. That alone is punishment which you could end up suffering till you get what you want. Imagine, not buying a car and every day you come back home late, tired, smelly and frowning. There is every likelihood that you will soon start to hate the house. Same for if you buy a car when what your heart really wants is an accommodation. This is also an important metric to consider even if it isn’t as crucial as the rest.

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This article originally appeared on Nairametrics on August 8, 2014


Nairametrics is Nigeria's top business news and financial analysis website. We focus on providing resources that help small businesses and retail investors make better investing decisions. Nairametrics is updated daily by a team of professionals. Post updated as "Nairametrics" are published by our Editorial Board.



  1. Leye

    August 8, 2014 at 10:07 am

    This is a well written article but it has only made me more confused. lol. I think you should just go with your heart. Whatever matters more to you, thats what you should spend on. Happiness is key. But while you’re trying to decide make you can make some money in the stock market by trading online. Rgister here

  2. flexzyflows

    December 29, 2014 at 11:40 pm

    priority z de foundation of prosperity

  3. Dare Akinola

    February 3, 2015 at 2:29 pm

    I always advise you go for what you do not have rather than spend on what you have already.

    In this case, i believe buying a car is more rational since he leaves with his parents.

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Funds Management

Before you transfer RSA: Best Pension Fund managers in Nigeria (1)

Pension fund managers based on the availability of information on the website, responsiveness to inquiries, and ease of navigation of the websites, among other factors.




In a recently published article, I did a piece on what to look for in a fund manager. Since then, a few people have contacted me to ask for my recommendations.

Unfortunately, I do not recommend fund managers, however, I try as much as possible to put the facts out there and leave readers, RSA holders and investors, to make their choice. This is even more important now with the transfer window open for RSA holders.

For those who want to use the pension fund performance as part of the decision variable for choosing where to transfer to, please refer to my recent piece on the YTD ranking of pension funds or contact me directly via the comments page of this article.

READ: Sacked workers cash in N2.56 billion in 25% early pension withdrawal

Recently, I did a piece on the most transparent pension fund administrators in Nigeria, that article too can be a reference point. Although, a lot has changed since I wrote that piece, either as a result of the article or as a result of adherence to best practice requirements by the pension fund administrators or managers.

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So, here are my take on pension fund managers based on the availability of information on the website, responsiveness to enquiries, and ease of navigation of the websites, among other factors, in no particular order.

READ: SEC extends deadline for filing quarterly financial statement due on October 30, 2020

OAK Pension Fund Administrators

Wow! OAk, you rock! This fund administrator packaged the pricing information in such a downloadable form that anyone can see it in pdf format for the entire month. However, the only issue is that for anyone without the ability to translate pdf files into excel, the historical analysis may be a problem.

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Current and past Funds’ audited financial statements are also available for download. I did not see a chart of the fees or portfolio structure, two pertinent pieces of information that investors may need.

Explore Data on the Nairametrics Research Website

Sigma Fund Administrators

Its presentation of the daily reporting for all four funds is a beauty to behold. The data comes in an easily downloadable form. With their information on portfolio structure, it is easy to know what the funds are invested in and to what extent.

You can also easily find the fee structure, which shows you how much fee you are or will be charged. Also available, are current and past audited financial statements for the various pension funds.

READ: NNPC releases audited financial statements, refineries record losses of N154 billion

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First Guarantee Fund Administrators

It reported on all 4 in the last 10 business days, thereby meeting the minimum requirement. Again, it would have been good to show the entire month for people who had no time to visit the site weekly.

Stanbic IBTC

The implication of this is that historical data is lacking on the site. There is information on portfolio structure, so it is easily discernible what the funds invest in, however, I could not see any fee chart that shows what investors are being charged. There are audited financial statements but they take an undue amount of time to open up when clicked on.

READ: PZ Cussons suffers a pre-tax loss of N7.984 billion in 2020

Stanbic IBTC Fund Administrators

This is one of the most transparent fund managers in Nigeria in mutual and pension funds. In a beautiful format that can be copied, this fund administrator reports its prices for all 5 funds (including micro pension fund). With portfolio structure information readily available and up to date, you can see where your funds reinvested.

However, the only information I saw about fees, is the flat administration fee charge. There is need to put any other fee charged out there for investors to see. The audited financial reports on display are about the pension fund and fund returns for 2019. I did not see the returns for earlier years, although there is information on 3-year rolling returns.

Anchor Fund Administrators

It reports in a very imaginative form, where you can get pricing information for a long period of time. There is also an updated portfolio structure detailing what the funds are invested in and the percentages. There is also a rate of return page where you can see the historical performance of the funds. There are current and past financial reports on display for download and analysis.

READ: Nigeria’s pension fund assets increase to N8.14 trillion

Legacy Pension Fund Administrators

It reports on funds – all 5 funds (including micro pension fund), on beautifully and strategically positioned clickable icons on their website. The icons which opens up when you click on the view history, displays the required information which is accessible by defining the period of interest.

Information on the portfolio structure comes in a downloadable format, so you can easily know what the funds are invested in. There is information about the admin fees charged, but that is so close to the price icon that you need to look very closely to see.

The annual rate of return of the funds is also available dating from 2006 (depending on when the fund was launched). You can also see each fund audited financial statement, the latest of which is for 2019, as expected.


READ: Why African Alliance has not released its FY 2019 and Q1 2020 results

ARM Pension Fund Administrators

It reports on all 5 funds (including micro pension fund) on beautifully positioned and strategically clickable icons on their website. Past and current funds’ audited financial statements are readily available. It does not, however, look like there were information on portfolio structure, fee or rate of returns as I could not find those on the web site.


I will be releasing another part of this piece as it is not possible to evaluate all the PFAs in one article. So, stay tuned.

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Funds Management

Cowrywise launches 6 new mutual funds

Cowrywise has partnered with Asset and Resource Management Holding Company (ARM Holdco) to launch six new mutual funds.



Cowrywise to re-launch as Cowrywise Circles

In a bid to attract more first time investors into the mutual funds’ space, Cowrywise recently announced its partnership with Asset and Resource Management Holding Company (ARM Holdco) to launch six (6) new mutual funds.

This is according to a disclosure by the firm, as seen by Nairametrics.

What they are saying

Cowrywise said: “We are excited to launch 6 new mutual funds from Asset and Resources Management Holding Company (ARM Holdco) on Cowrywise. With this partnership, Cowrywise users get more quality investment options in Naira and dollars. Also, this is in line with our continuous drive to get 10 million first time investors into the mutual funds’ space.”

What you should know

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The six (6) new mutual funds listed are; ARM Eurobond Fund (Dollar fund), ARM Discovery Balanced Fund, ARM Aggressive Growth Fund, ARM Ethical Fund (Halal investments), ARM Money Market Fund, and ARM Fixed Income Fund.

According to Investopedia, a mutual fund is a type of financial vehicle made up of a pool of money collected from many investors to invest in securities like stocks, bonds, money market instruments, and other assets.

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Funds Management

Pension Fund performance ranking for October 2020

Below are the 5 best performing RSA funds as at the end of October 2020, on a year to date (YTD) basis.



Pension funds

In what could be best described as magic, in an environment where the markets all over the world are grappling with the effects of a pandemic, Nigerian pension fund managers are churning out positive performances in double digits.

The high-interest regime that characterized the Nigerian market in the early to the tail end of 2019 paid off for many pension funds in Nigeria who recorded impressive performances in 2019. It, however, beats my imagination that under current low-interest regime of 2020 and other headwinds in the market, that pension fund managers would even do better, in terms of performance in 2020.

Going by an analysis conducted by Quantitative Financial Analytics based on pricing information gleaned from various fund managers’ websites, the Retirement Savings Account (RSA) category made an average of 18.61%, with returns ranging from 52% to 8.99%.

Information about the performance of Crusader Pension RSA was not available and efforts to get such information yielded no result. Crusader Pensions RSA is therefore excluded in this report.

Below are the 5 best performing RSA funds as at the end of October 2020, on a year to date (YTD) basis.

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Best Performing Fund:

Name of Fund: NLPC Pensions RSA Pension Fund 2

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YTD Performance %:  52%

YTD Gain per unit:  N2.05


2nd Best Performing Fund:

Name of Fund: AXA Pensions RSA fund 2

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YTD Performance %:  29.2%

Stanbic IBTC

YTD Gain per unit:  N0.88


3rd Best Performing Fund:

Name of Fund: Anchor Pensions RSA Fund 2

YTD Performance %:  26.87%

YTD Gain per unit:  N0.73


4th Best Performing Fund:

Name of Fund: Fidelity Pensions RSA Fund 2


YTD Performance %:  23.34%

YTD Gain per unit:  N0.75


5th Best Performing Fund:

Name of Fund: OAK Pensions RSA Fund 2

YTD Performance %:  22.44%

YTD Gain per unit:  N0.68


Retiree Fund Performance

Retiree Pension funds, otherwise known as fund 4, performed slightly less than the RSA funds. On average, Retiree funds generated an average return of 15.15% on a YTD basis as at October 2020. The returns which ranged from 39.26% to 7.65% have the NPLC Retiree fund taking the lead. Again, Crusader Retiree Pensions funds is excluded from the analysis for lack of data.

Here are the best 5 Retiree funds.


Best Performing Fund:

Name of Fund:  NLPC Pension Retiree Fund 4

YTD Performance %:  39.26%

YTD Gain per unit:  N1.34


2nd Best Performing Fund:

Name of Fund: Investment One Pensions Retiree fund 4

YTD Performance %:  36.18%

YTD Gain per unit:  N0.91


3rd Best Performing Fund:

Name of Fund: Fidelity Pensions Retiree Fund 4

YTD Performance %:  24.64%

YTD Gain per unit:  N0.81


4th Best Performing Fund:

Name of Fund: AXA Pensions Retiree Fund 4

YTD Performance %:  21.56%

YTD Gain per unit:  N0.65


5th Best Performing Fund:

Name of Fund: NPF Pensions Retiree Fund 4

YTD Performance %:  19.19%

YTD Gain per unit:  N0.28


PENCOM Transfer Window

The type of performance noted above is good news for retirement planning. The goal of anyone planning and saving for retirement is to make such gains that would enable them retire gracefully and with so much financial accumulation that could help them do just that.

The importance of knowing how pension funds have and continue to perform cannot be timelier than now, given that the National Pension Commission of Nigeria has opened the transfer window for RSA account holders to decide on where to transfer their pension funds.

While it is widely known that past performance is not an indication of future performance, pension fund performance alone should not be the only reason or decision variable in transferring from one pension fund administrator (PFA) to another.

RSA account holders are enjoined to make their decisions as holistic as possible by considering all the factors before they move their funds. For those who want a complete list of the YTD performance of pension funds, you can make such request through the comment section of this publication.

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